Hamilton Mortgage Source

Hamilton and Burlington Ontario MLS Housing Report for October 2010

 According to the MLS, Hamilton-Burlington saw a decrease of 12 % in sales growth over October when compared to October 2009. This said, and on a mortgage positive note, housing sales volume actually did increase by 3.6% compared to the same period last year (so only the growth of the sales has decreased, but Hamilton is still experiencing growth none the less). This continued strength in the area is owed to in part for continued low mortgage rates and reasonable housing affordability in the area compared to Toronto.  The Hamilton Burlington Real Estate Board highlighted that there is a currently solid property inventory and that the average price of freehold residential properties sold in the month of October witnessed an increase of 2 percentage points compared to October last year. More specifically, the condominium market recorded an increase of 9.7 % in value over last year and that the total number of homes put up for sale in Hamilton and the area saw an upward move of 19.8 percent. The continuation of low mortgage rates in Hamilton helped first time buyers get into homes, and also assisted in the affordability for those who upgraded their home.    

For great mortgage ratses, and excellent mortgage service, check out my web site at www.brentrichardson.ca or contact me today for questions! - brent@brentrichardson.ca

CMHC Spring 2010 Hamilton Mortgage and Housing Report

The Spring 2010 report indicates that total MLS housing sales are to reach 13,600 units in the Hamilton and area market. However, this momentum should decrease towards the later part of 2010 and into 2011 with the introduction of HST on new home sales and a possible increase in Hamilton mortgage rates. Housing starts should total 3000 units in Hamilton in 2010 and just over 400 in Brantford. More specifically, about half of the sales in 2010 will occur in the Mountain and Burlington areas of Hamilton, and that extensive research demonstrates that both of these areas are highly attractive destinations for families and those working in the surrounding area. Notably, existing home sales will remain strong over the long term. This is because of a wide gap forming between the price of a resale single detached home and that of a new home. This said, sales in general may slow through 2011. Hamilton mortgage rates should remain attractive, and the increase in the price of mortgages will depend on the strength of the economy in general.

Specifically, Hamilton will see MLS listings increase by more than 4% and Brantford will see an increase of 5%. The report mentions that the value of an existing home in Hamilton is set to increase by 8%, which indicates a sellers housing market. It is projected that a large number of homes listed will be sold rather easily with multiple offers, thus moving home pricing higher. Moving forward into 2011, it is expected that prices will move up with the rate of inflation. In Hamilton Ontario, the new home market is picking up with construction beginning on 3000 homes. This tells a story of solid demand for new homes, especially townhouses in both markets. In the Hamilton/Burlington area, construction of single detached homes will begin to overtaken by townhouses and apartments due to lack of land space, as well as the affordability of these homes. Finally, relatively low mortgage rates in Hamilton will support the housing growth and intensification.

Employment research indicates that Hamilton will record a rate of 8%, which sits on the lower end of the local employment spectrum .  This said, the health and education sectors should be major catalysts for local employment increases. Also, despite lower employment in 2010, the average weekly earnings continue to rise.  Jobs that were lost in the manufacturing sector are beginning to trickle back on a more part time basis.

At the time of writing, the current overnight mortgage in Hamilton Ontario is 0.5%, and is expected to rise in the later part of 2010 along with fixed rates. Importantly, mortgage rates could rise at a swifter pace if there is a stronger economic recovery.

DANGEROUS Lines of Credit and Mortgage Products Offered by Banks

Over the past several years, some of the Big Banks have decided to design mortgage products that lock customers into their Bank- even when the mortgage comes up for renewal. The really unfortunate part about these Banks and products is that in most cases, the Bank will not disclose the negative information to its clients. Most in the broker industry consider these practices incredibly decietful.

With titles such as 'Step' or 'Homeline', these mortgages will offer a line of credit that is attached to the mortgage. The main issue is that when the Bank registers one of these products against your house, they register it under what is called a 'Collateral Charge Term' (not the usual 'Standard Charge Term') at 125% of the value of your home. This has the affects of:

• Disallowing any other financing to be placed against your home.
• Locking you in at mortgage term renewal. This gives Banks massive liberties to charge unfavourable rates when your term is up.  
• Charge major penalties to ever exit these products and lowers others abilities to compete for your future business.
• The ability to change their bank prime rate without your consent. For example, the Bank can decide, as they did in 2008, to move up credit lines across the board by 1% in 1 day. 

