Housing prices in hottest Canadian markets a concern
Norma Greenaway, Postmedia News • Tuesday, Aug. 31, 2010
OTTAWA -- Steep housing price increases in six of Canada’s hottest real estate markets since 2002 have all the hallmarks of an “accident waiting to happen” if mortgage rates rise too sharply, warns a new report.
The report by the Centre for Policy Alternatives says smart mortgage rate setting is needed to prevent the bubbles hanging over the housing markets in Vancouver, Edmonton, Calgary, Toronto, Ottawa and Montreal from bursting.
“The hottest six real-estate markets could be in for a correction at best or, at worst, a bubble burst,” writes David Macdonald, author of the report. “Rate setters at the big banks are in the driver’s seat now as mortgage rates inch up. They need to hit the breaks lightly.”
The chief concern is the price increases in those markets are outside the “historic comfort level,” which makes them much more susceptible to mortgage rate changes, the report said.
The average, inflation-adjusted house price in the cities has historically held stable at between $150,000 and $220,00 in today’s dollars. But the current average price in all six major markets now is over $300,000, it said.
Macdonald says a housing bubble burst has been a rare phenomenon in Canada. Since 1980, it has only happened three times — in Vancouver in 1981 and 1994 and in Toronto in 1989.
“But the steep rise in house prices in so many cities displays all the hallmarks of an accident waiting to happen,” Macdonald writes, adding the price increases have exceeded the growth in inflation, household incomes and economic growth.
“Canada is experiencing for the first time in the last 30 years, a synchronized housing bubble across the six largest residential real-estate markets in Canada.”
The report traces the trend in large part to low mortgage rates and access to easy credit, which can encourage buyers to purchase homes they might not otherwise be able to afford.
“While housing may be ‘affordable’ based on record low rates, the affordability situation in Canada could change rapidly if mortgage rates return even part way to their historic norms,” the report says.
Macdonald, a research associate with the centre, said in an interview he doesn’t expect mortgage rates to increase much in the near term. His concern is three to five years down the road.
Macdonald called on the big banks and other mortgage lenders to stick to slow, gentle increases to avert the bottom falling out of housing prices.
He also recommended returning to pre-2006 mortgage rules, which required a down payment of 10% and a 25-year mortgage. The current rules call for five per cent down and a 35-year mortgage.
Macdonald says the best scenario would be to have housing prices stagnate over the next five to 10 years while inflation slowly eats away at their value.
The goal should be to get prices back to the “comfort zone” where house prices are in line with inflation, he said, and where owners will neither gain nor lose a lot of money when they sell.
Read more: http://www.financialpost.com/news/Housing+prices+hottest+Canadian+markets+concern/3463776/story.html#ixzz0yBPfRm5D
Wednesday, September 1, 2010
Variable Rate Article
Variable rate may no longer win
Garry Marr, Financial Post • Tuesday, Jul. 27, 2010
Not that there are a lot of people buying houses these days, but the answer to the age-old question of whether to go long or short on your mortgage is unclear yet again.
The Bank of Canada’s second quarter-of-a-point rate increase in the past two months is likely not going to do much to boost a real estate market that saw sales drop almost 20% across the country in June from a year ago.
The popular variable-rate product tied to prime that helped people buy a lot more house with more debt is going up too. The prime rate at the major banks, which tracks the Bank of Canada’s rate, is now at 2.75%.
But a funny thing happened as the Bank of Canada was raising rates. With much of the credit crisis seemingly behind us, the discounts on short-term borrowing are increasing as the cost of funds for banks also fall. Instead of borrowing at 100 basis points above prime, it’s now 70 basis points off prime.
At 2.05%, a variable-rate product today may look as attractive as ever, but the five-year fixed-rate closed mortgage is falling fast. It can now be had for a shade under 4%, says Rob McLister, editor of Canadian Mortgage Trends.
“Bond yields have fallen out of bed and nobody expected that,” said Mr. McLister, adding the spread between the five-year Government of Canada bonds and five-year mortgages is still large enough that the banks may reduce long-term rates even more. However, at about 4%, the five-year closed fixed-rate mortgage isn’t far off its record low.
