Sharie Marie Mortgage Team wins Big Award

Heather Thomson, Alberni Valley Times

Published: Monday, January 30, 2012

Only a year after starting her business, Sharie Marie Francoeur has been named real estate company of the year.

Francoeur was excited and surprised when she won the Vancouver Island Business Award, handed out by the Business Examiner on Thursday night in Victoria.

"It gives our team some recognition and shows people they can have faith in us," she said.

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"And it makes me feel more confident in growing my team."

In 2011, Francoeur set up Sharie Marie Mortgage Team in Port Alberni. She grew up here, and had been living in Victoria since she graduated from Alberni District Secondary School five years ago. But her love of the city and its community feel brought her back.

Francoeur thinks one of the reasons she won was the speed at which the company grew. She also established the Mortgage Mentoring Program in Ladysmith, which put her up for the entrepreneur of the year award on Thursday night. Through that program, her company has grown rapidly. She now has 10 licenced mortgage brokers and 13 in training. Two are in Port Alberni, and the rest are around Vancouver Island.

"I wanted to help other mort-gage brokers learn, not only what's in the books, but what they will need in the job," she said.

Francoeur was not the only Alberni Valley business to be nominated in these awards. Seven other businesses got the nod, including Van Isle Ford, Kismet Quilts (small business), West Coast SLAM (community leader), Catalyst Paper (forestry/wood products company), NSS Investments (real estate), Trends Design Team and Trends 2 (small business) and Acoustic Wood Ltd. (small business).

"Port Alberni tends to have a really negative image," Francoeur explained. "It is important that business owners in small towns, especially Port, get out there and show what we can really do and start to change that image."

Even being nominated offers advantages. Rosanne Gray, owner of Trends Design Team, said they are grateful for the community support and honoured to be nominated again this year.

"The competition was very tough, and we are very proud to be included in the same category as the other finalists," Gray said. "Trends Design Team will continue to provide professional services to all our customers and look forward to continued success and growth."

HThomson@avtimes.net

Canadian Economy

When Bank of Canada governor Mark Carney made his inaugural speech as head of the banking industry's global regulator on November 8 he said the world economy is getting hurt by a slump in liquidity, meaning banks are less willing or less able to lend money. And because global liquidity has fluctuated over the past five years, Carney said that Europe is already in a recession. He used the 2008 collapse of the U.S. investment bank Lehman Brothers as an example. The impact of that was that banks shied away from lending to both companies and consumers. That helped plunge the world economy into a major recession.

Clearly, if banks stop lending, consumers stop spending and businesses stop spending. For an economy to function, money needs to keep moving.

There has been talk recently that Carney might lower the prime interest rate to keep inflation in check. Carney has also said that the Canadian economy won't fully recover until well into 2013. Currently the prime rate is sitting at 1%. Inflation is approximately 2.7% and is predicted to slow to 1% in the second quarter of 2012. The Bank of Canada likes to keep the inflation rate between 1 and 3%. 

So what does that all mean for Canadians?

So far, the credit crunch hasn't hit Canada. While mortgage lending has tightened up a bit, banks are still lending money to businesses. The federal government has been making slight concessions to make sure Canada continues to grow:

• For example, on November 27, Finance Minister Jim Flaherty eliminated $32-million in manufacturing tariffs. This will allow businesses to lower their costs, enhance their ability to compete globally, which will help stimulate growth and job creation.
• On November 23, Mark Carney said he would stay flexible on interest rates. Despite the fact that inflation has been creeping higher, Carney said that although it may take longer to return inflation to target, being flexible with the rates will protect the country from any economic and/or financial shocks.
• The federal government is also moving ahead to change the laws that govern financial institutions, adding more oversight to protect consumers. "Canada has been ranked as having the soundest banks in the world by the World Economic Forum for four consecutive years," said Jim Flaherty, Minister of Finance in a statement released on November 23. "The Financial System Review Act will ensure our financial system continues to be secure for Canadians and a fundamental strength for our economy."

These changes likely won't have a direct impact on most Canadians but the after effects will. They include more jobs, higher profits for all businesses, access to low cost money for home buying and investing, stable housing markets and a strong and healthy banking system. 

All of this makes Canada a growing, stable economy that can weather short term fluctuations for a strong and prosperous future.

Penalty Calculations

"When a Certified Financial Planner (CFP) can’t figure out how to calculate his mortgage penalty, it’s got to be really tough for Joe Borrower.