No wonder Banks call these products 'customer retention devices'. Good mortgage brokers will always fully disclose such information whereas most of the time, Banks have not been reporting this kind of information to thousands of customers. It is potentially costing customers $10,0000's each. Indeed, customers should be retained by providing excellent service, value and a good customer experience. There are many excellent mortgae products in the market that can meet your needs and goals, and give you the low rates and long term flexability that is far more desirable.

Questions? Comments? Feel free to contact me any time or leave a post below.

Best Regards,

Brent www.brentrichardson.ca - brent@brentrichardson.ca

How Credit Scores Work and How to Increase

How Credit Works and the Easiest ways to Increase Your Credit Score

            Because credit can affect many areas of our lives, especially when a loan or mortgage is needed, it is important to understand how the system works, and what kinds of things can affect your score. Indeed, for many, the credit system is somewhat of a mystery. Weather you are wondering about how the system works, or if you are looking for the easiest ways to improve your score, this article will help you.   

The following criteria lays out how the Beacon Score, or credit score is calculated. For each criteria, we look at how to increase your score. Remember, the following advice speaks of a perfect situation. Although perhaps not immediately attainable for many, the closer you can get to these ideal situations, the better your credit score will be. 

1. Payment History – 35% of Score Calculation: Factors in the number of debt payments over 30 days late, collections and any other matters resulting from late payments. A single payment currently showing over 30 days late removes 20 credit points instantly. Credit will begin to repair after only two months of on time payments, so use this rather short repair period for motivation to pay consistently.

2. Current Debts - 30% of Calculation: Looks at how much debt you have relative to your credit and debt limits. For example, a total credit limit of $10,000 which has $8,000 outstanding totals 80% of credit used. Any number above 50% of credit used will begin to diminish a credit score. If 50% can not be attained, a good goal is 70%. Your variety of debt will also affect your credit. Try to keep two credit cards and hold onebank loan to maximize your score in this area. A loan can be as simple as an RRSP loan which will build your credit, be invested to make interest for you, can be paid back quickly, and mainly, can give you a nice tax refund at the end of the year! Finally, be sure to NEVER go above your credit limit.

3.  Account Age – 15% of Calculation: How long you have held a bank account with your financial institution affects your score slightly. The optimal number of accounts held is three and the longer they have been open the better.

4. Types of Credit – 10% of Calculation: Similar to two. Focuses on the mix of debt you have (credit cards, bank loans, lines of credit). The optimal mix is one store credit card (ex. the bay, Best Buy…), one or maximum two bank credit cards, and one installment bank loan. Make sure to use your credit cards as well - even if just for gas, and to re-pay the balance every month. Again, this is an optimal position and any reasonably similar situation will not lower your credit much. 

5. Number of Credit Inquiries – 10% of Calculation: Over the past 12 months, how many times has your credit score been looked at? Having too many credit or loan applications could deem you a ‘credit seeker’, so try to keep the number less than 5 per year.  

Finally, have your credit bureau checked for mistakes. I have seen many individuals with mistakes on their credit score that resulted in higher interest payments. Check with Equifax regularly to ensure your credit score is accurate.   

Reasonable variation from this perfect situation will still give you a great credit score and obviously, the closer to it, the better it will be. Contact myself for further information on increasing your credit rating and save thousands of dollars on interest as a result.

I am always happy to help.

www.brentrichardson.ca - brent@brentrichardson.ca

Brent Richardson

Have a question or comment? Feel free to make a post.

Hamilton Area Real Estate Market Showing Signs of Strength - Mortgage Rates at All Time Lows

Although home sales are down 4.7% in the Hamilton Ontario and Brantford area, according to the REALTORS Association of Hamilton-Burlington, the housing market picked up in March from the previous months levels. Although it is still unclear as to when the global recession will begin to subside, what is clear is that mortgage rates are at all time lows, and that housing can be purchased at a good discount when compared to market highs. When seen in light of Hamilton and Brantford's long term economic prospects, it seems that now is a very attractive time to look at a house.

