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2nd Annual Holiday Campaign

Season's Greetings,

It is hard to believe that December has arrived and the holiday season is upon us.  2011 has been another crazy year in the mortgage business, but Mortgage Connection is truly blessed to work with such wonderful clients. The beginning of 2012 will see a move to a new location for Mortgage Connection. Our new space is under renovation and will be opening soon. Of course the renovations are taking longer than expected! Our office in the East Village is no longer and until the new space is ready we are located in Bridgeland.  In the New Year, you will be able to visit us in the heart of Historical Inglewood with plenty of free off street parking!

Last year we kicked off a holiday campaign to donate to five charities selected by you, our valued clients.  We pledged to give a total of fifteen thousand dollars ($3000.00 per charity) "on the behalf of the clients of Mortgage Connection."  The campaign was a great success and we look forward to doing it again this year. 

What we need is for you to nominate a deserving charity (local, domestic or international). Please send us an email indicating where you would like to see the donation go and why the cause is important. Once we have received the nominations we will announce the selected charities on December 19, 2011.  Last year the selected groups were:

The Salvation Army, Veterans Food Bank (Poppy Fund), Water School, KidSport and Inn from the Cold. 

On the mortgage side of things, our second eBook will be ready soon and provide you with "5 Money Saving Moves within Your Mortgage" .  In the meantime, if you you want to set up an annual mortgage review, please do so. With rates at historical lows, there are many money saving opportunities and mortgage plans to help you achieve your financial goals.

Change of Ideas

With summer holidays behind us it is a good time to review mortgage plans. For the past twelve months Canadians have been warned that the low interest rate market was about to end.  How things have changed.  The Bank of Canada held rates this week and the forecast is that rates will remain unchanged, or even drop well into 2012.  If the Canadian economy continues to shrink an extended period of record low rates is likely.  For a mortgage holder, or someone looking to get into the market, record low rates are a great thing, but remember they are the result of troubling economic times. 

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Is this the End?

First off, there needs to be some clarification on what rates have moved and by how much.  The recent increase in rates is for fixed rates only.  The Bank of Canada has not increased the overnight rate and in turn Prime is still at 3%.  Furthermore, the 5.44% rate that is being blasted on the news is a reflection of the new Bank of Canada 5 year Bench Mark rate.  Think of this as a posted rate, not a discounted mortgage rate.  Discounted mortgage rates for 5 years are in the 4% range. We have seen rates increase since late summer by about .50%, but this is a reaction to the bond yield. As the spread between bonds and mortgage rates tightens, rate will go up.  This tightening is a warning that the low rates we have been enjoying may be coming to an end.

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Mortgage Connection Holiday Campaign

Season's Greetings,

The past couple of years have been a wild ride for individuals and businesses.  Mortgage Connection has not been immune to a stalling economy, but we are very aware that because of you, our valued clients, we have remained successful in our goal of helping consumers meet their financing goals through value added mortgage strategies and top level service.  

As you may or may not know, Mortgage Connection has supported a local under-funded elementary school for the past four years.  We are happy to report that in 2010 we have committed another twenty five thousand dollars to help ensure the future of our city is bright.  We thank you for allowing us to make this contribution. 

We truly feel blessed to work with such wonderful clients and live in our vibrant city.  As you all know, many people in our city, country and world are not so lucky.  As a token of our appreciation for your continued support, Mortgage Connection is launching  a Holiday Charity Campaign.  We want you to tell us what charities you would like to support and why these organizations and their causes are important to you.  We will be selecting five charitable organizations and donate three thousand dollars to each on behalf of “The Clients of Mortgage Connection”. 

Please send your requests to us by December 15th, 2010 as we will be announcing our selections in the coming weeks.  We look forward to your ideas!

All the best this Season and always,

A Fall of Uncertainty

Well, the global financial rollercoaster continues to roll on!  Not sure why Germany agreed to host the EU party with Greece on the invite list, but it does make for interesting financial news. We have had an autumn of up and down markets and mortgage pricing has done the same.  With all the uncertainty we have seen two trends with mortgage pricing.

