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INTEREST RATE HISTORY

History of the Canadian Prime Rates. Click here for graph.
History of the Bank of Canada Bank Rates. Click here for graph.

WHO IS KURT HENRY?

Kurt is truly one of a kind. His unique approach to educating his clients, with simple explanations to complex situations is a well refined skill that makes his clients comfortable in making decisions. He is not a generalist with various specialties in loan products, investments, banking, etc... He is a specialist with one thing that he does every single day, that being mortgages. The mortgage market has been changing drastically over the past 3 months; just look at the mortgage rates. A mortgage specialist is now more important than ever. The younger face does bring experience. Kurt is a previous mortgage specialist and former financial services manager for one of Canada's major financial institutions. He has a Business Commerce University degree, with a concentration in finance and a minor in economics. He also holds the AMP designation from the Canadian Association of Accredited Mortgage Professionals. The AMP designation requires a certain amount of experience in the mortgage industry, along with continuing education courses to be completed. Kurt's education and experience is bound to save you time and money, and ease the mortgage experience into a smooth one.

WHY USE KURT HENRY TO ARRANGE MY FINANCING?

The best mortgage rates, products, and service are just the beginning. As of January 1st 2009, Kurt and Randy Henry work together as a father/son team, and offer a truly unique mortgage experience that is not found anywhere else. Kurt and Randy's mission is to provide a mortgage experience that is unique to the mortgage industry that creates value to their clients, which will ensure that their clients are not just satisfied, but are truly happy. Their clients will save money with them, and will want their family, friends, colleagues, and neighbours to have the same unique mortgage experience while saving time and money just as they did.

ARE 100% FINANCING OR ZERO DOWN MORTGAGES STILL AVAILABLE?

100% financing is no longer available, however there are some options available where no downpayment is required. This type of financing however requires good credit history, and strong borrowers. If you would like more information on this, click on "Email Kurt" or "Call Me Back" at the top of this page.

WHAT DOES KURT HENRY DO?

My office is located in Courtice, just east of Toronto and I service clients anywhere in Ontario. I will start by walking you through the necessary steps to get you where you want to be. Depending on your fluency with mortgages we can start with the basics with very clear education, or start by getting right into it. After collecting your information and it is time to move forward, I have the major banks and lenders bid on your business. In essence, I shop your mortgage to find the best deal and present you with the outcome. Even better, my service is free to you! It's the lender that pays me. I arrange financing for home purchases, refinances, and whenever your mortgage is up for renewal. Inquiries are always welcome.

KURT'S TESTIMONIALS

"Kurt, as I reflect over the past six months or so, it occurs to me that you were the first person I contacted for help when I decided to sell my house and buy a duplex. I felt quite nervous about securing financing for the new place, and was completely unsure about my eligibility, various financing options and the necessary steps to take. I am so appreciative of your expert guidance through this whole process. Your calm, welcoming, and friendly manner put me at ease as soon as I came to your office. You listened carefully to my situation; understood my circumstances; provided excellent recommendations; and followed up with every last detail, right up to the day that my purchase was finalized. You were always available to me by phone and patiently answer my every question. Your high level of professional knowledge, combined with your attention to detail and genuine concern and desire to do the best for me, are your oustanding qualities. I highly recommend you to others and encourage you to provide my name as an extremelely satisfied customer and professional reference."- Linda Watson, Retired Executive Director of Grandview Childrens Centre.

"Kurt, thank you so much for your help. You were able to provide the expertise with professionalism & thoughtfullness, yet with an air of compassion that has helped us in our struggle to get back on track."

"Dear Kurt, We would like to thank you for your expertise, facilitation and support of our recent mortgage refinance. Your extensive knowledge and kind manner made the process seamless and ‘pain-free’. We certainly will seek out your help if the need for your services arises again and as well will pass your name on to friends and family that may be in need of your services.

Your customer service skills are bar none and you have provided us with excellent follow-up to the process. We enjoy your newsletter and have found many interesting and useful articles in this publication."

MY SPECIFIC NEEDS

What do I do with my upcoming mortgage renewal?
I am thinking about refinancing but I'm not sure how it works or if it makes sense?
I am thinking about purchasing a house since we are in a buyers market but I'm not sure if I should or what the steps are, or how much I would qualify for.
My mortgage is not up for renewal but the rates are low and I am wondering if I can benefit from the low rates somehow?

