How Do Mortgage Rates Today Compare to One Year Ago?

From the desk of Carolyn Dunlop, Senior Mortgage Specialist, Dominion Lending Centres Edge Financial...

February 26, 2009. Given recent decreases in activity in the real estate market it may be prudent to examine how falling mortgage rates are affecting potential purchases for clients today. Believe it or not it is actually much more affordale to buy a home now as opposed to one year ago.
In February 2008 the best 5 year mortgage rate was 5.79%. For a client with a $250,000 mortgage this translates to a monthly payment of $1,568 based on a 25 year amortization. Over the course of this 5 year term the client would pay interest on this mortgage of $68,026.
Compare this to today's best 5 year rate of 4.00%*. The same $250,000 mortgage will now cost the client $1,315 per month based on a 25 year amortization and will result in interest of $46,537 over 5 years. The interest savings to the client over 5 years is $68,026 - $46,537 = $21,489. But that's not all...the client also saves on the monthly payment. Payment savings are equal to $1,568-$1,315 =$253/month x 60 months = $15,180. So the total savings to the client is $21,489 + $15,180 = $36,669!!!
The remarkably low rates could also be used to help purchase a more expensive home. If the client was able to pay $1,568 per month for a $250,000 mortgage one year ago at the 5.79% rate, they could now purchase a home for $48,000 more for the same payment. With a rate of 4.00%* they now qualify for a mortgage of $298,000 at the same payment of $1,568.
Perhaps this is a bright spot in our present economy....

TREB President's Column as it appears in the Toronto Sun

Toronto Real Estate Board to Feds: More help to Homebuyers
January 23, 2009 -- It was encouraging, and inspiring, to see the optimism surrounding the inauguration of President Barack Obama earlier the week. Considering the importance of the U.S. economy to the world, I, like many, hope that the President will move swiftly and decisively to address his nation’s economic challenges; but while U.S. action is critical for the global economy, action is needed by all governments, including Canada’s. This is why next week’s federal budget announcement in Ottawa is receiving so much attention from all circles, including REALTORS®.
The federal budget has one simple mission: take action on the economy. To do so, there are various areas that it can, and should focus on, but there is no question that the housing sector is, always has been, and always will be, one of the most important parts of the economy. A recent study conducted for the Canadian Real Estate Association (CREA) determined that every time a consumer purchases a re-sale property in Ontario, they pump approximately $33,000 into the economy on things like furniture, renovations, and appliances. Nationally, in an average year, re-sale housing sales generate approximately $16 billion of spin-off spending for the Canadian economy, including over $2 billion for the Toronto area alone.
This spending translates directly into jobs and should be encouraged. With this in mind, one of the things that REALTORS® have been telling the federal government it can do is to increase the amount that home buyers can borrow from their RRSP’s, under the Home Buyers’ Plan, to put towards the down payment on a home.Under this program, individual home buyers are allowed to withdraw up to $20,000 ($40,000 per couple), tax-free, from their RRSP, to put towards the down payment on a home. The funds must be deposited in their RRSP at least 90 days before being withdrawn under the program. This makes the Home Buyers’ Plan one of the best ways to save for a down payment because home buyers get the added benefit of a tax deduction for contributions made to their RRSP. Under the program, home buyers are required to repay funds into their RRSP, but repayments are not required to begin until the second year after the withdrawal, and can be made over 15 years.
Since 1992, an estimated 2 million Canadians have used the Home Buyers’ Plan to purchase approximately 900,000 homes, making the program a huge success. Unfortunately, as time has passed, the usefulness of this program has eroded because withdrawal limits have not been adjusted. For this reason, REALTORS® are calling on the federal government to use its upcoming budget to increase the Home Buyers’ Plan withdrawal limit to $25,000 and adjusting it for inflation every five years.
Governments across the world have been taking bold action to address the economic challenges we face. In this regard, next week’s budget will be an important opportunity for Canada’s federal government to show that it understands the critical role of the housing sector in the economy.
Maureen O’Neill is President of the Toronto Real Estate Board, a professional association that represents 28,000 REALTORS® in the Greater Toronto Area.

