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Issue No. 10                     "Representing Your Best Interest!!"July 13, 2010
 Bank of Canada To Raises Rates Again! 

It is expected the Bank of Canada will raise it's prime lending rate by .25% again next Tuesday buoyed by increased job creation numbers and an overall sense that businesses are moving forward.


 While expected, the news does not come at a good time for a slow housing market out west. The good news is that the posted qualifying rate has been reduced to 5.79% for all products other than a 5 year mortgage. This is down from a high of 6.25%, so should increase the availability of the Variable to some buyers. The spread between the Fixed and Variable Terms is narrowing as we all presumed, and the government's wish that buyers lock in for 5 years instead of hedging on a Variable rate mortgage is beginning to come to fruition. With the qualifying rates still relatively high for Variable products, the Fixed rates dropping slightly again, the Variable product risk is beginning to not look so prudent. Over the next 5 years the Bank of Canada rate is going nowhere but up, and the government wants to make sure we do not have a bunch of home owners hurting with payments increasing substantially because they are in a variable rate mortgage.


Stay tuned for rate updates as they occur!
Managing Broker
Rod Minnes

Rates as of July 13, 2010
Fixed Rate Mortgages  
6 month convertible           4.95%
1 year open                          6.50%
1 year closed                       2.54%
2 year closed                       3.50%
3 year closed                       3.75%
4 year closed                       4.19%
5 year closed                       4.09% 

Variable Rate Mortgages    
5 year closed - Prime* - .65%  ****
5 year open   - Prime* + .80%

Home Equity Line Of Credit

Please call for product availability and rates.

Information from sources deemed to be reliable. Product availability and borrower qualification apply.
*Prime = 2.50%
Rod Minnes
Global West Mortgage

Upbeat survey may pave way for interest rate hike


By Julian Beltrame

OTTAWA - Canadian firms are giving the recovery a vote of confidence in a key quarterly survey, paving the way for the Bank of Canada's expected interest rate hike next week.

The central bank's quarterly survey, released Monday, showed firms were concerned about the fallout from the European sovereign debt mess, but still generally upbeat about the coming year.

"Overall, (business executives) are positive about the outlook for business activity over the next 12 months," the bank wrote.

"For the first time in two years, firms, on balance, reported an improvement in their past sales activity."

The bank's governing council next interest rate announcement is next Tuesday.

Following a strong jobs report last week, the survey likely represents the last piece of evidence governor Mark Carney was looking for to confirm a predisposition to continue raising rates.

"I'd say there's a 75 or 80 per cent probability they will hike next week by 25 basis points," said Derek Holt, vice-president of economics with Scotia Capital.

"I think they'd want to avoid the perception that they just came out with a whole new round of bullish forecasts and then got wobbly knees after just one quarter-point hike (in June)."

What could stay Carney's hand, economists say is the unknown factor of what will happen to the global economy as governments move from spending to restraint later this year and next.

Canada's domestic economy appears well grounded. Statistics Canada reported on Friday that an additional 93,000 jobs were added in June, bringing total re-hiring since the recession's end to over 400,000.

And the business outlook survey showed that 50 per cent of firms surveyed said they planned to add workers over the next 12 months, as opposed to only 10 per cent that planned to cut their workforce.

TD Bank economist Diana Petramala viewed that finding as the strongest in the report, although she said it might indicate some hiring that's already taken place.

While an increase in the bank's policy rate to 0.75 per cent will raise short-term interest rates for consumers, most economists say it is unlikely to have much of an impact on longer-term, fixed mortgage rates. Many see a hike at this time as not applying the brakes to growth, since the rate would remain near the historic low, but as a judgment by the bank that the recovery is taking hold.

Not all agree, however. A bearish minority argue that Canada still faces considerable headwinds from the European situation and ongoing U.S. weakness, and that Carney should refrain from adding a further impediment to growth.

But failing a climb down from its forecast of 3.7 per cent growth this year, and 3.1 per cent next year, the bank appears on track to take interest rates a little higher next week, analysts say.

