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A recent article by Canadian Mortgage Trends, The Case for Home Ownership, does not debate affordability and what government should do about it. What it does do is discuss all the economic and social benefits home ownership can provide. You may be surprised by the lengthly list; I know I was. In conclusion "society benefits when families have access to affordable, responsible home ownership and thus government policy should continue to support it."
 
See the full article below for the interesting details:
 

"Housing affordability questions have placed homeownership and public policy near the top of the national agenda, as mortgage brokers know. Most of the commentary has been focused on the extent to which government policy, particularly with regards to supply, is contributing to the affordability challenges. This debate is ongoing and will not be resolved here.

 

But there is less basic commentary about why we should care about homeownership. Why should government policy support homeownership? Simply put: it remains a powerful conveyor belt to the middle class.

 

Homeownership is associated with a raft of economic and social benefits including better educational and health outcomes, stronger families, safer communities, higher levels of civic participation and greater wealth accumulation. A few policy areas are more likely to generate upward mobility and economic opportunity than housing and homeownership.

 

Here are some highlights from a considerable body of research:

 

Kulkarni and Malmendier (2015) analyze the link between homeownership and upward mobility, and find a strong positive relationship for the children of homeowners that the two economists attribute to the stability and social capital that is associated with owning one’s home.

 

- A post-recession update to past research on the broad economic and social benefits of homeownership by Rohe and Lindblad (2013) concludes that “there is considerable evidence that positive homeownership experiences result in greater participation in social and political activities, improved psychological health, positive assessments of neighborhood, and high school and post-secondary school completion.”


- Ni and Decker (2009) study the relationship between homeownership and crime and find not only that “homeownership itself has a strong and statistically significant negative effect on both violent and property crime rates,” but that increases in homeownership rates reduce criminal activity over time.


- Haurin et al. (2002) study the link between homeownership and educational performance for children and find that it leads to a 13 percent to 23 percent improvement in a higher-quality home environment, greater cognitive ability and fewer child behaviour problems relative to renting.


- Harkness and Newman (2003) examine whether children from lower-income and higher-income families benefit equally from homeownership and find that for children growing up in families with incomes less than 150 percent of the federal poverty line, homeownership raises educational attainment, earnings and welfare independence in young adulthood.

 

These studies show the direct and spillover benefits that can come from a pro-homeownership society. Limited research has tested these findings in the Canadian context. Yet the work that has been done finds similar experiences and results.

 

2013 CMHC survey of nearly 1000 Canadians who purchased a home through Habitat for Humanity casts light on the significant benefits that come with homeownership. Respondents showed positive results across a range of economic and social indicators, including labour force attachment, the educational performance and behaviour of their children, improved personal finances, better health, and general happiness. Most respondents identified that these benefits derived “from the security, stability and sense of control that comes with homeownership” (2).

 

2012 study commissioned by Habitat for Humanity Toronto found similar results in its assessment of the “social impact” of homeownership. The findings are powerful: 95 percent of respondents said that their families were stronger, 81 percent reported an improvement in their child’s social life, 76 percent reported improvement in their children’s grades, 72 percent reported strong community and neighbourhood ties, and 50 percent reported that they felt safer.

 

As for wealth accumulation, housing has been a major driver of overall household net worth in Canada. A 2015 report by TD Economics finds that it represents about one-third of the roughly $6.6-trillion increase since 1990. The importance of housing wealth has even increased as an overall share of household net worth and accounted for 40 percent of the total increase in net worth since 2001 (TD Economics 2015).

 

While a number of factors contribute to upward mobility and middle-class opportunity including education, family and culture, homeownership plays a strong role in Canada and elsewhere. This is a critical point: the evidence shows that the benefits are not just limited to homeowners. Society benefits when families have access to affordable, responsible homeownership and thus government policy should continue to support it."

 

Regards,

 

Tony Marchigiano 

Mortgage Broker

 

310-328 West Hastings Street
Vancouver, BC
 
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Puzzling out how to keep your house as cool as possible during these hot summer months? Trying to remember the conventional wisdom but not quite sure how it goes? Those window fans, for example, should they be placed to draw air in or out? Upwind or downwind of the dwelling? And what about windows, shades, and awnings? Are windows on the North side of the house better left closed or open during the day? Are awnings better than shades?

 

Find out the answers to these questions and more, right here:

 

The recent heat spell on the East Coast dredged these questions up for me, and I am sure these questions are seasonal for many of us. Efficient cooling saves money, energy, and the quality of our lives.

 

Turning to Consumer Guide to Home Energy Savings by Alex Wilson, Jennifer Thorne, and John Morrill of the American Council for an Energy-Efficient Economy has provided a wealth of answers to just these questions and more. I’ve compiled 23 tricks about how to keep a house cool to reduce the need for air conditioning from this book, as well as a few from The Real Goods Solar Living Sourcebook. These tips are really useful.

 

1. Reduce the cooling load by employing cost-effective conservation measures. Provide effective shade for east and west windows. When possible, delay heat-generating activities such as dishwashing until evening on hot days.

 

2. Over most of the cooling season, keep the house closed tight during the day. Don’t let in unwanted heat and humidity. Ventilate at night either naturally or with fans.

 

3. You can help get rid of unwanted heat through ventilation if the temperature of the incoming air is 77 F or lower. (This strategy works most effectively at night and on cooler days.) Window fans for ventilation are a good option if used properly. They should be located on the downwind side of the house facing out. A window should be open in each room. Interior doors must remain open to allow air flow.

 

4. Use ceiling fans to increase comfort levels at higher thermostat settings. The standard human comfort range for light clothing in the summer is between 72 F and 78 F. To extend the comfort range to 82 F, you need a breeze of about 2.5 ft/sec or 1.7 mph. A sow-turning ceiling-mounted paddle fan can easily provide this air flow.

 

5. In hot climates, plant shade trees around the house. Don’t plant trees on the South if you want to benefit from passive solar heating in the winter.

 

6. If you have an older central air conditioner, consider replacing the outdoor compressor with a modern, high-efficiency unit. Make sure that it is properly matched to the indoor unit.

 

7. If buying a new air conditioner, be sure that it is properly sized. Get assistance from an energy auditor or air conditioning contractor.

 

8. Buy a high-efficiency air conditioner: for room air conditioners, the energy efficiency ratio (EER) rating should be above 10; for central air conditioners, look for a seasonal energy efficiency ratio (SEER) rating above 12.

 

9. In hot, humid climates, make sure that the air conditioner you buy will adequately get rid of high humidity. Models with variable or multi-speed blowers are generally best. Try to keep moisture sources out of the house.

