The US Economy Remains Strong | Good News for Canada

The New York Times this morning led with an article that stated that the US has added jobs during the month of November. The article goes on to say… “That economists had raised their estimates for today’s report after a separate employment survey showed an unexpected surge in November payrolls. But the Labor Department’s report, considered a bellwether for the broader economy, showed more modest gains, with a jump in service-sector and government jobs but declines in factory and construction payrolls.

The report reinforces investors’ expectations that the Fed will lower interest rates again at its meeting on Tuesday. Some market participants have called for an aggressive half-point cut, but continued strength in the job market may make a quarter-point cut more likely. Central bankers have said they intend to avert a recession, but several are wary of sparking inflation with an unnecessarily sharp cut.”

Can a rate cut from the Bank of Canada be far behind as the central bank tries to moderate the Canadian dollar against the US dollar. Mortgage rate declines are still in question because the impact of the subprime crisis and its impact on the Bankers Acceptance rates which drive mortgage rates.

The delay in the recession will give the bankers an opportunity to sort out the subprime mess without the complication of a recession.

Duncan Seward is a mortgage broker in BC. Duncan’s business focus is as an advocate for people who have been turned down by conventional lenders. He specializes in second mortgage with bad credit in BC and debt consolidation mortgage loans in BC.

True to Form | We Made A Mistake and You Pay

In the past month, all of the major Canadian banks have quietly moved to cut the discount they provide on mortgages. Why?, their profits have strung because their borrowing costs have increased. A significant reason for the increase in costs is due to the subprime scandal.

Discounts off prime hover around .60%, less then 2 months ago the discount was .90 percentage points off. With prime at 6.00%, it means the difference between a mortgage rate of 5.40% versus 5.10% which could mean an additional $1,500 of interest on an average Canadian home over 5 years.

The move to sharply reduce discounts is not just limited to variable rate mortgages. The banks have also cut how much they are willing to lop off longer term mortgages, including the five-year closed mortgage which remains the most popular product in Canada.

The move by the banks is typical. They made a mistake and now Canadian consumers will have to pay for it.

Duncan Seward is a mortgage broker in BC. He is an advocate for people who have been rejected by conventional lenders. Duncan’s business focus is on second mortgages in BC and debt consolidation in BC.

The Big Flip | Time to Cash In?

The big change of the valuation of the Canadian dollar with respect to the US dollar is encourage US investors in BC real estate to consider cashing out.

A combination of the increase in property values in BC plus a big change in the exchange rate is motivating US investors to consider selling their Canadian properties.

Downtown Vancouver condo’s are being listed in order for their owners to repatriate their dollars. It is now much less attractive for US investors to purchase in Canada relative to the increasingly cheaper US properties that are available. Real estate agents have said that their US investors have dried up.

The BC property registry has documented that US buyers are selling faster then they are buying. A mass exodus is unlikely due to the forthcoming Olympics. The opportunity to attend the Olympics is a big attractive for the US owners, but after the Olympics who knows.

Duncan Seward is a mortgage broker in BC who focuses on the hard to place business. Duncan business fills in the gaps where the banks do not want to lend.