It is critical that you find the right person as your Mortgage Specialist. Our job is to assist you in finding the best source for mortgage and refinancing options.

The video below gives a brief description of some of the key factors to consider in choosing a mortgage specialist.

I am a member of the  AMBA  and CAAMP and in good standing.  I have served the Edmonton area for over 8 years helping new home buyers, people wanting to refinance their mortgage, families ready for a larger space and boomers ready to downsize.

Knowing your mortgage specialist is backed by an organization that requires stringent rules and governance means you can rely on your mortgage specialist to act with integrity and discretion, and provide the best service possible for you.

Typically, when interest rates are low (er) it is the time to consider doing a refinance of your mortgage in order to take advantage of the equity in another area of your financial life.

You can benefit from a refinancing your mortgage in a variety of ways:

1. Children’s college education – if you are facing college tuition fees and the cost is prohibitive on your monthly cash flow.
2. Home Renovations – If you intend to spend 15-20K+ on home renovations rather than moving and financing a new mortgage, a refinance may solve your problems. (If your home renovations are small, it may be better for you to consider a short term loan or a line of credit)
3. Investment Property – with low interest rates now may be the time to add a rental home or commercial property to your family estate.  If so, you may need to free up some needed investment cash.
4. Two Mortgages?  Perhaps you owe family or friends for one loan on your home and the bank for another.  Things get complicated when love ones need/want their money back.  You can opt for re-financing based on the equity you have built.
5. Debt out of Control – If you need to consolidate your debts into a payment that makes sense, your home equity could help.  There are laws that regulate how much you can refinance, and we encourage some debt counseling as a complimentary strategy to debt control.

I am happy to help you work through your options.  Give me a call if I can help.

 Edmonton Mortgage Specialist Bettyanne Neufeld encourages first-time single women home buyers to take advantage of the lower interest rates and slightly lower prices in Edmonton housing market – with one serious caveat.

Twenty percent of housing purchases in Canada (including Edmonton)over the past year were made from single women between the ages of 18-34.  That is good news.  Women should be able to buy homes. The concern is about the depth of debt.  With our still current lower interest rates, it is quite possible to get in over your head.  The amount of mortgage you are able to cover right now, may be exceedingly difficult with the possible rise in interest rates.

Women should take care to find a home you love, on a budget less than you can afford.

The real estate market in Canada is still showing growth as “value conscious” buyers are looking for family homes, condos and urban homes that take advantage of the convenience of easy walking  for daily errands

If you are buying a home in Edmonton, the prices here have dropped a bit as have Vancouver’s.  It is a buyers market. Toronto is facing a demand for single family homes and prices are rising. In fact, if you have two million to spend, Toronto has the market for you there – with an increase of higher end homes being sold.

If you have questions on your best mortgage advice, feel free to contact me for assistance at no charge.

I have offered some links above to present news on this topic.  Additionally you may want to check out:

Related articles

• Be very afraid of the Canadian housing bubble (cbc.ca)
• National home sales rise in March (creanews.ca)
• Europe’s Financial Uncertainty for Edmonton Home Buyer (bettyanneneufeld.ca)

Some of my clients are determined to get out of their mortgage as quickly as possible.
For them, the lure of travel and fancy cars pales in comparison to being out of debt and
owning their home outright.  They are making mortgage prepayments consistently on their homes.

They have chosen to make extra payments monthly (some even weekly) that will go
directly to the principle of the mortgage. Typically lenders allow a certain percentage to
be paid as a “ mortgage prepayment,” and savvy homeowners can choose if and when to make the
payments.

Since the mortgage prepayment goes directly to the principle, over 5 years, it can make a
significant impact on the amount owning on your home and increase your equity should
you decide to sell or buy another home.

Related articles

• 5% Down Program (bettyanneneufeld.ca)

Mortgage rates historical trends (Photo credit: Wikipedia)

Are you aware that lenders are fighting hard to loan you money? Welcome to the world of Mortgage Rate Wars.

In Canada, to avoid more economic turmoil, the mortgage rates have remained quite low (artificially low) for the past few years, with the lowest point in 2009 at 2.25%.  Our present 3.00%, despite predictions to the contrary, has remained solid since September 2010.

While most of us may enjoy the mortgage rate wars as we saw rates continue or even drop, the manipulated rates can, in the long-term cause home buyers more harm than good.

As a mortgage broker, I am certainly not opposed to you buying a home! (smile)
Still, it behooves us all in as we reflect on the US market, and recently the situation in Greece, to insure that our debt ratios make sense for the long term.

One would think that we would learn from watching the world, the false lure of debt.  But in true fact, Canadians are increasing their debt while enjoying the benefit the low interest rates afford.

In summary, there is no reason you should not enjoy a new home and create the nest

most everyone wants, but do keep in mind the signs of the times for predictable increases in mortgage rates,  and the balance of debt vs. possessions.  I suggest there is a pretty high interest (rate) on peace of mind.

