Buy now to get an unheard-of rate for a 10-year mortgage| Toronto Real Estate Blog #Toronto #realestate

Banks are vying for property buyers by slashing their mortgage rates. - Banks are vying for property buyers by slashing their mortgage rates. | RAFAL GERSZAK FOR THE GLOBE AND MAIL

Rob Carrick

Buy now to get an unheard-of rate for a 10-year mortgage

Rob Carrick | Columnist profile | E-mail

From Tuesday’s Globe and Mail

There’s a brilliant reason to get into our expensive and quite possibly weakening housing market right now.

A 10-year mortgage is now available for under 4 per cent. You can thank the banks for this unheard-of rate. In the past week or so, competition between them on mortgage rates has gone nuclear.

More related to this story

 

Term Rate (with a top discount)
One year 2.59% – 2.84%
Two year 2.59% – 2.69%
Three year 2.89% – 2.99%
Four year 2.99% – 3.09%
Five year 2.99% – 3.29%
Seven year 3.84% – 3.99%
10 year 3.84% – 3.99%

Source: RateHub.ca, MonsterMortgage.ca

Today (Jan. 17) at noon (ET), Vince Gaetano of MonsterMortgage.ca joins The Globe and Mail for a live discussion about mortgage rates, where they are heading and what home owners should consider when making decisions about borrowing.

Mobile users can join the discussion by clicking here.

 

 

For more personal finance coverage, follow me on Twitter (rcarrick) and Facebook (Rob Carrick).

 

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Scotiabank considers selling Toronto tower | Toronto Real Estate Blog #Toronto #realestate

Scotiabank considers selling Toronto tower

Could be Canada’s biggest commercial real estate deal

Posted: Jan 19, 2012 9:31 AM ET

Last Updated: Jan 19, 2012 5:04 PM ET

Scotiabank says it is exploring selling its Toronto headquarters.  
Scotiabank says it is exploring selling its Toronto headquarters. (Courtesy Scotiabank)

Scotiabank’s landmark red skyscraper in the heart of Toronto’s financial district could fetch $1 billion or more if real estate trusts, pension funds and others get the chance to bid for Canada’s second-tallest building, a commercial real estate expert said Thursday after the bank revealed the granite tower may be for sale.

“I think what you will get is a bidding war,” said Bill Argeropoulos, director of research at real estate firm Avison Young.

“It is really a unique opportunity to own one of the country’s triple-A towers.”

Argeropoulos said fund managers such as the Ontario Teachers’ Pension Plan, the Canada Pension Plan Investment Board and the Caisse de depot et placement du Quebec, as well as the major real estate trusts would all likely be interested in acquiring all or some of the building.

“I wouldn’t be surprised if you saw two pension funds come together to perhaps spread the risk in an investment this large,” Argeropoulos said.

Scotiabank (TSX:BNS) confirmed Thursday that it was in the very early stages of exploring the possible sale of the building as part of a regular review of its operations.

“In the current low-interest rate environment, it’s potentially a good time to sell and we have chosen to explore the sale of Scotia Plaza,” bank spokeswoman Ann DeRabbie said in an email.

Scotiabank is the only one of Canada’s big banks that owns its head office in downtown Toronto.

“I think a lot of people have asked the question, when is the bank going to sell,” Argeropoulos said.

He noted that the downtown Toronto real estate market has been hot with several big deals as low interest rates give investors easy access to cash to buy properties.

Last year, Hines REIT sold the Atrium on Bay office and retail building to H&R REIT for $345 million, while Dundee REIT acquired a $690-million portfolio of office buildings from Blackstone and Slate Properties that included $373 million in Toronto properties.

“From a timing perspective, I don’t think there is a better time than today if you needed to free up some capital,” Argeropoulos said.

Barclays Capital analyst John Aiken suggested the sale of the building could help boost Scotiabank’s financial position ahead of new capital requirements.

“We view the sale of Scotia Plaza as a creative and brilliant move to help boost Scotia’s capital ratios without having to alter its core strategic assets or issuing common equity,” Aiken wrote in a note to clients.

“Consummating the sale could go a long way in putting this issue behind it.”

Under the incoming Basel III rules, a bank’s required Tier 1 capital ratio must be at least seven per cent. The ratio of how much of the bank’s assets include shareholder equity and other core capital, is a key a measure of a bank’s health and ability to endure downturns.

Canada’s banks, which had relatively high levels of Tier 1 capital going into the 2008-2009 financial crisis, were widely regarded as among the world’s most solidly financed during the global recession that was sparked by the U.S. banking scare. Some also moved to further increase their Tier 1 capital, but on occasion with types of security that won’t be allowed under the new rules.

According to Avison Young, the office vacancy rate in Toronto fell 70 basis points to 7.9 per cent in 2011 and was expected to decline further this year.

