Whois Dave?

Dave Kendall is a Mortgage Agent who joined our company in January, 08. He has been in the mortgage industry well over 18 years starting his career with Royal Bank as a mortgage specialist. In 1996 Dave joined Canada Trust as a mortgage specialist and became quickly top 10 in canada for the bank. When TD merged with Canada Trust Dave decided to leave the banking side and joined a Mortgage Brokerage as an independent Mortgage Consultant.
An endeavour he has enjoyed for the last 9 or so years.

His background and years of experience give credence to his industry commentary and we look forward to hearing Dave's opinion. Often offered with a grain of salt and a bit of pepper his commentary is looked at by over 800 email recipients and we are happy to share his emails on our blog.

Watch for Dave's commentaries!!

Dave's Email 10-21-08 - Mortgage Market Update

The Bank of Canada has once again dropped rates by .25%. (Not the .50% that some economists were hoping for.).

Slowly this morning the Banks appear to be following suit, by reducing their prime to 4.00%. BMO, CIBC, Royal Bank, Scotia Bank TD Bank and ING have now confirmed the same reduction to their prime. MCAP has confirmed their drop tomorrow.

This is great news for those who are staying Variable. But once again there does not seem to be any lenders lowering their fixed rates. I think there is still an element of concern with the Global Banking issues. On the more positive side is that fixed rates appear to have stopped rising at this point.

A few of our lenders have re-introduced some of their Quick closing discounts which is giving access to 5.40% 5 year fixed rates again. But, with Prime +1.00% at 5.00% the variable rates mortgages appear to be the more popular choice of this week.

October 17th has come and gone, the official end to the 40 year amortizations and 100% financing. Although Genworth claims that almost 25% of their business last year fell in either 100% financing or 40 year amortizations I do not see the loss will significantly impact access to mortgage financing. I think the largest portion of that 25 % was 40 year amortizations, and still having access to 35 year amortizations does significantly increase mortgage payments.

The one other change that did take effect on Oct 17 is minimum Beacon Scores. CMHC originally announced the minimum beacon score was going to be 620, however then decided to back off and go with 600. They also announced that on exception those with 580 and or above can be considered on an exception basis but can not make up more the 3% of the lenders portfolio. This is where lending is truly being effected, or how things are tightening up. Even though sub 600 beacons are permitted by CMHC, it is not freely being approved by the lenders. Exceptions that would easily been approved in the past are no longer being granted by lenders. We even have one lender; Macquarie, who has actually raised their minimum beacon score to 680. This is the lender's way of saying they are going to be very selective in granting credit for the immediate future. This change is affecting who gets a mortgage and who doesn't..

So you now have even more reasons to maintain a good credit rating. I have attached a copy of a PowerPoint presentation I used to present which gives some in-site to your beacon score.

If you have any questions about your current mortgage or would like some ideas on how to make your current mortgage payment a little more affordable, then please give me a call.

I am still going Variable with my mortgage next month.

Thanks,

David Kendall
Senior Mortgage Consultant
211 York Road, Unit 3, Dundas, Ont. L9H 1M9

What the overnight reduction means for Mortgagees

This is good news for those holding variable rate mortgages. Their effective rate of interest can be considerably low based on previous rate offerings, in variable products, of discounts from .25 to a full 1.00 percent off of prime.

Today's benefits seem not as valuable, as lenders will only entertain mortgage offerings at prime plus 1.00 to 2.00%. Although seemingly not as good, fixed rates remain higher and it is unknown if they will continue to rise. The economic crisis experienced globally is creating an unstable market. Other factors effecting fixed rate terms may also include that fact that Canadian banks who invested in US mortgage paper are out to recover their losses, the cost of money to loan out in mortgages, based on the cost of 5 year bonds, is high.

With these factors in mind the government is creating security for lenders who were entering into a credit crunch and not willing to lend out their money to each other, which is good news. The government is putting out money into term pra's and offering additional security for mortgagors by guaranteeing additional mortgages. This should ease up restrictions in mortgage lending and keep opportunities available for those needing to refinance or purchase a home.

What type of mortgage - fixed or variable?- The decision still sits with your comfort level.

