Wednesday, January 11, 2012

Most Canadians Wrongly Believe Canada is in Recession

There are times that a little bit of information can be a dangerous thing.

This is apparently being reflected by many Canadians in terms of their views and attitudes on the Canadian economy. According to a recent survey sponsored by the Economic Club of Canada, many Canadians believe that we are in recession, when in fact we are not.

The poll found that only 25% of respondents feel optimistic about the economy, which represents a drop of more than 10% from last year. A staggering 70% of respondents believe that the country is experiencing a mild recession, while economists insist that, while the economy faces some challenges currently, we most certainly not in a recession.

It’s no big surprise, really. Everywhere Canadians turn these days there is negative economic data, cautious warnings about slowing economic growth, dwindling consumer spending in the face of elevated household debt levels and employment uncertainty.

Coupled with the constant media attention on the fact that the Euro zone is likely facing a recession, it is not entirely unexpected that Canadians, who may not have access to all the data, or the training to interpret it, may think that the country is in fact, in a recession.

It’s not just misperception either; the findings of this online poll suggest that there is a disconnect between the crunching of numbers, presentation of data, and the way that Canadians actually feel about their economic prospects in general.

While most Canadians do not have economic training, many do feel that they are involved with it- in that they are on the receiving end of the financial impact.

While things are perhaps not optimum, they could be much worse economists argue. Economic growth is slow, but is expected to sluggishly tick along; while unemployment is increasing, it is still lower than it has been in the past. Some pockets of the country are even experiencing a job boom.

The housing market, for instance, continues to outshine and outpace the economy, taking advantage of the sound fundamentals that propel the market for growth. While many expect the market to moderate in 2012, it is still expected to grow at a reasonable pace.

As Leslie Penney, Vice President, APlus Mortgage Group/Mortgage Alliance told, people in his local market are, for the most part, generally optimistic: “Personally, I feel that clients here in Newfoundland are pretty upbeat about the economy. Right now the housing market is fairly healthy and employment prospects haven’t been better. So the euphoria of a well to-do economy is in the air here right now. “

“Now, that’s not to say that people still aren’t worried. All you have to do is turn the television on and most of what you see would make you believe the world is experiencing another Great Depression. And many people believe that here in Canada we have it coming to us yet, but in dealing with clients this is where we become crucial.”

As Penney points out too, there is a clear role for Mortgage Professionals to help cut through all the news reports and statistics: “Of course, as professionals, we need to remain upbeat about the economy ourselves. Not to create the notion for our clients that everything is rosy, but to explain and confirm things like how our economy is built on strong financial practices, and that the trouble that we see in other places such as the US and Europe, were brought on by acts of greed and complacency, particularly when it comes to the banking sectors. By doing so I believe we can clarify many of the stories that these people are seeing on television and reading in the newspapers about the world is going to collapse.”

Monday, January 9, 2012

When is a condo not a condo?

When looking for a condominium, be aware that different buildings may have very different types ownership.

Freehold Units
Most condos are freehold strata units, where typically you have fee simple ownership of your unit. The land as well as common areas are owned collectively by all the owners. With most freehold condos, you pay monthly strata fees for upkeep.

Leasehold Units
Here you have a lease from a landlord for the right to use the unit for a specific number of years. Many leaseholds are created for 99 years, and you may only purchase your unit for the part of the lease that remains.

Co-op Units
With this arrangement you purchase shares in a co-operative association which owns the land and building including individual units and common areas, and you have a leasehold interest in your unit. You usually pay monthly dues to the co-op board to cover the building’s taxes and upkeep.

Condo buying tip
Monthly condo fees can affect how much home you can afford. By choosing a property where the monthly fees are just $200 lower, you can boost your purchasing power by $18,000.

Understanding your credit report and credit score – Part 1

What many prospective borrowers don't realize is that the pricing of mortgages and other loans is based in part on their credit-worthiness. Consumers need to be aware of how their credit is evaluated by lenders, and how they can work to avoid so-called "bruised credit" – people with a lower credit score can find themselves paying a higher interest rate, or even denied access to certain types of loans.

A credit report is a detailed history of how consistently you meet your financial obligations, and provides a picture of your financial health based on your past behaviour. A credit score is a three-digit number, usually between 300 and 900, representing your overall credit-worthiness, based on personal information from your credit report and other sources.

Both your credit report and score are important. When deciding whether or not to grant a mortgage loan, lenders refer to an applicant's credit report and score, along with a range of other factors such as income, employment history, and size of down payment.

The higher your score the more likely you are to be approved for a mortgage and receive favourable rates because the lender considers you to be a better credit risk. Several factors are used by the two main credit agencies in Canada (Equifax Canada and TransUnion Canada) to calculate credit scores:

Debt payment history.
Amounts owed compared to your current credit limits with lenders.
How often you seek new credit.
Length of time you have had credit accounts.
Type of credit, such as car loans, lines of credit, credit cards.