Related articles

• Canadian Economy and Your New Mortgage (bettyanneneufeld.ca)
• What if your mortgage rate went up 2 points? (business.financialpost.com)

Difference Between the Variable Mortgage Rate and Fixed Rate

Although in some markets there is a distinct benefit in the choice, for the most part I encourage my clients to consider their need for stability.  Variable mortgage rates can work in your favor over the longer term, if you have a tolerance for fluctuation in the market.  These rates change with the lending rates.  Normally you can get in at a lower rate, and if you can ride the potential changes in your monthly payments, you can usually do better long term.  Of course, there are no guarantees and I wouldn’t want to be misunderstood as an expert in finance.  In general, this is the case.

A fixed mortgage rate is much more popular.  People tend to feel safe knowing their mortgage costs will always be the consistent, even if it means they pay a bit more for that insurance.  If you are on a fixed budget, or find constant change stressful, this may be the better choice for you.

If you are a first time home buyer, you qualify for a benefit many first time home buyers don’t know about from the government.  This tax credit was created to help you recover some of the expenses you have in buying your home – like land transfer taxes, closing costs and even those legal expenses or necessary home repairs.

It’s not always a slam-dunk, you do have to have purchased a “qualified home,” the total amount cannot exceed $750.00 and you must claim it within 12 months of your purchase.

Qualifications center around Canadian tax payers, buying Canadian homes, where your name is on the title.  Learn more about qualified buyers.

You won’t get paid until after you have already put the money out, as it is a rebate.  But, hey, the costs of buying your first home normally put a bit of a strain on the budget and if you can save some, why not?

Here is a simple, short video to help you understand the Tax Credit – part of Canada’s Economic Action Plan.

The Bank of Canada’s Mr Carney suggests that the authorities in Europe will find a solution.

How that solution unfolds and the timeliness as it relates to world economy remain a mystery.   2012 forecasts for the Canadian economy are expected to “to be more modest than previously envisaged” mostly due to world economy and situations beyond our control.

Present predictors are indicating a more “normal” economic forecast by the third quarter of 2013, but there’s a long way road between now and then, and homebuyers need to be advised and be smart.

The American mortgage crises offers us a valuable lesson to learn and apply today and in the future.  Buy a home within your means and learn to love it – rather than buy outside your means and fail to pay it!

There are several options for you – home equity loans used reasonably can help you update your existing home.  If you prefer to buy a new home, buy wisely.

Let me help you secure solid financing at rates you can afford.  Call Bettyanne Neufeld at (780) 980-2946

According to some experts, Alberta is once again facing the opportunity for strategic and maybe even “boom” rated growth as long as there is interest in the export of Alberta’s oil sands and it’s energy potential.  With a boom in economic growth comes the need for labor, homes and retailers to sustain the growth. If you are looking to sell your home, or are in construction of new homes, you may be in luck!

Not new to the Alberta landscape, booms come and go, often leaving families and employers alike in trouble.  A recent article in the Vancouver Sun discusses the short term future.

According to writer Tamara Gignac, the almost 4% growth rate predicted for the Alberta economy will outpace every province in 2012 except Saskatchewan.

Read more here.

Edmonton Alberta’s housing market is effected by the new families that move to the province and how they live together.  The past decade has shown clear signs of change, as families feel the pinch the children stay at home longer.  While perhaps diminishing the need somewhat for first time home buyer housing, the alternate thought is the financial savings and down payments that can be accumulated through planning, saving and wise spending habits.

The following article is copied for your convenience with permission by the author.  More detailed information on the original copy and location online can be found at the end of the article.

What makes for affordable housing rates?

Interest rates, wages and prices are all factors affecting housing affordability, which in turn influence housing demand by Alberta families. Of interest here is the influence of new households on the markets, as it is new entrants in the buyer market that keep construction going and demand strong.

In Alberta, it’s traditionally thought that inter-provincial migration has been the dominant source of new people. What shouldn’t be overlooked, however, is the impact that the boom had on how the average Albertan decided to cohabitate, especially among the younger generation.

There tends to be established trends, based on age, in how individuals in any community live together. Children live with parents before gaining independence and starting a household of their own. The path varies from person to person, but it is nonetheless a fairly consistent one.

While the path towards independence tends to be stable, shocks do sometimes occur. In the United States, for instance, massive unemployment has caused many formerly independent households to cohabitate with family or friends. In contrast, the boom years in Alberta probably encouraged more rapid formation of households among young adults.

Over the past decade, construction activity in Alberta was very strong and – even with stellar economic and population growth – was more than sufficient to accommodate the growing population. These extra homes were absorbed thanks to a jump in the household formation rate (HFR), with younger individuals being able to live independently sooner than in the past.

A major trend which will influence housing demand going forward will be the aging of the population, with relatively fewer young Albertans entering the housing market than during the boom. Offsetting this will be net in-migration, with international migrants becoming increasingly important.

Alberta’s construction boom

Combining household formation rates and demographic changes over the past decade, we see just how well the housing stock has managed to keep pace with demand. Over the decade there were roughly 344,000 net housing additions to accommodate an estimated increase of 316,000 new households.

