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Posted Real Estate news

Zoocasa announces Zoopraisal, a FREE property valuation service.

Ever wonder what your home is worth today?  Or that house down the street?   How about a friend or neighbor’s house?   Finding out would normally involve contacting a realtor for their professional opinion or hiring a professional appraisal.

Well now you can find out on your own.  The release of Zoopraisal, by Zoocasa.com, may have caused some controversy with appraisers but the service is here and it’s getting a lot of attention.

Zoocasa has entered into an agreement with Centract Settlement Services, an appraisal service company that has administered millions of appraisals across Canada.  Here’s a direct quote from Zoocasa.com website “Zoopraisal™ is Zoocasa’s estimated market value, computed using a proprietary formula, powered by Centract. It’s a starting point in determining a home’s price.”  (Clearly, Zoopraisal is not guaranteeing the value.  It’s just an estimate…the service provides a range of value.)

Zoocasa.com is an online service that provides access to homes that are listed for sale, online.   The goal of the site is to provide a place where buyers can start their search using the internet.   In my opinion, Zoopraisal will only enhance this service.   This can’t replace a good realtor that’s out there looking to match your needs when buying a house.  I think there are still too many intangibles that come into play.  Local knowledge is invaluable and is something that can’t be uploaded online.

But if we look to the U.S., we’ll find similar sites such as Zillow.com.   This powerful site tells you everything from the selling price to whether it’s being foreclosed, to the Zillow’s estimated value, the price per sq foot, etc.   They also offer mortgage quotes, realtor referrals, etc.   These info sites make their money by charging those that want to advertise or participate on their site.

There is a question as to whether all this information should be made public and whether this infringes on one’s right to privacy.  The debate will continue… One thing is for sure, with pressure from the Competition Bureau on the Canadian Real Estate Association to make it easier to access the MLS, we are definitely headed in a new direction.    There is more access to data.   This is not a bad thing.   More data is better.  It helps to make an informed decision.   Professionals like Realtors, Appraisers and Mortgage Brokers should not be worried.  Their expertise will always be needed.

Watch for more of these sites to pop-up soon in Canada.

Posted Interest rates

BMO Economist forecast no rate hikes til 2013

More good news…. interest rates are not expected to increase til 2013, according to Bank of Montreal.

Really no surprise here.  The global economy is not doing well.  But here in Canada, the economy is performing relatively well.   The only reason our stock market and Canadian $ are down is because of the uncertainty of the European debt crisis.

5 year fixed rates are hovering at 3.39%… and they are even lower for qualified borrowers…. Variable rates are at around 2.60%…  We are in record low territory.

Did you know a $300,000 mortgage will carry for as little as $1199/month?   Hey, if you’re paying $1400/mth for rent, then why not consider buying place of your own…  And for those that want off the stock market roller coaster, a rental property may just be what you need…  Best thing is to talk to a Mortgage Broker, crunch the numbers and see how it looks.   It’s probably easier than you think.

Posted Consumer Debt

Canadians buy $4.9billion worth of Florida property in 2010

Here’s some interesting stats…. According to the Jacksonville Business Journal, Canadians accounted for 39% of all international buyers of property in Florida during 2010…  That’s $4.9billion worth of property purchased by Canadians. Wow, we must have a lot of snowbirds here.!  Or maybe we just have a lot of investors?   Perhaps it’s is a combination of the two.

One thing is for certain, Canadians like Florida…  It certainly has become a popular investment for many.   Who wouldn’t want a sunny getaway in Florida?  The ads are everywhere…condos starting at $30k… houses that once sold for $600k are now selling for $225k.  Clearly, Canadians see Florida as a bargain.

And maybe, just maybe, Canadians aren’t getting into debt for frivolous reasons?… Maybe we are borrowing with these record low interest rates to invest?   Maybe those stats and articles that keep telling us we should be concerned with the ‘high personal debt levels’ of Canadians, are not a true reflection of our spending habits…??

Most Canadian buyers of Florida property are obtaining loans from a Canadian bank.   Borrowing from a Florida bank isn’t easy these days.  That’s why many Canadians will refinance their homes and use the equity to buy their Florida property.

Borrowing to invest is a good thing…. this is known as ‘good debt’….but I don’t think there are any stats that show how much we are actually borrowing to invest…. sure would be nice to know those figures…

Posted Mortgage News

BIG BANKS need your help for higher profits!!