Bank of Montreal senior economist Sal Guatieri does agree that variable-rate products have worked out better than fixed-rate mortgages throughout history, but says the tide may be turning.
“Given that the central bank has already raised rates a couple of times now and will likely continue to raise rates, it probably is a correct assumption to make,” says Mr. Guatieri, noting variable usually works in a declining interest-rate environment. “The next five years might not quite follow the past. You could probably argue it’s wiser to lock in now. It’s a close call.”
Bank of Montreal is forecasting another 25 basis point move in September and says rates will climb another 1.5 percentage points by the end of 2011. If Mr. Guatieri and others are right, by 2012, the variable-rate products out today would clock in at just above 3.75%, if the discounting remains the same.
“If you are still in that variable-rate product then, you’d have to sweat out the next three years because there would still be possibly more increases,” says Mr. Guatieri, who adds his bank sees the overnight rate eventually going to 4% in the following three years. Based on the present gap between the Bank of Canada and prime, that would place the variable-rate product you get today at 6% by around 2015.
Fears of such a scenario are driving people into fixed-rate products again. That, plus new mortgage rules that make it easier to qualify for a mortgage if you go for a fixed-rate product with a term of five years or longer.
“The Bank of Canada is doing what it said — it’s going ahead with rate increases. If I was counselling someone, the prediction is rates are going up, so now is a good time to consider locking in for a term,” says Don Lawby, president of Century 21 Canada.
It makes sense, but with variable rate still at around 2%, it’s easy to see why people wouldn’t want to lock in. Even Mr. Guatieri says if you are secure in your financial situation and don’t need to fix your mortgage payments, “you might just want to let it ride.”
There just never seems to be a clear answer on whether to lock in or stay variable.
Read more: http://www.financialpost.com/personal-finance/Variable+rate+longer/3329442/story.html#ixzz0yBQrPwKB
Garry Marr, Financial Post • Tuesday, Jul. 27, 2010
Not that there are a lot of people buying houses these days, but the answer to the age-old question of whether to go long or short on your mortgage is unclear yet again.
The Bank of Canada’s second quarter-of-a-point rate increase in the past two months is likely not going to do much to boost a real estate market that saw sales drop almost 20% across the country in June from a year ago.
The popular variable-rate product tied to prime that helped people buy a lot more house with more debt is going up too. The prime rate at the major banks, which tracks the Bank of Canada’s rate, is now at 2.75%.
But a funny thing happened as the Bank of Canada was raising rates. With much of the credit crisis seemingly behind us, the discounts on short-term borrowing are increasing as the cost of funds for banks also fall. Instead of borrowing at 100 basis points above prime, it’s now 70 basis points off prime.
At 2.05%, a variable-rate product today may look as attractive as ever, but the five-year fixed-rate closed mortgage is falling fast. It can now be had for a shade under 4%, says Rob McLister, editor of Canadian Mortgage Trends.
“Bond yields have fallen out of bed and nobody expected that,” said Mr. McLister, adding the spread between the five-year Government of Canada bonds and five-year mortgages is still large enough that the banks may reduce long-term rates even more. However, at about 4%, the five-year closed fixed-rate mortgage isn’t far off its record low.
Bank of Montreal senior economist Sal Guatieri does agree that variable-rate products have worked out better than fixed-rate mortgages throughout history, but says the tide may be turning.
“Given that the central bank has already raised rates a couple of times now and will likely continue to raise rates, it probably is a correct assumption to make,” says Mr. Guatieri, noting variable usually works in a declining interest-rate environment. “The next five years might not quite follow the past. You could probably argue it’s wiser to lock in now. It’s a close call.”
Bank of Montreal is forecasting another 25 basis point move in September and says rates will climb another 1.5 percentage points by the end of 2011. If Mr. Guatieri and others are right, by 2012, the variable-rate products out today would clock in at just above 3.75%, if the discounting remains the same.