Feel free to email Kurt by clicking on the "Email Kurt" button at the top of this page. Kurt can give you answers and advice specific to your situation.

HOW DO I CHOOSE THE RIGHT PERSON TO ASSIST WITH MY MORTGAGE NEEDS?

First, be aware that mortgage agents have a unique interest in your well being. Mortgage agents such as myself strive to make you as happy as possible, as my business depends on it; almost 100% of my business is generated through referrals. Your other option is to confront a financial institution on your own, knowing that they have a unique interest in the profitability for the institution that they work for. Their compensation depends on that profitability, whereas my compensation depends on my clients' willingness to refer their friends and family. One other comparison is this: my goal is to get you the best deal in the entire mortgage market (at no cost to my client), as opposed to the best deal within one single financial institution.

Secondly, be sure to work with someone that you trust and that you are comfortable with. This will help you understand what they are explaining to you, and will make the mortgage experience that much better. Believe it or not, the mortgage experience can be enjoyable.

Thirdly, be aware of your learning style. Personally, I am a visual learner with a dislike for pressure. As my clients know, I draw pictures and graphs to educate them, and they will not get any pressure to go ahead with anything.

MORTGAGE NEWS AS IT COMES AVAILABLE...

September 9th, 2009

Bank of Canada expected to keep rates at record low

Paul Vieira, Financial Post Published: Tuesday, September 08, 2009

OTTAWA- Analysts appear to be unanimous in believing the Bank of Canada will hold its record-low policy rate steady at its meeting Thursday, and maintain its commitment to keep the rate at 0.25% until June 2010.

The only item to look for in the pending rate statement, they indicate, is any change in nuance or tone, and possibly further concern about the rise of the Canadian dollar.

"The fact that the major economic data has largely evolved in line with the Bank of Canada's forecasts suggests (the central bank) is likely to reiterate its conditional statement to keep the overnight rate at 0.25% until the end of the second quarter of 2010," said Charmaine Buskas, senior economics strategist with TD Securities.

"And with no expected change to the overnight rate, all the focus will be on the nuances in the statement. It is likely to be very similar to the July 21 statement."

For the record, 21 economists in a Bloomberg News survey anticipate no change in the Bank of Canada rate, nor do the 11 members of the C.D. Howe Institute's monetary policy council.

The C.D. Howe said the Bank of Canada should stick to its mid-2010 commitment, adding that growth prospects remain uncertain as council members questioned how sustainable Canadian exports growth abroad will be, with "the dependence of U.S. and Chinese growth on government stimulus being a particular point of concern."

CMHC expects housing market to rebound strongly this year and next

Financial Post Published: Friday, September 04, 2009

Canada's housing market will rebound strongly in the second half of this year and into 2010, the federal housing agency said yesterday. Housing starts will reach 141,900 this year and increase to 150,300 for 2010, said Canada

Mortgage and Housing Corp. "Improving activity on the resale market and lower inventory levels in both the new and existing home markets are expected to prompt builders to increase residential construction," CMHC said.

Bob Dugan, CMHC's chief economist, said, "Economic uncertainty and lower levels of employment tempered new housing construction in the first half of this year. In the second half of 2009 and in 2010, we expect housing

markets across Canada to strengthen."