The more I think about it, the more fired up I get!   OSFI (Office of the Superintendent of Financial Institutions) has come out and said Bank profit margins are shrinking and the BIG Banks may start to loosen their credit lending policies in order to write more business and therefore earn more profit.

This statement just doesn’t make any sense…. let’s think about this for a minute… Take a look at Financial Post’s Biggest Companies ranked by profit in 2010.…let’s see where the Banks rank:

– is RBC $5.2 billion

-#3 is TD Bank $4.6 billion

– #4 Bank of Nova Scotia $4.2 billion

– #9 Bank of Montreal  $2.9 billion

– #12 CIBC $2.4 billion

Five of the top twelve most profitable companies are Banks!!!  This doesn’t look like the Banks are hurting that badly, does it?  We should also not forget that the govt has made several changes to mortgage lending rules…It’s already harder to qualify for a mortgage and line of credit…  So what gives, OSFI??

Look, OSFI has spoken and we must not ignore this….I don’t like what they are saying and the logic they are trying to give us doesn’t make sense….But we can’t bury our head in the sand either… The Banks have too much power… We should prepare ourselves for changes… Make plans and adjust accordingly… Don’t wait for the Banks to act.

It’s clear to me that we could see some changes in lending policies…My guess is this will translate to some increased rates on your secured lines of credit, a possible review of your account, even a reduction in your limit… That’ right, the banks can even call your line of credit and ask you to repay it in full…!! They might ask you to lock into a fixed rate mortgage or get into an amortized repayment schedule instead of just paying interest only.

But it doesn’t end there… commercial accounts will also be under the magnifying glass, in my opinion.  Commercial loans and mortgages get reviewed annually by the Banks…This is why it’s very important to choose your commercial lender carefully… Not all Banks are alike… there are some institutions that offer commercial loans that are not callable…

Bottom line is to be aware, stay informed and act accordingly…. If you are not sure where you fit in with these possible changes, give me a call.. I’m happy to help.

Posted Consumer Debt

Setting us up for fewer rate drops and higher bank profit margins..

It’s becoming clear that the Banks and govt want us to boost Bank profit margins…. Yes, it’s true!   They want you and I to pay a higher interest rate so that the Banks can earn a higher profit…

Let’s look at some facts…

-The Banks recently got together and increased their Variable rate pricing from Prime less 0.75% to Prime less 0% (the Bank websites are showing their variable rates at Prime less 0% but there are still places you can get Prime less 0.40%).   So why is that?  They tell us ‘profitability concerns’ is the reason…

-The best 5 year fixed rate on the web from any of the Big Six Banks is 3.99%… Yet, the 5 year govt of Canada bond yields are at 1.43% today…that’s a spread of 2.56%... historically, that spread is between 1.10% to 1.50%… (by the way, you can still get a 5 year fixed rate at 3.39% from reputable lending institutions).   The Banks are making a fortune these days on Fixed Rate mortgages.

– OSFI (Office of the Superintendent of Financial Institutions) has now come out and said that they are concerned consumers will borrower more than they should because interest rates are so low… and because of this, they are urging Banks not to loosen their lending criteria, especially on Home Equity Lines of Credit…

Read the warning signs

If you read between the lines, we are being warned that tighter lending rules could be just around the corner for Secured lines of credit… I don’t think the govt needs to make any further changes to mortgage lending…both secured lines of credit and mortgages…  We have seen several rules changes over the past few years….  But  the message we are being fed is that Banks need to charge a higher rate of interest because consumers cannot be trusted to borrow wisely…

The reality is that interest rates should actually be lower than where they are today.   Cost of funds are down… so why can’t we just let consumers pay fair market interest rates?  It’s one thing to be told that interest rates are going up because of market conditions and cost of funds… but when I start hearing that Bank Profit concerns and consumer spending habits are issues, then I have to start questioning the motives.   This just sounds like another excuse to raise rates and charge the average consumer more…..Consumers beware…!

Some good news

There was some good news… and that is that US interest rates are forecast to remain low into 2013…. Canada usually follow the US very closely….Hey, let’s enjoy the low interest rates…. a $300,000 mortgage will carry from between $1200/mth and $1325/mth…what’s wrong with that?  Enjoy Canada… Enjoy.