Bank of Canada announces a further reduction in the overnight rate

Press Releases


2008
FOR IMMEDIATE RELEASE21 October 2008
CONTACT: Jeremy Harrison613 782-8782
Bank of Canada lowers overnight rate target by 1/4 percentage point to 2 1/4 per cent
OTTAWA - The Bank of Canada today announced that it is lowering its target for the overnight rate by one-quarter of a percentage point to 2 1/4 per cent. The operating band for the overnight rate is correspondingly lowered, and the Bank Rate is now 2 1/2 per cent.
Three major interrelated developments are having a profound impact on the Canadian economy. First, the intensification of the global financial crisis has led to severe strains in financial markets. The associated need for the global banking sector to continue to reduce leverage will restrain growth for some time. Second, the global economy appears to be heading into a mild recession, led by a U.S. economy already in recession. Third, there have been sharp declines in many commodity prices. The outlook for growth and inflation in Canada is now more uncertain than usual.
Consistent with the G7 Plan of Action, major economies have announced extraordinary measures to stabilize their financial systems. These initiatives will be pivotal to resuming the flow of credit to support global economic growth. Canada's economy and strong financial system will benefit directly from these actions.
The weaker outlook for global demand will increase the drag on the Canadian economy coming from exports. Lower commodity prices will also dampen the outlook, working through a deterioration in Canada's terms of trade to moderate domestic demand growth. The marked tightening in Canadian credit conditions in recent weeks will restrain business and housing investment. The Bank expects growth to be sluggish through the first quarter of next year, then to pick up over the rest of 2009 and to accelerate to above-potential growth in 2010 supported by improving credit conditions, the lagged effects of monetary policy actions and stronger global growth. The recent sizeable depreciation of the Canadian dollar will also provide an important offset to the effects of weaker global demand and lower commodity prices. Overall, the Bank projects average annual growth in real GDP of 0.6 per cent in both 2008 and 2009, and 3.4 per cent in 2010.
With excess supply projected to build throughout 2009 and lower assumed energy prices, inflationary pressures will ease significantly relative to the projection in the July Monetary Policy Report Update. Core inflation is now projected to remain below 2 per cent until the end of 2010. Total CPI inflation should peak during the third quarter of 2008, fall below 1 per cent in the middle of 2009, and then return to the 2 per cent target by the end of 2010.
In the face of diminished inflationary pressures, the Bank of Canada lowered its policy interest rate by 50 basis points on 8 October, acting in concert with other major central banks. This extraordinary move, combined with today's announcement, brings the cumulative reduction in our target for the overnight rate to 75 basis points since the Bank's last fixed announcement date. These actions provide timely and significant support to the Canadian economy. The cumulative reduction in the Bank's policy rate since last December is now 225 basis points.
In line with the new outlook, some further monetary stimulus will likely be required to achieve the 2 per cent inflation target over the medium term. The evolution of the financial crisis, its impact on the global economy and the timing of the effects of the various extraordinary measures being taken to address it pose significant risks to the projection on both the upside and the downside.
The Bank will publish the details of its new projection for the economy and inflation, including all the key risks to the projection, in the Monetary Policy Report on 23 October 2008.
Information note:
The Bank of Canada's next scheduled date for announcing the overnight rate target is 9 December 2008.

Outstanding Professionals

In keeping with my belief in the process of referrals, and as part of the service I provide, I want to be sure to refer my clients and associates to other qualified businesspeople in the community.

I have included a list of services in which I know very credible, ethical, and outstanding professionals. If you’re looking for a professional in a specific area that I’ve listed, please feel free to contact me. I will be glad to put you in touch with the people I know who provide these services.

• Automobile Insurance
• Electrician
• Life and Disability Insurance
• Florist
• Commercial Bank Service
• Nutritional Supplements
• Accounting
• Massage Therapy
• Bookkeeping
• Web Design
• Financial Advisor
• Printing and Design
• Lawyer General Practice
• Home Staging and Decorating
• Real Estate Sale Representative
• Fashion Design
• Computer Technician
• Promotional Products
  

Lisette Amalfi, AMP
(905) 529-1199

Banks Pushing Homeowners to Lock in Mortgage Rates...

A Notice from Dave Kendall...

We have finally seen the lenders calm down with changes in the mortgage industry of last week. However some of these changes have been somewhat drastic.