With rates of 3.85% and lower, mortgage refinances also look very attractive to almost any individual who has held a mortgage for over a year.

Call me, Brent Richardson, for more information on who you can benefit from purchasing or refinancing in Hamilton Ontario.

519 568 3377 - brent@brentrichardson.ca

Hamilton Firms Optimistic About Future of Local Economy for 2009

An interesting article from the Hamilton Spec reports that although local businesses believe that 2009 will be a year of trouble, these same businesses also believe that their own outlook is brighter. Specifically, half of business owners surveyed in a major Ontario Chamber of Commerce study, report that their business will fare the same or even better in 2009.

It is in the nature of a business owner or an entrepreneur to rationalize their own success, but when business owners put their spending where their mouth is, the effects are tangible and thus a good sign for the local Hamilton economy.

It was found in the survey that 1/3 of business planned on increasing spending or would maintain spending in 2009. Another 1/3 said that they would cut spending, while 20% said that they would cut spending in some areas so that they could spend more in others.

Companies reported that the money would be spent on hiring, increased training and professional development.

It is important to note that Hamilton's and Brantford's economy is very diverse, and that manufacturing accounts for less than 20% of the City's workforce.

As housing prices remain relatively stable, this local economic and corporate diversiy continue to prove them selves in a generally weak economic environment. With mortgage rates at all time lows (like 4.18% for five years!) and with stable housing prices, this makes for a logical choice of City and excellent strategic timing to buy.

For questions or comments, feel free to leave a post! Or better yet, contact me, Brent Richardson, for the mortgage advice you deserve!

February 2009 Hamilton Area Housing and Mortgage Update

According to statistics released by  Realtors Association of Hamilton-Burlington, due to the seasonally weakest time of the year and a moderating economy, housing sales were down 27% in the month of February. Accordingly, home prices (housing and condos) showed a decrease of 4.2% when compared to the February of last year.

This said, total unit sales were up 58% from the month before (January, 2009) and housing prices are up 1.5% as well from the previous month. This gives us a strong indication that as we emerge from the weakest time of the year for the housing market (the winter months), Hamilton is showing remarkable resilience to the economic downturn as housing prices are currently on the rise.

It is still a buyers market in Hamilton and Brantford, which means that buyers are at a slight advantage in the negotiating process (this said, there are many reports from Realtors that multiple offers on properties are still prevalent, which means continued strength in housing prices). The buyers market, when combined with the lowest mortgage rates ever (like 4.18% for a 5 year fixed mortgage), means it is an excellent time to purchase a home in Hamilton, Brantford or the surrounding area. As we emerge from the broader recession in one to two years, purchasers who lock in now should be well rewarded.

For any other questions or details on this article, contact me, Brent Richardson, and I'll be happy to answer your Hamilton mortgage and housing market questions. Feel free to leave a post as well!

CMHC Hamilton and Brantford Winter 2009 Housing and Economy Outlook

‘Housing prices and sales in Hamilton and Brantford will remain steady in early 2009’, is the indication given by the Canada Mortgage and Housing Corporation’s latest area review. Due to a growing population and emerging job sectors, housing in the Hamilton area has preformed relatively well. Although more housing choice in the resale home markets will result in less housing starts in 2009, housing prices are expected to grow overall. The summary of this review will be broken down into New Home Sales, Resale Home Market, The Local Economy and Job Market, and Finally Mortgage Rates in the Hamiltonand Brantford area.

New Home Sales

New home starts will decline slightly in 2009 to 3,045 starts in Hamilton, slightly above the total witnessed in 2007. Housing prices for new homes will continue to increase, however, due in part to the rising costs of development. Demographic trends will move new housing purchases away from single detached homes, towards condos and attached homes. The empty-nester baby boom generation will be accounting for much of this trend. Specifically, these types of purchases will move from just under ¼ of all new home sales, to just over 1/3.

In Brantford, total home starts will increase by 2% going in to 2009, and the average price of a single detached home will reach a price of $252,000 by the end of the year.