“If you are still in that variable-rate product then, you’d have to sweat out the next three years because there would still be possibly more increases,” says Mr. Guatieri, who adds his bank sees the overnight rate eventually going to 4% in the following three years. Based on the present gap between the Bank of Canada and prime, that would place the variable-rate product you get today at 6% by around 2015.
Fears of such a scenario are driving people into fixed-rate products again. That, plus new mortgage rules that make it easier to qualify for a mortgage if you go for a fixed-rate product with a term of five years or longer.
“The Bank of Canada is doing what it said — it’s going ahead with rate increases. If I was counselling someone, the prediction is rates are going up, so now is a good time to consider locking in for a term,” says Don Lawby, president of Century 21 Canada.
It makes sense, but with variable rate still at around 2%, it’s easy to see why people wouldn’t want to lock in. Even Mr. Guatieri says if you are secure in your financial situation and don’t need to fix your mortgage payments, “you might just want to let it ride.”
There just never seems to be a clear answer on whether to lock in or stay variable.
Read more: http://www.financialpost.com/personal-finance/Variable+rate+longer/3329442/story.html#ixzz0yBQrPwKB
Monday, August 16, 2010
Home sales plummeted 30 per cent in July
Home sales plummeted 30 per cent in July
Housing sales dropped by 30 per cent nationwide last month, largely due to a new tax in British Columbia and Ontario experts say deterred home buyers in two of the country's hottest housing markets.
The Canadian Real Estate Association on Monday reported a 6.8 per cent drop in home sales through its MLS service, compared with June numbers. The decline is part of a gradual dampening of Canada's once-booming real estate market.
B.C. and Ontario account for roughly 85 per cent of the slump, as the implementation of the harmonized sales tax this summer pushed many home buyers to purchase earlier this year, the association said in a statement.
The two provinces typically represent more than half of the country's sales.
"We're not seeing a huge slide," BNN's Andrew Bell told CTV News Channel on Monday.
"Things were pretty frenetic last year… We're actually still up year-on-year on sales, prices are holding -- so we're not seeing a dive in the housing market by any means."
So far, this year's sales are up 5.6 per cent from the first seven months of 2009. But experts predict that lead to fade in the next few months, since sales grew dramatically in the second half of last year.
Activity peaked last December as home buyers who had held off during the recession let loose on the market and took advantage of low interest rates.
That momentum lasted through the first half of this year, fuelled by fear of the HST, interest rate hikes and changes to mortgage rules.
Still, sales fell in six of the last seven months, dropping 25 per cent in the past three months alone, said Douglas Porter, deputy chief economist at the Bank of Montreal. That signals a shift towards a buyer's market, he added.
British Columbia showed the largest decline at 14.1 per cent, with Ontario in second place with an eight-per-cent decrease. Activity in the Prairies and Quebec was level with June numbers.
"We (and many others) were consistently warning of a significant second-half slowdown in housing activity but, if anything, the cooling looks even a bit chillier than expected," Porter wrote in a report Monday.
With files from The Canadian Press
Housing sales dropped by 30 per cent nationwide last month, largely due to a new tax in British Columbia and Ontario experts say deterred home buyers in two of the country's hottest housing markets.
The Canadian Real Estate Association on Monday reported a 6.8 per cent drop in home sales through its MLS service, compared with June numbers. The decline is part of a gradual dampening of Canada's once-booming real estate market.
B.C. and Ontario account for roughly 85 per cent of the slump, as the implementation of the harmonized sales tax this summer pushed many home buyers to purchase earlier this year, the association said in a statement.
The two provinces typically represent more than half of the country's sales.
"We're not seeing a huge slide," BNN's Andrew Bell told CTV News Channel on Monday.
"Things were pretty frenetic last year… We're actually still up year-on-year on sales, prices are holding -- so we're not seeing a dive in the housing market by any means."
So far, this year's sales are up 5.6 per cent from the first seven months of 2009. But experts predict that lead to fade in the next few months, since sales grew dramatically in the second half of last year.
