I received the following from Nancy MacCallum, a Mortgage Planner with Mortgage Architects here in Ottawa:
Economic pundits say the worst may be over.
· TSX +51.40pts (Reuters) for a 5th straight session, supported by rising energy shares, which climbed along with oil prices, and by a rally in financials.
· DOW -81.80pts stocks fell on all 3 main indices as investors took some profits following four days of positive gains.
· Dollar +1.7c to $.84.03US.
· Oil +$2.47to $48.81US per barrel. helped up by worries over the effects of Israel’s attacks on Gaza and a market dispute that has resulted in a cut to Russia’s natural gas output to the Ukraine has also benefited oil
· Gold -$21. to $857.80US per ounce
www.bankofcanada.ca/en/rates/bond-look.html Canadian bond prices
Overall sentiment was lifted by a meeting involving Canadian Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney with country’s top bank executives on Monday to urge the banks loosen up lending to try to get the economy moving. Flaherty may comment on the talks on Tuesday.
Economic pundits say the worst may be over Alia McMullen, Financial Post
Canada has begun 2009 with a financial crisis, a global economic slowdown, political unease at home and the emergence of a new ideology in the United States. Amid the uncertainty, the National Post and Canadian Club’s 32nd Annual Outlook, presented by Scotiabank, Monday brought together an economist and three Financial Post columnists to present their thoughts on what the year might hold. None expects 2009 to be easy, and while there is a high risk of more market shocks to come, there is an equally good chance that the worst is over.
Warren Jestin
The chief economist at Scotiabank says 2009 will be a “challenging year; one that suggests that prudent management, cautious spending is the order of the day.” It will also be a year marked by global synchronicity. Global growth will decline to 1%-1.5% as consumers feel the fallout of declining stock markets, slowing economies, and falling real estate values. In Canada, the economy won’t begin to recover for another six months, and even then the process will be slow. There remains a high risk another unforeseen event, such as the collapse of Lehman Brothers in September, will shock the markets. He says interest rates will fall further and the Canadian dollar will likely stay between about US80-85 cents. And while food prices may rise, overall price pressures will remain deflationary.
Terrence Corcoran
The editor of the Financial Post says the stock market is likely sitting at the bottom of a trough and will recover in the next 12 months. However, government interference in the financial markets and economy through regulations and stimulus packages could block a recovery. “Until governments settle down … the markets will remain dangerous and uncertain,” he says. He questions whether investors will buy shares in financial and automotive companies that will be forced to comply with strict rules as conditions to receive government assistance. And while he says he does not really believe in astrology, it is interesting to note that 2009 is the Chinese year of the Ox. Five of the last seven Ox years have produced a bull stock market run. The 2008 year of the rat predicted recession and turmoil.
John Ivison
The political correspondent at the National Post expects sanity will return to the Hill in 2009 after the coalition shakeup at the end of last year resulted in a prorogued parliament. “It shocks me to say this, but 2009 might actually bring out the best in our politicians,” he says. The Stephen Harper minority conservative government is also likely to retain power, with the Liberals, under the new leadership of Michael Ignatieff, expected to support the federal budget. He says there eventually will be an election between Mr. Harper and Mr. Ignatieff, but the later needs time to build his public profile. In the meantime, the Harper government will begin to prepare Canada for growing labour shortages as the Baby Boomer generation retires by pumping money into training and retraining.
Diane Francis
The Financial Post editor-at-large says 2009 will certainly not be worse than 2008, but the global economy has sunk into a state that is somewhat equivalent to a depression. However, this depression will differ from that of the past, leaving behind the long food lines, and bracing an era of historic international co-operation. She expects those that abused the financial system to be held accountable amid the birth of a new order of global market oversight organizations. “Like the last Great Depression, we are going to be in for some sweeping reforms,” she says. The inauguration of Barack Obama on Jan. 20 and the switch to a stimulatory economic policy of Obamanomics could also present challenges for Canada. “He will cut taxes, which will force us to cut taxes,” she says.
Close
Presented by
Canadian homebuilders deny market headed for meltdown
No parallels with U.S. Eric Beauchesne, Canwest News Service
OTTAWA – The Canadian housing market is cooling but is not facing a U.S. style meltdown, builders here say.
“A few commentators have drawn a parallel between the Canadian housing situation and the extreme difficulties in the housing market in the United States,” the Canadian Homebuilders say in a report Monday that dismisses such comparisons.
“There is absolutely no merit in drawing such a parallel,” it said in a report that contends the pace of housing construction in Canada is merely returning to a level that is consistent with underlying housing requirements following the boom of recent years.
“The housing situation in Canada is totally different from that of the U.S.,” it said. “There will be some price moderation in some markets, but there is nothing to suggest that housing markets in Canada are vulnerable to the oversupplies and plunging prices that characterize many markets in the U.S.
“We did not experience the same housing boom conditions that occurred in the U.S., and there is no reason to expect that we are in for the serious pain they are currently suffering,” it said.
The moderation of house prices will improve affordability and create opportunities for first-time home buyers, it said. Meanwhile, existing homeowners have little to fear.
“For those selling a home and buying another, the moderation of housing prices should be relative – there should be no significant gain or loss from the easing of house prices,” it said.
“For those who have owned a home for some period, their equity will be substantial, given the rising prices of the past few years,” it said. “For those who purchased their home recently, there should be few worries about a modest temporary reduction in value.”
To support its argument that the Canadian housing market is not going the way of the U.S. market, it cited a variety of differences:
• Unlike in the U.S., underwriting standards for qualifying mortgage borrowers in Canada have been maintained at prudent levels resulting in mortgage borrowers here being much more creditworthy;
• Canadian mortgage lenders never offered low initial ‘teaser’ rate mortgages that led to most of the difficulties for mortgage borrowers in the U.S.;
• Most mortgages in Canada are held by their original lender, not packaged and sold to third parties as is typical in the U.S., and consequently, Canadian mortgage lenders have a vested interest in ensuring that their mortgage borrowers are creditworthy and not likely to default;
• Only 0.3% of Canadian mortgages are in arrears versus 4.5% in the U.S. and what even before the start of the U.S. housing meltdown two years ago was 2%;
• Canadians tend to pay down their mortgage faster than in the U.S. where mortgage interest is deductible from taxes, which encourages U.S. homeowners to take equity out of their homes to finance other spending, a difference that is reflected in the fact that in Canada mortgage debt accounts for just over 30% of the value of homes, compared with 55% in the U.S.
In Canada, home prices are down 9.8% from a year earlier, compared with an 18% drop in the U.S. from what were already deeply depressed prices a year ago, the latest real estate industry figures show.
Most analysts here agree that Canada should avoid a U.S. style housing market meltdown.
Michael Gregory, senior economist with BMO Capital Markets, said recently that “we won’t even come close” to what is happening in the U.S. thanks to stronger employment and income growth here as well as banking system that “continues to make mortgages” available to Canadian consumers.
But he cautioned that if unemployment rises in Canada, there will be a larger fallout for the domestic housing market.
“Anyway you slice it, if you don’t have a job, you can’t get a mortgage and you can’t buy a house,” Mr. Gregory said.
Nancy MacCallum, AMP
Mortgage Planner
Mortgage Architects
FSCO Agent # M08003391 -Brokerage 10287
150 Isabella St.Suite 110
Ottawa,ON K1S 1P7
tel:613-276-6912
March 5, 2009
It is wonderful to be able to promote the work of both friend & local artist- Allison Fagan. She never stops amazing me!!! She is an award-winning pencil crayon artist, an incredible singer, and now author! Where does it stop Allison??
