TD Weekly Bottom Line 12/20/2010
Highlights United States • Signs of improved economic growth continue to spring forth. This week, retail sales, industrial production and housing starts all surprised on the upside. • The bi-partisan tax plan passed the Senate and the House this week and will soon become law, providing an additional boost to economic growth in 2011. • Beyond the next few quarters, a further improvement in economic activity will require resolution of the outstanding issues holding back growth: clearing foreclosures, reducing uncertainty in the housing market, and repairing household balance sheets. Canada • The economic data this week were mostly good news. Manufacturing sales up 1.7% in October, and forward looking indicators point to continued strength in the coming months. Meanwhile, more good news came from the existing home market with sales up 5.4% - a fourth consecutive monthly gain. Sales are still down 16% from year ago levels. • In other news, we learned the Canadian household debt-to-income ratio surpassed that in the U.S., rising to 148%. Both Bank of Canada Governor Mark Carney and Minister of Finance Jim Flaherty expressed concern over the level of household indebtedness. In the event that household debt became a larger concern, both argued that regulation would be the most appropriate tool to curb household borrowing. click here to read full report Add Comment TD Weekly Bottom Line 12/10/2010
Highlights United States • A compromise on Federal 2011 tax policy was reached this week between the White House and congressional Republicans • The package surprised markets, and prompted forecasters – including ourselves – to upgrade projections for next year’s growth • The plan provides an important source of short-run stimulus • However, one must remain cognizant that the proposals are rather short-term in nature, and do nothing to address the US government’s longer-run debt challenges Canada • Optimism surrounding the U.S. economic outlook beginning to materialize. • Near-term U.S. economic growth bolstered by fiscal and monetary measures. • Will be good news for Canada ’s export sector. • However, this week’s interest rate announcement and the release of the winter issue of the Financial System Review highlight that the Bank of Canada is firmly focused on the balance of risks rather than near-term growth. • With heightened sovereign debt concerns, the elevated Canadian dollar, and uncertainty regarding the global outlook weighing against record high household debt levels and relatively sticky inflation, the Bank is caught in a delicate balancing act. Click here to read full report TD December Bottom Line 12/06/2010
Highlights United States • U.S. non-farm payrolls disappointed this week with a gain of only 39K in November, following October’s gain of 172K. • Nonetheless, signs continue to build that U.S. economic growth and therefore job growth should continue to improve in 2011. One dissapointing month does not alter this view. • While progress will continue, the pace will be moderate and the unemployment, which in November rose to 9.8%, will remain elevated and inflation will remain subdued. Canada • This week saw the release of three lukewarm Canadian data reports that all served to temper expectations that the economic recovery would be smooth sailing going forward. • On the heels of a large deterioration in net trade, Canada ’s current account deficit widened to $17.5 billion in Q3 (4.3% of GDP), the largest level on record since 1946. • Q3 real GDP growth came in at disappointing 1.0% annualized growth, below the Bank of Canada’s forecast. However, all signs tell us that there is upside potential going forward. • In November, the national economy squeezed out 15K net new jobs, better numbers than the last few months, but a far cry from the numbers seen earlier in the year. Job growth is likely to remain lackluster in the next few months as there is simply not enough incentive for firms to regain their former robust pace of hiring. Click here to read full report TD November Bottom Line 11/09/2010
Highlights United States • Events this week had been widely anticipated by financial markets and did not disappoint. Stock markets posted impressive gains with the S&P 500 and Dow both setting new highs for 2010 • Congressional midterm elections have caused a shift in America’s political landscape, as Republicans have taken back control of the House of Representatives • On Wednesday, the Fed confirmed that it will begin a program of Treasury purchases, with hopes of kick starting growth in the U.S economy • The $600bln size of the program was in line with market expectations, but the decision to only purchase a small portion of bonds in the 10 – 30 year space caused 30 year yields to rise • Friday’s non-farm payrolls report revealed that the U.S. economy created 150K jobs in October, more than twice consensus expectations Canada • Canadian employment stalled in October, but a drop in the labour force helped bring the unemployment rate down to 7.9%. On a positive note, full-time employment is still growing at a relatively decent clip. • The release of the October CFIB small business confidence index this week underscores our belief that employment growth will remain soft in the near-term. • While a second round of quantitative easing in the U.S. has helped improve market sentiment, barring a sharp revival in U.S. demand, it is unlikely to materially improve Canadian economic growth and employment. A strong Canadian dollar will remain a headwind for Canadian exporters. click here for full report SUMMARY Effective July 1, 2010, the Harmonized Sales Tax (HST) in Ontario and British Columbia will apply to residential home purchases from builders closing within 120 days. When completing these applications it is important to ensure the purchase price of the residential property includes the HST minus any applicable rebates. While most builders include the HST, minus any applicable rebates in the purchase price, not all of them will do this. When the builder does not include the HST, it will result in an uncomfortable customer experience at closing as the customer may have a large outstanding HST amount included on their Statement of Adjustments. ACTION When completing a residential home purchase from a builder closing within 120 days, carefully review the Purchase Agreement to determine if the purchase price of the property includes or excludes the HST, minus any applicable rebates. 1. If the purchase price includes the HST, minus any applicable rebates, use the purchase price as stated on the Purchase Agreement. 2. If the purchase price excludes the HST and/or any applicable rebates, you should obtain an Amendment/Addendum from the builder reflecting a purchase price inclusive of the HST, minus any applicable rebates. ADDITIONAL INFORMATION · For questions specific to HST and Federal or Provincial New Housing Rebate eligibility, customers must contact their builder or solicitor directly. · The CRA’s current policies’ regarding the application of the GST to housing generally applies to the HST. Similarly for rebate eligibility, the property must be the primary place of residence of the purchaser or a direct relation of the purchaser. Click here for examples and more details HST What's Taxable and What's Not 07/02/2010