However, it should be pointed out that using 2001 as the start year is rather arbitrary (but you have to start somewhere). For instance, construction activity during the latter part of the 1990s was particularly weak. As a result, some of the activity in the following decade was a result of some pent-up demand. Building tends to go in cycles, similar to the rest of the economy.

We used the HFR to help estimate what the trend demand for housing will likely be as the population changes. These trends may not be constant, however. When divorce became more prevalent, for example, the HFR rose, reflecting more households for a given population. Even more important than societal shifts are economic conditions, in particular, patterns that would be considered unusual when one thinks of the normal business cycle (e.g. Alberta in the mid-2000s).

Housing demand (as suggested by the HFR) indicates that, despite the record high levels of net migration, there were more than enough homes built between 2001 and 2006. Even so, by 2006, a once-in-a-generation boom in housing prices began when demand outpaced supply. The only explanation, consistent with such a strong level of construction, is a sudden jump in the HFR.

There were a number of economic factors that pushed the HFR higher by 2006, chief among them the extremely strong job market. This was especially true for younger workers, where the impact on the housing market was felt most acutely. Not only were there more jobs, but by 2005 there was a sudden jump in average weekly wage rates.

Another factor lifting demand was a series of changes in mortgage financing rules. The Government of Canada introduced 40 year mortgages with zero down payment requirements in 2006. This was a significant shift in the traditional mortgage market, which previously had only 25 year amortizations, and Canadians snapped them up (although they were available only to individuals with sufficiently high credit scores, i.e. these weren’t sub-prime loans). Ultimately, the change allowed households to leverage-up and buy more costly homes relative to their income than ever before.

For cultural and economic reasons, we don’t expect trend household formation to change significantly over longer periods of time. Today’s graduates don’t expect the same kind of bidding frenzy that occurred among their predecessors during the boom, and mortgage financing rules have been returning to more traditional levels.

To summarize, the pace of home construction over the decade of the 2000s was enough to accommodate a fast growing population – but it was still overwhelmed by the increase in the HFR that the economic boom and new mortgage market rules brought. If the HFR had not changed, the jump in construction would have meant an oversupply of anywhere between six months to a year in construction activity, and prices would not have spiked.

Future housing demand trends

The foregoing discussion highlights how the highly cyclical nature of Alberta’s energy based economy makes it very difficult to forecast housing trends. One trend that is rather easy to predict, however, is the aging of the population. While Alberta isn’t aging as quickly as the rest of the country, the birth rate is significantly below what it was in previous generations and this will no doubt influence housing demand going forward.

If we purposefully exclude any migration and forecast housing demand based solely on Alberta’s aging demographics, housing demand will drop off dramatically.

In 2012, native Albertans will have added 19,000 households, but by 2015 they will add only 16,000; by 2020, it falls to only 12,000. For the most part, this is due to a steady decline in the percentage of the native population aged 25-34 (the prime age at which most new households are formed).

Fortunately, robust economic activity in Alberta means it is a magnet for new migrants. In the past, inter-provincial migration was the dominant source of population growth, but increasingly international migrants are choosing Alberta. In fact, the number of international migrants actually jumped considerably exactly when inter-provincial migration started to wane, going from 16,500 in 2008 to 21,400 in 2009.

Toronto, Vancouver and Montreal attract the majority of new international immigrants. There are several reasons for this, including these cities’ large, diverse economies and already established ex-pat communities. As Calgary and Edmonton continue to grow, some of this momentum may shift in their favour. Inter-provincial migration, by contrast, is very volatile due to shifting relative economic opportunities and costs of living.

How much total migration will be required to offset upcoming lower housing demand stemming from an aging population? Net migration of around 45,000 individuals would keep total household formations at roughly 30,000 annually for the foreseeable future. This is higher than the previous 10-year average, but not impossible. The reason household formations stabilize at this level in the forecast is, with migration of this magnitude, the percentage of the population aged 25-34 also stabilizes.

Conclusion

In a boom/bust economy like Alberta’s, there can be great volatility from year-to-year, which makes it difficult for the construction industry to match supply with demand. Yet, common and predictable patterns remain – the most obvious being that children born will eventually move on to start families of their own. This is the natural rate of household formation.

While the household formation rate is influenced by economic conditions and housing affordability, causing either occasional surges in demand or weak periods, it tends to even out in the long run. This is why given assumptions on birth, death and migration rates, a rough estimate of the natural rate of housing demand can be made.

Clearly the trend towards smaller families, which started decades ago, will have an impact on the housing market. This isn’t to say it will cause a glut in housing or a precipitous drop in prices, as it’s hard to say how the market will adjust. The most plausible scenario would simply see new housing activity slowdown, which would have its own implications for the local economy.

One cannot escape the fact that even in Alberta the population is slowly aging; going forward, the province will come to rely increasingly on migration as a source of population growth and new housing demand. These migrants might certainly be coming given buoyant projections for Alberta’s energy sector, but we shouldn’t hold our breath expecting the real estate market to take off like it did in 2006 unless we see in-migration begin to rise precipitously.

Be Advised:  This article was printed with permission from Troy Media and appropriate comments from this author are included in red.

Will Van’t Veld is an economist with ATB Financial.