Keep Your Eye on the Employment Rate

An interesting number that I think some people haven’t seen much of is the Employment Rate. We usually hear a lot about the Unemployment Rate, which doesn’t take into account those that are unemployed but who aren’t actively looking for work. Currently the Unemployment Rate is 7.8%, down from a high of approximately 8.65 in late 2009. So either more people have found jobs, stopped looking for both, or a mix of both.

The Employment Rate, on the other hand, measures how many adult aged people are working for pay, and thus in a position to take care of themselves and their families. Since the recession, every job lost has been made back up in our economy. Some of them may be different jobs, paying more, less, or the same as the old job, and some people got their old jobs back. The important thing is that the number of jobs that were lost have been made up in the last 12 months.

It is likely that most of those jobs were at companies that export goods and services, and a lot of people started their own businesses. The question is: How does this affect our economy? The answer to that question is mixed because of a couple of factors: 1) The more people working in Canada, the more income available to be spent in the economy. 2) If the bulk of the jobs that people found who had lost their jobs in the recession pay less than their old jobs there will be less money available to be spent than there was previously. So which one is it?

The inflation and GDP figures would make me lean towards the latter, as both have been subdued. That’s good news for people getting mortgages or who have mortgages coming up for renewal. The lower those numbers (inflation and GDP) remain, the more that mortgage rates will remain stable. So while rates will bounce around over the next 12-18 months don’t expect them to leap higher and stay there. We will likely be in this low-rate environment for a while.

Warm regards,
Chris
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Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003

www.guelphmortgagecentre.com

Kitchener/Waterloo Home Show is Free (this Weekend)

I just found out the the Kitchener Waterloo Home & Garden Show is now a free event. To find out more about the show please visit their website.

I'm not a big fan of these types of events because I typically rely on referrals from people I trust to people who can help me with my project. What I do like about these shows is that you can get a lot of information from different vendors in a short period of time.

One thing you aren't likely to get at a home and garden show is mortgage advice. If you want to get some advice on your situation and what type of mortgage is best for you please give me a call. I would be happy to help!

Cheers,
Chris
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Christopher Bisson
The Mortgage Centre
866-838-4366 x1003

www.mortgageconcierge.ca

Core Inflation helps Variable Rate Mortgage Holders

Core inflation is low, and playing right into the hands of people who have Variable Rate Mortgages (VRMs). When inflation is low the Bank of Canada keeps short-term rates low in order to "grease" the wheels of commerce. Low rates normally insent more people and businesses to borrow because it is cheap.

Some people worry that the current low-rate environment will lead to high inflation. These expectations will affect the fixed-rate mortgage market. In fact, just about every time we hear news that the economy is humming the fixed mortgage rates rise, and just about every time we hear things aren't so rosy the rates drop. I've seen the 5 year fixed rate gyrate back and forth between 3.80% and 4.40% three times since November.

The outlook for the next 2 years is that the USA is going to have tough times. With us shipping about 70% of our exports to the USA we will see a lag too. Even if we change gears and find new markets for our products it is unlikely our short-term rates will move much out of step with the USA's short-term rates. The greater the spread the higher our Loonie will soar. And that will hurt manufacturing... I can't see the government wanting to put people into Unemployment lines on purpose...so count on VRM rates to hold pretty steady.

With Variable Rates down near 2.3%, it's no wonder so many people are going variable nowadays!

Cheers,
Chris
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The Mortgage Centre
866-838-4366 x1003

www.mortgageconcierge.ca

Last Chance to Refi to 90% of your Home's Value

The new mortgage rules being implemented by the Government of Canada come into affect on March 18th, 2011. One of the changes to the rules limits the amount of money someone can pull out of their home for a refinance.

The new rule allows home owners to refinance up to 85% of their home's value, compared to 90% that is currently possible.

If you or someone you know has a large amount of consumer debt they would probably benefit from a refinance because it usually means lower payments AND lower rates. Make sure the application is submitted by 3pm on the 17th to ensure it can be submitted for approval by the end of day in order to meet the deadline!

Apply on-line at www.mortgageconcierge.ca to speed up the process!

Warm regards,
Chris
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Christopher Bisson
The Mortgage Centre
866-838-4366 x1003

www.mortgageconcierge.ca

Condo Fees and Down Payments

I have had a few clients ask me if there is going to be a change in the way the banks calculate affordability numbers for people wanted to get a mortgage. Specifically, I've had people ask me if the new minimum down is 10% as well as those thinking that you have to use the entire condo fee payment when calculating the "affordability" numbers.

Let me provide you with a short answer to these two items: Neither is true. In fact, although the banks can't approve you for a mortgage that is worth 100% of the value of the home you may want to buy, you can still buy with nothing down. How's that possible? The answer is that you can still borrow your 5% down or get a cash back mortgage to cover the down payment. Certain conditions apply so talk with us to find out how you or someone you know might be able to take advantage of these programs.

And one last thing: When you want mortgage advice, make sure you are getting it from an expert like someone at our office.

Warm regards,
Chris
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Christopher Bisson
The Mortgage Centre
866-838-4366 x1003
www.mortgageconcierge.ca

Inflation Subdued?

Total Inflation for January came in at 2.3% higher than the previous year. Core inflation came in at 1.3% for the same period. Core Inflation strips out highly volatile items like food and energy. That’s good news for those who are afraid that inflation is getting out of control.

While keeping interest rates as low provides stimulus for the economy that may result in inflation, the risks of increasing the short-term rates is too great. Besides, without the USA doing the same we can’t have our rates rise much without sending our Loonie higher, which would hurt manufacturing. The last thing that the government wants is a large group of workers lose their jobs because of the exchange rate.

Bond Yields have been holding steady around 2.6%, which allows fixed rates to remain the same.

Expect rates to stay very close to where they are for the remainder of the year. It is unlikely that they will swing by more than 0.5% either way by December.

I arrange mortgages for people and would be happy to help you. Please feel free to contact me if you'd like help saving time and money!

Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003

www.guelphmortgagecentre.com