 

10. Try not to use a dehumidifier at the same time your air conditioner is operating. The dehumidifier will increase the cooling load and force the air conditioner to work harder.

 

11. Seal all air conditioner ducts, and insulate ducts that run through unheated basements, crawl spaces, and attics.

 

12. Keep the thermostat set at 78 degrees F or higher if using ceiling fans. Don’t air-condition unused rooms.

 

13. Maintain your air conditioners properly to maximize efficiency.

 

Additional tips from the Real Goods Solar Living Sourcebook, edited by Doug Pratt and the Real Goods staff.

 

Warm Weather Window Solutions


14. Install white window shades or mini-blinds. Mini-blinds can reduce solar heat gain by 40-50 percent.

 

15. Close south and west-facing curtains during the day for any window that gets direct sunlight. Keep these windows closed, too.

 

16. Install awnings on south-facing windows, where there’s insufficient roof overhang to provide shade.

 

17. Hang tightly woven screens or bamboo shades outside the window during the summer to stop 60 to 80 percent of the sun’s heat from getting to the windows.

 

18. Apply low-e films.

 

19. Consider exotic infills in your windows, a new technology that fills the space between panes with krypton or argon, gasses that have lower conductivity than air, and which boost R-values.

 

Tips for your A/C


19. Provide shade for your room A/C, or the outside half of your central A/C if at all possible. This will increase the unit’s efficiency by 5 percent to 10 percent.

 

20. Clean your A/C’s air filter every month during cooling season. Normal dust build-up can reduce air flow by 1 percent per week.

 

22. Turn off your A/C when you leave for more than an hour.

 

23. Several studies have found that most central air conditioning systems are oversized by 50 percent or more.

 

Adapted from Consumer Guide to Home Energy Savings, by by Alex Wilson, Jennifer Thorne, and John Morrill. Copyright (c) 2000 by the American Council for an Energy-Efficient Economy . Reprinted by permission of Chelsea Green Publishing Company.


Adapted from Consumer Guide to Home Energy Savings, by Alex Wilson, Jennifer Thorne, and John Morrill.

 

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According to a recent statement from the Bank of Canada the next interest rate decision could be an increase. Their next meeting is July 12th. Economists were forecasting them to start raising rates early 2018 but are now thinking it may be sometime in the latter part of this year.
 
The Fed's in the U.S. raised their prime lending rate this week as well.
 
See the full article below from MortgageBrokerNews.ca for the details on why the Bank of Canada is thinking of raising rates:
 
"The next policy move from the Bank of Canada could be a rise in interest rates.

Senior deputy governor Carolyn Wilkins spoke at the Asper School of Business yesterday and said that there are some good signs in the economy, including adapting to lower oil prices, growth in a range of industries, and growth in the labour market.

“What’s encouraging is that this growth is not being driven by just a few key industries,” Senior Deputy Governor Wilkins said. The data show that more than 70 per cent of industries have been expanding and the labour market continues to improve.

However, inflation is below the bank’s target and Ms. Wilkins said to meet its objectives, the bank will need to assess current economic conditions and how they will evolve. 

She added that monetary policy must “anticipate the road ahead” noting that rather than having to “slam on the brakes” things need to be done slowly.

The comments are a hint that interest rates could be on the way sooner than the mid-2018 expectation of analysts, to allow for smaller, gradual increases."


Regards,

 

 

Tony Marchigiano

 

Mortgage Broker

 

310-328 West Hastings Street
Vancouver, BC
 
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Home buyer activity returned to near record levels across the Metro Vancouver* housing market in May.


Residential property sales in the region totalled 4,364 in May 2017, a decrease of 8.5 per cent from the 4,769 sales in May 2016, an all-time record, and an increase of 22.8 per cent compared to April 2017 when 3,553 homes sold.

 

Last month’s sales were 23.7 per cent above the 10-year May sales average and is the thirdhighest selling May on record.

 

"Demand for condominiums and townhomes is driving today’s activity," Jill Oudil, Real Estate Board of Greater Vancouver (REBGV) president said. “First-time buyers and people looking to downsize from their single-family homes are both competing for these two types of housing.”

 

New listings for detached, attached and apartment properties in Metro Vancouver totalled 6,044 in May 2017. This represents a 3.9 per cent decrease compared to the 6,289 units listed in May 2016 and a 23.2 per cent increase compared to April 2017 when 4,907 homes were listed.

 

The month-over-month increase in new listings was led by detached homes at 27.1 per cent, followed by apartments at 22.7 per cent and townhomes at 14.1 per cent.

 

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 8,168, a 5.7 per cent increase compared to May 2016 (7,726) and a 4.5 per cent increase compared to April 2017 (7,813).

 

"Home buyers are beginning to have more selection to choose from in the detached market, but the number of condominiums for sale continues to decline," Oudil said.

 

The sales-to-active listings ratio across all residential categories is 53.4 per cent. By property type, the ratio is 31 per cent for detached homes, 76.1 per cent for townhomes, and 94.6 per cent for condominiums.

 

Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

 

“While sales are inching closer to the record-breaking pace of 2016, the market itself looks different. Sales last year were driven by demand for single-family homes. This year, it's clear that townhomes and condominiums are leading the way,” said Oudil. “It’s important to work with your local REALTOR® to understand the different factors affecting the market today.”

 

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $967,500. This represents an 8.8 per cent increase over May 2016 and a 2.8 per cent increase compared to April 2017.

 

Sales of detached properties in May 2017 reached 1,548, a decrease of 17 per cent from the 1,865 detached sales recorded in May 2016. The benchmark price for a detached property is $1,561,000. This represents a 3.1 per cent increase over May 2016 and a 2.9 per cent increase compared to April 2017.

 

Sales of apartment properties reached 2,025 in May 2017, a decrease of 5.8 per cent compared to the 2,150 sales in May 2016.The benchmark price for an apartment property is $571,300. This represents a 17.8 per cent increase over May 2016 and a 3.1 per cent increase compared to April 2017.

 

Attached property sales in May 2017 totalled 791, an increase of 4.9 per cent compared to the 754 sales in May 2016. The benchmark price for an attached property is $715,400. This represents a 13.1 per cent increase over May 2016 and a 1.9 per cent increase compared to April 2017.

 

*Areas covered by the Real Estate Board of Greater Vancouver include: Whistler, Sunshine Coast, Squamish, West Vancouver, North Vancouver, Vancouver, Burnaby, New Westminster, Richmond, Port Moody, Port Coquitlam, Coquitlam, Pitt Meadows, Maple Ridge, and South Delta.