September 8th, 2009

THE NEW HST TAX ON NEW HOMES

The new harmonized sales tax being proposed in British Columbia and Ontario may end up being an overall wash for some consumers but anyone buying a new house is about to get dinged.
The new harmonized sales tax being proposed in British Columbia and Ontario may end up being an overall wash for some consumers but anyone buying a new house is about to get dinged.
The HST met with some resistance from the real-estate sector in Canada's largest province when it was first proposed earlier this year but the government agreed to some concessions.
New homes in Ontario currently just face a 5% goods-and-services tax, which builders have buried in the price of the home since the tax was introduced 19 years ago. Starting on July 1 of next year, new houses would face a combined HST which would be 13% in Ontario.
With new-home sales slowing after a seven-year bull run, the last thing the industry needed was something that would curtail activity further.
There was a sigh of relief when the government agreed to grandfather from the tax any deals signed prior to the date the announcement was made - June 18, 2009. Deals closed before July 1, 2010 would also not face the tax.
Everybody else was in trouble. So the government came up with an exemption from the added tax on the first $400,000 of any new home, meaning consumers outside of Toronto were for the most part unaffected.
Despite the government's "generosity," about 40% of people buying a new home in Toronto are going to face a major tax hit. That's the percentage of new homes that sell for more than $400,000.
On a $500,000 home in Toronto, the HST will mean $6,000 in new taxes. Here's how it works. The HST means an additional $40,000 in new taxes on that home, based on 8%. Builders get an estimated 2% tax credit on supplies, lowering the bill to $30,000. Minus a $24,000 tax break on the first $400,000 and you get to $6,000.
So who is going to pay for that $6,000? As the price goes up, the tax bill gets higher. It's $36,000 for a $1-million home.
"I don't know this for a fact but I don't think any builder will make [the HST] an extra closing cost because they imbedded the GST for so long," says Stephen Dupuis, chief executive of the Toronto-based Building & Industry Land Development Association.
Maybe that extra tax is not added on to the sticker price, but at some point the consumer is going to pay. Maybe through a higher price, cheaper materials or fewer finishings thrown in.
"A tax like this is going to be passed on to the consumer over time and the consumer is going to lose," says Brian Johnston, president of Monarch Corp., one of Toronto's largest home builders.
Economist Benjamin Tal, of CIBC World Markets, predicts the tax will have an impact on housing sales. "It's not like something you can brush under the carpet," says Mr. Tal. "There will be reduced demand."
He predicts the industry will build more houses without all the finishings. That will leave the consumer to do work on the black market with contractors to avoid the HST. That's what happened in the Maritimes, where the HST has been in play for years, said Mr. Tal.
"This will give a boost to the under-the-table transactions. Is that an optimum thing?" says Mr. Tal.
It's no wonder British Columbia's housing industry is fighting the HST tooth and nail. It's not interested in the Ontario compromise of an exemption on the first $400,000 of a home. B.C will provide a $20,000 tax break on the first $400,000 of a purchase, the amount being lower because the province has a 7% sales tax.
"There is no single family home here you can buy at that price," says Peter Simpson, chief executive of the Greater Vancouver Home Builders' Association. "They've taken what happened in Ontario and thought it would fly here. They underestimated the pushback on HST out here."
The provincial budget released this past week gave few hints the province might back down on taxing the industry, other than a throwaway line that it would work with industry groups to minimize the impact of the HST.
Mr. Simpson says he's not interested in any compromise, including any compromise that might grandfather housing now under construction from the new tax.
"I won't even talk about that. It will mean we've given in and we're not," says Mr. Simpson.
Good luck. Something tells me the cost of housing in B.C. is going to rise.

August 31st, 2009 -

The perils of writing off the mortgage

Jamie Golombek, Financial Post

It has been nearly six months since the Lipson decision, in which the Supreme Court of Canada effectively blessed the debt-swap strategy known as the "Singleton shuffle." But a new court decision reminds us how critical it is when rearranging your debt to do so legally.

After all, in Canada, it's nearly impossible to write off your mortgage interest without some advance planning.

The Singleton shuffle, named after Vancouver lawyer John Singleton's 2001 Supreme Court victory, stands for the notion that you can rearrange your financial affairs to make the interest on investment loans tax-deductible. How you do that is by replacing non-deductible debt with tax-deductible debt.

The case decided last month involved Nina Sherle, who owned a rental property (Property A) with a mortgage on it upon which the interest was deductible. She also owned a personal residence (Property B) free and clear.

She wanted to switch properties. In other words, she wanted to live in Property A as her personal residence and rent out Property B. She stated she didn't want to change her financing strategy, which was to live in her personal residence (soon to be Property A) mortgage-free.

To accomplish this, she mortgaged Property B to pay off the loan on property A. As a result, she was now making interest payments on the new mortgage secured by Property B. She deducted this interest on her tax returns but was reassessed by the Canada Revenue Agency.

The CRA argued that for interest to be deductible, one must look to "the actual, direct use of the borrowed funds" and whether such use was for the purpose of earning income.

Since the mortgage proceeds were used to pay off the loan on Property A, which was to be a personal residence, not an income-producing property, the interest was not taxdeductible.

The judge in the case agreed. He wrote: "Why funds are borrowed is irrelevant.... It is the use of the funds that governs [the decision]. In the present case, the required link between the use of the proceeds and the income-producing property is just not there."

In a twist, the judge went on to describe what Ms. Sherle could have done to permit the interest to be deductible. While somewhat complex, it essentially involves Ms. Sherle selling Property B to a friend in return for a promissory note.