The result compared with a national average of 7.6 per cent in 2011, down from 8.3 per cent in 2010.

In its outlook for 2012, the firm noted that 2010 saw a number of big real estate deals as lenders were ready with cash and interest rates sat near record lows.

Avison Young said the trends was expected to continue, “tempered only by a scarcity of high-quality assets and the spectre of international economic difficulties.”

The 68-storey tower near the corner of King and Bay streets has been the home of Scotiabank’s Canadian operations since it opened in 1988.

The building, at 275 metres, is currently second only in height to the nearby First Canadian Place, which has 72 stories and stands 298 metres tall. However, plans call for the Trump International Hotel and Tower currently under construction in the same vicinity to take over second place at almost 277 metres.

All three are considerably shorter than the CN Tower, which soars 553 metres.

Scotiabank shares closed up $1.42 at $53.98 on the Toronto Stock Exchange on Thursday.

via cbc.ca

 

Robin Sharma’s Dose of Inspiration

Most of you have heard of Robin Sharma one way or another. He is one of world’s top leadership experts around. I am sharing one of his recently written blog post offering insightful tips to making 2012 your best year yet!

https://i0.wp.com/www.gpnworld.com/inc/newspics/2012-red-letters.jpg

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#1. My Identity Shapes My Reality
Neuroscience confirms your brain is like a giant spam filter – you only see what you focus on. So if your self-identity is all about being a victim, you’ll literally spot conditions that confirm your victimhood. On the other hand, if you see yourself as a powerful creator of your conditions, you’ll see opportunities to get to your goals – and dreams – all around you.

#2. Dream Big But Start Small
Ok, you’ve heard me say this before but a good coach repeats the fundamentals until they become a part of the way you think and perform. As I wrote in my new book “The Secret Letters of The Monk Who Sold His Ferrari” – “small daily improvements over time lead to stunning results.” One of the great keys to transformation are those little daily wins that stack up into a tsunami of change over the coming months.

#3. Vague Plans Provoke Vague Results.
I strongly recommend that you write out a 12 month plan, recording at least 5 little or big projects that you commit to getting done each month to ensure this year ends in rare-air. The fact is that a plan becomes a self-fulfilling prophecy (as researchers in the emerging field of positive psychology are confirming). In other words, clarity breeds mastery. And the goals you set drive the actions you’ll take.

Please comment and share if you like this. You can read full article here: The Mark Wahlberg Factor

 

 

Why CHIP Rates Remain High | Toronto Real Estate Blog | #Toronto #realestate

An insightful overview of why CHIP rates remain high by Rob McLister of Canadian Mortgage Trends.

Why CHIP Rates Remain High

CHIP-reverse-mortgageMost interest rates have dropped to historic lows in recent years…but not all of them.

One that hasn’t is the rate on CHIP reverse mortgages.

On October 12, 2009, CHIP parent HomEquity Bank announced its receipt of bank status. Bank status helped it significantly cut rates down to 5.90% for a 5-year term in October 2009 (that compared to almost 9% a year earlier).

Today, CHIP’s 5-year rate is 5.95%, which at first glance seems unreasonable considering that interest rate benchmarks like the 5-year government yield have nosedived 1.46 percentage points since October 2009.

But, as is often the case, there’s more to the story.

Unlike regular mortgage lenders, CHIP cannot insure its mortgages and benefit from low-cost government-backed funding. Nor can it fund long-term mortgages with cheaper short-term debt like many other mortgage lenders.

Instead, CHIP “matches maturities” to control risk, meaning it tries to borrow for roughly the same amount of time as it lends money to its customers.

On 5-year reverse mortgages, HomEquity Bank raises its money primarily through 5-year GICs and medium-term notes (which are essentially AAA-rated bonds bought by institutional investors. Their yield is in the ballpark of a 5-year GIC).

Here’s why all of this matters. Back in fall 2009 when CHIP last lowered its rates significantly, 5-year GIC rates were in the 2.60% range +/-.

Today, more than two years later, GIC rates are about the same.

In other words, HOMEQ hasn’t seen much improvement in its interest spread over the last few years. In fact, its year-over-year mortgage spread percentage actually decreased in Q3 (see the chart below).

HOMEQ-Mortgage-Spread-Percentage

This goes a long way in explaining why most CHIP reverse mortgage rates haven’t improved for a while.

At the moment, 5-year reverse mortgage rates are almost double that of a traditional mortgage. Is that fair? You decide, but consider that HomEquity:

  • Lends to almost anyone with a pulse who’s 55 and over and has a reasonably marketable property
    • CHIP does almost no check of qualifications (i.e., no validation of credit, income or debt-servicing ability)
  • Receives no payments for over a decade in many cases
    • The average CHIP customer stays in their home 12 years after getting a reverse mortgage.
    • In the meantime, HomEquity receives minimal repayments before discharge of the mortgage. Unlike a normal lender, that means it receives little money back with which it can re-invest and boost returns.
    • When it does get paid back, the time value of money takes a toll (more so than a traditional lender because HomEquity gets paid back in even less valuable future dollars).
  • Is the only game in town
    • It’s got no direct national competitors and has earned monopoly pricing power.

