Christine Buemann Mortgage Broker

Over the past few months, major economists have back peddled on their rate hike predictions. Not long ago, the consensus of economists was projecting a July 19 increase. Now, those same analysts aren't looking for a rate bump until this fall...or later. A slew of factors justify a deferral of rate increases, including: • A parade of weak economic data from the U.S.—our key trading partner • Core inflation that remains manageable • Global economic risks • Debt-laden consumers that are only cautiously spending • A U.S. housing market that's double-dipping • U.S. unemployment that may be structurally and permanently elevated • A Canadian dollar that is still acting as a brake on our economy. For reasons like these, TD Bank became the first major bank last week to predict the Bank of Canada would stand pat on rates through 2011. Depending on how the next rounds of economic data look, other banks may follow suit. Then again, the rate picture can and does change. BMO says: "...i

Bank of Canada Governor Mark Carney sounded more alarm bells last week. It was a warning about the perfect storm of rapidly rising home prices and the future vulnerabilities of homeowners when interest rates start rising. Fittingly, Carney was speaking in Vancouver, where home prices are up a whopping 25.7% year-over-year—if you include the sales of high-end homes. Carney noted that the average house price nationally is at four-and-a-half times the average household disposable income. This compares to an average ratio of three-and-a-half times during the past quarter century, he said. Here's a Chart. (Mortgage affordability, however, is still just slightly above normal, based on long-term averages, but that is based on current interest rates.) While he didn’t come out and call Canada’s housing market a “bubble,” he certainly warned about the current level of “financial vulnerabilities.” “...the ratio between the all-in monthly costs of owning a home and renting a home, as measured

CANADA’S JOBLESS RATE FALLS TO LOWEST LEVEL IN TWO YEARS By Julian Beltrame, The Canadian Press OTTAWA - Canada's unemployment rate fell to its lowest in more than two years as a combination of more self-employed workers and fewer job seekers in May pushed the key economic marker down to 7.4 per cent. Statistics Canada said 22,300 new jobs were created last month, slightly above consensus estimates following April's strong 58,000 jobs gain. The last time Canada's unemployment rate was as low as 7.4 per cent was in January 2009, a few months after the economy had plunged into recession. The finer details of the May report were less impressive, however. "Small business is of vital importance to the Canadian economy, but job creation within this category in a soft spot for the economy (and) is always a knock against the quality of the headline gain," Derek Holt, vice-president of economics for Scotiabank, said in a note to clients. The number of employees in Canada a

The Bank of Canada lowered their Qualifying Rate by another .10% to 5.49%, effective today. The qualifying rate is generally used by lenders on most high ratio* deals to qualify: • A mortgage with any term length of under 5 years • Variable rate mortgages • Home Equity Lines of Credit • 50/50 mortgages The reason why the Qualifying Rate was implemented is because interest rates have been hovering around at a historic low. Using the increased rate ensures that purchasers have room within their monthly budget to withstand an increase in mortgage payments. Essentially, the Bank of Canada wants Canadians to only be entering into mortgages that are sustainable over the long run for their income. Every lender has their own set of guidelines for conventional deals (more than 20% down payment). *a high ratio deal is one that has less than 20% for down payment

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