The next day, Ms. Sherle could have borrowed money from the bank to pay off the mortgage on Property A. She then could buy back Property B from her friend, financing that purchase through a mortgage on Property B.

Her friend would take the proceeds from the sale of Property B and use them to repay the promissory note. Finally, Ms. Sherle would use the proceeds from the promissory note to pay off the bank loan.

Confused yet? The end result is that only the mortgage on Property B would be outstanding. The interest should be taxdeductible since the direct use of the mortgage proceeds was to buy the rental property. - Jamie Golombek, CA, CPA, CFP, CLU, TEP is the managing director of tax and estate planning with CIBC Private Wealth Management in Toronto

August 17th, 2009 -

Housing resales rocket in July

Record 18.2% jump

Alia McMullen And Garry Marr, Financial Post

Canada 's housing market boomed in July as low interest rates and improving economic confidence sent sales of existing homes to a record for the month, despite generally weak economic conditions.

The remarkable turnaround from an almost frozen market at the start of the year has economists stunned, and while they predict activity will level out soon, the risk is continued low interest rates begin to stoke a house price bubble.

"We can't rule it out," Douglas Porter, the deputy chief economist at BMO Capital Markets, said of the possibility of a bubble. But he said the scenario was hard to fathom given the underlying weakness in the economy.

Even so, that weakness to date has not prevented a strong rebound in the existing housing market, which declined steadily throughout 2008 and hit a decade low in January.

Home resales increased by 18.2% in July compared with a year earlier, to reach 50,270 units- the highest July sales result on record, Canadian Real Estate Association figures showed yesterday. At this pace, the housing market is on track to be even hotter than it was in 2007, which was a record year. Seasonally adjusted sales have risen for six straight months to be up 61.2% since January and are now just 1.4% below the peak in May 2007.

But despite the spectacular gain, the level of activity in the first seven months of this year remains 6% lower than in 2008 when activity had already begun to decline. Mr. Porter said some of the rise in the month was a result of sales that had been held back from the start of the year because of the weak market conditions.

But homebuyers have swarmed back into the market because of low interest rates and more affordable house prices.

"Homebuyers recognize that interest rates and prices have bottomed out, and are taking advantage of excellent affordability before prices and interest rates move higher," said Dale Ripplinger, the president of CREA.

A five-year fixed-rate mortgage, the most popular product among consumers, is still available for under 4% at some financial institutions. Variable-rate mortgages, tied to prime, remain in the 3% range and are not expected to rise until June. The Bank of Canada has promised to keep the benchmark interest rate at a record low 0.25% until mid-2010, provided inflation does not begin to rise.

The strength in the market has been felt right across the country. Vancouver sales last were up 90% from a year ago, while sales climbed 28% in Toronto and 28% in Edmonton. The strong demand in the country's highest-priced markets has to some degree skewed the average price higher. The average price of a home sold on the Multiple Listing Service last month rose 7.6% from a year earlier to $326,832.

The strength in the resales market has not been echoed in the price of new homes, which fell 3.3% in June compared with a year earlier, Statistics Canada figures showed Wednesday.

Part of the pressure on prices has come from a decline in supply, which has fallen for seven straight months. New listings in July were down 13% from a year earlier to 73,444.

Economists are skeptical the housing market will be able to continue to post such strong growth.

"After improving markedly, affordability will deteriorate in coming quarters, and unemployment will continue to rise," said Pascal Gauthier, an economist at TD Bank Financial Group. "New listings might well start rising again too. Combined, a larger supply and a softening in demand should cool prices in a delayed fashion."

August 11th, 2009 -

U.S. recession seen ending this quarter

Reuters Published: Monday, August 10, 2009

WASHINGTON- The worst U.S. recession since the Great Depression will probably end in the third quarter, but there is uncertainty over the speed and duration of the economic recovery, according to the most recent survey of private economists.

The Blue Chip Economic Indicators survey of private economists released on Monday showed about 90% of the respondents believed the economic downturn would be declared to have ended this quarter.

This upbeat assessment followed recent government data showing gross domestic product (GDP) contracted at a shallow 1.0% rate in the second quarter after sinking 6.4% in the January-March quarter.

Recent data, including housing and key labour market indicators, have suggested a bottoming in the recession and the the economy close to turning the corner.