With so many seniors expected to rely on reverse mortgages, we’d love to see CHIP rates come down. Then again, given the above, it’s fairly understandable why they haven’t. 


Rob McLister, CMT

 

Global Toronto | Homes in Newmarket, Milton sell fastest in the GTA | Toronto Real Estate Blog # Toronto #realestate

Homes in Newmarket, Milton sell fastest in the GTA

 

TORONTO – Detached homes in Newmarket sell faster than any other region in the Greater Toronto Area, according to data released by the Toronto Real Estate Board.

Once listed, homes in Newmarket are on the market for an average of just 25 days before being sold. Homes sell just one day slower – at an average of 26 days – in the quickly expanding city of Milton.

The quick pace of home sales in Newmarket and Milton may be attributed to the diversity of the communities, according to Jason Mercer, senior manager of Market Analysis for the Toronto Real Estate Board. “These are areas that have a pretty diverse array of housing opportunities, whether it be single, detached, town homes, condominium apartments or what have you, so now you’re starting to attract a potentially big segment of the population,” Mercer said.

Mercer also warns that communities with a slower pace of home sales doesn’t necessarily mean they aren’t an attractive place to live, but instead, simply cater to a small segment of the population. The Bridle Path for example, where homes generally take longer than other areas to sell, is by no means an undesirable neighbourhood. “You’re seeing an average price that’s well above what you’ve seen for the GTA as a whole. You can’t say that this neighbourhood not ‘hot’ or not ‘sought after’ it’s just that the housing types are catering to a fairly small segment of the population,” Mercer said.

The price of homes seems to be increasing as well as demand seems to outpace supply. According to the Toronto Real Estate Board, the average price of a home is growing. “The low months of inventory over the past two years resulted from very strong sales relative to the number of homes listed. In 2011 in particular, there was a shortage of listings in the GTA. We continue to experience tight market conditions and considerable upward pressure on the average selling price,” said TREB President Richard Silver. Though the price of a home is expected to grow approximately 4 per cent in 2012 – to $485,000 – the Toronto Real Estate Board says it will still be affordable for the average person.

 See detailed information on the real estate market in the GTA’s various cities. 

 

Visualizing the average amount of days a home spends on the market, before being sold. 

Visualizing the average price for a home in the GTA’s various cities. 

 

Toronto’s toughest real estate markets have absolutely nothing in common | Toronto Real Estate Blog

Here is an interesting prespective of Toronto’s real estate markets by Open File.

Toronto’s toughest real estate markets have absolutely nothing in common

While Toronto’s real estate market is growing rapidly, that broad description doesn’t apply to all parts of the city. Some parts sell very fast. Others, not so much. From the Toronto Star, we learn that the two slowest-selling parts of the city are about as different as you could imagine:

In realtor speak, they’re known as C12 (The Bridle Path) and W05 (Jane and Finch). And according to recent statistics released by the Toronto Real Estate Board it would take exactly 102 days to burn through the current inventory in both regions, if no more properties came on the market.

By comparison, it would take 36 days to sell off all the properties currently listed in (E02) The Beach and W02 (The Junction/High Park).

As one of the sources quoted in the story notes, this isn’t actually all that confusing. The two tail ends of the market—the very cheap and the very expensive—are both going to take the longest to sell. One thing that will probably help the Jane and Finch area will be the Spadina Subway extension, which may explain why a bungalow in a less-desirable neighbourhood was still listed for more than half a million dollars.

The real estate market is crazy enough that some people are opting out entirely, renting despite the ownership craze. This may make sense, as analysts continue to make dire warnings about the perils of home ownership in Canada.

Blog photo by Joe Lipson via Flickr.

 

Home prices to go up in 2012: LePage | Toronto Real Estate Blog

Home prices to go up in 2012: LePage

Hausse prévue de la valeur des maisons canadiennes

 

The price of homes in Canada will continue rising this year, but the hottest markets in Toronto and Vancouver will grow much more slowly, predicts the country’s largest real estate broker.

Low mortgage rates will continue underpinning housing demand despite the weakening economy, said Royal LePage Real Estate Services in its annual housing outlook Thursday.

LePage president and CEO Phil Soper said that predictions from housing experts and economists for a drop in prices for 2012 are wrong as mortgage rates remain near record lows.

“Interest rates are the primary driver behind activity levels in the marketplace,” Soper said. “People buy homes on the payments that they will be making, not on the sticker price of a particular home.”

