23 Nov

Latest On Rates, Mortgage Free Retirement, Cheap Florida Market

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Bank of Canada to stay ‘flexible’ on interest rates

 The Bank of Canada understands that targeting inflation is still its No 1 job, and that there are limits to its ability to keep borrowing costs on hold to buffer against economic shocks or trouble in the financial system, Governor Mark Carney said today.  

In his first remarks on his approach to inflation-control since the Harper government renewed his mandate on November 8th, Carney defended his “flexible” approach, which has seen him keep interest rates at 1% since September 2010, amid price gains that have exceeded his 2% target for much of the past year. Plus, he reiterated that the 2007-09 crisis taught central bankers that in some exceptional cases, monetary policy may be needed to complement attempts by regulators and supervisors to keep the financial system stable.

 In both cases, however, Carney came out swinging against so-called policy purists who have expressed concern that he’s moving the central bank too far away from its principal task.

 “We make monetary policy in the real world, where shocks are a fact of life,” Carney said in a speech prepared for delivery to the Board of Trade of Metropolitan Montreal. “That is why the Bank responds with a flexible approach, taking decisions guided by considered analysis and informed judgment rather than mechanical rules.”

 Click here for the full Globe and Mail article.

 Mortgage-Free Eventually: RBC Poll Finds Majority of Canadians Hope to Pay Off Their Homes by Retirement

 Nearly three-quarters (72%) of Canadians with a mortgage hope to be mortgage-free by the time they reach age 65, but one-third (33%) of older Canadians (those over the age of 55) have 16 or more years left on their mortgage term, according to the latest RBC Housing Snapshot poll.

 “Canadians want to be mortgage-free as they approach retirement age and beyond, but the reality is that it takes prudent planning and the right advice to stay on track,” said Claude DeMone, Director of Strategy for Home Equity Financing, RBC. “Using flexible and accelerated payment options are an easy and pain-free way to help take years off your mortgage and save thousands of dollars in interest costs.”

 Canadians overwhelmingly say that a low interest rate is the most important feature when choosing a mortgage (96%). Almost nine-in-10 Canadians also say that accelerated payment options (85%) and flexible payment options (88%) are important and desirable features.

 Looking ahead, the majority of Canadians expect steady interest rates in the next six to 12 months. Almost one-in-five Canadians (18%) expect rates will rise less than 1%. Just over a quarter of respondents (26%) think interest rates will rise more than 1% in the same time period.

 Click here for the RBC press release.

 Buying a condo: New or resale?

 When it comes to buying a condo, what’s a better investment? Buying one that’s already built and is being resold, or buying on the hype of a new building that’s yet to be constructed?

 Jana Masiewich considered both a resale and pre-construction condo before deciding that buying a condo prior to it being built presented a better opportunity for her to make money on her investment. The 29-year-old, who lives and works in downtown Toronto, was looking for a condo property that met her criteria, in particular one in an up-and-coming area of the city. But she also had to discuss with her advisers whether she had the cash to purchase a yet-to-be built condo now.

 To land confidently on her decision she consulted with her financial planner, her realtor, and did her due diligence on the developer building the condo. Masiewich says she understands there is some risk in buying pre-construction, but if you do your research, and go with a credible builder, then you significantly reduce the chance of a bad investment.

 Click here to read more from the Globe and Mail.

 Canadians eye cheap Florida real estate

 Canadians are eying cheap Florida real estate.

 Joe Waddell got the best cross-border bargain of his life last year – a three-bedroom, 1,700-square-foot condo for just under $120,000 (US).

 The Fort Myers property is just 15 minutes from southwest Florida’s gulf beaches, within an easy drive of Miami nightlife and, better yet, about two hours from Disney World.

 But Waddell, 45, his wife and 11-year-old daughter won’t actually be using their sun-and-sand getaway for a few more years.

 Instead, they are among the growing ranks of Canadian “endvestors” — investors who’ve been snapping up deeply discounted bargains south of the border with the intention of renting them out until they retire.

 Click here for the full article in The Star.

 

 

13 Nov

Industry News

General

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Industry News

Planning For Retirement – There Is No Substitute

One of the best risk-adjusted investments you can make requires no commissions, no buying and selling, and no management fees.

According to a new study from the Certified General Accountants Association of Canada, the boring old mortgage prepayment performs better than most common retirement savings vehicles, including RRSPs.

