Canadians more optimistic regarding household debt

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A report from PricewaterhouseCoopers spotlights new trends in Canadian views on debt, as well as the impact of mortgage restrictions on the real estate market.

Data from The Tide Turns: Canadians, Debt and Retail Lending study shows that more Canadians are comfortable with the amount of debt they're carrying, and they're also more focused on reducing it. Of 1,228 Canadians surveyed, 57 percent felt their debt level was about right. This marks a decrease from 59 percent during the previous year.

Meanwhile, 66 percent of respondents indicated that they plan on reducing their debt this year. This represents a 3 percent increase from last year.

Additionally, Canadians remain optimistic regarding the economy and their own financial situations. More than half (55 percent) of respondents said they think the nation's economy will remain stable or grow. Nearly half (46 percent) believe their income will rise over the next five years. Continue reading

Over Half of Canadian Retirees Are in Debt, but That Doesn’t Have to Include You

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A recent poll done by CIBC and Harris/Decima has found that 59% of Canadian retirees are still in debt. Worse yet, the poll finds that 55% of people that carry debt into retirement have seen their debt levels either increase or remain unchanged over the past year.

As you can imagine, it only becomes more difficult to repay your debt once you have lost the bulk of your income due to retirement. So it stands to reason that every effort should be made to repay your debt before retirement, right? Easier said than done, of course, but it is possible. The earlier you start paying down your debt the better, but there are options, even if you are on the cusp of retirement. Continue reading

Canadians saving more, paying off mortgages faster

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Who says Canadians can't save?

According to an article from The Globe and Mail, the Canadian personal savings rate is twice that of our neighbors to the south, and nearly six times higher than it was 10 years ago.

"All the talk about the Canadian household being tapped out or out of shape is a bit overdone," Doug Porter, chief economist at BMO Nesbitt Burns, told the news source.

Data from Statistics Canada shows that the savings rate during the first quarter of 2013 was 5.5 percent, up from 5.4 percent during the final three months of 2012. That may not seem like a large improvement, but it's important to keep in mind that the original forecast for the savings rate during the fourth quarter of last year was 3.8 percent, according to Statscan. Continue reading

Possibility of rate increase looms

Among all the ups and downs in Canada's housing market over the last few months, one thing has remained certain: Mortgage rates are low. This has spurred homebuyers and homeowners alike to obtain new mortgages or refinance their current ones, offsetting the cooldown in sales due to Finance Minister Jim Flaherty's restrictions on government-backed mortgages.

However, some industry observers are exploring the possibility that rates may be rising sooner rather than later.

"If you're house hunting or thinking of refinancing, and you don't have a mortgage rate hold, consider getting one," writes Rob McLister for Canadian Mortgage Trends. "Canada's 5-year bond yield just pierced a three-month high. That means – barring a big reversal - there's a good likelihood that fixed rates will ratchet higher. (Bond yields steer fixed mortgage pricing, most of the time.)"

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Many urban Canadians opt for condos

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Home sales may be slowing down, but a report from the Bank of Montreal shows that plenty of Canadians are looking to enter the condominium market.

The BMO Housing Confidence Report is based on survey responses from homeowners in four of Canada's major cities: Toronto, Vancouver, Calgary and Montreal. The goal of the survey was to examine buyer intentions regarding the next five years.

In Toronto, nearly one-third (31 percent) of respondents said they plan to purchase a condo in the next five years. This represents an increase of 11 points from the fall. Meanwhile, in Vancouver, buyer intention regarding condos has fallen five points during the same time period, with only 28 percent of respondents saying they planned to buy a condo in the next five years. Continue reading

Mortgage rates present opportunity

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Historically low mortgage rates are continuing to make homeownership affordable for Canadians, according to the Royal Bank of Canada.

Data from the RBC's Housing Trends and Affordability report shows that low mortgage rates are keeping Canadian homeowners from entering dangerously unaffordable territory. Additionally, the report stated that rate increases are likely not on the horizon.

"Exceptionally low mortgage rates have been the main factor preventing affordability from reaching dangerous levels in recent years; yet, we believe that the likelihood of a surge in rates is slim at this stage," the report stated.

Continued low mortgage rates are good news for Canadians, especially as a report from the Certified General Accountants Association of Canada shows that while many Canadians are satisfied with their finances, they're not necessarily keeping on top of them. Continue reading

OSFI considers shortening amortization rates

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Reports out of Ottawa could spell big changes for mortgage borrowers concerning amortization rates, according to The Globe and Mail.

Apparently The Office of the Superintendent of Financial Institutions Canada (OSFI) is weighing the pros and cons of uninsured mortgages of more than 25 years. Brock Kruger, OSFI spokesman, has attributed this attention to the high levels of debt carried by many Canadian households, among other matters.

"We are working to determine the desirability of some changes given current conditions in housing markets and recent trends in household indebtedness," Kruger told The Globe and Mail.

Considering the fact that Finance Minister Jim Flaherty tightened mortgage rules four times in as many years, the most recent being in July 2012, it's not far-fetched to think this attention from OSFI could result in further restrictions on home loans Continue reading

Homeowners optimistic regarding mortgage repayment

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New data from Scotiabank reveals that homeowners are feeling more confident in their ability to pay off their mortgages faster.

Figures from Scotiabank's Mortgage Landscape Study, which surveyed 1,000 Canadian homeowners between February 14 and February 25, 2013, show that nearly two-thirds of mortgage holders (67 percent) say it's possible to pay off their home loans faster. What's more, they say it's possible to do so without impacting their lifestyle.

Meanwhile, a majority of mortgage holders (59 percent) said that adding $20 per month to their home loan payments would have no impact on their finances. Continue reading

Preparing your credit for a mortgage application

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While it's easier than ever for Canadian homebuyers to lock in low mortgage rates, it's important for individuals to understand how their credit will influence the process. While current mortgage rates are currently at historically low levels, the best rates will only be made available to borrowers who can show exemplary credit on their mortgage applications. It's with this in mind that prospective homeowners should do all they can to prepare their credit for the mortgage application process.

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The first step for homebuyers should be to receive a copy of their credit report. Canadians are allowed to order as many free copies of their credit report as they require each year, as long as the request is made in writing for a printed copy delivered by mail. While these requests will be noted in an individual's report, they will not affect their credit score. Continue reading

Paying off a mortgage faster

Data from the Canadian Imperial Bank of Commerce shows that Canadian borrowers believe it will take them longer than previously thought to pay off their mortgages.

A poll from the CIBC shows that the average Canadian homeowner believes they will reach the age of 57 before they pay off their mortgage. This is up from age 55 during the previous year. The province with the longest expected repayment period was British Colombia, where the average Canadian expected to reach age 59 before paying off their mortgage.

"Being mortgage free sooner can help accelerate retirement savings, but carrying a mortgage into your late 50s can have the opposite effect and make it more challenging to reach your long term savings goals," said Colette Delaney, executive vice president of mortgage, lending, insurance and deposit products at the CIBC. "If your other debts are heading up, your chances to pay off your mortgage sooner are going down, and that's why you need a clear plan that takes into account debt management, mortgage repayment and long term savings." Continue reading