"Debate now centers on the speed, strength and durability of the recovery," the survey said.

It showed nearly two-thirds of respondents believed the economy was set for a U-shaped recovery, marked by below-trend growth in gross domestic product before stronger growth took hold in the second half of 2010.

About 17% of the respondents anticipated a V-shaped rebound, where growth pulled back to its trend rate on a sustained basis, while the same percentage fretted that a W-shaped recovery could follow, the survey showed.

"In their view, GDP growth will pop higher for a quarter or two only to falter again before a lasting recovery takes hold," the survey said.

Growth in the second half was expected to be supported by a reduction in the pace of business inventory liquidation, marginal improvements in consumer spending and residential investment. The survey predicted non-residential investment would remain a drag on GDP.

Despite the improved economic picture, unemployment was likely to remain a problem, with jobless rate predicted to peak at just over 10% late this year or early 2010, the survey showed. It was seen falling only slowly.

Government data on Friday showed the unemployed rate nudged down to 9.4% in July from 9.5% in June, but mostly because many people dropped out of the labour force.

"Indeed, about 70% of the panelists believe the jobless rate will not dip below 7.0% on a sustained basis until the second half of 2012 or later," the survey said.

The sluggish labour market, together with excess capacity in many business sectors were seen dampening inflation pressures.

"Consumer price inflation excluding food and energy costs will increase by slightly less n 2010 than in 2009," the survey said.

July 28, 2009 -

BoC may have to break interest rate promise

Alia McMullen, Financial Post Published: Thursday, July 23, 2009

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"The time for tightening is not yet at hand, but June 2010 seems too late," said Yanick Desnoyers, the assistant chief economist at National Bank Financial. "The day when the condition for the Bank's low-rate commitment is no longer met will probably come before then."

Mr. Desnoyers said the benchmark interest rate had been lowered to a record low of 0.25% to limit the damage of the recession and financial crisis. However, he said the rate was too low relative to core inflation, which stood at 1.9% in June, just one basis point below the bank's target rate.

The outlook for higher interest rates, whether they come sooner or after June next year, has helped support the Canadian dollar, which has increased by about 8% since the beginning of the month.

The loonie inched up US0.16¢ to US$92.50 Monday after reaching its highest level since October in intraday trade. The rise was boosted by an improvement in investor sentiment after new U.S. home sales surged by 11% in June and the three-month Libor rate, the benchmark borrowing rate banks generally charge each other, fell to a record low 0.496%.

The decline in Libor, which peaked at 4.82% in October, is a sign that credit pressures continue to ease. Commodity prices were also marginally higher amid expectations of an uptick in demand.

Aron Gampel, vice president and deputy chief economist at Scotia Capital, said the Canadian dollar has also strengthened against the greenback because many were concerned U.S. stimulus efforts would leave behind a problematic debt hangover. He said the loonie was likely on its way back to parity with the U.S. dollar.

With the Bank of Canada having declared that the recession is likely over, interest is beginning to turn to when interest rates will begin to rise. Some, such as Mr. Desnoyers, believe the Canadian recovery, bolstered by government stimulus, will push inflation up faster than expected, forcing the Bank of Canada to use its "get out of jail free card" and raise the benchmark policy rate before June 2010.

The central bank said it would keep interest rates on hold until June 2010 "conditional on the outlook for inflation".

Bond yields have risen in recent weeks and now reflect a 90% chance of an interest rate rise withing nine months.

Others, such as Mr. Gampel, believe the central bank will keep interest rates on hold until mid next year, but embark on an aggressive tightening thereafter. However, he said the economy was at a turning point and the Bank of Canada's ultimate decision would depend on the speed of economic recovery.

"They could be looking at having to push interest rates up at a faster rate, and sooner, if the recovery takes on a greater scope going forward," Mr. Gampel said.

He said the recovery could well be on track to outpace expectations as businesses rebuild inventories, consumer spending picks up and fiscal stimulus kicks in.

However, he said evidence to date does not suggest the central bank will need to hike rates before June, particularly with a large amount of excess capacity in product and labour markets.

July 23rd, 2009 -

Central banks vow to keep lid on rates

Kevin Carmichael

Ottawa — Globe and Mail Update Last updated on Wednesday, Jul. 22, 2009 02:59AM EDT

T he U.S. and Canadian central banks are promising to keep borrowing rates at record lows well into next year as they seek to foster a recovery that both institutions say won't hit its stride until 2011.