 

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When purchasing a property one must have the down payment to do so but you'll also need money for closing costs. A good estimation for closing costs is 1.5 to 2.5% of the purchase price. Most mortgage lenders will also require a borrower to prove they have at least 1.5% (in addition to their down payment) in order to get the required mortgage financing. But what are closing costs?
 
Mortgage lender, Home Trust, did a recent blog on these costs which gives a very detailed look at all possible closing costs to consider. 
 
Here's the full article below:
 

"When you purchase a new home, there are many additional costs beyond the purchase price for which you will be responsible before you are handed the keys. In this Home Trust Mortgages Blog article, we will look at some of these additional expenses and provide a rough idea of the cost you can expect for each item.

 

While total closing costs will vary by region, you can expect them to equal somewhere between 2 – 4% of the purchase price. In fact, most lenders will require proof that you have sufficient resources beyond your down payment in order to manage these expenses.

 

To help you understand not only the costs you will incur during the purchase process, but also when you are required to pay, we’ve broken this discussion into the following phases:

 

- Costs when making the offer

- Costs prior to closing

- Costs due at closing

 

Costs When Making the Offer


The main cost you face when presenting your offer is the deposit. The purpose of the deposit is to demonstrate the sincerity of your offer and to show that you have the means to purchase the property.

 

The rules regarding deposits vary by jurisdiction; in Ontario, for instance, you can include your deposit with the offer or within 24 hours after your offer is accepted by the seller. Also, there are no specific rules as to how much is required for a deposit but for in-demand markets where sellers typically receive multiple offers, a higher deposit may help swing the deal in your favour.

 

For this reason, it is not uncommon to see deposits of up to 5% of the selling price in these markets. In less active markets, smaller deposits are more common.

 

Keep in mind that the deposit is considered part of your down payment so providing a higher deposit does not mean you are paying more for the house. However, be very clear on the rules around deposits. If your offer is accepted but the deal then falls apart later, depending on the cause for the collapse, you could be forced to forfeit your deposit.

 

Costs Prior to Closing


In some situations, in order to secure a mortgage your lender will require you to arrange for an appraisal of the property as well as a home inspection. An appraisal provides a third-party, expert assessment of the true market value of the property you are considering and this will likely cost between $300 and $500.

 

A home inspection, even if not required by your lender, is still something to consider to provide peace of mind that the property has no major issues waiting to surface after you take possession. If possible, consider making your offer conditional to a satisfactory inspection result. However, be aware that if a competing offer is presented at the same time as yours that does not include this condition, the seller may exclude your offer to go with one that does not contain additional conditions.

 

The Canadian Association of Home & Property Inspectors website estimates the price of an inspection for a typical single family home to be around $500.

 

Costs Due at Closing


Land Transfer Tax

 

Land transfer taxes vary by location but all Canadian provinces have some form of tax that must be paid by the buyer to transfer the property’s title. Some municipalities including the City of Toronto impose an additional land transfer tax on all property transactions and these taxes are due on closing.

 

Adjustments

 

In some cases, utility bills, taxes, or other expenses associated with the home may have been prepaid by the previous owner. In this situation, you will be required to reimburse the seller for any portion that may extend into the time when you officially take possession of the home. These expenses will be listed in the Statement of Adjustments.

 

Property Insurance and Title Insurance

 

Your lender will insist that you have sufficient property insurance to cover the cost of replacing your home in the event of a fire or other incident. The cost for property insurance varies by location and property value.

 

In addition, many lenders now also require you to have title insurance. As noted on the Financial Services Commission of Ontario (FSCO) website, title insurance protects you from potential problems that could prevent you from having clear ownership of the property including the existence of previous liens against the property as well as the possibility of land survey or public record errors.

 

Title insurance typically costs the average homeowner between $200 – $300.

 

Legal Fees

 

New home buyers are advised to hire a lawyer that specializes in real estate to ensure that all official documents are completed and filed as required. Budget at least $500 for even the most straight-forward of transactions.

Provincial Sales Tax on Mortgage Insurance.

 

If you have less than 20% of the selling price available as a down payment, your lender will require you to obtain mortgage default insurance through an agency such as the Canada Mortgage and Housing Corporation (CMHC). Your lender will include the cost of this insurance in your mortgage, but at the time of closing, you will be required to pay any provincial sales tax owing on the purchase of the insurance.

 

While we can’t anticipate every extra cost you could possibly face in the purchase of your new home, this discussion should give you a good idea of the most common expenses. Ultimately, what you need to take away from this is that there are many additional expenses beyond just the purchase price which you will face when buying a new property.

 

Pino Decina

EVP Residential Mortgage Lending
Home Trust Company

 

 

Regards,

 

 

Tony Marchigiano

 

Mortgage Broker

 

310-328 West Hastings Street
Vancouver, BC
 
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Condominiums and townhomes in high demand across Metro Vancouver 

 

Demand for condominiums and townhomes continues to drive the Metro Vancouver* housing market.

 

Residential property sales in the region totalled 3,553 in April 2017, a 25.7 per cent decline compared to April 2016 when 4,781 homes sold and a 0.7 per cent decrease from the 3,579 sales recorded in March 2017.

 

April sales were 4.8 per cent above the 10-year average for the month.

 

For the first four months of the year, condominium and townhome sales have comprised a larger percentage of all residential sales on the Multiple Listing Service® (MLS®) in Metro Vancouver. Over this time, they’ve accounted for 68.5 per cent, on average, of all residential sales. This is up 10 per cent from the 58.2 per cent average over the same period last year.

 

“Our overall market is operating below the record-setting pace from a year ago and is in line with historical spring levels. It’s a different story in our condominium and townhome markets," Jill Oudil, Real Estate Board of Greater Vancouver (REBGV) president said. “Demand has been increasing for months and supply is not keeping pace.

 

This dynamic is causing prices to increase and making multiple offer scenarios the norm.”

 

New listings for detached, attached and apartment properties in Metro Vancouver totalled 4,907 in April 2017. This represents a decrease of 19.9 per cent compared to the 6,127 units listed in April 2016 and a three per cent increase compared to March 2017 when 4,762 properties were listed.

 

The total number of residential properties currently listed for sale on the MLS® system in Metro Vancouver is 7,813, a 3.5 per cent increase compared to April 2016 (7,550) and a three per cent increase compared to March 2017 (7,586).

 

The sales-to-active listings ratio for April 2017 is 45.5 per cent for all property types. This is two per cent below March 2017 and is indicative of a sellers’ market. Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

 

By property type, the sales-to-active listings ratio is 26 per cent for detached homes, 58.2 per cent for townhomes, and 82.2 per cent for condominiums.