Resale Home Market

Although the economic environment will be moderating in Hamilton and the broader Ontarioeconomy in 2009, the resale market continues to perform relatively well. Resale home sales have decreased 7.7% from the same period last year, but the average resale selling price is expected to reach $280,000  - an increase of 4% compared to the year before. It is useful to note that 2007 was a record high for home sales in Hamilton, and that other years will seem lower in comparison. Home sales remain healthy.

 

Throughout 2009, the resale market will be quite balanced in Hamilton

and housing price growth will come in around 3%, just above the rate of inflation.  Importantly though, this more moderate growth in housing prices will help increase demand in the future. In Brantford, housing prices will increase by 2.8% in 2009 and reach an average selling price of $224,000. More moderate housing prices in Brantford will attract some home buyers from the Hamilton area, but slowing employment growth in ’09 will place downward pressure on sales.

The Local Economy and Job Market

Today, the manufacturing sector in Hamilton represents only 14% of all jobs. Even with a continuing moderation of the manufacturing job sector, Hamilton’s total employment remains at a record high. Moreover, full time employment, which is a major factor in supporting the growth in housing prices and purchasing, remains at a strong high. The current unemployment rate at the end of 2008 is 6.5%.

On a very positive note, the targeted growth industries, including health sciences, bio technology and advanced manufacturing will continue to support job creation and long term local economic stimulation. The City of Hamilton Ontario is working diligently to secure innovation based corporate and education investment to ensure it competes well in the emerging, knowledge based global economy. Total employment is expected to increase by less than 1% in 2009.

In Brantford, incentive programs that are attracting new business to the area is supporting modest employment growth. Moreover, long term provincial plans to intensify cities surrounding the Golden Horse Shoe area will very likely maintain consistent population and employment growth in Brantford. Like Hamilton, employment rates are expected to increase by less than 1% in Brantford in 2009.

Mortgage Rates in Hamilton and Brantford

Mortgage rates are expected to decrease going into 2009 to very low levels. Rates are expected to increase towards the end of 2009 however due to a surplus of 5 Year Government bonds and a resulting increase in bond yields. This increase in Government bond yields is a result of massive stimulus and bail out packages that governments will need to raise capital for. Those who can lock in at 5 year fixed mortgage rates in Hamilton and Brantford at all time low rates will fare very well over the course of the term, especially given preferred home prices in a buyers housing market. Given a long term focus on high growth industry areas, the economy looks strong in the Hamilton and Brantford area going forward.

Contact me Brent Richardson, for any questions, comments or specifics about this article summary. Feel free to leave a post below as well! 

Increase Your Credit Score and Save Thousands

Indeed for many, savings of thousands of dollars per year could be had easily by reducing interest rates on loan and mortgage payments. For others, the dream of attaining an affordable mortgage and a home becomes attainable. In knowing how the credit scoring system works and how your credit score can be raised, the money saved on interest can be used to pay off your mortgage faster, or in any other way besides making your lender richer.

 

The credit scoring system:

Your Equifax Beacon Score informs lenders about how much of a lending risk you are, and ranges between 500-850. The following chart tells us how these scores generally affect mortgage rates:

Beacon Score	Interest Rate
719-850	The best rate
700-719	+0.20%
675-699	+0.65%
620-674	+1.70%
560-619	+2.50%
500-559	+3.50%

So given that the average Canadian credit score is about 690, most people have some room left to save thousands of dollars on interest payments.

 

How to raise your score then? The following criteria lay out how the Beacon Score is calculated. For each criteria, we look at how to increase your score. Remember, the following speaks of a perfect situation. Although perhaps not immediately attainable for many, the closer you can get to these ideal situations, the better your credit score will be.

 

1. Payment History – 35% of Score Calculation: Factors in the number of debt payments over 30 days late, collections and any other matters resulting from late payments. A single payment over 30 days late removes 20 credit points instantly. Credit will begin to repair after only two months of on time payments, so use this rather short repair period for motivation to pay consistently.