“Single individuals and couples with no dependents may be better off accelerating their mortgage payments than contributing to a retirement account,” finds the study. “This is the case for all income levels and savings rates, but particularly for lower-income individuals.”

“Those earning $30,000 annually and saving 2% of their earnings will get a nearly twice higher return by accelerating their mortgage payments compared with saving through an RRSP.”

Click here to read the full CGAAC study results.

Click here to read more from CanadianMortgageTrends.com.

Eoro Recession Will Depend On Banks: Carney

The euro zone is headed for at least a brief recession, but the nature and length of the slump and the degree to which it affects other parts of the world depends on how the region’s lenders choose to repair their balance sheets, Bank of Canada Governor Mark Carney warns.

Moves by the European Central Bank to backstop financial institutions mean it is unlikely there will be a “European equivalent” of the Lehman Brothers collapse in 2008 that triggered the worst global downturn since the Depression, Carney said Tuesday in a speech in the heart of London’s City financial district. Still, he said, the world is once again seeing a tightening of available funds because of Europe’s debt woes, and the impact both in the region and elsewhere will depend on careful management by banks as well as policymakers.

“Measures to avoid disaster are not necessarily sufficient to promote recovery,” Carney told the Canada-UK Chamber of Commerce, noting that the effects of a pullback in funding are “not limited” to Europe. “As global liquidity recedes, volatility is increasing and activity falling. The effect on the real economy will soon be felt.”

Carney’s speech, his first since becoming chairman of the Financial Stability Board – the global body coordinating efforts to overhaul international banking – outlined ways that European banks could meet a recently imposed June 2012 deadline to raise their level of top-quality capital to 9% from 7%, cautioning against relying exclusively on sales of risky assets.

Click here to read more from the Business News Network.

Crisis Underscored Risk From Credit Excesses: Bank Of Canada

The 2008-09 crisis and its aftermath have underscored the unique risks that credit-fuelled excesses pose to economies, forcing the Bank of Canada to pay closer attention to financial stability and to be flexible as it pursues its No 1 goal of keeping inflation tame and reliable, Mark Carney and his policy team said today.

A day after the Harper government confirmed that the Bank of Canada will continue to focus squarely on achieving annual price gains of about 2% for another five years, policymakers released a background document detailing situations in which they might take longer than usual to reach their inflation target to respond to an economic shock or a building imbalance in the financial system.

While the central bank is still mandated to achieve its inflation target above all else, policymakers essentially said the success of that framework and the lessons of the recent crisis mean there may be cases where monetary policy can be used to complement efforts by regulators and supervisors to keep the financial system stable. There is no consensus on how to do this, in part because dangerous financial bubbles are hard to identify before they burst, but there is a growing sense that pure inflation-targeting is insufficient for the post-crisis economic realities.

“Economic stability and financial stability are inextricably linked, and pursuing the first without due regard for the second risks achieving neither,” Carney and his officials said in the document. “A framework anchored on a solid and credible inflation target provides the flexibility for monetary policy to play an occasional role in supporting financial stability.”

Click here for more from the Globe and Mail.

Searching For A Home

Ever notice how many developers boast their new community is “just minutes from shopping, schools and all the amenities!”? And that “Everything you need is right at your doorstep”?

This is not just marketing gimmickry at work. These factors really matter, as such attractions are critical in determining a development’s appeal to buyers – for lifestyle and comfort while living there, as well as resale potential down the road.

But one of those factors carries a little more weight than the others: proximity to infrastructure.

The federal and provincial governments have been spending billions on infrastructure improvements over the last few years to upgrade highways, transit systems, airports and other services such as health care. For housing developments, this means more and better access.

Click here for the full article from HomeTrader.

Effective Time Management: Nine Tips

Do you ever wonder why top producers are top producers? Are they gifted? Do they have connections that the average person can only dream of? Are they lucky?

Perhaps. But chances are the one thing that top producers have in common with each other is an innate sense of how to translate every hour in their day to impact productivity – and, ultimately, their bottom line. Time management can either be your friend or your foe when it comes to climbing the ladder of success.

Is it a more effective use of energy to run in circles or make a direct dash for the finish line? In productive business, not all activity is created equal. You may be busy and pressed for time, but you must make sure that the tasks in front of you are the important ones, and that they’re getting allocated the appropriate amount of time.

Click here for more time management tips from PropertyWire.ca.