Both the U.S. Federal Reserve Board and the Bank of Canadasignalled yesterday the recessions in their countries are all but over, echoing their counterparts at the Bank of Japan and Reserve Bank of Australia, which published similar assessments.

But just as they agree the worst is over, Fed chairman Ben Bernanke and Bank of Canada Governor Mark Carney are united in their nervousness over the fragility of a rebound that is being fuelled almost entirely by benchmark interest rates that are near zero and hundreds of billions of dollars in short-term government spending.

North America's climb out of the deepest global recession since the Great Depression is being slowed by rising unemployment that is a threat to consumer confidence and an impediment to domestic spending.

The two central banks said those concerns are offsetting what would otherwise be stronger gains from better financial conditions and increasing signs that economic activity is expanding in other parts of the world.

“I want to be clear: We have a very long haul here,” Mr. Bernanke said during three hours of testimony to the U.S. House financial services committee. “It's not going to feel like a very strong economy.”

Mr. Bernanke, who returns to Capitol Hill today to complete his semi-annual report to the U.S. Congress by submitting to questions from senators, reaffirmed that he intends to leave the federal funds rate at “exceptionally low levels for an extended period of time.”

The benchmark U.S. lending rate is currently in a range of zero to 0.25 per cent, while Canada's key overnight target is 0.25 per cent, the lowest it can go without roiling short-term money markets.

Mr. Carney, through the Bank of Canada's latest policy statement, recommitted to keep the overnight target at 0.25 per cent until June, 2010, conditional on an unexpected burst of inflation.

Economic conditions in Canada have improved enough to warrant a brighter outlook from the central bank.

Policy makers used yesterday's statement to adjust their forecast for 2009 to a contraction of 2.3 per cent, compared with an April prediction that gross domestic product would collapse 3 per cent. GDP will expand 3 per cent next year, compared with a previous estimate for growth of 2.5 per cent, the Bank of Canada said.

The revisions reflect what the central bank said are “increasing signs that economic activity has begun to expand in many countries” as a result of unprecedented monetary and fiscal stimulus.

“The recovery is nascent,” the Bank of Canada said.

“Effective and resolute policy implementation remains critical to sustained global growth.”

At home, domestic demand also is getting a boost from improved financial conditions, firmer commodity prices and a rebound in business and consumer confidence, the Bank of Canada said. Growth is being significantly offset by a higher dollar that is crimping exports and restructuring in the auto and forestry industries.

The central bank's revised outlook, which it will explain when it releases its latest quarterly economic report tomorrow, puts it in line with the 2009 forecasts of Canada's biggest banks and leaves it more optimistic about 2010.

Inflation remains tame and is unlikely to pose a threat for some time. Canadian policy makers don't expect the economy to return to a level at which it risks sparking rapid inflation until mid-2011.

July 9th, 2009 -

New Immigrants Driving Housing Demand, according to Scotia Economics

TORONTO, July 9 /CNW/ - Canadian immigrants are narrowing the homeownership gap with their Canadian-born counterparts, according to the latest Real Estate Trends report released today by Scotia Economics. The most recent census data available show that in 2006, almost 72 per cent of immigrants lived in a dwelling owned by a household member, up from 68 per cent in 2001. The comparable share for the Canadian-born population rose a more modest two percentage points over this period, from 73 per cent to 75 per cent.

"Homeownership tends to increase the longer one has lived in Canada, with the majority of new arrivals first settling in rental accommodation," said Adrienne Warren, Senior Economist, Scotia Economics. "Over time, immigrant families eventually make the move to homeownership, at rates similar to the Canadian-born population. However, between 2001 and 2006, the homeownership rate rose for all immigrant groups, regardless of how long they had resided in Canada. The biggest increase was among those living in Canada for less than 10 years.

"As recent immigrants to Canada make the transition from renter to owner, they will increasingly drive housing demand," states Ms. Warren. According to the report, the faster transition to homeownership has been supported in part by strong labour markets. The employment rate for core working-age recent immigrants jumped 3 1/2 percentage points between 2001 and 2006 (to 67.0 per cent). This was faster than the 1 1/2 percentage point gain among their Canadian-born counterparts (to 82.4 per cent). The employment rate for all immigrants also increased over this period, but by a more modest one percentage point (to 77.5 per cent).