Activity peaked last December as home buyers who had held off during the recession let loose on the market and took advantage of low interest rates.
That momentum lasted through the first half of this year, fuelled by fear of the HST, interest rate hikes and changes to mortgage rules.
Still, sales fell in six of the last seven months, dropping 25 per cent in the past three months alone, said Douglas Porter, deputy chief economist at the Bank of Montreal. That signals a shift towards a buyer's market, he added.
British Columbia showed the largest decline at 14.1 per cent, with Ontario in second place with an eight-per-cent decrease. Activity in the Prairies and Quebec was level with June numbers.
"We (and many others) were consistently warning of a significant second-half slowdown in housing activity but, if anything, the cooling looks even a bit chillier than expected," Porter wrote in a report Monday.
With files from The Canadian Press
Monday, July 19, 2010
Interest rates expected to edge up
Interest rates expected to edge up
19/07/2010 2:23:11 PM
CBC News
The Bank of Canada, weighing strong domestic growth against weakness internationally, will likely raise its key lending rate by another quarter of a percentage point Tuesday morning, economists say.
That would bring the central bank's overnight lending rate to 0.75 per cent.
Increases in the overnight lending rate generally lead directly to increases in lines of credit rates, variable-rate mortgages and other demand loans.
All 12 primary securities dealers expect the central bank to announce a quarter percentage point hike. A survey of 20 economists by Bloomberg found similar unanimity.
If that rate hike does materialize, it would be the second straight hike by the bank, which had left its benchmark lending rate at a rock-bottom 0.25 per cent for more than a year to provide a shot in the arm to a struggling economy.
Canada's central bank was the first in the G7 group of industrialized economies to raise interest rates since the global financial crisis began unfolding.
Canada's economy faring better than most
Recent data has shown the Canadian economy continuing to shake off the effects of the recent slowdown.
The most recent employment report issued showed that Canada created 93,200 jobs in June, far above economists' forecasts. The Canadian economy has now recouped almost all of the jobs lost in the recession.
The unemployment rate fell to 7.9 per cent - its lowest level in more than a year.
Bank of Canada surveys released last week suggest that Canadian businesses remain optimistic as far as sales and hiring are concerned.
"With solid employment growth powering consumers, and business investment now surging, Canada's domestic economy still looks solid," noted Bank of Montreal economist Benjamin Reitzes.
The international economic recovery has been more uncertain. Recent U.S. and European economic data, for instance, has been tentative at best.
Analysts say that weakness should be enough to keep the Bank of Canada from aggressively raising rates.
TD Bank economist Grant Bishop agrees that the central bank will hike by a quarter point Tuesday, but thinks the bank will underscore "the economic uncertainties in its communiqué, leaving an open door to a pause on rate hikes if conditions warrant."
A survey of 20 economists by Reuters finds that most expect the central bank's key lending rate will be at 1.25 per cent the end of the year, meaning that a couple of additional small rate hikes may be in the offing after Tuesday's, along with a pause or two.
19/07/2010 2:23:11 PM
CBC News
The Bank of Canada, weighing strong domestic growth against weakness internationally, will likely raise its key lending rate by another quarter of a percentage point Tuesday morning, economists say.
That would bring the central bank's overnight lending rate to 0.75 per cent.
Increases in the overnight lending rate generally lead directly to increases in lines of credit rates, variable-rate mortgages and other demand loans.
All 12 primary securities dealers expect the central bank to announce a quarter percentage point hike. A survey of 20 economists by Bloomberg found similar unanimity.
If that rate hike does materialize, it would be the second straight hike by the bank, which had left its benchmark lending rate at a rock-bottom 0.25 per cent for more than a year to provide a shot in the arm to a struggling economy.
Canada's central bank was the first in the G7 group of industrialized economies to raise interest rates since the global financial crisis began unfolding.
Canada's economy faring better than most
Recent data has shown the Canadian economy continuing to shake off the effects of the recent slowdown.