2. Current Debts - 30% of Calculation: Looks at how much debt you have relative to your credit and debt limits. For example, a total credit limit of $10,000 which has $8,000 outstanding totals 80% of credit used. Any number above 30% of credit used will begin to diminish a credit score. If 30% can not be attained, a good goal is 50%. Attempting to increase your credit or a debt consolidation loan are possible ways to help lower your percentage of outstanding credit limit. Your variety of debt will also affect your credit. Try to keep two credit cards and hold one consolidated bank loan to maximize your score in this area.

3.  Account Age – 15% of Calculation: How long you have held a bank account with your financial institution affects your score slightly. The optimal number of accounts held is three and the longer they have been open the better.

4. Types of Credit – 10% of Calculation: Similar to two. Focuses on the mix of debt you have (credit cards, bank loans, lines of credit). The optimal mix is one store credit card (ex. the bay, Best Buy…), one or maximum two bank credit cards, and one installment bank loan. Again, this is an optimal position and any reasonably similar situation will not lower your credit much.

5. Number of Credit Inquiries – 10% of Calculation: Over the past 12 months, how many times has your credit score been looked at? Having too many credit or loan applications could deem you a ‘credit seeker’, so try to keep the number less than 5 per year.

 

Finally, have your credit bureau checked for mistakes. I have seen many individuals with mistakes on their credit score that resulted in higher interest payments. Check with Equifax regularly to ensure your credit score is accurate.   

 

Reasonable variation from this perfect situation will still give you a great credit score and obviously, the closer to it, the better it will be. Contact a credit professional or myself for further information on increasing your credit rating and save thousands of dollars on interest as a result.

Brent Richardson

Have a question or comment? Feel free to make a post.

Pay Off your Mortgage Faster

After attaining the lowest possible interest rate, the second most important thing to Canadians regarding their mortgage is paying it off as fast as possible. Fortunately there are numerous ways to accomplish this task, so lets take a look at some here.

 

Make bi-weekly accelerated payments: Since there are 52 weeks in a year, we can devise that by making a mortgage payment once every two weeks, we would make 26 payments in a year. On the other hand, there are 12 months in a year, so if we made two payments every month, that would only amount to 24 payments in a year. So we can see that by making bi-weekly accelerated payments instead of two payments per month, it is as if there are 13 months in a year (because of the 26 bi-weekly payments). Thus, we make an extra months payment per year. This has the effect of saving thousands in interest on a mortgage and will reduce a 40 year amortization mortgage to 35 years.

 

Make Lump Sum Payments: Most mortgage lenders will allow you to make a lump sum payment of at least 10 % of the principle amount owed, once per year. Utilize this feature, even modestly, to save thousands in interest and pay your mortgage off faster. For example: A $200,000, 25 year amortization mortgage at 5.75% with $1000 extra paid each year will save 5 years and 10 months and $63,463 interest off of the mortgage.

 

Increase mortgage payments: Even a slight increase in your monthly or bi-weekly payments can make a substantial difference in how fast your mortgage is paid down. For example: A $200,000, 25 year amortization mortgage at 5.75% with $100 additional paid on a monthly basis would save 3 years and 8 months and $30,038 in interest of the mortgage. This method is effectively the same as reducing your total mortgage amortization period if commenced at the beginning of mortgage amortization. However, by opting for a longer amortization period and the ability to increase payments, you get the option of paying less on a monthly basis should your financial situation tighten during a period.

 

Start a small business: While mortgage interest in the USA is tax deductible, it isn't in Canada. So we pay mortgage interest with after tax dollars. What we can do, however, is write off a portion of our mortgage interest if we conduct a business out of the home. Check out some small/part time business opportunity websites or franchise web sites for some ideas on what business would work best for you. Besides tax write offs, you could use any business profit to help make lump sum payments to pay your mortgage down faster and save thousands in interest.

 

Obviously the best way to pay off your mortgage in the fastest time possible would involve some combination of these strategies based on your unique situation. These techniques also help underscore the importance of proper mortgage planning, as opposed to simply finding the best interest rate. There are many more details to consider. So, whether you are looking for a new mortgage, refinancing or renewing a current one, the best thing to do is find an experienced and knowledgeable mortgage broker that will take the time to find you the right mortgage and mortgage plan, at the best possible rates.