Peter Estephan
RE/MAX Elite
#17, 8103 - 127 Ave., Edmonton, AB
P: 780-406-4000
F: 780-406-8777
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Edmonton Mortgage Report

In this section of my website you’ll find more useful reports on the local Edmonton market. From real estate news to renovation tips, I try to keep my clients up to date on trends in this area. To learn more about financial conditons relating to mortgages, please contact Shaddy Estephan on (780) 406-4000 or visit his website by clicking on Edmonton Mortgage services.

Edmonton Mortgage Report - Wednesday, July 28, 2010 - To Fix Or Not To Fix A Mortgage Interest Rate

One of the biggest decisions in buying a home is figuring out whether to take out a fixed or variable mortgage. In the past, variable mortgages usually resulted in savings over the long run. The fixed variety locked you into a rate, normally for five years and if the banks lowered the interest rate, well, you were just out of luck.

On the other side of that coin, if the Bank of Canada decides to raise mortgage rates, which it has done a number of times since the beginning of 2010; your monthly mortgage payment remains the same. You can sleep knowing you won’t wake up to a costly surprise in your bank statement.

Sal Guatieri, a senior economist with the Bank of Montreal has been studying the situation. While normally variable mortgages are a good buy, he is inclined to think that in the current environment, a fixed mortgage is the way to go. He, and others, anticipate that rates will climb over the next five years. Just how much is unknown. A good guess is that by the end of 2011 the mortgage rates will increase by an additional 1.5 percent and by 2012 the Bank of Canada’s rate will reach 3.75 percent.

At present, the variable rate is roughly 2 percent, so it is understandable why some people don’t want to commit to a four or five year fixed rate that, at least for now, is higher. Borrowers will just have to assess their financial situation and decide how much of a risk they can afford to take.

Edmonton Mortgage Report - Tuesday, July 20, 2010 - Wet July Dampens Sidewalks But Not Sidewalk Performers

No matter snow or sleet or rain the mail…and the show… must go on. That is probably the only thing the postal service and those in the acting profession have in common, but it is a pretty big thing. The stage prop falls down around you, the lines still get delivered. The rain falls down like a monsoon in June and the street performers perform. That is the way of it.

Edmonton’s International Street Performers Festival had to deal with an enormous amount of rain but still gave a great show to about 230,000 people who showed up this past weekend. There were some sunny breaks and the performers took advantage of every square of dry cement by doubling up on the performances.

Freewill Shakespeare Festival, held in Hawrelak Park had diminished attendance because of thunderstorms. That festival is out in the open with no nearby buildings to duck into. There were seats under the amphitheatre tent, but the weather did understandably keep some folks away. Sunday’s weather was a bit better and attendance for Macbeth numbered more than 600.

Rainfall so far in July has measured 71.5 mm according to Environment Canada. The record for the month is 92 mm. Only 21 mm left before the city ties and the breaks the record with almost two weeks left. Wagers anyone?

Edmonton Mortgage Report - Monday, June 28, 2010 - Leader Of Rural Mortgage Fraud Scheme Gets Jail Time

Eugene Chamczuk pled guilty to being the head of a multi-million dollar mortgage fraud operation and was sentenced this past Wednesday. He received a three year prison term and was ordered to pay $1.3 million to organizations he had bilked. These include TD Canada Trust, Canada Housing and Mortgage Corporation, CIBC and Genworth Financial.

A total of $3.9 million was involved in the fraud and there were 32 separate offences. Much of this money appears to have disappeared. The straw buyers, those that were paid $5,000 to get involved in the project, some by submitting fraudulent information, were not awarded any funds.

The way the scam worked was that people who had questionable or no credit history that wanted to purchase real estate were approached and offered money in exchange for their personal information. Loans would be taken out, many times for more than the said properties were worth and the “straw buyers” would be on the hook for mortgages they could not pay.

Chamczuk’s defence lawyer was aiming for a community service sentence, but Justice Richard Marceau felt that prison time was more appropriate. The judge could have given the man four years under the law but because Chamczuk pled guilty the sentence was reduced.