The most recent employment report issued showed that Canada created 93,200 jobs in June, far above economists' forecasts. The Canadian economy has now recouped almost all of the jobs lost in the recession.
The unemployment rate fell to 7.9 per cent - its lowest level in more than a year.
Bank of Canada surveys released last week suggest that Canadian businesses remain optimistic as far as sales and hiring are concerned.
"With solid employment growth powering consumers, and business investment now surging, Canada's domestic economy still looks solid," noted Bank of Montreal economist Benjamin Reitzes.
The international economic recovery has been more uncertain. Recent U.S. and European economic data, for instance, has been tentative at best.
Analysts say that weakness should be enough to keep the Bank of Canada from aggressively raising rates.
TD Bank economist Grant Bishop agrees that the central bank will hike by a quarter point Tuesday, but thinks the bank will underscore "the economic uncertainties in its communiqué, leaving an open door to a pause on rate hikes if conditions warrant."
A survey of 20 economists by Reuters finds that most expect the central bank's key lending rate will be at 1.25 per cent the end of the year, meaning that a couple of additional small rate hikes may be in the offing after Tuesday's, along with a pause or two.
Tuesday, June 1, 2010
Dinner with a CEO June 10,2010
Location
Bella Notte Ristorante
3570 Brock Street North
Whitby, ON L1R 0G2
(905) 430-5744
Change Place
Who’s coming?
4 Young professionals
16 spots left — RSVP deadline: June 9, 2010 1:00 PM
CAD30.00 per person
refund policy
The Dinner with a CEO series aims to provide the opportunity for a small group of people to learn leadership insights from, and share fellowship with, leading current and former CEO's and Board Chairpersons in a small group setting.
For our first event of the year we have invited Todd Skinner
Todd Skinner is Founder and Partner of The Business Accelerator Group, a global consortium of business executives that specializes in helping businesses with their growth and transition strategies. In Durham Region Todd is better known as “The Growth Coach”.
Todd has a passion for helping businesses to succeed. Coming from an entrepreneurial background, he draws from almost two decades of personal experience in both entrepreneurial ventures and corporate executive positions. Todd has an extensive Global perspective living and working in the United States and England. He has also conducted business in over 45 countries; including turning around a failing business in England, starting a business in Russia, China and a joint-venture in India all before his 30th birthday.
He was member of the Board of Directors of the Whitby Chamber in 2008 and currently Host "Business Today" a Rogers TV show.
Price:
JCI Whitby members: FREE
Non-members: $30
Price includes dinner.
Bella Notte Ristorante
3570 Brock Street North
Whitby, ON L1R 0G2
(905) 430-5744
Change Place
Who’s coming?
4 Young professionals
16 spots left — RSVP deadline: June 9, 2010 1:00 PM
CAD30.00 per person
refund policy
The Dinner with a CEO series aims to provide the opportunity for a small group of people to learn leadership insights from, and share fellowship with, leading current and former CEO's and Board Chairpersons in a small group setting.
For our first event of the year we have invited Todd Skinner
Todd Skinner is Founder and Partner of The Business Accelerator Group, a global consortium of business executives that specializes in helping businesses with their growth and transition strategies. In Durham Region Todd is better known as “The Growth Coach”.
Todd has a passion for helping businesses to succeed. Coming from an entrepreneurial background, he draws from almost two decades of personal experience in both entrepreneurial ventures and corporate executive positions. Todd has an extensive Global perspective living and working in the United States and England. He has also conducted business in over 45 countries; including turning around a failing business in England, starting a business in Russia, China and a joint-venture in India all before his 30th birthday.
He was member of the Board of Directors of the Whitby Chamber in 2008 and currently Host "Business Today" a Rogers TV show.
Price:
JCI Whitby members: FREE
Non-members: $30
Price includes dinner.
Credit Score Secrets
Credit Score Secrets
by Gail Vaz-Oxlade, for Yahoo! Canada Finance
Thursday, May 27, 2010
Ever wonder how that magical number – The Credit Score – is computed?