 

“Until more entry level, or ‘missing middle’, homes are available for sale in our market, we’ll likely continue to see prices increase,” Oudil said. “There’s been record building this past year, but much of that inventory isn’t ready to hit the market.”

 

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $941,100. This represents a five per cent increase over the past three months and an 11.4 per cent increase compared to April 2016.

 

Over the last three months, the benchmark price of condominiums has seen the largest increase in the region at 8.2 per cent, followed by townhomes at 5.3 per cent, and detached homes at 2.8 per cent.

 

“Home buyers are looking to get into the market and they’re facing fierce competition,” Oudil said. “It’s important to work with your local Realtor to help you navigate today’s marketplace.”

 

Sales of detached properties in April 2017 reached 1,211, a decrease of 38.8 per cent from the 1,979 detached sales recorded in April 2016. The benchmark price for detached properties is $1,516,500. This represents an 8.1 per cent increase over the last 12 months and a 1.8 per cent increase compared to March 2017.

 

Sales of apartment, or condominium, properties reached 1,722 in April 2017, a decrease of 18.3 per cent compared to the 2,107 sales in April 2016.The benchmark price of an apartment property is $554,100. This represents a 16.6 per cent increase over the past 12 months and a 3.1 per cent increase compared to March 2017.

 

Attached, or townhome, property sales in April 2017 totalled 620, a decrease of 10.8 per cent compared to the 695 sales in April 2016. The benchmark price of an attached unit is $701,800. This represents a 15.3 per cent increase over the past 12 months and a 2.4 per cent increase compared to March 2017.

 

*Editor's Note

 

Areas covered by the Real Estate Board of Greater Vancouver include: Whistler, Sunshine Coast, Squamish, West Vancouver, North Vancouver, Vancouver, Burnaby, New Westminster, Richmond, Port Moody, Port Coquitlam, Coquitlam, Pitt Meadows, Maple Ridge, and South Delta.

 

The real estate industry is a key economic driver in British Columbia. In 2016, 39,943 homes changed ownership in the Board’s area, generating $2.5 billion in economic spin-off activity and an estimated 17,600 jobs. The total dollar value of residential sales transacted through the MLS® system in Greater Vancouver totalled $40 billion in 2016.

 

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Affordability in Vancouver has improved slightly following the implementation of the foreign-buyer tax in August, but it remains a “major vulnerability” in the city, according to an RBC report released April 24.


This doesn’t mean a crash is likely, however, because the city’s employment situation is solid, according to the report.


The jobless rate in the city has fallen to 4.7% – the lowest it has been since 2008, and this trend is expected to

continue, providing “substantial support” to the housing market, according to RBC.

 

One factor that could lead to vulnerabilities in the medium term is a declining adult population growth rate. Between March 2016 and March 2017, the growth rate was 1.4%; this is down from 1.9% over the previous year. According to RBC, this means the growth rate has dipped below a 1.5% threshold that signals the existence of elevated housing risks.


The market’s demand-supply balance has eased over the past year, moving away from a strong seller’s market. This happened quickly, with policy changes over the past several months lowering price expectations between September 2016 and January of this year, particularly for single-detached homes. Prices increased slightly in February and March, however, which RBC said is due to many foreign buyers returning to the market after initially stepping aside after the 15% tax was implemented.


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All levels of government are concerned with the overall health and affordability of the Canadian housing market. The first order of business is to gather input from various industry participants to determine the impact the recent mortgage rule changes have had on the ability of first time homebuyers to purchase their first home.

 

Recently the House of Commons, through its Standing Committee on Finance, released a report on Canada’s housing market(s). Members of Parliament from all political parties have heard and understood the concerns of the mortgage industry. The recommendations are as follows.

 

1) The Government of Canada will work with its provincial counterparts to ensure that – when needed - they implement responsible measures that will result in stable, affordable regional housing markets.​

 

2) The Government of Canada will examine increased support for first-time homebuyers.

 

3) The Government of Canada will use Statistics Canada to address the gaps in housing-related data by creating a nationwide database.  The database could provide data on such items as home purchase and sales, non-primary mortgage lending, foreign ownership, real estate investors etc.

 

4) The Government will ensure that further changes to Canada’s mortgage regulations do not occur until sufficient time has passed to assess the effects of the October 2016 changes.

 

5)  The Government endeavor to ensure that mortgage regulations treat all mortgage lenders fairly.

 

The last two points are of particular interest to anyone who believes that as mortgage consumers we should have all the choices available in the mortgage marketplace and that fair competition from all mortgage providers benefits those looking to secure the best possible rates and terms. 

 

Mortgage Professionals Canada is a national association that has worked at the political level to ensure fair competition and regulations that benefit all mortgage consumers.

 

If you or anyone you know would like to know more about the recent announcements and how they impact us all, please simply email or call me.

 

Regards,

 

 

Tony Marchigiano

 

Mortgage Broker

 

310-328 West Hastings Street
Vancouver, BC
 


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A recent article featured in the Globe and Mail discussed the importance of having a “stellar” credit rating when wanting approval for mortgage financing.

 
While your credit history is very important in the approval process it’s not everything and there are definitely lenders with specific mortgage programs to help people who might not have “stellar” credit ratings.
 
Here’s the link to the article below which details, among other things, the breakdown of the importance of such things as making payments on time and balances owing on existing credit.
 

The following article is from Canadian Real Estate Wealth Magazine.

 

When you begin shopping around for a mortgage the importance of your credit history and score becomes evident.

 

Your credit score is an important item that will determine what interest your mortgage agent will be able to offer you. It should be a priority because it can save you thousands of dollars. If you take care of your credit, your credit will take care of you! Whether you have had credit for a long time or are completely new and just beginning, the reality is that you will have to at some time or another prove that you are a low enough risk for lenders to lend to.

 

If you are just beginning to build credit a good way is by using a credit card.

 

What is a credit report?


A credit report is a quick look into your credit history. If you have taken a loan or used a credit card you will have a credit history. Financial institutions, trust companies, credit companies and grantors that give you credit may send information about whether or not you make your payments on time to a credit-reporting agency/bureau.

 

Credit bureaus collect information about you and how long it takes you to pay back money you have borrowed. This is is called your credit history.

 

Credit lenders rely on a credit bureau to analyze an applicant’s current and past credit history in order to determine the likelihood of future repayment. This provides a fairly accurate indication of future repayment trends.

 

The two most popular credit bureau agencies operating in Canada are Equifax and Transunion. You can request your credit report by mail for free but your score is not included. If you request your credit report online a fee is charged and your credit score is included.

 

You are the only person who can see your credit report. No one else can access the information in your report unless you allow it. Generally you would allow credit checks to organizations you are applying to for credit. Usually you sign documentation allowing them to do so.