Globe & Mail columnist Ted Rechtshaffen, a CFP, recently wrote about this very topic. He says: “My mortgage breakage cost truly is a mystery…I have read my mortgage contract…It can’t be found in the fine print.”

Like many banks, his (TD Bank) explains how to calculate its penalty, but people have to deduce the numbers to plug into the formula themselves.

Those numbers include:

1. The contracted interest rate (easy enough)
2. The posted rate at origination (not as easy)
3. The months left on the term (easy)
4. The relevant comparison rate (not as easy)
5. The current mortgage balance

To confirm these numbers, the borrower generally has to call his or her lender.

Wouldn’t it be nice, however, if you could log into your lender’s website and get this information with one click? It would, but lenders would much rather you call them for it. That way they can try to sell you a new mortgage.

A key point Rechtshaffen makes is that some lenders go out of their way to muddy the waters with respect to mortgage penalty calculations. They do that by:

• Not including certain inputs for calculating your penalty in their mortgage contracts (like the posted rate); and/or,
• Not telling you where to get the inputs on your own; and/or,
• Not clearly explaining (with examples) which term to use when determining yourcomparison rate; and/or,
• Writing penalty explanations in language that almost requires a law degree.

Penalty calculation shouldn’t be this cryptic. CAAMP says that 47% of people who refinance before maturity have to pay penalties. (It’s actually more than that if you include refis with blended rates [which have penalties built in].) So it’s not like this is some infrequent obscure need that borrowers have.

Lenders who believe they have their customers’ best interest at heart should provide a web page that clients can log into. It should provide an instant penalty quote, with a comprehensible explanation of how that penalty was calculated, showing the math.

RBC has a semi-workable solution with its penalty calculator. Unfortunately, you have to fill in the blanks yourself and few people will know what to enter for things like the “Discount off posted rate.”

In any event, one of the nice benefits of not getting a big bank mortgage is that your penalty is often based on discounted rates instead of posted rates. That often saves people hundreds or thousands of dollars. It’s even more meaningful given that most people break their five-year fixedterms in 3.5 to four years on average."

Rob McLister, CMT

Fifteen years of economic growth means little in everyday lives

OTTAWA - A generation of solid economic growth has meant little in the everyday lives of most Canadians, according to a new index of wellbeing.The finding is a yellow light for decision-makers that social unrest is just around the corner unless deep changes are made, warns Roy Romanow, the advisory board chairman of the University of Waterloo group that created the index.

The index suggests the middle class, in particular, is eroding."There are some very, very troubling signs," Romanow said in an interview.

"I think if we continue on this trajectory we're going to have bigger and bigger disparities. You can never build a solid political, social and economic community with wide disparities."

The Canadian Index of Wellbeing is meant to be GDP's alter ego, measuring the quality of life in society in ways gross domestic product does not.

The index has been years in the making, pulling together 64 indicators to track progress in areas such as community spirit, education, health, environment, leisure and democratic engagement. While GDP measures what companies and government produce, the wellbeing index measures how Canada and its people are faring.

It shows that between 1994 and 2008, wellbeing improved by just 11 per cent. The economy over that period grew by 31 per cent. So while investment and corporate activity were ticking along at a decent pace, Canadian households saw only minor improvements in their lifestyle. "The divergence in the (index of wellbeing) and GDP tells us emphatically that we have not been making the right investments in our people and in our communities. And we have not been doing it for a long time," the report on the index says. The index's subcomponents show that quality of life actually deteriorated over that time frame in areas such as the environment, leisure and culture, and time use.  Researchers noted that metal reserves are at rock-bottom, species abundance has declined, greenhouse-gas emissions have soared, and ground ozone has risen.

When it comes to leisure, Canadians are working out more and taking longer vacations, but they spend less time engaged in arts and culture. Health care saw a slight gain — we're smoking less and getting our flu shots, but diabetes and depression were on the rise. Wealthier people had better health status.  Living standards rose 26.4 per cent, but at the expense of income inequality. The rich took the lion's share.  While parents are reading more to their young children and signing them up for all sorts of classes, kids are also spending more time in front of screens. And seniors are seeing less of their families.  In other words, a typical household is now working harder and longer to keep on track financially, at the expense of having free time with family and friends, enjoying arts and culture, and volunteering.  "Many Canadians are simply too caught up in a time crunch to enjoy leisure and culture activities in the company of friends and family. The question raised by the results of this domain: Is that progress?" the study asks.