Whether you’re obsessing over your FICO score or your Beacon score, you’re likely shopping for credit. The FICO score was developed by Fair Isaac & Co., which began credit scoring in the late 1950s. The point of the score is consolidate your credit profile into a single number. The Beacon score is a brand name used by Equifax, the largest credit-reporting agency in Canada. While Fair, Isaac & Co. and the credit bureaus do not reveal how these scores are computed, whether you get a loan or not is a numbers game: The more points you score on your credit app, the better you do.
There’s a reason you have to fill out so much information when you’re applying for credit. Everything counts. Your age, your address, and even your telephone number all have a role to play in whether or not you’ll get credit.
Young ‘uns and old folk are at a disadvantage since under 21 and over 65 likely means you aren’t working; no points for you. If you're married, you’ll get a point for being “stable.” And while you might think that being divorced would work against you (all that spousal and child support), most creditors don’t give a whit.
No dependents? Zero points. You’re probably still gallivanting like a teenager since you haven’t yet “settled down.” One to three dependents? Score one point. You’re a solid citizen. More than three dependents? Score zero. Have you no self control! And don’t you know you that with all those mouths to feed you could get in debt over your head?
Your home address counts too. Live in a trailer park or with your parents? Bad risk, score zero points. You could skip town with nary a look over your shoulder. Rent an apartment? Give yourself one point. Own a home with a big fat mortgage and you’ll score major points since someone has already done some checking and you qualified for a mortgage. Own your home free and clear? Even better. You’ve proven you can pay off a sizable debt and now you have a pile of equity that the card company would love to help you spend.
Previous Residence? Zero to five years (some applications only go to three years), score zero points since you move around too much. No land-line: zero points. How the Dickens are they gonna find you when you fall behind in payments. Since they can’t use your cell phone to actually locate you physically, it doesn’t count.
Less then one year at your present employer earns you no points. Again, it’s a stability and earning continuity thing. The longer you’re on the job, the more likely you are to be bored out of your mind but you’ll score more points. And, not to overstate the obvious, the more you make the better.
The more willing you are to make your lender rich, the higher your score will be. Since the FICO score was originally designed to measure customer profitability, if you pay off your balance in full every month, you’re going to score lower than the guy who only makes the minimum payment and pays huge amounts of interest.
Scores range from 300 to 900 and if you manage to hit 750 or above you’ll qualify for the best rates and terms. Score 620 or lower and you’ll pay premium interest if you even qualify; 620 is the absolute minimum credit score for insured mortgages.
Your credit score can change quickly. Payment history accounts for about 35% of your credit score and just one negative report can drop your pristine score into the doldrums. Since scores are updated monthly, your bad behaviour won’t go unpunished for long.
The type of credit you have counts for about 10% of your score. And your current level of indebtedness accounts for about 30% so going too close to your credit limit is another way to deflate your score. One rule of thumb is to keep your balances below the 65% mark. So if you have a limit of $1,000, you won’t ever carry a balance that’s more than $650.
Having too much credit available can also hurt your ability to borrow since the more credit you have, the more trouble you can get yourself into. If you’ve got a walletful of cards, canceling credit you’re not using can be a good thing – for both you and your credit score – over the long haul. Careful though. If the card you’re eliminating is one with a long, positive history, you’ll eliminate what could be a very good record of your repayment when you cancel the card. You’d be better off cutting up the card so you aren’t tempted to use it, while you establish a track record (six months or more) before you actually cancel the account.
Credit shopping can also cost you points. Since about 10% of your credit score relates to the number and frequency of new credit enquiries, applying willy nilly for new credit will end up costing you. However, it’s only when a lender checks your score that this registers on your score. Checking your own credit report/score is considered a “soft” inquiry and does not go against your score.
http://ca.finance.yahoo.com/personal-finance/article/yfinance/1623/credit-score-secrets
by Gail Vaz-Oxlade, for Yahoo! Canada Finance
Thursday, May 27, 2010
Ever wonder how that magical number – The Credit Score – is computed?
