Canadian Banks Rethink Record Low Mortgage Rates

This article appeared on Reuters and was written by Cameron French on February 9, 2012.

Canada’s big banks, which entered a mini-price war on mortgages last month, are now raising their rates ahead of schedule, due to higher costs that make the cheap mortgages more expensive to fund.

Royal Bank of Canada (RY.TO) and Toronto-Dominion Bank (TD.TO), which had offered a record-low rate of 2.99 percent on a four-year mortgage, said on Wednesday they were cancelling the offer, well ahead of the original expiry date of February 29th.

TD’s lowest rate on a four-year mortgage is now 3.39 percent, it said.

Bank of Nova Scotia (BNS.TO) followed suit on Thursday, while a Canadian Imperial Bank of Commerce (CM.TO) spokesman said the bank would likely adjust rates on Friday.

The moves underscore how nervous the banks have become about narrow margins in their consumer lending portfolios. Bond yields have begun to inch higher from historically low levels in December. Banks typically issue bonds to fund their mortgage lending.

“Our long term funding costs have gone up considerably due to global economic concerns, and while we have held off in passing on these rate changes to our clients, it is now necessary for us to increase this mortgage rate,” said RBC spokesman Matt Gierasimczuk.

Analysts say the banks will struggle to increase earnings this year due to low rates, which narrow the margins on loans.

While they can partially compensate for that by raising lending volumes, the Bank of Canada and the federal Finance Department have been warning Canadians to lower their already-high debt levels.

Bank of Montreal (BMO.TO) kicked off the price war when it announced a two-week offer of a record-low 2.99 percent 5-year mortgage in mid-January.

The move to cut rates drew criticism as it came just days after bank CEOs had warned of the possibility of a housing bubble in certain regions across the country.

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Kamloops Meets City’s Growth Expectations in 2011 Census, Kamloops Daily News

This article appeared in the Kamloops Daily News on February 8th, 2012 and was written by Michelle Young.

Kamloops beat the national average in terms of population growth between 2006 and 2011, but it lagged slightly behind B.C.’s average.

Statistics Canada released initial figures from its 2011 census Wednesday that showed Kamloops has 85,678 residents. That’s up 6.6 per cent from 2006. B.C. as a whole saw its numbers rise seven per cent between 2006 and 2011.

Venture Kamloops executive director Dan Sulz said the city’s growth during tough economic times bodes well. “To me, that’s good news as opposed to what you hear in the world economy with people shutting down business and moving out of town,” he said. “We’ve not only sustained, but we’ve grown over that period.”

That’s attractive to business owners looking for places to set up or branch out, because it indicates a growing base for workers and customers, he said.

Mayor Peter Milobar said the census growth rate matches what City staff predicted using building permits and household averages. They estimated a 1.25 per cent increase per year. “We’re almost bang on,” he said.

Those figures are used when the City seeks funding or grants from the provincial and federal governments, he said. It also helps when the City looks at shopping areas, road networks and other infrastructure. “We have to be mindful of planning ahead on projects. We have to be ready to move if need be, for infrastructure grants,” he said.

City administrator Randy Diehl said a slightly higher growth rate would be nice, but the 6.6 per cent in five years is manageable. “When you have zero or no growth, your economy tends to be in big trouble. It’s not sustainable, people have a hard time making a living,” he said. “When you get higher than 2.5 to three per cent, it’s difficult for local government to keep up with the pace of change and demand on service from pipes and pavement to softer services like parks and recreation.”

While City council has been raising the idea of building a new performing arts centre in Kamloops, that’s driven more by the arts community than the population numbers, Diehl said. “It’s about the community that makes use of those facilities that wants more,” he said.

City community development supervisor Randy Lambright said the census figures match what was forecast in KamPlan as far back as 1997.

The stats also showed the number of homes in Kamloops was at 36,900 in 2011, compared with 34,100 in 2006 — a jump of about 8.1 per cent or 558 homes per year, he said.

That, too, was in keeping with the City’s predictions. “We’ve always said if we grow at 500 plus dwellings a year, that’s very manageable,” he said.

It’s a pace that lets the City keep up with infrastructure demands and doesn’t dump a huge tax burden on residents, Lambright said.

Knowing the City’s predictors are so close to reality helps keep on top of cost estimates so there aren’t massive fluctuations in utility or tax rates, he said. It also helps manage the available land supply, preventing sprawl and containing the growth, he said.

Statistics Canada will be releasing more information in the coming months, which Sulz is eagerly anticipating. “I’m really looking forward to finding out some of the details. I’m interested to see what age demographics are moving to each community.” Some of the age demographics are being released in late May, while Statistics Canada will be putting out information about households, families, homes and language in September.

How do we compare?

Statistics Canada released information Wednesday from the 2011 census that shows population increases for the following cities in B.C. that are comparable to Kamloops:
* Kamloops, 85,678 in 2011, 80,376 in 2006, up 6.6 per cent
* Nanaimo, 83,810 in 2011, 78,692 in 2006, up 6.5 per cent
* Kelowna, 117,312 in 2011, 107,035 in 2006; up 9.6 per cent
* Prince George, 71,974 in 2011, 70,981 in 2006, up 1.4 per cent
* Chilliwack, 77,936 in 2011, 69,217 in 2006, up 12.6 per cent.

Home-based Businesses Continue to Grow, Kamloops This Week

This article appeared in the Kamloops This Week on February 8th, 2012 and was written by Jeremy Deutsch. I thought this would be an interesting article to post on my blog since I think it shows that Kamloops has a healthy economy in comparison to some other smaller cities. This article does not specifically relate to real estate in the city however a healthy economy by default keeps real estate moving (no pun intended). Read the article below.

In the last decade, the Tournament Capital has become a do-it-yourself town.

Roughly three quarters of new business licences handed out by the city since 2002 have been for home-based operations.

The numbers have city officials trying to figure out why there hasn’t been as big an increase for businesses in commercial- and industrial-zoned areas.

David Trawin, director of development and engineering services, said his department will study the issue.

He said the numbers are disconcerting, given there is an increasing number of vacancies  downtown, while the city has plans to grow the North Shore.

“What we are undertaking is looking at the geographic locations of those increases or decreases over 10 years in terms of business licensing,” Trawin said, suggesting new businesses are likely locating in the southwest sector of the city.

However, he wouldn’t speculate on any solutions — or if there is even a problem.

Since 2002, the city has handed 1,100 additional business licences, but only 350, or 35 per year, have gone toward businesses destined for commercial or industrial areas.

In the meantime, it turned out to be an average year for the city’s business-licensing department.

According to the 2011 development and engineering services department annual report, the number of new businesses licensed dropped by 3.5 per cent to 790, compared to 819 in 2010.

The total number of business licences in the city rose slightly to 5,512 for 2011, up from 5,421 the previous year.

The number has steadily increased over the last 10 years.

In 2002, there were 4,432 businesses licensed with the city.

The city also managed to take in more money, collecting an extra $15,247 in license revenue, bringing the total for the year to $1.025 million.

The number of home-based business in Kamloops also rose last year, to 1,943 from 1,915 the previous year.

Home-based businesses make up 34.9 per cent of all licences in the city, but the share dropped slightly from 35.2 per cent in 2010.

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