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Take this to the Bank

The global financial turmoil that hit in 2008 demonstrated the strength and responsible lending practices of the Canadian banking system.  However, this same industry has developed a nasty practice in recent years that is hurting the mortgage consumer and very few people are aware of the injustice. 

It is in the form of payout penalties on fixed rate mortgages.  Most fixed rate mortgages have two options for payout charges if a mortgage loan is broken mid-term.  The first is 3 months simple interest.  The second is interest rate differential or IRD (the cost to re-invest the money back into the mortgage market).  A lender will charge a mortgage holder the greater of these two options.  This is not new and in theory there is nothing wrong with this practice. However, the banks have changed how IRD is being calculated and the new formula is absurd. 

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Charities Selected


We would like to thank all of our clients that took the time to nominate a charity to be part of our holiday campaign.  It was very tough to select just five, but we have now made our choices and they are as follows:

The Salvation Army, Veterans Food Bank, Water School, Kids Sport and Inn from the Cold. 

Please feel free to contact Mortgage Connection for more information on any of these worthy causes. This week Mortgage Connection will be providing three thousand dollars to these selected charities "on behalf of the clients of Mortgage Connection". 

However, due to the great response we have decided to make additional donations of five hundred dollars to a variety of other nominated charitable organizations. 

We thank you for your nominations and for your continued business.

All the best in 2011!

How to Move in this Market?


The big question that we are being asked is not about rates, but about ownership.   "Should I buy now?" is a tough question to answer and there are a lot of different opinions on the topic of home ownership in the current market.  Perhaps an even tougher questions is "Should I sell now?"

Are we sitting on another housing bubble with serious reductions in pricing on the horizon?  Some experts estimate that Canadian housing is still 20% inflated (see Macleans November 1 issue).  The mere prospect of a future drop in pricing has a lot of first time buyer’s fence sitting. 

Making such predictions on the housing market is very difficult.  What we do know is that housing has come down and you are a lot better buying now than you were 2 or 3 years ago (not to mention the myriad options of housing sitting on the market to choose from).  A potential buyer now can actually shop, become educated and make an informed buy. Also, with rates so low the cost of ownership is once again less expensive than many renting opportunities.  A further drop in house pricing (if it is slight) could easily be negated by an interest rate hike. 

The more difficult scenario is for the current home owner looking to buy.  There is no denying that Calgary is in a buyer’s market and supply outweighs demand.   With downward pressures on price, selling now is an arduous task.  However, there is often a false sense of fear of losing capital by selling now.  If you bought 4 or 5 years ago there is a good chance you have a strong equity position, and if you are not upside down in your current home, you shouldn't be concerned about taking a little less for it.  Remember you can buy for less too!  As long as you buy and sell in the same market, you will do just fine.  If you bought at the height of the market or you simply want to wait to sell, it may be worth converting it to a rental (assuming you have a source for a down payment, rents will cover your costs, you have some savings to cover incidentals and that you are okay with the landlord idea).  New mortgage regulations allow qualifying for a new home while converting your existing into a rental property as a viable option for many consumers.  This will allow you to capitalize on the lower prices today and hopefully, again in a few years, with a upswing in the market.

There is very little to convince us that the housing market will collapse, but at the same time significant growth by this time next year is not likely.  If we look at the Calgary and Alberta markets there are two things that need to happen to get things moving and back into a balanced real estate market.  First, demand needs to increase to deplete housing inventory.  This should happen in 2011 with increased job creation and net migration to Alberta.  Secondly, rates need to remain low to attract new buyers.  There is no reason at this point for significant hikes and low rates throughout next year is the general consensus of most economists. So, there is optimism that the markets are heading in the right direction, but the movement will be small and slow.  If you are thinking you can sell in spring 2011 for a significantly higher amount than now, or buy for significantly less- you probably will not find what we are looking for.

If you know a potential buyer that needs expert advice, or you want to look at moving, please contact us and let MCI put together a personalized home ownership strategy.