Federal Budget Helps Home Buyers and Owners

Maureen O’Neill TREB PRESIDENT’S COLUMN AS IT APPEARS IN THE TORONTO SUN February 06, 2009
Federal Budget Helps
Home Buyers and Owners
It is always rewarding when hard work produces results.
That’s why REALTORS® are proud of the work they did
to make sure that the recently announced Federal Budget
recognized the importance of the housing sector to the
economy. I’m happy to say that these efforts helped to
produce a Budget that puts more money in the pockets of
home buyers and owners.
One of the most important announcements in the Budget
was a change to the Home Buyers’ Plan that REALTORS®
have long been calling for. Specifically, the Budget proposes
to increase the maximum amount that individuals can
withdraw, tax-free, from their RRSP to put towards the down
payment on a home, from $20,000 to $25,000. REALTORS®
worked hard to ensure that the government understood that,
while this program has been extremely successful since it
was first implemented in 1992, its usefulness to home buyers
was deteriorating because the withdrawal limit had not kept
pace with inflation. The increase in the limit announced
with the Budget addresses this concern.
Another important Budget announcement for home buyers is
a tax credit that will help to offset the closing costs associated
with housing purchases. Closing costs can include things
like legal fees and land transfer taxes. They can represent
a significant cost for many buyers. The Federal Budget
recognized this and includes a First-Time Home Buyers’ Tax
Credit of 15 per cent on up to $5,000 of costs associated with
the home purchase. This means that first-time home buyers
could be eligible for a tax credit of up to $750.
The Federal Budget also includes an initiative that helps
both current home owners and home buyers considering
properties that may benefit from renovations. The Home
Renovation Tax Credit provides a 15 per cent credit that
can be claimed on the portion of eligible home renovations
exceeding $1,000, but not more than $10,000, which means
that home owners could be eligible for a tax credit of up to
$1,350. This credit would apply to eligible home renovation
expenditures, after January 27, 2009 and before February
1, 2010, on one or more of an individual’s personal use
properties.
While it is encouraging to see the federal government take
action to help home buyers and owners, it is important for all
levels of government to do their part. This is especially true
in the City of Toronto, where the Toronto Land Transfer Tax
discourages home ownership. Like the federal government,
Toronto City Council should recognize the importance of the
housing industry to the economy, and the best way it can do
this is to roll back the Toronto Land Transfer Tax.
By helping to create thousands of jobs, buying or improving
a home is not only an investment in a property; it is also an
investment in the economy. REALTORS® are encouraged that
the Federal Budget recognized this reality and will continue
to work hard to represent the interest of home buyers and
owners at all levels of government.
REALTORS’® interaction with governments occurs in many
forms, but probably the most critical is the work they do to
ensure that politicians consider the impact of their decisions
on home buyers, home owners, and real estate markets.
With this in mind, REALTORS® and their professional
associations such as the Canadian Real Estate Association,
Ontario Real Estate Association, and the Toronto Real Estate
Board are constantly monitoring government proposals and
actions, and are ready to spring into action.
Maureen O’Neill is President of the Toronto Real Estate Board,
a professional association that represents 28,000 REALTORS®
in the Greater Toronto Area.

Finding a Needle in a Haystack

There are hundreds of homes on the market in the area where you might choose to live. But very few of those homes will have the features that are on your top 10 list and the price you can afford. Sifting through the pile to narrow down the best choices takes time, experience, and a complete listing of all For Sale homes in the market area. Without the right tools it can be like finding a needle in a haystack.
While some folks enjoy the challenge of exploring the real estate market on their own, it never hurts to team up with a network of professionals who know the market inside and out. Finding the right home for you has little to do with luck and everything to do with hard work and perseverance!
Choosing me as your real estate professional will provide you with:
* The knowledge of an experienced REALTOR to steer you through the twists and turns of real estate transactions.
* Straight answers to your toughest questions.
* An area-wide multi-list of Homes For Sale. Since more sellers list with REALTORS® than “do it yourself” selling, you have a much larger selection of homes to choose from.
* Up to date information on property values in the area of your interest.
* A complimentary market analysis of your current property—even if you aren’t ready to move yet, this is a useful tool to have.
I would be honored to serve you now or in the future.