Edmonton Mortgage Report - Saturday, June 12, 2010 - Latest Hearing on New Oilers Arena Postponed Until Fall

The owners of the Edmonton Oilers have put a hold on plans to construct a new arena in the downtown area. On June 7, the Katz Group announced that there will be a postponement on a hearing about the latest project updates. The legally required hearing was supposed to occur on June 28. Bob Black, Katz’s executive VP of sports and entertainment, said that there needs to be a clearer determination of what the public may be asked to pay for the arena and surrounding structures. The overall cost is projected to be more than $1 billion.

Black said that he would like for the next hearing to occur this fall, but could not confirm if anything would be ready for public viewing around the time of the civic election on October 18. With extra time on its hands, the Katz Group will re-think its financing options.

The plan to build a new arena initiated after the Oilers were purchased by Daryl Katz in 2008. Katz said he wanted the team to have a state-of-the-art new venue downtown. Katz said he would contribute $100 million, or what he thought would be 25 percent of a project estimated at the time to cost $400 million. There was no plan as to where the rest of the funding would come from.

However, the plans became increasingly more grandiose, with the proposed addition of a larger complex on nearly seven hectares that the Katz group bought on 101st Street. The most recent public hearing generated mixed reactions from the public, and a common reaction from consumers was a question over funding.

Edmonton Mortgage Report - Monday, May 24, 2010 - Condo and Housing Prices to Rise: CMHC

Buyers looking to purchase a home may be wise to buy sooner rather than later.

The Canada Mortgage and Housing Corporation (CMHC) predicted that resale home prices will rise next year to amounts equivalent to the 2007 housing boom.

Housing prices, both condos and single family homes alike, have already risen almost four per cent since 2009 to an average of $333,000 but are expected to rise another 3.6 per cent to an average of $345,000. At the peak of 2007’s boom, the average sale price in Edmonton was $338,636.

CMHC says that prices are rising due to a higher number of people wanting larger homes and a balancing market.

In 2009, resale home value dropped 3.2 per cent in the Edmonton area.

The CHMC predicts that apartment vacancy rates will fall from last year’s 4.5 per cent to four per cent. In 2006 and 2007, apartment vacancy rates were between one and two per cent. Also according to the CHMC, rents will remain steady this year and slowly increase next year.

In 2009, a two bedroom apartment rented for an average of $1,015, only slightly above the rate of $1,000 for 2010. By next October, however, rent is predicted to rise again to $1,030.

Overall, the CMHC says the rise in costs is actually modest and housing prices will be kept under control by stricter mortgage conditions and higher rates. Even so, buyers may want to act quickly if they’re to beat the increase, no matter how modest.

Edmonton Mortgage Report - Monday, May 10, 2010 - Investment Firms Gearing Up For Market Recovery And Want to Buy Green

Green buildings are in. Roughly two thirds or Canadian real estate firms want to invest at some point during the next year and they are taking a closer look at green buildings, even if they cost more. Over 85 percent of these firms want to keep their money in Canada, with Toronto being the preferred investment target. Montreal and Vancouver are also sought after markets.

World wide, almost 64 percent of real estate investors are confident enough in the market to want to invest in the coming year. The 240 major investors polled have a combined wealth of over $300 billion. Most of those questioned do not believe the market has hit bottom yet, but rather that in the latter part of this year the recovery will start, and it will be strong.

Almost half of those polled said they wanted to sell off unprofitable assets but 42 percent of those potential sales would wait until the recovery period. Also noted was the fact that investing in real estate is not the same as investing in the stock market. Returns on purchased stock can sometimes rise and/or fall quickly but you also can buy or sell much more easily. Investing in real estate is generally a long term commitment with a lot more hoops to go through to have a property change hands.

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Edmonton Mortgage Report - Thursday, April 22, 2010 - Mortgage Lending Rates To Increase, Economic Growth Expected to Return to More Normal Numbers

Mortgage lending rates will rise, the question is how fast. Between January and March of this year, Canada’s economy grew at a faster pace than seen in the last ten years. That meteoric rise is expected to slow as the housing market slows, government spending programs wind down and the Canadian Dollar holds strong against the United States greenback.