"With price pressures expected to rise in the production line, excess economic slack continuing to melt away, and credit and lending conditions continuing to ease, the survey results weigh on the tightening side," noted economist Michael Gregory of BMO Capital Markets.

The summer poll, and a separate survey of loan officers also released Monday, found sentiments positive, if not deliriously so, across a range of topics.

The bank said credit conditions appear to be easing, especially for larger corporations, a critical prerequisite for expansion.

The balance of opinion was also positive on questions of sales volume prospects for the coming year, and future investment intentions.

Not all doubts have vanished, however.

Business executives expressed concerns about "recent global economic and financial uncertainties and possible spillover effects in Canada."

And although on the plus side of the ledger, expectations on future sales and investment intentions were softer than three months ago. That's partly because of the way the Bank of Canada couches its questions, contrasting expectations to what they were in the earlier survey.

The bank noted the responses suggest that firms that have already experienced strong sales growth from recession lows now believe that the growth rate will slow to more sustainable levels, but remain positive.

And many firms that do not expect to increase spending on new machinery have already made those investments, particularly firms in the services sector.

On other elements of business activity, executives said they expect the cost of their inputs to increase at a greater rate during the next 12 months, and plan to pass on these cost increases to their customers.

But the inflationary expectations over the next two years were modest, within the central bank's one-to-three per cent range.

Rod's Musings
Doing a Mortgage      Check-up
While many Canadians visit the doctor every year for a physical checkup, very few review their Mortgage annually as well. Plenty can change in a year in today's fast pace lifestyle, and as such mortgage holders should review the current interest rate market and new product availability that may better suit their current needs. A career change, kids, retirement or newfound money, or a major event is on the horizon, they all can affect the type of mortgage that fits just right.
Managing your financial lifestyle is just as important as managing your exercise and diet. Many people just wait 5 years and for the renewal note from the bank before acting on their mortgage, missing out on rate holds that could be in place many months prior to the actual maturity of the mortgage!  Even more mortgage holders do not rate shop or challenge what was sent to them by the banks, in terms of rates, and many are overpaying.
Refinancing and renewals at maturity are the only time as owners of a mortgage you have the ability to shop around and improve your financial situation by decreasing the cost of your mortgage.
 Even though banks are in the business of getting as much interest from you as they can, many will allow people to pay a lump sum of the principal on the mortgage's anniversary and increase their monthly payments. An extra $100 a month on a standard $200,000 mortgage could save almost $18,000 in interest and shorten the amortization period by about four years, so as your financial mortgage advisor, we can set up a mortgage to minimize the amount of interest you will pay to the banks.

Even something simple such as making renovations could affect the type of mortgage desired. For example, topping up or refinancing an existing mortgage can pay for renovations, providing you're comfortable with a blended interest rate. If you're buying a new home, you may be able to port your current mortgage. Or maybe you just want to consolidate higher-interest unsecured debt into your mortgage. Rolling that debt into your mortgage can significantly save on interest costs and that will help you get out of debt sooner.

A mortgage can also help you become more tax efficient if you're thinking of investing in a business, buying a rental property or putting some money into mutual funds or the stock market. That's because the interest paid on money borrowed on a principal property can be written off against revenue from those investments.

But the biggest reason for making changes to your mortgage mid-stream may be because it could be a lot easier to do something before your situation changes. "Making changes to your mortgage before you go into a new venture, ie: going Self Employed ; or before you retire would allow you to qualify much easier rather than waiting for your mortgage to come up for renewal!

At Global West Mortgage, we look forward to working with people and helping them determine the right financial path for their mortgage and property investments.
At a time when the cost of living and taxes are rising, we need to look for  ways to save money, and our mission statement shows you why we will look after all of our clients needs.

A customer is the most important visitor to our business.                     
They are not dependent on us. We are dependent on them. 

They are  not an interruption in our work. 
They are the purpose of it. 
They are not an outsider in our business. 
They are part of it.
We are not doing them a favor by serving them. 
They are doing us a favor by giving us an opportunity to do so