Federal Reserve – Commercial Real Estate and Loans

Prices of existing commercial properties have already declined substantially from the peak in 2007 and will likely decline further. As job losses have accelerated, demand for commercial property has declined and vacancy rates have increased. The higher vacancy levels and significant decline in the value of existing properties have placed particularly heavy pressure on construction and development projects that do not generate income until after completion. Developers typically depend on the sales of completed projects to repay their outstanding loans, and with prices depressed amid sluggish sales, many developers are finding their ability to service existing construction loans strained.

As a result, Federal Reserve examiners are reporting a sharp deterioration in the credit performance of loans in banks’ portfolios and loans in commercial mortgage-backed securities (CMBS).  At the end of the second quarter of 2009, approximately $3.5 trillion of outstanding debt was associated with CRE, including loans for multifamily housing developments. Of this, $1.7 trillion was held on the books of banks and thrifts, and an additional $900 billion represented collateral for CMBS, with other investors holding the remaining balance of $900 billion. Also at the end of the second quarter, about 9 percent of CRE loans in bank portfolios were considered delinquent, almost double the level of a year earlier.³ Loan performance problems were the most striking for construction and development loans, especially for those that financed residential development. More than 16 percent of all construction and development loans were considered delinquent at the end of the second quarter.

Bank of Canada Prime Rate – 2.25% Remains

OTTAWA –  A recovery in economic activity is also under way in Canada. This resumption of growth is supported by monetary and fiscal stimulus, increased household wealth, improving financial conditions, higher commodity prices, and stronger business and consumer confidence. Volatility and persistent strength in the Canadian dollar are working to slow growth and subdue inflation pressures.  The Bank now expects that the output gap will be closed in the third quarter of 2011, one quarter later than it had projected in July. Correspondingly, inflation is also expected to return to the 2 per cent target in the third quarter of 2011.

Conditional on the outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target. http://www.bankofcanada.ca/en/notices_fmd/2009/notice_fad201009.pdf.

Accelerated Mortgage Payments – The Benefits

Accelerated mortgage payments have two significant benefits.

First, you will pay less in interest – you will save money! As the example above demonstrates – you will pay the equivalent of an extra monthly payment every year. The extra payment is taken directly off of the principal. This will save you money in interest. That saving in interest will then be applied directly to your principal. As you can see, this compound effect will save you thousands of dollars!

For example, with regular monthly payments on a $200,000 mortgage at a 5.00% fixed rate, you will have paid nearly $350,000 at the end of 25 years. However, if you use an accelerated bi=weekly payment plan, you will only pay around $325,000 and have it paid off in just over 22 years! You save a staggering $25,000 dollars and have the mortgage paid off 3 years earlier!

And that is the other great benefit of making accelerated payments on your mortgage – you will be mortgage free faster!

BC Home Owners Grant (Property Tax Exemption)

Basic Home Owner Grant (BC)

The basic grant can reduce your property tax by as much as $570. The minimum tax payable ($350) ensures that all homeowners (or eligible occupants, which includes an eligible occupant of an eligible apartment, housing unit, land cooperative or multi-dwelling leased parcel) contribute towards the funding of local services such as road maintenance and police protection.

For 2009, the basic grant will be reduced by $5 for each $1,000 of assessed value over $1,050,000, and is eliminated on homes assessed at $1,164,000 or more.

If your property’s assessed value is over $1,050,000 but has more than one residence on it, you may still qualify for the home owner grant on one residence. For further information, please call our office toll-free in British Columbia at 1-888-355-2700.

To be eligible for the grant, you must meet the following criteria:

	You are a Canadian citizen or landed immigrant and ordinarily reside in British Columbia.
	You are the registered owner or eligible occupant of the home. The home must be located within the province.
	The home is your principal residence -where you live and conduct your daily activities. The grant does not apply to summer cottages, second homes or rental properties.
	Spouses who live together, including those who are married or who live together in a marriage-like relationship, including same-gender partners, can qualify for a grant on only one residence in the province in a calendar year.
	Spouses who live apart can each claim a grant on their principal residence if they have a written separation agreement or a court order recognizing the separation.

Please see How to Apply for more information.  Application FORM click here.

If you are over 65, have a disability, or receive a war veteran’s allowance, you may be eligible for the additional grant.

New Immigrant – 新移民房貸服務 BC省政府認可

新移民房貸服務 BC省政府認可

“新移民房貸” New Immigrant Program

l   已登陸報到 Landed Immigrant

l   或 持楓葉卡 Maple Card

l   或 居住於加拿大未滿5-10年 * (每家銀行條例不同)

加拿大買房置產, 取得最優惠利率
無收入及信用紀錄 即可申請

為何選擇 Christine Chien, 房屋貸款經理?

