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HST reference sheet

July 1st is Canada Day.. but for the residents of Ontario in 2010, it will be the launch of the much talked about Harmonized Sales Tax or HST…(let’s call it HST Day).

We took a closer look at how this will affect the average citizen and found an interesting reference guide from the Ontario Government.  HST- Ontario reference guide It  lists what is and isn’t affected…

Surprisingly, a great many things will not be affected, including Resale homes and new homes under $400,000.   Still, this new tax (and I do call it a new tax since I, personally, will be affected negatively) will affect us all one way or another…. Real estate commissions, lawyer fees, death (yes, funerals are now subject to retails sales tax), hockey arenas, gym memberships, karate classes, ballet classes, soccer, hockey (yes, our national sport),  haircuts and many other services….

New home purchases over $400,000 are eligible for a $24,000 new housing rebate (must be your principal residence).

This new tax may not be popular and I question the timing of it’s introduction (coming out of a recession), but I don’t think this will have a huge impact on the majority of us.  HST Day is coming….take a look at the reference sheet and see how it will affect you…  What do you think?

Are our Personal Debts too high?

2 reports came out recently that received  much air time on TV, Radio and Internet.   Let’s look at these reports from the CBC

1-The Certified General Accountants Association stated that the average Canadian’s debt is $41,740 per person….Apparently, it’s among the worst of the 20 most advanced countries in the world…

Well, let’s think about that for a moment ask some questions….

  • I wonder how many people have borrowed to invest lately?
  • $44k per person… is this a high number?  I mean, what does a basket of goods cost in some of these other top 20 countries like, Greece, Hungary, Poland or the U.S.?  Aren’t things more expensive in Canada?
  • Canadians have a reputation of being conservative….are we borrowing wisely?  Could it be that Canadians are taking advantage of these record low rates to borrow for rrsps, resp, stocks, real estate or other good investments?

2- The Canadian Association of Accredited Mortgage Professionals reported that 475,000 Canadians would be challenged if their mortgage rate went above 5.25% and 375,000 were already facing pressure to pay their bills.

  • I spoke with a contact at Canada Mortgage and Housing Corporation (CMHC) and Genworth Financial, the mortgage insurance companies that insured hi-ratio mortgages.   There was no indication that Mortgage defaults were a problem.
  • I have not seen any reports that show our Mortgage defaults are in trouble.
  • Canada is near or  has the lowest mortgage defaults among the top 20 countries.
  • why would you take a 5 year fixed rate at 4.59% (today’s rate) when you could get 1.70% with a variable rate?  How long will it take before variable rate reaches 5.25%?   2, 3, 4 years or more or never?  Where will our debt load be at that time?

I think the confidence level in Canada is strong…  let’s keep it that way…    Spend and borrow wisely…

Toronto Real Estate Board reports a 13% increase in sale prices

The Toronto Real Estate Board reported that sale prices are up 13%….The average sale price was $437,600 in April 2010 compared with $385,641 in April 2009.    Resales jumped 34% from last year April… and new listings jumped by 59%… Source National Post.

These figures could be viewed many different ways…. if listings are up, will the supply outpace the demand?  Or are homeowners just doing some profit taking?   Good topic for discussion….  We need to add in affordability to this mix… We’ll cover this further in the coming months.

Major Mortgage Fraud charges from BMO

Yesterday, the CBC reported that the Bank of Montreal was suing several hundred people in an alleged mortgage fraud scam that might well be the largest of its kind ever reported in Canada….

Here are the highlights or lowlights…

  • $140 million involved in this scheme.
  • $70 million of which was phony mortgage money.
  • BMO may lose $30 million.
  • it is alleged that lawyers, mortgage brokers and even some BMO employees took part in this massive fraud.


What’s interesting is that they mention the ‘desktop appraisal services’ in the article… this stood out for me… an appraisal has always been part of the credit underwriting process.. Lenders want to know their security or collateral is of good, marketable quality in case of default….  But with the goal of trying to do more with less, several Banks started offering clients so-called FREE APPRAISALS… that wasn’t entirely true…

Banks must demonstrate to their shareholders that they perform proper due diligence before granting credit.  Rather than pay the $250 or $300 for a standard appraisal, we saw the introduction of a desktop appraisal…  Imagine trying to look at a computer screen and try to determine the value of a property in downtown Toronto, Vancouver, Calgary, Edmonton or any other city where house prices vary from block to block… it’s almost impossible without visiting the property personally…

Hopefully, the senior management at the Banks and other mortgage lending institutions will review their credit adjudication process and realize that it’s worth paying $300 to get that peace of mind…

Playing devil’s advocate, the crooks can employ the services of a corrupt appraiser but most Lenders have an ‘Approved Appraiser’ list…. it’s more difficult to get a bad appraisal this way… ..


Mortgage Fraud occurs regularly…  it just doesn’t get reported often…that’s because the banks don’t want the bad publicity.   It would be helpful to know if fraud is growing or slowing….  This latest report doesn’t sound like it’s slowing…

Bank hikes are questioned by the media

Just can’t leave this one alone…

The Globe and Mail ran a great article about the recent mortgage rate hikes by the Big Banks…..Seems like more of us are questioning the latest round of fixed rate increases….

The article gave some great stats that I wanted to share… First, we should point out that Fixed rates are affected by the Bond Market for the most part but Banks also raise money through GICs… Variable rates are affected by the Bank of Canada Key Lending Rate…. with that in mind…. here are the stats from the article….


  • 5 yr Bond 4.05%
  • Big Bank 5 yr posted fixed rate 6.75%
  • Big Bank 5 yr GIC 3.31%


  • 5 yr Bond 3.02%
  • Big Bank 5 yr posted fixed rate 6.25%
  • Big Bank 5 yr GIC 2% to 2.1%

Has to make you wonder…?

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