On the positive side, the index also revealed that Canadians feel safer than in the 1990s, and feel a stronger sense of belonging to their community. The "community vitality" index rose 20.7 per cent over the 15 years. Education has improved, especially with university graduation rates soaring. But our international rating has declined in literacy, math and science.  While Romanow, the former NDP premier of Saskatchewan, is the face of the new index, he says the work put into the index is far from political or ideological. Rather, the data is taken from Statistics Canada and elsewhere, collected and crunched by a wide variety experts in their field. The work is recognized by the Organization for Economic Co-operation as leading edge.  The policy prescriptions, however, point to failures at every level of government over the past couple of decades, Romanow says — adding that he, too, carries some of the blame. "We all wear some of this."  Instead of focusing on redistributing wealth and building programs that improve quality of life for Canadians, governments are obsessed with juicing GDP, he said. The result has been to whittle away at the vibrancy of the middle class, and undermine core Canadian values that encourage individual effort, in part, through redistribution of wealth, Romanow said. "I think this is a yellow light. A cautionary light," he added. "We want to be able to make sure that ... our societal values are not diminished here."

Heather Scoffield, The Canadian Press, On Thursday October 20, 2011, 6:40 am

By Heather Scoffield, The Canadian Press

Average resale home prices rise 6.5%

"A September surge in home buying helped boost the number of Canadian homes sold in the first nine months of this year an unexpected 1.2 per cent compared to the same period last year, according to figures compiled by the Canadian Real Estate Association.

Sales of existing homes rose 2.7 per cent in September compared with August, according to a monthly report released Monday by CREA. On a year-over-year basis, home sales in September were up 11 per cent from the same month in 2010.

The strong September activity drove the number of homes sold on CREA's multiple listing service in the first nine months of 2011 to 361,749.

The increase over last year was surprising given that many economists and industry watchers, including CREA, had earlier predicted that sales this year would decline over the same time in 2010.

TD economist Sonya Gulati said she expects a “tug of war” between several factors — including low interest rates and waning consumer confidence — to take hold in the coming months, leaving conditions fairly balanced, with sales and prices holding steady at current levels over the next year.

“Several factors appear to have clipped the wings on resale activity this year, including: (1) new mortgage eligibility rules; (2) a wave of economic uncertainty emerging in recent months; and (3) a growing saturation of the first-time home buyer category,” she said.

“Helping cushion the impact of these negative forces has been the persistence of low mortgage rates. “

Sales have remained stronger and for longer than expected largely because the period of ultra-low interest rates has been extended beyond earlier expectations due to an uncertain global economic outlook. The Bank of Canada's overnight lending rate currently sits at 1 per cent.

Low interest rates impact variable mortgages and other loans tied to a bank's prime rates, and have encouraged many, especially first-time buyers and those who might not otherwise afford ownership, to enter the market.

The Bank of Canada dropped rates to an emergency low 0.25 per cent during the recession of 2009 to encourage Canadians to spend on big purchases like houses.

Buyers entered the market in droves during the latter half of 2009 and early part of 2010, driving prices higher as some — encouraged by low lending rates — engaged in bidding wars to secure a home while rates were low.

That drove prices to record levels that some economists have predicted are not sustainable. Others have said a drastic drop could be on the way.

The national average price for a resale home made its smallest year-over-year increase since January, rising to $352,600 — up 6.5 per cent from September a year earlier.

That's down from as much as 9.3 per cent year-over-year increases posted in July, noted Bank of Montreal economist Robert Kavcic.

The upward pressure on prices from high-end sales in the expensive Vancouver and Toronto markets appears to be receding, he added.

“Note that sales in formerly white-hot Vancouver are now just two per cent above year-ago levels compared to nearly 30 per cent year-over-year in the spring, and average prices have come off the boil in recent months, though they're still up 10.5 per cent year-over-year.”

“Meantime, Toronto (and most of Ontario for that matter) is now seeing sales growth at a heated 21.3 per cent year-over-year pace, but that compares to a depressed period last summer.”

The September increase in activity reflects strengthened activity in a number of major markets, led by Toronto, CREA said.

The number of newly listed homes nationally was little changed in September from the previous two months and more that two-thirds of markets were in balanced territory.

New listings were up from the previous month in a number of major markets including Toronto, Montreal, Ottawa, Oakville and Vancouver, but declined in Edmonton and British Columbia's Fraser Valley.

The national sales-to-new listings ratio, a measure of supply and demand, stood at 52.8 per cent in September, up from 51.6 per cent in August.

“Canada's housing market remains stable amid continuing financial market volatility, contributing to Canadians' confidence in the economy and providing support for Canadian economic growth,” said Gregory Klump, CREA's chief economist.