1. 政府認可 BC Licensed Mortgage Broker
2. 專業可靠 比較各類銀行貸款
3. 過程簡易 為您提供完善服務100% 滿意

Home Buying Series – What Taxes am I Paying?

Property Purchase Tax – BC Summary Closing Costs

Property Purchase (Transfer)Tax

Property Purchase Tax – The British Columbia Provincial Government imposes a property purchase tax which must be paid before any property can be legally transferred to a new owner. The tax is 1% on the first $200,000 of the property value and 2% on any value over $200,000.  Certain exemptions for First Time Home Buyers apply.

Goods & Services Tax – For newly constructed home(s), the purchasers may be subject to 7% GST on the purchase price. However, if the home is under $350,000, a rebate will reduce the GST paid to 4.48% of the purchase price. If the price is over $350,000 the net GST to be paid increases gradually until it is a full 7% at amounts over $450,000.  Starting July 2010, Homonized Sales Tax (HST) will be imposed for all new home purchase. Contact me for further detail.

News: Canadian Insured Mortgage Purchase Program

Last fall, when the credit markets were in near-panic mode, the government threw lenders a lifeline called the IMPP (Insured Mortgage Purchase Program).

The IMPP allowed the government to buy up to $125 billion of insured mortgages.  The goal was to add liquidity to Canada’s mortgage market.  At the time, lenders (and borrowers) were suffering from unprecedented interest-rate premiums due to perceived mortgage default risk.

That IMPP program is set to expire this week. However, there were various media reports last week with word that the government will renew it.

Rate Choices – Strategy Discussion

With Mortgage Rates Dropping, It’s Strategy Time

It was a little less than a year ago that the global financial crisis began to hit home, which is to say that mortgage rates spiked higher.  Now, the cost of mortgages is coming down. If you’re buying a home or renewing a mortgage, it’s time to review your options.

Fixed-rate mortgages declined a little last week, but the most dramatic changes can be seen in variable-rate mortgages. For the first time in almost a year, it’s possible to get a variable-rate mortgage at the prime rate used by most major financial institutions, which is currently 2.25 percent.

Pre-crisis, variable-rate mortgages came with discounts that ranged from 0.75 percentage points to as much as 0.9 points off prime. By late last fall, crisis conditions prompted lenders to start charging prime plus a full percentage point or more. Now, some lenders are starting to unwind their crisis-rate premiums.

Difference between HELOC and Regular Mortgage

HELOCs vs. Mortgages

“What is the difference between a HELOC (home equity line of credit) and a variable-rate mortgage? Why would someone want a HELOC instead of a mortgage?”

HELOCS	MORTGAGES
Allow you to continuously borrow and re-borrow up to your available limit (i.e., they are “revolving”).	Can only be paid down (unless they’re re-advancible)
Have rates that are not guaranteed for the life of your term. Lenders can increase the rate premium they charge on HELOCs at any time. (Some lenders like FirstLine, National Bank and Canadian Tire, who have refused to raise LOC rates on existing customers.)	Come in two types: Fixed: with mortgage rates that are guaranteed for the life of the term. Variable: which have guaranteed spreads from prime for the life of the term (e.g., prime + 0.25% or prime – 0.50%).
Are fully open.	Are usually closed but can be open.
Require 20% equity	Often require just 5% equity
Offer interest-only payments	Principle + Interest payments
Are usually reported to the credit bureaus-which can negatively impact your score (only a handful of HELOCs are not reported)	Are usually not reported to credit bureaus, and typically don’t harm your score even if they are.
Are usually technically callable the lender-even if you make your payments on time.	Mortgages cannot be called as long as you abide by the terms of the mortgage.
Have higher interest rates, as of today	Have notably lower interest rates, for the most part

HELOCs are generally most suited to very financially stable individuals who value liquidity (quick access to their home equity).

Keep in mind, many of the things that make HELOCs unique can be either a benefit or a disadvantage, depending on the borrower. If you need help deciding if a HELOC is right for you, get some free advice from a mortgage professional.

Source: Canadian Mortgage Trend and TMG Backend

Mortgage News Update – Prime Rate to Stay Low

OTTAWA — Despite growing confidence that economic growth is in the offing, monetary policy around the world is likely to remain “ultra-accommodative,” perhaps until 2011, as doubt remains as to whether or not the growth expected this quarter is sustainable, analysts say.

“The key message from Jackson Hole was … that monetary policy is likely to remain ultra-accommodative for the foreseeable future – at least for the next several years,” said Julian Jessop, chief international economist at Capital Economics of London.

“It seems more likely that there will be no increases in interest rates in any of the major economies over the next 12 to 18 months.”