Governor Mark Carney lifted the commitment to not raise lending rates until mid 2010 since the economy is healthy enough not to need it. He did note that the amount of the lending rate increase, as well as the frequency of those increases would be carefully monitored to keep the country from suffering another economic freefall.

Though there is risk that the economy will slow, perhaps more than wanted, the increase in interest rates will also slow the accumulation of debt now shouldered by many. The strong currency and the gradual gains in productivity in the private sector should keep the economy in control, but caution is the word of the day.

It is expected that the Bank of Canada will implement the mortgage increases in 25 base point segments. Most economists expect the first rise to occur sometime in June. A report recently released with that prediction caused the loonie to trade at a 22 month high.

The trick is to raise the lending rate enough to ensure a healthy amount of spending, but not enough that inflation increases more than the average 2 percent. The unknown factor is how much the housing market will cool, and how much more tepid real estate sales affect the Canadian economy in general.

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Edmonton Mortgage Report - Tuesday, April 13, 2010 - Canadians Rushing to Beat Mortgage Rate Hikes, Mortgage Restrictions

Canada’s real estate market continues to experience vitality, ensuring vigorous activity among realtors, initiating some bidding wars and driving prices upward. Several factors are propelling a sense of urgency to buy and sell, the most significant being record-low interest rates. When the global recession of 2008-2009 began to take its toll on Canada, the government’s stimulus program included a reduction in rates from the Bank of Canada. Mortgage costs dropped to near-record lows, and consumers flocked to the housing market.

Interest rates are currently beginning to rise, in keeping with a recent hike in rates by Canada’s major banks. Also, the government initiated legislation effective April 19 that will make it more difficult to obtain certain types of mortgages; buyers who cannot supply at least a 20-percent down payment on a home will be required to qualify based upon the official five-year mortgage interest rate. Homebuyers, particularly those buying their first residence, are hurrying to lock into the best rates possible, as well as avoid the impending regulation.

The harmonized sales tax, arriving July 1 in Ontario and British Columbia, will not result in beautiful music for buyers in those provinces, as it will add nearly $3,000 to the average home buy.

The average Canadian home has a sales tag of $328,440, showing an 18-percent increase versus a year ago. The most expensive real estate market in the country, Vancouver, exceeded the national gain with a 20-percent hike in its average home price of $584,435. The average sale price of a home in the Toronto metro area is $434,696, trailing that of Vancouver by almost $150,000. Montreal’s average price of $245,000 is less than half that of Vancouver’s, but still represents a ten-percent increase versus last year.

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Edmonton Mortgage Report - Wednesday, March 10, 2010 - Canadian Banks Exceed Financial Profit Expectations

The Toronto Dominion Bank and Edmonton’s Canadian Western Bank had better than expected financial first quarters and seemed to solidify the positive outlook on the economy. Toronto-Dominion (TD) showed a record $5.04 Canadian in profit and Canadian Western (CWB) spiked at $40 million Canadian.

Canada’s second largest bank, TD, saw its shares rise 2.2 percent topping off at $69.84 Canadian on the Toronto Stock exchange. CWB also showed a price increase of 1.4 percent to come in at $21.97 Canadian per share.

This eased worries caused by the profits of the Royal Bank of Canada (RY) being weaker than expected. The Bank of Nova Scotia (BNS) has yet to report its earnings.

Canada’s domestic banks are outperforming their United States counterparts and are expected to do so until the economy rebounds south of the border. That is expected to take much longer than the economy reversal in Canada, with virtually little upward movement expected in 2010.

The TD division in the United States took a bigger hit during the recession that the Canadian division and the recovery has been slower, but they still showed a five percent profit. Most of TD’s operations are in the north eastern part of the USA.

Canadian Western Bank which services British Columbia, Alberta, Saskatchewan and Manitoba for both personal and commercial banking needs has a strong domestic footprint in Western Canada.

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