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International Mortgage Trends…. first edition

Consumer confidence is everything…  If you feel confident about your job, the economy and housing market, then you probably feel confident about buying a home and being able to pay your mortgage.   Measuring consumer confidence isn’t easy to do…   How about measuring the attitudes of homebuyers from 8 different countries?

Here’s the first edition of International Mortgage Trends, by our friends at Genworth Financial.  This report assesses homebuyer’s attitudes and sentiments from 8 countries spread out over 4 continents.

Surprisingly, the report puts India in the top of most categories, but Canada, Australia and Mexico also shared top spot in many categories.  Ireland, UK, Italy and the U.S. homebuyers were not as optimistic about home ownership and mortgage debt.   Here are some highlights from the report:

  • India and Mexico felt the most confident about how their national economies would do in the next 12 months…Canada and Australia were not far behind.  Ireland and the UK were at the bottom (no surprise there).
  • India and Mexico were also the most confident about their personal financial situation….Australia and Canada were next…Italy and Ireland were most concerned.
  • Rising fuel costs and living expenses seemed to be top concerns for many in almost all countries except Mexico.
  • India and Mexico had fewer problems paying their mortgage debt over the past 12 months… Canada was in the middle of the pack (this was a surprise to me).
  • Living with your parents stat(reminds me of that movie ‘Failure to launch’… I have a cousin that’s in this situation)… But this can save you money… Over 80% of First time homebuyers (FHB) in India and Mexico share the home with more than one generation… and it’s also more common in other European and Asian countries…..   Canada, UK, and the US are much less likely to house multiple generations under one roof.
  • Average age of the FHB keeps going up… it’s now 31.58 years of age… compare this with 26.6 years of age in the 1970’s… (in Canada, it’s 30.26 years of age).
  • Affordability…42% of FHB feel it’s a good time to buy a home…. 47% for Canadian FHB…and only 6.4% for India (this stat puzzled me after all the other positive outlooks by India’s FHB)
  • Only 30% of all those surveyed were positive about the state of the economy… In Canada, it’s 38%

There’s a lot of data in this report… I recommend taking a few minutes to review…. Scroll to 18 to see each country’s summary stats and see how Canada compares… In short, Canada seems to have a cautiously optimistic outlook.  Our conservative reputation stands out in most categories.

Solar Power subsidy… update on my application

On May 25th, I submitted my own application for the Ontario Power Authority’s (OPA)Microfit program.   The program was created by the Provincial Liberal govt as a way to encourage homeowners to use alternative, clean source of energy such as sun, wind, water and bioenergy. Green energy.

Solar power is the one that interests most people, including myself.   The deal is simple.  The govt will pay me $0.802 kWh for 20 years.   Compare this with the $0.07 to $0.10 kWh that most homeowners pay for normal household electricity and you can see this can be a very lucrative incentive to ‘get off the grid’, as they say.     That could generate around $7,000 per year for me.    But then again, it’s gonna cost me around $30,000 to $40,000 to install the solar panels and hook up to local hydro company….  Still, the payback is around 8 to 10 years… after that, it’s all profit and eventually, I can make and use my own electricity.

Back to my application….. It’s being processed by the OPA and it could take upwards of 45 days to get it processed.   I have also submitted my application to my local hydro provider, Burlington Hydro.   They also must approve my home for connection and hook up.  I’m now in a race against the election clock.   Yes, another election this fall…..  This time it’s a Provincial election.  The Conservative govt has made it clear that if they win, they will probably scrap the program as it’s too expensive in their mind.   But all existing applications and contracts will have to be honored no matter which political party is in charge.

And so, I wait…   stay tuned for more details as they unfold…

Oh, and by they way, I do see why the Conservative govt would want to scrap the program…  Up until last December, there were a number of companies that popped up and offered FREE installation of the solar panels, in return for 85% of the revenue for 20 years…and then there are the bigger farm properties…  I took a drive up to Tobermory a few weeks ago.   Along the road were dozens of these strange looking barns with no walls and  just a solid frame and roof… They were huge!  The roofs were covered with solar panels…  These buildings were clearly designed for one purpose… attach the solar panels and  produce electricity… and to generate revenue…..

This is not what the program was intended for… The program was created for property owner to produce their energy…not over produce and sell it for an exorbitant profit…. We can probably guess that once the 20 year guaranteed govt contract is up, these huge barns will probably collapse and disappear….

It’s these sort of loopholes that infuriate most of us…  The govt seems to have closed the gaps now but not before many have taken advantage of the offer and are now generating untold $$$thousands and probably $$$millions in some cases per year….  Some forward thinking could have prevented and minimized the losses.

Fixed mortgage rates down again!

We haven’t seen the bond market this low since November 2010.  The current 5 year Canadian Bond yield is 2.24%.  It’s only been below 2.00% a couple of times… Just after the 2008 U.S. mortgage crisis from December 2008 to January 2009 and late last year in October 2010.

Last year we saw the 5 year fixed mortgage rates hit an all time low of around 3.49%.  Today’s best 5 year fixed rate is hovering at around 3.79%….   Could be even be more room for fixed rates to drop….

Enjoy the low rates!

U.S. looking at Canada’s mortgage and banking yet again..

Found this article interesting….

Canada is the envy of the world when it comes to our mortgage and banking regulations.   This article in the Huffington Post questions why is there a 30 year fixed rate mortgage term and points to Canada’s mortgage and banking system as a better, more viable option.

In case you didn’t know, 30 year fixed rate terms are the norm in the U.S.   5 year Variable rate mortgages are the more common mortgage product around the world, including Canada.   200 U.S. Banks have failed since 2008… NONE in Canada… and in 1985, almost 3,000 U.S. banks failed but only 2 Canadian Banks closed their doors....

Go ahead Canada, feel good about yourselves…!

Bank of Canada leaves Key Rate unchanged

This morning marked the fourth of eight scheduled meetings for 2011 by the Bank of Canada.  No surprises, the BOC left the rate unchanged. This keeps the Bank Prime rate at 3.00% and keeps those Variable rate mortgages well under 3.00%.  Great news for borrowers.

In their press release, the BOC noted concerns about the high Canadian $dollar… increasing the BOC rate would probably mean an even higher $CAD, putting more pressure on Canada’s exports.   The  $CAD is currently $1.02US.  Still, the BOC is concerned about inflation and keeping inflation within the Target Zone of between 1.00% and 3.00% has always been one of the biggest factors that drive BOC policies.   “…inflation expectations remain well-anchored.”

The next BOC meeting is July 19… right now, it does not appear as though we will see any hikes until September or later…

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