 

What’s in your credit report?


Personal information such as:
- your name
- current and previous addresses
- S.I.N., phone number
- date of birth
- previous employer/s

 

Financial information such as:
- credit cards
- lines of credit
- loans and mortgages
- bankruptcies, court judgements and backed secured loans which are considered public records and debt that was referred to a collection agency for payment.

 

A list of credit report inquiries: You, your lender, or any other authorized agent is also included which is usually used to determine if you are a credit seeker: someone who applies for a lot of credit.


How are you rated?


The credit agency describes your credit history by rating it. A scale of 1 to 9 is used with 1 meaning that you pay your bills within 30 days and 9 meaning you have bad debt, never pay your bills, have been placed for collection or claimed bankruptcy.

 

In front of the number there is a letter. The letter stands for the type of credit you are using. R means you have revolving credit such as a credit card, O means you have open credit such as a line of credit and I means you credit has been given on an instalment basis.

 

Your credit score is a numerical representation of the your current and past credit. It can range between 300 representing the lowest and 900 representing the best rating.

 

The breakdown that is used to determine your credit score is the following:

35 per cent – Payment history
30 per cent – Amounts owed
15 per cent – Length of credit history
10 per cent – New credit
10 per cent – Types of credit

 

If you contact Equifax or Transunion and find that the information on your credit report is incorrect, you may request that a correction be made. You will have to contact the institution that reported the activity and submit documentation proving financial resolution has been made to the credit bureau and they will remove it. Good luck! Equifax Canada Credit Bureau, Tel: 1-800-465-7166, Fax: 514-355-8502. TransUnion Canada Credit Bureau, Tel: 1-866-525-0262 (except in Quebec), Tel: 1-877-713-3393 (Quebec residents)

 

TOP TIPS ON KEEPING A GOOD CREDIT SCORE


1.) Make your payments in the correct amount on or before the due date! This will have a positive effect on your credit score. Missing or late payments and judgements, bankruptcies, collections or other public records will have an unfavourable impact on a credit score.

 

2.) Keep your balance considerably lower than the available credit limit provided. If you have several accounts with high balances relative to your available credit, this may indicate that you are relying greatly on credit to meet your daily needs.

 

3.) Multiple credit inquiries can lower your credit score, so reduce the number of credit applications you make.

 

4.) Always maintain a credit history. You can use a credit card to build a good history.

 

5.) The best mix of credit is a combination of a store credit card and a major credit card such as a VISA or MasterCard. It is important not to have too many credit cards or store cards as that may negatively impact a credit score.

 

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Tony Marchigiano

Mortgage Broker
310-328 West Hastings Street
Vancouver, BC
 
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TORONTO — Royal LePage says early evidence suggests that the recent correction in Vancouver’s housing market may be short-lived.

 

The realtor released a report Tuesday saying Canada’s two largest real estate markets continued their divergence in the first quarter of the year.

 

The aggregate price of a home in the Greater Toronto Area rose by an “unprecedented” 20 per cent across all housing types to $759,241 in the first three months of 2017.

 

In the Greater Vancouver area, the price of a home rose 12.3 per cent year-over-year to $1,179,482.

 

Royal LePage CEO Phil Soper says the housing correction in Vancouver began seven months ago, around the time that the B.C. government introduced a 15 per cent tax on foreign nationals buying real estate in the city.

 

Sales volumes then plunged and prices slowed their torrid upwards trajectory.

 

But just in the past month, sales in the Vancouver area have leapt forward by close to 50 per cent on a month-over-month basis, says Soper — better than the seasonal average.

 

“An unfortunate side effect of heavy-handed regulatory intervention is that we risk market whiplash,” Soper said in a statement.

 

“In the coming weeks, it is possible that six months of pent-up demand will be unleashed on the market, sending prices sharply upward again; this when the pre-intervention 2016 trend was a natural market slowdown based on eroding affordability.”

 

Across Canada, the aggregate price of a home grew 12.6 per cent year-over-year to $574,575 during the first quarter, Royal LePage said.

 

The price of a two-storey home climbed 13.9 per cent year-over-year to $681,728, while the price of a bungalow rose 10.9 per cent to $490,018. Condo prices increased by 8.9 per cent to $373,768.

 

In Calgary, home prices were up 0.6 per cent to $461,635, while in Edmonton they rose 0.3 per cent to $381,733.

 

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VANCOUVER — Home sales in Metro Vancouver are bouncing back after a dismal February, but the Real Estate Board of Greater Vancouver says transactions are still almost 31 per cent below the March 2016 record.

 

The board says a shortage of property listings and strong demand, especially for condos and townhomes, propelled the market in March.

 

Board president Jill Oudil says sellers still seem reluctant to put their homes on the market, creating stiff competition for homebuyers.

 

The numbers of new listings haven’t been this low since March 2009.

 

Oudil says the competition also means home prices are likely to continue to increase until we see more housing supply coming on the market.

 

The composite benchmark price in March for all residential properties in Metro Vancouver is over $919,000, a 1.4 per cent increase compared with February.

 

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The Bank of Canada met today and made it's announcement regarding the Prime lending rate. As expected they left it unchanged once again and see no changes for the rest of 2017 and possibly into 2018 as well. This despite the numerous positive reports about the economy lately. 
 
Even though there has been some positives come to light there are still headwinds into the next year or two. 
 
See the article from MortgageBrokerNews.ca and the Canadian Press below for all the details:
 
"The Bank of Canada held its trendsetting interest rate unchanged on Wednesday, despite a recent run of stronger-than-expected data, saying it believes the economy has yet to show it can stick to the higher growth trajectory.

In holding the rate at 0.5 per cent, the central bank said it also considered significant uncertainties still weighing on its outlook, including the potentially adverse impacts of the U.S. economic agenda.

Canadian growth exceeded the bank's expectations and it now predicts real gross domestic product will expand at an annual rate of 2.6 per cent in 2017 _ up from its January forecast of 2.1 per cent.

The recent improvement, it said, was largely fuelled by unexpectedly robust residential investment as well as temporary factors such as the resumption of expenditures in the energy sector and the consumer-spending lift from bigger child-benefit cheques.

However, the bank noted export growth was uneven and that there were signs of weakness in areas like business investment and within underlying employment indicators such as hours worked and wages.

``While the recent rebound in GDP is encouraging, it is too early to conclude that the economy is on a sustainable growth path,'' the bank said in a news release that explained its interest rate decision.

TD Bank senior economist Brian DePratto said the bank is attempting to ``throw cold water'' on discussion that the economy has been improving.