Most experts believe interest rates will remain stable for this year and well into next as the economy expands sluggishly, but eventually rates should rise with stronger growth.

Royal LePage, which franchises real estate agencies across the country, predicted the national average price for resale homes will rise 2.8 per cent by the end of the year.

The forecast follows a gain of 4.2 per cent in the national average price for a standard two-storey home to $375,427 in the just completed fourth quarter of 2011.

In Vancouver, a standard two-storey home had an average price of $1.1 million in the fourth quarter, up 10.9 per cent from a year earlier, while Toronto saw a home in the same category gain 4.2 per cent to $629,000.

But for 2012, Royal LePage expects prices in Vancouver to gain about 2.3 per cent, while Toronto is expected to see growth of 2.6 per cent.

Regina is expected to lead the country with gains of five per cent for the year, reflecting the sharp growth in Saskatchewan, a province rich in potash, oil, uranium and other resources.

Soper noted that affordability in Vancouver is “on a knife’s edge” as people spend upwards of 70 per cent of their post-tax income on their mortgage, property taxes and utilities.

The economic slowdown in China may also affect the market in Vancouver, which has a large Chinese-Canadian population with economic and business ties to China.

“If the investment from China slows, it will change the high-end and certain neighbourhoods,” Soper said, noting that the west side of Vancouver, West Vancouver and Richmond have all seen in influx of wealthy Chinese buyers.

The International Monetary Fund has said that Canadian homes on average are 10 per cent overpriced and warned it may be a factor that puts the country’s economic recovery at risk.

The Bank of Canada has also repeatedly cautioned prospective buyers to guard against being lured by low mortgage costs because interest rates and therefore monthly payments, will eventually increase as the economy gets stronger.

However Soper suggested that moves made by Ottawa to tighten mortgage lending rules have helped limit the risks.

“The government has made small but significant regulatory changes that have restricted access to the more risky mortgage products post the recession,” he said.

The Royal LePage forecast came as the Statistics Canada reported the price of new homes rose again in November, led by gains in Toronto and Montreal.

The government agency’s new housing price index rose 0.3 per cent in November, after a 0.2 per cent increase in October. On an annual basis, the index was 2.5 per cent higher in November compared with November 2010.

The largest year-over-year price increases reported by Statistics Canada were in Toronto and Oshawa, Ont., where they were up 6.2 per cent.

In the fourth quarter, the average price for detached bungalows rose 7.2 per cent from a year earlier to $532,137; prices for standard two-storey homes rose 4.2 per cent to $629,188 and standard condos rose 3.4 per cent to $347,659.

In Victoria and Saint John, N.B., house prices were flat or slightly down in the fourth quarter year over year.

In Saint John, detached bungalows fell 2.2 per cent year-over-year to $179,946, while standard two-storey properties slipped 0.3 per cent to $298,076. Condos were the exception, with average prices climbing 16.1 per cent year-over-year to $159,370, although LePage said those increases weren’t typical.

In Victoria, standard two-storey homes were unchanged, with prices remaining at $480,000 while detached bungalows slipped 0.8 per cent to $486,000 and condos dropping 1.1 per cent to $282,000.

— with files from David Paddon in Toronto

   
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The Bank of Canada has also repeatedly cautioned prospective buyers to guard against being lured by low mortgage costs because interest rates and therefore monthly payments, will eventually increase as the economy gets stronger.

However Soper suggested that moves made by Ottawa to tighten mortgage lending rules have helped limit the risks.

“The government has made small but significant regulatory changes that have restricted access to the more risky mortgage products post the recession,” he said.

The Royal LePage forecast came as the Statistics Canada reported the price of new homes rose again in November, led by gains in Toronto and Montreal.

The government agency’s new housing price index rose 0.3 per cent in November, after a 0.2 per cent increase in October. On an annual basis, the index was 2.5 per cent higher in November compared with November 2010.

The largest year-over-year price increases reported by Statistics Canada were in Toronto and Oshawa, Ont., where they were up 6.2 per cent.

In the fourth quarter, the average price for detached bungalows rose 7.2 per cent from a year earlier to $532,137; prices for standard two-storey homes rose 4.2 per cent to $629,188 and standard condos rose 3.4 per cent to $347,659.

In Victoria and Saint John, N.B., house prices were flat or slightly down in the fourth quarter year over year.

In Saint John, detached bungalows fell 2.2 per cent year-over-year to $179,946, while standard two-storey properties slipped 0.3 per cent to $298,076. Condos were the exception, with average prices climbing 16.1 per cent year-over-year to $159,370, although LePage said those increases weren’t typical.

In Victoria, standard two-storey homes were unchanged, with prices remaining at $480,000 while detached bungalows slipped 0.8 per cent to $486,000 and condos dropping 1.1 per cent to $282,000.

— with files from David Paddon in Toronto