Whether you’re obsessing over your FICO score or your Beacon score, you’re likely shopping for credit. The FICO score was developed by Fair Isaac & Co., which began credit scoring in the late 1950s. The point of the score is consolidate your credit profile into a single number. The Beacon score is a brand name used by Equifax, the largest credit-reporting agency in Canada. While Fair, Isaac & Co. and the credit bureaus do not reveal how these scores are computed, whether you get a loan or not is a numbers game: The more points you score on your credit app, the better you do.
There’s a reason you have to fill out so much information when you’re applying for credit. Everything counts. Your age, your address, and even your telephone number all have a role to play in whether or not you’ll get credit.
Young ‘uns and old folk are at a disadvantage since under 21 and over 65 likely means you aren’t working; no points for you. If you're married, you’ll get a point for being “stable.” And while you might think that being divorced would work against you (all that spousal and child support), most creditors don’t give a whit.
No dependents? Zero points. You’re probably still gallivanting like a teenager since you haven’t yet “settled down.” One to three dependents? Score one point. You’re a solid citizen. More than three dependents? Score zero. Have you no self control! And don’t you know you that with all those mouths to feed you could get in debt over your head?
Your home address counts too. Live in a trailer park or with your parents? Bad risk, score zero points. You could skip town with nary a look over your shoulder. Rent an apartment? Give yourself one point. Own a home with a big fat mortgage and you’ll score major points since someone has already done some checking and you qualified for a mortgage. Own your home free and clear? Even better. You’ve proven you can pay off a sizable debt and now you have a pile of equity that the card company would love to help you spend.
Previous Residence? Zero to five years (some applications only go to three years), score zero points since you move around too much. No land-line: zero points. How the Dickens are they gonna find you when you fall behind in payments. Since they can’t use your cell phone to actually locate you physically, it doesn’t count.
Less then one year at your present employer earns you no points. Again, it’s a stability and earning continuity thing. The longer you’re on the job, the more likely you are to be bored out of your mind but you’ll score more points. And, not to overstate the obvious, the more you make the better.
The more willing you are to make your lender rich, the higher your score will be. Since the FICO score was originally designed to measure customer profitability, if you pay off your balance in full every month, you’re going to score lower than the guy who only makes the minimum payment and pays huge amounts of interest.
Scores range from 300 to 900 and if you manage to hit 750 or above you’ll qualify for the best rates and terms. Score 620 or lower and you’ll pay premium interest if you even qualify; 620 is the absolute minimum credit score for insured mortgages.
Your credit score can change quickly. Payment history accounts for about 35% of your credit score and just one negative report can drop your pristine score into the doldrums. Since scores are updated monthly, your bad behaviour won’t go unpunished for long.
The type of credit you have counts for about 10% of your score. And your current level of indebtedness accounts for about 30% so going too close to your credit limit is another way to deflate your score. One rule of thumb is to keep your balances below the 65% mark. So if you have a limit of $1,000, you won’t ever carry a balance that’s more than $650.
Having too much credit available can also hurt your ability to borrow since the more credit you have, the more trouble you can get yourself into. If you’ve got a walletful of cards, canceling credit you’re not using can be a good thing – for both you and your credit score – over the long haul. Careful though. If the card you’re eliminating is one with a long, positive history, you’ll eliminate what could be a very good record of your repayment when you cancel the card. You’d be better off cutting up the card so you aren’t tempted to use it, while you establish a track record (six months or more) before you actually cancel the account.
Credit shopping can also cost you points. Since about 10% of your credit score relates to the number and frequency of new credit enquiries, applying willy nilly for new credit will end up costing you. However, it’s only when a lender checks your score that this registers on your score. Checking your own credit report/score is considered a “soft” inquiry and does not go against your score.
http://ca.finance.yahoo.com/personal-finance/article/yfinance/1623/credit-score-secrets
Bank of Canada raises interest rate to 0.5 per cent
Bank of Canada raises interest rate to 0.5 per cent
01/06/2010 2:51:23 PM
CTV.ca News Staff
The days of record low interest rates in Canada appear to be coming to an end, as the Bank of Canada announced Tuesday its first interest rate increase in three years.