``The growth outlook may be sunnier, but it seems to be all about the negatives for Governor Poloz,'' DePratto said in a research note.

``Poloz remains focused on the soft spots in Canadian labour markets and exports, and is not yet ready to declare Canada 'out of the woods' when it comes to unevenness in economic growth.''

Beyond 2017, the bank predicted growth will moderate and become more balanced.

It anticipates greater contributions from exports and business investment. The bank also expects the powerful pace of household spending _ particularly in residential investment _ to eventually slow next year as debt levels and borrowing costs rise.

For this year, however, the bank believes hot housing markets in cities like Toronto will help residential investment deliver a ``significantly higher'' contribution to Canada's growth performance than it had anticipated in January.

The bank also warned that climbing real estate prices in the Toronto area appear to now be driven, in part, by speculation.

Economic growth, it said, is now expected to expand by 1.9 per cent in 2018, down from the bank's January forecast of 2.1 per cent, and to hit 1.8 per cent in 2019.

The future, however, looks murky.

The statement said the bank's governing council was ``mindful of the significant uncertainties'' faced by the Canadian economy.

In its quarterly monetary policy report, which was also released Wednesday, the bank said its outlook once again factored in some of the effects caused by ongoing unknowns around the potential introduction of U.S. changes, especially in relation to trade and fiscal policies.

With the timing of any U.S. policy changes still unclear, the bank said its base-case projection includes only the estimated impact of ``prolonged and elevated trade policy uncertainty'' on trade and investment in Canada and internationally.

Changes under discussion in the U.S. include the renegotiation of the North American Free Trade Agreement, corporate and personal tax cuts, regulatory easing and a potential border tariff.

The bank said Canadian firms ``remain wary'' over potential U.S.-related developments that could increase protectionism and reduce competitiveness in the event of corporate tax reductions and regulatory changes.

Due to an expected additional drag on global investment connected to U.S. trade policy uncertainty, the report included slightly lower projections for export growth in 2017 and 2018 compared to the bank's earlier predictions.

The bank also pointed to the U.S. trade-policy unknowns, and the fact it now expects them to drag on longer than expected, in its decision to revise down its prediction for business investment in 2017.

``A notable increase in global protectionism remains the most-important source of uncertainty facing the Canadian economy,'' the bank said."


The Canadian Press

Regards,

 


Tony

 

Tony Marchigiano

Mortgage Broker
310-328 West Hastings Street
Vancouver, BC
 
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Demand for homes continues to outpace supply in Metro Vancouver

 

VANCOUVER, BC – April 4, 2017 – A shortage of residential property listings coupled with strong demand, particularly for condos and townhomes, continued to impact Metro Vancouver’s housing market in March.

 

Residential property sales in the region totalled 3,579 in March 2017, a decrease of 30.8 per cent from the 5,173 sales recorded in record-breaking March 2016 and an increase of 47.6 per cent compared to February 2017 when 2,425 homes sold.

 

Last month’s sales were 7.9 per cent above the 10-year sales average for the month.

 

“While demand in March was below the record high of last year, we saw demand increase month-to-month for condos and townhomes,” Jill Oudil, Real Estate Board of Greater Vancouver (REBGV) president said. “Sellers still seem reluctant to put their homes on the market, making for stiff competition among home buyers.”

 

New listings for detached, attached and apartment properties in Metro Vancouver totalled 4,762 in March 2017. This represents a decrease of 24.1 per cent compared to the 6,278 units listed in March 2016 and a 29.9 per cent increase compared to February 2017 when 3,666 properties were listed.

 

This is the lowest number of new listings in March since 2009.

 

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 7,586, a 3.1 per cent increase compared to March 2016 (7,358) and a 0.1 per cent decrease compared to February 2017 (7,594).

 

The sales-to-active listings ratio for March 2017 is 47.2 per cent, a 15-point increase over February. Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

 

“Home prices will likely continue to increase until we see more housing supply coming on to the market,” Oudil said.

 

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $919,300. This represents a 0.8 per cent decrease over the past six months and a 1.4 per cent increase compared to February 2017.

 

Sales of detached properties in March 2017 reached 1,150, a decrease of 46.1 per cent from the 2,135 detached sales recorded in March 2016.The benchmark price for detached properties is $1,489,400. This represents a 5.0 per cent decrease over the past six months and a one per cent increase compared to February 2017.

 

Sales of apartment properties reached 1,841 in March 2017, a decrease of 18.3 per cent compared to the 2,252 sales in March 2016.The benchmark price of an apartment property is $537,400. This represents a 5.2 per cent increase over the past six months and a 2.1 per cent increase compared to February 2017.

 

Attached property sales in March 2017 totalled 588, a decrease of 25.2 per cent compared to the 786 sales in March 2016. The benchmark price of an attached unit is $685,100. This represents a 1.3 per cent increase over the past six months and a 1.4 per cent increase compared to February 2017.

 

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More & more Millennials are getting help from from the Bank of Mom & Dad to purchase their first home but just where is the money coming from?

Well, a bigger & bigger portion of those gifted funds are coming from money received from a reverse mortgage done on the parents property.

Reverse mortgage used to be a dirty word but rates and fees to set up this kind of financing have got better & better over the years.

The most you can borrow is 40 to 50% & even in the most conservative calculations of home value increases one would still have plenty of equity remaining when they pass away.

More and more parents are wanting to see their adult children reap the benefits of an inheritance before they pass away.

See the full article below from MortgageBrokerNews.ca:
 
"Young Canadians are increasingly receiving help from their parents in order to become first-time buyers in Vancouver and Toronto."

A study by lender HomEquity Bank shows that parents are keen to find out about reverse mortgages to release equity in order to give their kids a downpayment.

"Ten years ago, this topic rarely came up as most seniors were more concerned with remaining self-sufficient. And, first-time homebuyers were purchasing houses on their own. That's changed. Up to 30 per cent of my clients aged 60+ now want to discuss to what degree they can help their adult children financially," explains Rona Birenbaum, financial planner and founder, Caring for Clients.

HomEquity says that by using a zero-rate mortgage registered in the home, the parents’ funds are protected and they can later choose to cancel the mortgage with the funds considered as a gift."
 
If you have any questions about Reverse or CHIP mortgages please feel free to reach out to me as I am a designated mortgage broker for this type of financing at Home Equity Bank.

Regards,

 


Tony

 

Tony Marchigiano

Mortgage Broker
310-328 West Hastings Street
Vancouver, BC
 
 
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Even if you don't have an alarm system, there are other inexpensive ways you can burglar-proof your home.