Minister Flaherty takes action to encourage choice and competition for business and consumers Press Release Code of Conduct Back Grounder CMHC has announced and will be implementing many changes that will impact all Insured mortgages. I have been hearing a lot of confusion regarding these changes and wanted to recap CMHC’s new rules effective April 9th & 19th 1) All changes are effective April 19, 2010 with exception to change # 7 & 8 which will be effective April 9th. 2) Qualifying rate - For Insured loans with fixed term of less than 5 years and for all Variable rate mortgages, regardless of the term, the qualifying interest rate is the greater of: the benchmark rate and the contract interest rate. The benchmark Bank of Canada’s 5 year interest rate is the average of the 5 major banks posted 5 year rate and essentially, this will be the new qualifying rate for shorter term mortgages and variable rate mortgages. It moves the current qualifying rate from 3.40% to 5.39% for those with less than 20% available to use as a down payment. 3) Refinance loan to value maximum will be 90% 4) Maximum loan to value for rental (non owner occupied) will be 80% LTV 1 to 4 units. 5) Rental income qualification. 50% of the gross rental income from the subject property may be included into the borrower’s gross annual income for the purpose of calculating the borrower's Total Debt Service Ratio. 6) Maximum numbers of Units under CMHC Second Home. Second home product only available for 1 unit owner occupied properties. 7) Changes to CMHC Self Employed Product will be effective April 9. For purchase and portability the maximum LTV will be 90%. For refinance the maximum LTV is 85%. Also qualification rules have changed for this product. If a client has been self employed in the same business for more than 3 years, they are NOT eligible under the CMHC Self Employed Product without Traditional third party validation of income (qualified deal). CMHC will continue to require that the borrower have a minimum of 2 years experience in the same field. This can include time spent working as a non self employed worker in the same field. Lenders are expected to obtain a copy of the business or GST license or Articles of Incorporation. Therefore if a client is self employed over 3 years, then you cannot do a self employed product. It must be qualified. If a client is self employed up to 3 years, you can do a self employed product. 8) Commissioned income will no longer be eligible for the CMHC Self Employed Product without traditional third party validation of income.1) All changes are effective April 19, 2010 with exception to change # 7 & 8 which will be effective April 9th. 2) Qualifying rate - For Insured loans with fixed term of less than 5 years and for all Variable rate mortgages, regardless of the term, the qualifying interest rate is the greater of: the benchmark rate and the contract interest rate. The benchmark Bank of Canada’s 5 year interest rate is the average of the 5 major banks posted 5 year rate and essentially, this will be the new qualifying rate for shorter term mortgages and variable rate mortgages. It moves the current qualifying rate from 3.40% to 5.39% for those with less than 20% available to use as a down payment. 3) Refinance loan to value maximum will be 90% 4) Maximum loan to value for rental (non owner occupied) will be 80% LTV 1 to 4 units. 5) Rental income qualification. 50% of the gross rental income from the subject property may be included into the borrower’s gross annual income for the purpose of calculating the borrower's Total Debt Service Ratio. 6) Maximum numbers of Units under CMHC Second Home. Second home product only available for 1 unit owner occupied properties. 7) Changes to CMHC Self Employed Product will be effective April 9. For purchase and portability the maximum LTV will be 90%. For refinance the maximum LTV is 85%. Also qualification rules have changed for this product. If a client has been self employed in the same business for more than 3 years, they are NOT eligible under the CMHC Self Employed Product without Traditional third party validation of income (qualified deal). CMHC will continue to require that the borrower have a minimum of 2 years experience in the same field. This can include time spent working as a non self employed worker in the same field. Lenders are expected to obtain a copy of the business or GST license or Articles of Incorporation. Therefore if a client is self employed over 3 years, then you cannot do a self employed product. It must be qualified. If a client is self employed up to 3 years, you can do a self employed product. 8) Commissioned income will no longer be eligible for the CMHC Self Employed Product without traditional third party validation of income. Principles for Interesting Times 03/11/2010
Governor of Bank of Canada Speaks to Carleton University.........Bank places supreme importance on policy measures within a well- developed framework. Click here to read speach With the recent announcement by the government to its changes in Mortgage Financing that will take effect on April 19. I thought I would highlight one of the changes in particular. What will the Posted rate be that will be used to qualify clients on April 19? This is still in discussions with the government so it is a great time to act now. For Example: Average family income of $80,000 Currently they can qualify at 3.75% New qualifying rate at April 19,2010 5.5% ( I am using a guess here ) Today they would qualify for approx a $422,000 mortgage On April 19...... They will only qualify for a mortgage of $339,000 . That means they are loosing out on 83,000 in purchasing Power. Get the most purchasing power by acting before April 19, 2010 |
RSS Feed