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From my favourite mortgage guy, Mr. Jon Sowerby; Verico TvH Mortgages October 29th, 2013 1. A Significant Shift in Policy - The Bank of Canada changes its mind. Sort of... 2. Working with Professionals: The TvH Group 3. Question? Comment? Know someone who might need some help? 1. A significant Shift in Policy - the Bank of Canada changes its mind. Sort of... Last week, Bank of Canada governor Stephen Poloz made his comments on interest rates and the Canadian economy in his usual market commentary released approximately every six to seven weeks. The summary is provided in the attached link. Although packaged as usual in a fairly technical way, the most recent release did get markets buzzing. Governor Poloz did not refer to something for the first time in over a year, specifically the likelihood that Canadian interest rates are on the cusp of being increased: http://www.bankofcanada.ca/2013/10/publications/press-releases/fad-press-release-2013-10-23/ Now, while such an omission may not seem like a big deal it has been getting plenty of press. Many of the points well summed up by this CBC article: http://www.cbc.ca/news/business/bank-of-canada-ends-rate-hike-warning-cuts-growth-outlook-1.2186658 The crux of the issue as explained by the Governor is that the Canadian economy has simply not performed according to plan. Exports, expected to be a key driver have continued to lag as the Canadian dollar has maintained its strength in the face of a slowly (very slowly) recovering US economy. Ironically, the announcement had a short term impact on the Loonie pushing it lower, something some pundits figure was exactly the Governor's aim. But a little posturing is likely to only take things so far with the dollar and more concrete actions will likely be required if driving the dollar lower to jumpstart exports is the ultimate goal. So what does that mean for mortgage holders or prospective home buyers looking for a mortgage? It means the low interest rate ride is not over yet. While fixed rates have seen some pricing pressures in recent months, some more policy driven than market driven, variable rates may be the big beneficiaries. Fixed rates first: As mentioned in my previous article fixed rate pricing has been under some pressure. At least a portion of this has been as a result of changes to the cost of doing business based on recent revisions to government policy. These changes have been pushed onto lenders and ultimately consumers. Furthering the government's aim to increase the cost of credit this kind of change is not likely to be reversed anytime soon. However, the bond market which is the underlying source of fixed rate mortgage funding may see a roll back and if this happens while it might be tough to see rates dip below 3 per cent again we might see them in the low 3 per cent range. Now variable rates: Well, assuming funding continues to be readily available in the money market the net result of these recent changes is variable rates potentially becoming once again the more attractive option. Currently variable rates look pretty attractive in the sub 3 per cent range but we may see some room for improvement on 2 fronts: First, pricing could improve meaning the discount offered against the prime rate (currently 3 per cent) could potentially go lower. It's been a few years since we saw prime minus 90 basis points but we might yet see something close to that given time. Any decreases in discounts are good for consumers as ultimately they pay less interest on the borrowing. Secondly, and this would be a direct result of what Governor Poloz's announcement covered, is the chance that they Bank of Canada lowers the overnight lending rate. It was only a few years ago that the overnight lending rate was at 0.25 per cent (currently holding for the last 3 years at 1.00 per cent). Assuming lenders passed the savings along (they haven't always done that) the