A friend of mine recently told me about a break- in at her home. The front door was smashed off the frame and all her jewellery was stolen. The loss of heirloom pieces that had belonged to her mother was devastating.

 

As a result, she installed an expensive burglar alarm system including cameras at both the front and the back of the house.

 

While Statistics Canada reports that alarm systems and motion detectors have led to a steady reduction in home break-ins in recent years, they may not deter a determined thief. They should be combined with other measures that help keep burglars from finding your home an attractive target.

 

Here are some things you can do at little or no cost:

 

1) Take your name off your mailbox


This will prevent thieves from calling 411 to get your phone number. Many thieves will call a house they are planning to rob first to see if you are home.


2) Never leave a note on the door

 

If you are going out and expect a delivery, resist the temptation to leave a note on the door asking the post office to leave the package with your neighbour.


3) Stop mail or newspapers

 

Before you go on vacation, stop mail and newspapers. Even if you leave town for a weekend, have a neighbour pick up these items plus unsolicited fliers.

 

4) Get a yappy dog

 

Dogs are not free, but if you have one that barks when people come to the door, pay attention. He may know something you do not. Even the most affectionate puppy like mine can scare away bad guys.

 

5) Prune trees or shrubs

 

If you have verdant greenery close to the house, tame it regularly so burglars do not have a place to hide.

 

6) Hide you spare key carefully

 

A key left under the door mat, on the ledge over the door or under a flower pot is an “open door” invitation to a dishonest person. Be more creative, or leave it with a neighbour.

 

7) Doors and windows

 

Always lock doors and windows and change the locks if you move into a new home or lose the key. Combination locks are becoming more popular because it is easier to change the code than replacing the whole lock. Put security bars on basement windows and secure sliding doors with a stick or a metal bar.

 

8) Don’t leave valuables in the open

 

If a thief can see valuables like art, electronics, jewellery or silver through a door or window, you could become a target. Consider a bolted down, fireproof safe.

 

9) Make the house look lived in

 

Have the grass cut and the driveway shovelled when you are away. Keep a car in the driveway. Use timers on lights, radios and TVs. Don’t put a message on your voice mail announcing your absence.

 

10) Put neighbours on alert

 

Let your neighbours know how long you will be away and if someone is coming to feed the cat. Make sure they have a way to contact you in case they see something strange happening around your home.

 

11) Don’t widely advertise your plans

 

Never mention you are going to be away to strangers or tweet your plans to all of your 10,000 followers.

 

12) Hire a house-sitter

 

Getting a friend to house-sit while you are away is a great way to keep your house safe from burglars. And if you have pets that need care, in-house care for them could be an added bonus.

 

Desperate, dishonest people are hard to deter. But they may also take the path of least resistance. With a little preparation, you may be able to prevent that path from leading to your front door.

 

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As Pierre Trudeau once said about living so close to the United States "Living next to you is in some ways like sleeping with an elephant. No matter how friendly or even tempered is the beast, one is affected by every twitch and grunt”. That statement, said almost 40 years ago, still holds very true today.


Our economies are even more intertwined now and it’s no wonder many Canadians are paying close attention to policymakers and politicians south of the border, particularly the U.S. Federal Reserve.


The U.S. Federal Reserve recently raised interest rates by 25bps (one quarter of one percent) this month and for the second time in 3 months. It has also stuck to its outlook for two additional rate increases this year while remaining cautious before implementing any further increases. “We have seen the economy progress over the last several months in exactly the way it was anticipated and we have some confidence in the path the economy is on” Fed Chair Janet Yellen said at a recent press conference. Employment numbers in the U.S. continue to look impressive and economic activity is expanding which helps keep the bond market relatively calm with no immediate increases in yields.


What does this mean for you?


For the time being this is good news for Canadians. The lack of bond yield increase in the U.S. has resulted in the Canadian bond prices to remain unchanged as well. If you are looking to get a 5 year mortgage, this means that you shouldn’t see any increases in rates as typically fixed term mortgages are tied to the yields (returns) on Canadian bond prices. Also, no significant changes are expected for variable rate mortgages as it appears the statements made by the U.S Federal Reserve will push the Bank of Canada’s decision to increase our Bank of Canada benchmark rate a little further into the future.

 

As your mortgage professional, it’s my responsibility to look at what’s happening in the Canadian mortgage landscape and what’s transpiring south of the border so I can see how it affects you and your mortgage. If you are thinking of buying your first or second home, or looking at options for your existing mortgage, please call or email me.

 

Regards,



Tony

 

Tony Marchigiano

Mortgage Broker
310-328 West Hastings Street
Vancouver, BC
 


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Brighten up your home and bring in buyers with these easy ideas.


Springtime brings sunshine, showers -- and plenty of opportunities for home staging. Make the most of the season with these fresh updates that are sure to attract buyers.


Whip your yard into shape. 


When you're selling in the spring, you need to get your yard in shape as quickly as possible. Clear winter yard debris, and get frost-resistant plants that won't be affected if a late cold spell hits. Or, invest in silk flowers for a touch of color that you don't have to worry about watering.


Do some spring cleaning. 


It's natural to want to spruce up your space in the spring, so scrub away! A sparkling home will impress buyers and make your home seem even more appealing.


Box up your winter wardrobe. 


Bulky winter clothes take up lots of space, so move them out as you de-clutter your closets. You'll impress buyers with all that space.


Spruce up the entryway. 


If your welcome mat is covered with winter dirt, pick up a new one. A clean, pretty doorway will help set the tone for the entire showing.


Bring spring aromas indoors. 


Spring is not only a colorful season, but a fragrant one, too. Bring the aroma indoors. Scents have a profound effect on mood, so infusing scent into your decor with diffusers, candles, fresh cut plants/flowers, or incense can change the overall feeling of a space.


Bring out the bright colors. 


Tuck away the heavy, winter flannel comforter and pull out crisp linens with coverlets for color. Bring in the spring with floral-designed spreads or colorful solids. Don't forget accent pillows for added style and comfort.


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Within the release of the budget they've also stated that, for the time being, there will be no additional mortgage rule changes or tightening. This is a good thing as the last set of changes resulted in a lot less competition and an increase in interest rates. 
 
The Liberals are promising to spend 11.2 billion in housing initiatives over the next decade. How are these dollars going to be spent? See the full article from MortgageBrokerNews.ca as reported by The Canadian Press below:
 
 
"Cities and affordable housing providers will find themselves with $11.2 billion more to spend on new and existing units over the coming decade, as part of the federal government's multi-pronged push to help people find homes.

Of that money, which comes from the government's social infrastructure fund, $5 billion will be allotted to encourage housing providers to pool resources with private partners and to allow the Canada Mortgage and Housing Corp., to provide more direct loans to cities.