“Interest rates are expected to remain low for longer, and evidence suggests that recent changes to mortgage regulations are preventing the kind of excesses they were designed to avert. Both of these developments are good news for the housing market.”

Economists have predicted interest rates will remain on hold until 2013. However, Mr. Kavcic said he believes sales and prices will fall somewhat next year.

“Canadian housing continues to look balanced and healthy, as low mortgage rates and a falling jobless rate are offsetting weaker consumer confidence and tighter mortgage rules,”he said.

“We continue to expect sales and prices to cool in the year ahead, but the landing should be a soft one.”

SUNNY FREEMAN

Ottawa— The Canadian Press

Why the sudden increase to Variable Rates?

Please enjoy this September 22, 2011 press release from Mortgage Brokers Association of British Columbia in regards to the recent increase to Variable Rates.

"The secret to the sudden increase in variable rate mortgages

Why could I get Prime minus .90 last week and today it is Prime minus .25?

 September 22, 2011 (Vancouver) – A great question, says the Mortgage Brokers Association of BC (MBABC), especially when fixed interest mortgage rates are remaining the same.  The quick answer?  As with many things, it all boils down to money.
Over the last couple of months, banks and other lenders have been offering historically low variable interest rates to qualified homebuyers in an effort to attract new clients and mortgage business.  In the short term, lenders have been prepared to accept these low profit margins with the knowledge that, as the prime rate inevitably rises, so too will their profit on variable mortgages – a similar ‘loss leader’ tactic used by retailers to get consumers into their door.

“However”, says Geoff Parkin, MBABC’s president, “the recent announcement by Bank of Canada governor, Mark Carney has changed the mortgage lending landscape.”   Carney stated that, because of poor performing global markets and continuing economic uncertainty, the benchmark interest rate would remain unchanged.  The long-term outlook indicates continuing low fixed interest rates with no significant increases to the Prime rate.  “In a nutshell”, says Parkin, “the bank’s theory of anticipating rising profits on variable rates was proven wrong.  They’ve had to quickly respond to this situation by reducing the variable rate discount in order to gain back profit.”

What does this mean for consumers who have variable rate mortgages?  Much of the same, says Parkin.  “We continue to see low fixed rates and the variable rate is under 3.0%.  There may still be value in going variable over fixed, but because consumers all have different financial situations and mortgage needs, we recommend they obtain expert financial advice from their MBABC mortgage broker.”"

Need access to your Home Equity?

Whether you need extra cash to pay off debt, renovate your home, travel, or whatever the reason may be. With mortgage rates as low as they are, this is a great time to refinance.  In the past, most people have resorted to a second mortgage or home equity line of credit to access their equity. More often than not these days, its more beneficial to pay out your first mortgage, incur a penalty, and refinance an increased amount at a lower rate. Take a look at this example of a client SharieMarieMortgageTeam recently helped gain access to their equity.

Bob is currently amortized about 27 years on his mortgage of $270,000. He has been in this mortgage for just over 3 years and is paying an interest rate of 5.29%. Since he has a penalty of almost $9000 to pay out his mortgage early, he went to his financial institution to discuss a second mortgage to access some of his equity. Bob was quoted a second mortgage for $40,000 at 7%, or a blended rate mortgage at 4.50% (for another 5 years) for the entire $310,000. Since the blend and extend option saves Bob the $9,000 penalty, he was leaning towards this option. This is what his payments would be:

Currently for the $270,000 - $1490/month

Option A - Keep current mortgage in place 2 more years and take a second mortgage - $1770/month

Option B - Lock in 5 more years at 4.50% for total $310,000 - $1565/month

Bob approached our team to double check his options and make sure he was making the best choice financially for him. We recommended Bob refinance his current mortgage to $319,000, giving him the equity he wanted and including the penalty in his new mortgage to avoid having to come up with the cash out of his own pocket. 

Option C (SharieMarieMortgageTeam Solution) 

$319,000 at 3.29% for 5 years keeping amortization the same as it currently is - $1390/month

So as you can see, our option provided Bob with a lower rate to lock in at for another 5 years and gave him access to his equity. Even though he incurred a penalty of $9000, his monthly payment is actually $175 less. Saving him almost $11,000 over the five year term, and freeing up monthly cash flow for Bob. This solution worked well and met Bob's needs. This is not necessarily always the best option for people as it does increase the balance owing on the mortgage, but in this situation it was ideal for Bob's needs. 

If you'd like to see how you can access equity and free up monthly cash flow, call SharieMarieMortgageTeam today.