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2013 Drawing to a Close with a Charity Campaign

Well, Old Man Winter has certainly showed he is here to stay in Alberta.  For our clients in other provinces, count your blessings!  For those here, stay safe and warm.

2013 is winding down and we want to first off thank you our valued clients for another great year.  We are honoured to be your trusted source for advice on your biggest investment-your home.  Part of the ongoing commitment at Mortgage Connection is to give back to the communities in which we serve.  In keeping with our tradition, we are launching our 4th Annual Charity Campaign over the Christmas and holiday season.  How it works is that MCI donates 3000 dollars each to five deserving organizations, as nominated by our clients.  We do this "on behalf of the clients of Mortgage Connection" To date this campaign as contributed 45,000 dollars.  So, here is your chance, simply reply to this email and let us know where you would like Mortgage Connection to help.


Here is a list of organizations that have received the 3000 dollar donation over the past 3 years:

Foundation for Prader Willi Research, Guide Dogs for the Blind, Alberta Association of Community Living, Calgary Women's Emergency Shelter, Hull Services, Right to Play, The Mustard Seed, The Poppy Fund, Seva Canada, Children's Cottage,The Salvation Army, Water School, KidSport, Inn from the Cold, Veterans Food Bank

If you are interested in other areas in which Mortgage Connection is serving the community on an ongoing basis please follow this link: MCI In Your Community

Now onto some mortgage and housing news.

Rates:  Still low and not going anywhere:

There has been so much talk of rates going up and the need for rates to go up, but the reality is they have remained historically low.  If you have been in a variable rate for the last 3 plus years, you have actually enjoyed a fixed rate, as prime has not moved.  We expect the same to hold true throughout 2014 and will likely see the overnight rate (by which prime is priced) start to creep up into the 1st quarter of 2015.  Fixed rates are a tale of two markets.  Since June we have seen long term fixed rates (think 5 years and longer) jump up about a full percent from their low point of 2.79%.  However, we are now seeing them retreat back down and currently sit under 3.50%.  Short term rates, continue to be low with many options under 3%.  So, there is no need to fear that rising interest rate anytime soon.  What we should fear is our ability to handle it when the day comes.  Some great strategies can be developed to hedge against this future risk.  Paying your current mortgage based on what a higher rate would reflect has a couple of perks:  First, the extra amount pays off principle, saving you interest. Secondly, it allows you to budget and become comfortable with higher payments to avoid a payment shock down the road.

Mortgages: More regulations, more changes:

Getting approved for a mortgage has become a lot harder.  Some further impacts are on the horizon with stiffer regulations set to be mandated by December 2014.  These regulations mostly have to do with servicing other debts and how lenders view them.  Many lenders are already following these new regulations, but all will have to in 12 months. The days of the 30 year mortgage look to be coming to an end.  Many think they are already gone, but for those with at least 20% equity, 30 year and even 35 year amortizations have remained an option.  However, this looks to be the next mortgage feature on the chopping block. It has never been as important to ensure you have an expert on your side.  Mortgage Connection will ensure all options are explored and your needs are taken care of.

Housing:  Alberta (Keep 'em Coming)

At the end of November, Mortgage Connection attended the CMHC Housing Outlook Conference and there is good news across the board for housing in Alberta.  Housing in the simplest form is a measure of supply and demand.  The reality is the demand in Alberta is once again surpassing the supply.  Unemployment in the province is relatively low at 4.6%, job creation and increased wages has led to a net migration over 95,000 people into Alberta in 2013 and 2014 is again going see a big number of people moving into the province.  With jobs, come people and with people, comes a demand for housing.

Housing starts are stable, sales of new construction and existing homes are up and average sales price are seeing gains as well.  This is also fueled by record low vacancy rates and record high rental rates.  Calgary is certainly the strongest of all centres in Alberta and vacancy is basically non-existent at 0.80%.  It is expected that the average sales price in Alberta for 2014 will be $387,400.  The forecast for Calgary is $447,000.

An interesting change in building dynamic can been seen between Calgary and Edmonton. Multi-family (think condos) starts in Calgary are expected to be 6600, or a 20% increase from 2013. On the other hand, Edmonton is looking at around the same amount of starts, but a decrease of 24% from the near 8000 units started in 2013.

Housing: Canada (Bubble to Burst-maybe not)

Housing bubble on the horizon.  Is that really still in the news?  You bet.  The issue with trying to predict a housing bubble, if it is really easy to do once it has burst, but not so easy leading up to it!  Canadians being over indebted is also a major concern, but housing debt may be the wrong place to be looking.  The debt to income figures that the media and Government are throwing out to the masses are misleading.  Debt to asset ratios are much more appealing with most Canadians having well over 20% equity in their homes. Debt payments to income is a more important factor and Canadians are looking fine here.  Of course with historical low rates, taking into account what this ratio would be with future rate hikes is very important, but the majority of homeowners are in a position to handle expected rate increases.  Of course some areas look scary, but as a whole Canada looks to be sitting pretty.

Of course real estate is a local market and in some areas of certain markets, there are concerns.  The major centres of Toronto, Vancouver and Montreal, may be in trouble in the condo market.  Chief Economist at Laurentian Bank, Carlos Leitao is worried that Montreal's condo market may see a significant correction.  However, foreign money (especially in Vancouver) should keep these markets buoyant.  Especially the high end downtown condo markets.  Of course, if Canada is not viewed as the great investment it currently is, then these markets could be impacted as well.

However, as a whole the Canadian housing market is stable.  Some further concerns are demographic, as first time buyers numbers are down and this is a trend that looks like it will continue.  This is due to age demographics (there are simply less people aged in the first time buyer category, due to the aging population in Canada) and due to tighter mortgage regulations that are impacting this sector more than others.  New immigrant buyers balance this out somewhat, but the impact will be felt over time.  Employment growth is still favorable across most regions and with rates remaining low and fairly balanced housing markets, a stable Canadian market with growth in the 2.5-3.5% is the forecast for 2014.

If you have any questions, want to review your current plan, or have friends or family that need some expert mortgage advice, please give us a call.

We wish everyone a safe and happy Christmas and holiday season.  We look forward to a prosperous 2014 and continuing to be the experts for all your mortgage needs.