The funding falls short of the $12.6 billion the mayors of Canada's biggest cities requested last year andWednesday's federal budget shows that the majority of the $11.2 billion isn't slated to be spent until after 2022.

Over the next 11 years, the Liberals pledged $202 million to free up more federal land for affordable housing projects, $300 million for housing in the North and $225 million to support programs that provide units to indigenous peoples off reserve.

The money, coupled with $2.1 billion for homelessness initiatives over the next 11 years, sets the financial backbone for the Liberals' promised national housing strategy that will be released in the coming months. The document will outline how the government plans to help people find affordable housing that meets their needs, and ensure a robust emergency shelter and transitional housing system for those who need it.

Finance Minister Bill Morneau told reporters the spending will make a difference for those who rely on social housing. He said the Liberals want to ensure cities can access funds as quickly as possible to make necessary investments in the country's stock of aging affordable housing.

The details are among many laid out in the budget, which outlines how the government plans to spend the $81 billion it is making available between now and 2028 to address future infrastructure needs and, the government hopes, boost the economy to create new jobs and government revenues.

It also gives $39.9 million over five years for Statistics Canada to create a national database of every property in Canada. This will include up-to-date information on sales, the degree of foreign ownership and homeowner demographics and finances to answer lingering questions about the skyrocketing cost of housing that may squeeze middle-class buyers out of the market.

The Liberals clearly see a need to attract private investors to help pay for infrastructure projects, including affordable housing, given the federal government's tight fiscal position.

At the centre of that push is a proposed new infrastructure bank that would use public dollars to leverage private investment in three key areas: trade corridors, green infrastructure and public transit.

The government is setting aside $15 billion in cash for the bank, split evenly between each of the aforementioned funding streams, with spending set to start as early as the next fiscal year on projects based on budget projections.

Morneau said that the government wants to have the bank up and running this year, including having some projects that will be identified for investors.

But the budget document again projects that the majority of the bank's spending won't happen until after 2022. And in the case of trade corridor infrastructure, spending isn't expected to start until 2020, even though some experts argue this stream would give the country the biggest economic bump.

The Liberals are also tweaking how much of the bill it will cover for municipal projects under the second phase of its infrastructure plan in order to nudge provinces to pony up more money for work and to prod cities to consider using the bank for projects that could generate revenue, like transit systems.

The government will cover up to 40 per cent of municipal projects under the upcoming phase of its infrastructure plan, 50 per cent for provincial projects and 75 per cent for indigenous projects."


Sincerely,

 
Tony
 

Tony Marchigiano

Mortgage Broker
310-328 West Hastings Street
Vancouver, BC
 
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According to the latest report by the OECD (Organization for Economic Co-Operation & Development) the pace of Canada's economy will grow faster than originally thought. See the full article below as reported by the #1 non-bank mortgage lender in Canada, First National:
 

"The latest outlook from the Organisation for Economic Co-operation and Development offers some good news for Canada.

 

The Paris-based think-tank has boosted its projection for economic growth in this country from 2.1% to 2.4% for 2017.  That puts Canada on par with the United States and ahead of the rest of the G7 countries.

 

For a long time housing has been a key driver of the Canadian economy, but the OECD is pointing to external factors for its improved forecast.  It cites better export-market growth and an end to the decline in commodity-related investment.  The organization does talk about housing though.

 

The OECD is, once again, warning about the rapid rise in housing prices in Canada.  It also mentions Australia, Sweden and the United Kingdom.  In its report the OECD says past experience has shown that “a rapid rise in house prices can be a precursor of an economic downturn.”

 

Sincerely,

 
Tony
 

Tony Marchigiano

Mortgage Broker
310-328 West Hastings Street
Vancouver, BC
 
 
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If you sold your home in 2016, you need to let the taxman know as failing to do so could cost you up to $8,000 in penalties.

 

You heard that right.  Canadians didn’t used to have to report the sale of the home that was their primary residence, but the Liberal government changed that when it introduced new federal mortgage rules last October.

 

Starting this tax-filing season, a home sale that took place after January 1, 2016 needs to appear on your income tax return. Here’s what you need to know:


You still get the principal residence tax exemption


The changes do not affect your ability to claim the principal residence tax exemption, one of the most cherished provisions of our country’s income tax system. If you made money from selling your home, you don’t have to pay a capital gains tax on the proceeds.

 

From now on, however, you need to report the sale in order to be able to claim the exemption.

 

New requirement part of a tax-evasion crackdown


The new rule is meant to reduce tax evasion and take some steam out of overheated housing markets by closing a loophole exploited by real estate speculators.


Without a requirement to disclose the sale of a primary residence, house flippers had an easy time buying and selling property tax-free. The primary residence exemption was never meant for such transactions, but what were the chances of an audit when the CRA wasn’t even aware the sales?


When the Liberals introduced the reporting requirement, it was widely seen as a measure to crack down on foreign buyers. But the primary residence exemption has been widely abused by Canadians as well, York University professor Lisa Philipps has noted in the Globe and Mail. 

 

And now that the CRA will start receiving more data on home sales, you can bet it will keep a close eye on them.


“There is a perception that house and condo renovation and flipping has been taking place and that the profits from those sales are not being reported,” Toronto tax lawyer David Rotfleisch wrote on his website. And that has put pressure on the CRA to crack down, he added.


The agency has added at least 70 auditors to look specifically at real estate in B.C., according to a leaked memo that emerged last summer.


The CRA has also recently told Global News that stepped-up information-sharing with the provinces has helped it detect fraudulent real estate transactions.


In general, the industry is one of three — along with the food and accommodation sector and the retail sector — that the agency has singled out in its effort to catch tax-cheats in the cash economy.


Here’s what you need to do to stay out of trouble


  • - Report the sale of your primary residence on Schedule 3 of your T1 return. You’ll have to indicate when you bought the house, when you sold it and how much you made on it. You’ll also have to provide a description of the property.
  • - If you didn’t live in the house for the entire period you owned it, you’ll have to also file Form T2091, according to the CRA website. This would apply, for example, if you’ve designated your cottage as your principal residence for part of the year.
  • - Even if you rent part of the house or use it for business as well, you might still be able to claim it as your primary residence. More details here.
  • - If you forget to report the sale this year, you should file an amended return as soon as you can. The CRA can impose a penalty of $100 for every full month since the filing deadline, capped at $8,000. The good news is that the agency has said that for the first year it will only apply the penalty “in the most excessive cases.” Remember, though, if you don’t file, you won’t be eligible for the capital gains tax exemption
 


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