December 2010 - Page 2 of 2

The Unusual Mortgage Market of the United States

The U.S. has an atypically high proponent of mortgagors opting for longer term fixed rate mortgages,

The International Comparison of Mortgage Product Offerings report released this September, composed by Dr. Michael Lee for the Research Institute for Housing America (RIHA), has revealed many oddities regarding the American mortgage market.

For starters, for a developed country, the U.S. has an atypically high proponent of mortgagors opting for longer term fixed rates. Securitization also plays a larger role in providing housing financing than in other countries, such as Australia where securitization plays virtually no role but interest rates are overall higher.

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Building permit values fall

Fewer people may be looking to take advantage of low Canadian mortgage rates to move into new homes in the near future, as the latest data from Statistics Canada showed a significant drop in the value of building permits during the month of October.

The group says that the value of building permits given out during the month was $6.2 billion – a 6.5-percent drop-off from the previous month, but close to what the market saw before the recession.

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Low interest rates, debt causing retirement struggles

While low Canadian interest rates have been helpful for those looking to buy a home, the Globe and Mail reports that they are also making it difficult for those getting ready to retire.

While low Canadian interest rates have been helpful for those looking to buy a home, the Globe and Mail reports that they are also making it difficult for those getting ready to retire.

Financial analysts told the paper that they are seeing an increasing proportion of the population planning to work after the age of 65, even if the retirement age doesn't go up, to save the government money on healthcare.
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Fixed-Rate Mortgage Predicted to offer the Best Mortgage Rates over the Next Five Years

selecting a fixed-rate five year mortgage term over a variable rate mortgage could grant Canadian mortgagors the best mortgage rates over the next five years

Fixed Mortgage Rates

According to recent forecasts laid out by a CIBC economist, selecting a fixed-rate five year mortgage term over a variable rate mortgage could grant Canadian mortgagors the best mortgage rates over the next five years.

CIBC’s Benjamin Tal presented a chart at last week’s CAAMP forum to illustrate the savings a five-year fixed rate mortgage could potentially garner over a five-year variable rate mortgage.

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Canada Mortgage Market Still Competitive

Among Canadian first-time home buyers, the percentage whom employ a mortgage broker has risen from 30 per cent in 2006 to 45 per cent in 2010.

Canada’s Mortgage Brokers maintain Choice and Flexibility

Interesting information comparing mortgage markets abroad with the mortgage market of Canada was presented last week by CAAMP’s international mortgage panel.

According to the Australian mortgage market report, provided by CEO Phil Naylor of the Mortgage and Finance Association of Australia, only three per cent of mortgages attained in Australia are transacted outside of a bank.

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The RESP Savings Calculator

A RESP is a prime method for Canadian parents or guardians to put away education savings dollars for their children or beneficiaries and watch them grow tax-free.

Determine the Best Savings Method for your Children’s Education Savings

The Registered Education Savings Plan (RESP) is a prime method for Canadian parents or guardians to put away education savings dollars for their children or beneficiaries and watch them grow tax-free.

RESPs involve a promoter and a subscriber. A subscriber can be a parent or common-law partner, an ex-spouse or former common-law partner, or a primary caregiver. The subscriber names a beneficiary, namely the child or children to whom the education savings will in time be paid. Contributions made to the RESP cannot be deducted from income tax, but within the RESP they may grow tax-free, and be paid out to the beneficiary tax-free as well. If RESP savings are not paid out to the beneficiary by the date of contract maturity, the promoter (though which the RESP is held) will return the RESP contributions to the subscriber, and no tax will be paid on the sum at this time.

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Questioning 35-Year Amortization

According to Canadian insurance providers, the average Canadian will pay their mortgage in less time than that provided by their amortization through the option of pre-payments.

35-Year Amortization in Debate

Rumors that the Government of Canada’s Finance Department is musing the possibility of dropping the maximum amortization from 35 years to 25 years are sparking discussion among financial experts and potential mortgagers.

The year before last the government decided to cut back amortizations on high ratio loans (loans that require financing of 80 per cent or more of the mortgaged property’s value) from 40 years to 35 years. Lessening the overall time homebuyers have to pay their mortgage loan back would decrease the amount of Canadians who could potentially qualify for mortgage financing. But is it in their best interest?

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Remembering RRSP Contribution During the Holidays

The final date by which you can contribute to your RRSP for the 2010 tax year is March 1, 2011.

Free up Funds by Being Practical and Thoughtful

As Christmas and New Years fast approach, it is easy to forget that the deadline to contribute toward your Registered Retirement Savings Plan (RRSP) for 2010 is also nearing.

The final date by which you can contribute to your RRSP for the 2010 tax year is March 1, 2011.

If you are uncertain as to the dollar value that you are eligible to contribute to your RRSP this year, check your 2009 Notice of Assessment. Maximum RRSP contributions for 2010 will equate 18 per cent of your total earnings last year, up to $21,000.

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