potential to see variable mortgage rates back in the low 2 per cent to high 1 per cent range does exist. What I think about all this: I think it is interesting that Governor Poloz made the shift he did and I think on the surface it seems like a wise move. Frankly, no one was taking the previous message about moving to increase rates terribly seriously anymore as the economy sputtered along and inflation was essentially non-existent. The broken record about moving rates up, which has been playing since April of 2012 had largely lost the attention of the market and I think was hurting the credibility of the BofC. Now, saying - or in this case not saying - you're going to do something isn't necessarily an indication you're going to do something. In other words, just because the Governor is not saying rates decreases are off the table doesn't mean he's going to engage in a race to the bottom. So while I think it was smart to leave the option open, I also don't think it is Mr. Poloz's first choice. So don't be disappointed if nothing much happens to the Bank of Canada's key overnight lending rate, certainly in the short term. Finally, it appears the time for variable rates to be in the spotlight might once again be making a comeback. For many, it was going to be at least late 2014 before the BofC looked to increase rates and I know personally, I have been suggesting probably more like middle 2015. Now, it might not be unreasonable to suggest we are looking at 2016 before something truly happens. But keep this one thing in mind - if the economy turns around next quarter and we see a pick-up in exports and inflation this will all go out the window. So to people who have chosen fixed in recent months you're going to be just fine. To those looking at the future fixed vs. variable is still a valid discussion as opposed to just a default in variables favour. As always I am happy to discuss whenever you are, so should you have any questions or concerns just let me know and we will work through your specific situation. 2. Working with professionals: One of my goals as a financial professional over and above my goals as your mortgage professional is to provide you with a support network that will help you manage your complete financial and real estate situation in the way we have managed your mortgage situation - by putting you in touch with ethical, principled and knowledgeable specialists from a variety of fields. If you have questions or needs in any of the following areas: TvH Mortgages, run by yours truly, Jon Sowerby as Mortgage Broker and Broker of Record TvH Financial, dealing with Investments and Insurance is headed by Jim Lao , Financial Advisor TvH Legal, dealing with Real Estate and Estate law in addition to civil litigation is headed by Sonia Kociper, Lawyer TvH Accounting, dealing with personal and business tax matters headed by David Jamestee, Chartered Accountant TvH Real Capital, dealing with mortgage investing, a subsidiary of TvH Mortgages We also know some excellent people in the following fields: Real Estate Property Insurance Contracting Even if you don't have a mortgage need at the present time but you need some help in one of the above areas please call or email me. I am privileged enough to work with some of the best in the business and I know they will take excellent care of you and yours. *Have a need in a field you don't see above? Let me know, I might still be able to help! 3 . Question? Comment? Know someone who might need help? Do you have a question or a comment? Do you know someone who is considering their financing options and would like some straight forward advice? Why not take a moment to send me your question? Email or phone me, whichever is more convenient. I'm always happy to help. Why wonder and maybe miss an opportunity when a few minutes of your time could provide all the help you need? Take care and stay in touch! Warmest Regards, Jon Sowerby Verico TvH Mortgages