The central bank hiked its overnight lending rate from 0.25 per cent to 0.5 per cent, an increase that was quickly matched by major banks.
BNN's Michael Kane told CTV's Canada AM that GDP numbers released Monday were likely "the final nail in the coffin for record low interest rates."
Those figures showed the country's gross domestic product expanded by a whopping annual rate of 6.1 per cent in the first three months of this year -- the largest quarterly increase in more than a decade.
Indeed, the statement from the Bank of Canada suggested those results figured prominently in its decision.
"Activity in Canada is unfolding largely as expected. The economy grew by a robust 6.1 per cent in the first quarter, led by housing and consumer spending. Employment growth has resumed," the statement read.
"...In this context, the Bank has decided to raise the target for the overnight rate to 1/2 per cent and to re-establish the normal functioning of the overnight market."
The bank's optimism was tempered by worries about "spillover" from the European debt crisis -- which, it noted, has so far been limited -- and said there remains "considerable uncertainty" about an "increasingly uneven" global recovery.
The Bank of Canada's rate hike is the first among the Group of Seven wealthy nations since the global recession began two years ago.
Prime lending rates, which banks extend to their best customers, quickly followed the Bank of Canada increase.
The TD Bank was the first to announce a quarter-point hike in its prime lending rate to 2.5 per cent, effective Wednesday. The Royal has followed suit and all the other major banks are expected to announce the same increase to their primes, which influence variable rate mortgages and lines of credit.
Short-term, variable mortgage rates will also likely rise, but longer-term fixed mortgage rates -- which are more influenced by the bond market -- are expected to remain unchanged for now.
The rate hikes may not stop here. Many expect further tightening, with some predicting the overnight lending rate could rise as high as 1.5 per cent by the end of the year. The central bank tried to keep such expectations in check in its statement.
"Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments," it said.
01/06/2010 2:51:23 PM
CTV.ca News Staff
The days of record low interest rates in Canada appear to be coming to an end, as the Bank of Canada announced Tuesday its first interest rate increase in three years.
The central bank hiked its overnight lending rate from 0.25 per cent to 0.5 per cent, an increase that was quickly matched by major banks.
BNN's Michael Kane told CTV's Canada AM that GDP numbers released Monday were likely "the final nail in the coffin for record low interest rates."
Those figures showed the country's gross domestic product expanded by a whopping annual rate of 6.1 per cent in the first three months of this year -- the largest quarterly increase in more than a decade.
Indeed, the statement from the Bank of Canada suggested those results figured prominently in its decision.
"Activity in Canada is unfolding largely as expected. The economy grew by a robust 6.1 per cent in the first quarter, led by housing and consumer spending. Employment growth has resumed," the statement read.
"...In this context, the Bank has decided to raise the target for the overnight rate to 1/2 per cent and to re-establish the normal functioning of the overnight market."
The bank's optimism was tempered by worries about "spillover" from the European debt crisis -- which, it noted, has so far been limited -- and said there remains "considerable uncertainty" about an "increasingly uneven" global recovery.
The Bank of Canada's rate hike is the first among the Group of Seven wealthy nations since the global recession began two years ago.
Prime lending rates, which banks extend to their best customers, quickly followed the Bank of Canada increase.
The TD Bank was the first to announce a quarter-point hike in its prime lending rate to 2.5 per cent, effective Wednesday. The Royal has followed suit and all the other major banks are expected to announce the same increase to their primes, which influence variable rate mortgages and lines of credit.
Short-term, variable mortgage rates will also likely rise, but longer-term fixed mortgage rates -- which are more influenced by the bond market -- are expected to remain unchanged for now.
The rate hikes may not stop here. Many expect further tightening, with some predicting the overnight lending rate could rise as high as 1.5 per cent by the end of the year. The central bank tried to keep such expectations in check in its statement.
"Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments," it said.
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