Weekly Mortgage News for March 27, 2009

March 27, 2009

This week started out with focus on the economy and ended with taxes. There was speculation that Canadian banks were going to aid U.S banks by giving them advice into how our lending system works. The week continued with more good news how our economic slump was less painful then the rest of the world, then our focus shifted to the new harmonized sales tax.

Banks stand back and watch the U.S governments plans take their own course.

There were foggy predictions that the Canadian banks would lend a hand when it came to U.S investments. Right now the Canadian banks are more focused on the losses they sustained from loans going bad. This is a good sign, if other countries want to take notes from our economy because it show’s our strength as we are still lending and still lowering rates.

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CMHC purchase plan will wind down but still be available if needed

Though there was plenty of funding to buy up insured mortgage pools to ease the flow of money in Canada, it seems that we don’t need it at this point. Canadian banks have less need for the government to buy these up than the rest of the world. Canada did buy $53.4 billion in insured mortgage pools, creating liquidity in the system and allowing banks to lend money more freely. The program is doing it’s job right now and since the banks are liquid, meaning they have money to lend, the purchasing of the pools will slow down but there are funds available if the need to purchase more arises.

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Easier Canadian recovery, but will lag the U.S

The statement all around the world is that this recession is worse than the second world war recession. Everyone agrees that Canada is in better shape then the majority of the world with predictions that we may even experience some growth at the end of the year. But with the global economy expected to contract by more than 2% this year, the new predictions are that we won’t be back to normal until 2011. The worse to be hit will inevitably be Japan. Forecast show that there exports of cars and electronics may shrink up to 7%. The new consensus for Canada is that we entered into the recession later, and therefore will exit later. On a good note, our ride will not be as rough as our counterparts south of the border.

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Ontario Combines taxes

The budget that was released yesterday included a provision for a harmonized tax. The plan is to combine both the 5% G.S.T and the 8% P.S.T into one tax of 13%. Although the plan was spearheaded to benefit companies and corporations within Ontario, I don’t think that majority of the population was kept in mind when putting the plan together. Rumor has it that the $1000 refund cheques were not even part of the plan till Wednesday of this week. This will be effecting people looking to purchase a home after the tax takes effect on July 1, 2010. Look for an increase in majority of your closing cost expenses. My advice, the rates are low, there’s a renovation refund in place, the tax hasn’t kicked in yet, you should seriously consider buying if your not a homeowner already.

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