Stay tuned for some new listings coming up! I'll provide pictures and details soon! And have a fantastic Thanksgiving weekend.

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In this business, every now and then, you stumble on an amazing deal. The stars align, miracles happen and you trip over the bargain of the century! Location is everything and this gorgeous 3 bedroom is on the market! It's a move in condition cottage style adorable house, with a real entertainers yard and shed...a shed complete with electricity, for serving up tunes and drinks with blenders to your guests! Or making into your personal painters studio...or...whatever you wish. An open style kitchen and dining area, a loft 2nd story. This is a house that is perfect as it is or for a renovator who wishes to blow out the upstairs and back and make a serious investment and return....contact me directly 416-993-3304 and here's the tour....enjoy! http://pfretour.com/23561

Spring - Get Ready!

Spring is finally in the air across most of Canada (sorry Alberta and Saskatchewan) and with the sun and warmer weather comes the realization that Old Man Winter has been torturing the outside of your house for the last six months. Before you break out the patio furniture and start planting your gardens, you might want to follow these six tips to get your home ready for a headache-free season. 1. Check your gutters and downspouts Whether you did this in the fall after all the leaves fell or not, there’s a good chance your gutters and downspouts need some care after the buildup of ice and snow. Do a perimeter check from the ground to make sure nothing has come loose or detached from the house. Get out the ladder and check for any clogs and make sure water is making its way out of the downspouts (and away from your foundation). You should also do a visual check of your chimney and the shingles on your roof during this process to see if there is any damage. If you’re not comfortable climbing a ladder, check with contractors in your area, as many offer services to do this for you. 2. Fix cracks Cracks that may have occurred in your foundation, walkways, and patio during the winter months are a welcome sign for water to get in your house and cause damage. Fill these as soon as you can and avoid paying for repairs after the spring rain. Also make sure your patio and walkways are sloping away from your house so water does not pool near your foundation. 3. Caulk, repair windows Just like cracks, gaps between your windows can let water (and critters) inside. Scrape off any old caulking and replace. Also check any wood trim or sills for signs of decay and repair or replace as needed. As a bonus this will also help keep drafts out and your energy bills down. 4. Move wood, junk away from your house That stack of firewood you had up against the house all winter needs to be moved. It’s damp and will be the perfect breeding ground for a variety of insects. Same goes for any junk you left out all winter that could have water accumulate when all the ice and snow melts. Have bugs breed now and you’ll be bothered by them until next winter. 5. Inspect your air conditioning unit, outdoor faucets, lights Having your air conditioning unit inspected by a certified professional before turning it on for the season is not only a good safety measure, but could also help prolong the life of the unit. It’s also wise to make sure your outdoor faucets, receptacles, and lighting and not damaged. If you have a gas barbeque you did not use over the frigid months you should have that inspected as well. 6. Don’t forget the inside While you’re eager to get outside, spring is also the perfect time to replace or clean your furnace filter, check your smoke and carbon monoxide detectors, check your dryer vent for lint buildup, and have your fireplace cleaned.

Crazy or what?

Of all the zany things happening in Toronto’s real estate market last week, perhaps the most mind-boggling was the melee that erupted over a pleasant yet unremarkable condo unit near Yonge and Davisville. Seven parties leapt into the competition and pushed the sale price to $420,000 – or 8% above the asking price of $389,000! I am totally flabbergasted by this! I would never in this market tell a buyer to get involved in a bidding war on a condo. A nice house in Riverdale/Leslieville maybe – but not a condo. But it could be an outlier. The point is that the market is extremely erratic at the moment. The numbers from the Toronto Real Estate Board show that sales edged up 2.4% in the GTA in the first half of January compared with the same period last year. The average selling price rose by 4% in the same period. But the market was – and continues to be – choppy and weird. Some properties stagnate for weeks and then sell at a significant discount of the asking price, while others sell overnight for more. Still…. there are a million cookie-cutter condos out there that no one cares about. So, that condo multiple bid was a real head scratcher to me. Some buyers are speculating that prices may fall and wonder if they should wait. But others are willing to move if they see the right property. They want that security that the market isn’t going to totally fall out of bed. I don’t believe it will. My advice? Set a realistic asking price instead of setting an eye-catching price in the hope of sparking a bidding war. But don’t ask too much. Prices have softened a bit since last spring. If you’re way too high, people will ignore you and buy something that’s not. And buyers? Always know that if the price seems too low, it probably is and the agent is working for multiple bids….all good, and fair, but have your Top Price in mind before going to battle and don’t go over it. I won’t ever push a client to do that, though I will counsel if I feel they are low balling too much and insulting a client right out of a good dialogue. Perhaps it’s been the lack of snow in January that may have helped the market for sellers because house hunters had no trouble tramping around. And the arctic temperatures this week didn’t deter the buyers of 76 Langley Ave. in Riverdale. The home, priced at $949,000, sold Tuesday night for $1,129,000. No, that’s not a typo. So much for the impending real estate crash, huh? But the volatile nature of the market makes it difficult for us agents to predict how the spring will shape up.

From the Financial Post....I like good news!

Historically, bull housing markets have tended to end sharply with little warning. But among financial industry players there is growing consensus that this time will be different. At a recent bank chief executive conference in Toronto, the heads of the major Canadian lenders agreed that the mortgage volume growth is moderating after a period of double-digit growth, partly because of moves by the federal government to tighten rules around mortgage lending. The thinking seems to be that residential real estate is headed for ‘soft landing,’ a healthy development that will eliminate some of the froth from the market.