• Within a 1 week span the pricing on variable rate mortgage products have gone from prime -.60 to Prime + 1.00. This puts variable rates back in line with fixedrates.
• Gas prices have returned to almost a $1.00 a litre.
• The Canadian dollar has returned to it previous somewhat standard exchangerate of $1.13 which is great for our Canadian exports.

It was almost as if the "EASY" button was replaced with a "RESET" button.

I came across this article in yesterday's Financial Post, which further clarifies the fixed vs variable debate.

Banks pushing homeowners to lock in mortgage rates: expertsGarry Marr, Financial Post Published: Tuesday, October 14, 2008

http://www.financialpost.com/news/story.html?id=879937

We have to sell what we have; the bottom line is that variable rate mortgages with rates below prime are no longer profitable for the bank's tooffer, even at prime + 1.00% having prime just dropped a .50%, means you arestill borrowing at 5.25% which is still a great rate. It is still below what most banks were offering as their best 5 year rate before everything started to rise.

Variable Rate ...5.25%My best 5 year fixed 5.49% vs most bank's offering 5.89 to 6.10%

Anyone with a below prime variable now has something that can no longer be replaced, for those staying variable makes sense. New applications, it is not so "cut and dry." With the 5.49% 5 year fixed rate vs 5.25% variable, for the sake of .25% and with the Canadian Banks starting to step outside of standard monetary policy with the setting of Prime, one may be seeking the security of a 5 year fixed rate mortgage.

These are volatile times which at times trigger some large rate adjustments. If you have a mortgage maturing in the next 4 months do not wait any further as it appears the longer we wait the worse the deals are getting. Please call me so we can commit a mortgage which will protect you from further product/rate changes.

Thanks,

David Kendall

Bank of Canada Overnight Rate Announcement

Publications and Research
Press Releases 2008

FOR IMMEDIATE RELEASE

8 October 2008 CONTACT: Jeremy Harrison
613 323-1402
Jill Vardy
613 782-8782

--------------------------------------------------------------------------------

Central Banks Announce Coordinated Interest Rate Reductions
Throughout the current financial crisis, central banks have engaged in continuous close consultation and have cooperated in unprecedented joint actions such as the provision of liquidity to reduce strains in financial markets.

Inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices. Inflation expectations are diminishing and remain anchored to price stability. The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability.

Some easing of global monetary conditions is therefore warranted. Accordingly, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, Sveriges Riksbank and the Swiss National Bank are today announcing reductions in policy interest rates. The Bank of Japan expresses its strong support of these policy actions.

Bank of Canada lowers overnight rate target by 1/2 percentage point to 2 1/2 per cent

The Bank of Canada today announced that it is lowering its target for the overnight rate by 1/2 percentage point to 2 1/2 per cent. The operating band for the overnight rate is correspondingly lowered, and the Bank Rate is now 2 3/4 per cent.

The intensification of the global financial crisis is having a marked impact on all countries. In recent weeks conditions in global financial markets have deteriorated sharply, the U.S. economy has weakened further, and commodity prices have fallen abruptly.

As a result of these developments, credit conditions in Canada have tightened significantly, despite the relative health of our financial institutions. Weaker growth in the United States and other important trading partners will increase the drag on the Canadian economy coming from net exports. The deterioration of our terms of trade will act to moderate the growth of domestic demand. While the recent depreciation of the Canadian dollar will help cushion the effects of the weaker global outlook on the domestic economy, it will not completely offset them.

Below-potential growth in aggregate demand through 2009, combined with a lower profile for commodity prices, will significantly ease inflation pressures in Canada. Inflation expectations remain well anchored.

In view of these developments, the Bank of Canada decided to join other major central banks and lower its target for the overnight rate by 50 basis points today. This action will provide timely and significant support to the Canadian economy. The Bank will continue to monitor carefully economic and financial developments, along with the evolution of risks, in judging whether any further action might be required to achieve its 2 per cent inflation target over the medium term.

Information note:
The Bank of Canada's next scheduled date for announcing the overnight rate target is 21 October 2008. A full update of the Bank's outlook for growth and inflation, including risks to the projection, will be set out in the Monetary Policy Report, to be published on 23 October 2008.

Bank of England
Bank of Japan
European Central Bank
Federal Reserve System
Swiss National Bank
Sveriges Riksbank