"The better labour market performance of recent immigrants may reflect a favourable skills mix, with many employed in high-growth industries such as engineering, construction and skilled trades. It may also reflect a greater geographic mobility to meet shifting regional labour requirements," said Ms. Warren.
The report also states that, of the more than one million immigrants that came to Canada between 2001 and 2006, 69 per cent settled in the three largest census metropolitan areas (CMAs) - Toronto, Montreal and Vancouver - and their surrounding municipalities. Meanwhile, a growing proportion (28 per cent) of immigrants settled in smaller CMAs, most notably Calgary, Ottawa-Gatineau, Edmonton, Winnipeg, Hamilton and Kitchener. Less than three per cent chose to live in a rural area.

"Given Canada's aging population and relatively low fertility rates, longer-term household formation and housing needs will be largely determined by immigration," concluded Ms. Warren. "Using standard assumptions regarding immigration, fertility and mortality rates, the share of Canada's population growth coming from immigration could rise to three-quarters a decade from now, up from 60-65 per cent today and almost all by 2030. Most of this growth will be in Canada's urban areas."

Canada 's economy set to shine on world stage: IMF

Paul Vieira, Financial Post

OTTAWA Canada 's economy is set to outperform nearly all industrialized countries this year and next, the International Monetary Fund said Wednesday, leading analysts to declare the country does not need additional stimuli as advocated by certain world leaders at this week's Group of Eight summit.

The latest IMF outlook suggested the world economy is "beginning to pull out" of the deepest recession since the Second World War. The global economy will shrink 1.4% this year, it said, but growth of 2.5% is now expected in 2010, an improvement of just over a half-percentage point from its previous forecast in April.

As for Canada, the IMF said the economy would contract the least among industrialized nations this year, with a drop of 2.3%, compared with the 3.8% shortfall expected among all advanced economies. In 2010, the Canadian economy is set to post growth of 1.6%, or second-best among advanced nations after Japan's expected 1.7% gain. In contrast, the U.S. economy is seen recording meagre growth of 0.8%, or half the Canadian output.

China and India, which crave Canadian-produced raw goods, are expected to be global growth leaders in 2010, with gains of 8.5% and 6.5%, respectively.

"Financial conditions have improved more than expected, owing mainly to public intervention, and recent data suggest that the rate of decline in economic activity is moderating," the IMF said, adding, however, that the recovery would likely be sluggish.

The release of the IMF report coincided with the beginning of a meeting of G8 leaders in central Italy, with much of the focus expected to be on measures to put the global economy back on track. U.S. President Barack Obama and Britain's Prime Minister, Gordon Brown, were among those advocating more fiscal stimuli be injected in the global economy, on the concern that the US$2-trillion spent worldwide may not be enough to ignite domestic demand.

On the other side is Stephen Harper, the Prime Minister, who is arguing his G8 peers should follow Canada's lead and make sure that already-announced spending initiatives are fully executed.

"Before there's talk of additional stimulus, I would urge all leaders to focus first on making sure the stimulus that's been announced actually gets delivered," he told reporters. "That's been our focus in Canada and I would encourage the same priority elsewhere."

The federal government has in place a two-year, $46-billion plan aimed at creating jobs and reviving tepid demand in an effort to mitigate the fallout from the global financial crisis. (The stimulus could reach nearly $80-billion when provincial and territorial contributions are taken into account.) Mr. Harper has said 80% of the federal stimulus funds have been committed.

The fiscal stimuli is on top of the Bank of Canada's move to chop 425 basis points from its key lending rate since December 2007, from 4.5% to its current 0.25% level.

Economists say the coming stimulus from Ottawa and the provinces should show up more forcefully in the economic data in the months ahead. Given the IMF's expectations, they believe there's no need to add to the stimulus pipeline.

"Staying the course is probably the prudent path right now," said Craig Wright, chief economist at Royal Bank of Canada. "From the time you announce fiscal stimulus to the time you actually see it bearing fruit, there is a great lag involved. It is coming and it will be coming alongside of the lagged impact from the low interest-rate environment."

Stéfane Marion, chief economist at National Bank Financial, said there are distinct differences between Canada and other G8 countries – most notably, Canada did not suffer the same type of collapse in real estate holdings, and its financial system is far better shape than in the United States and Europe.

"I am not sure there is much more than we can do," he said, adding people are "underestimating" how long it takes for the impact of interest-rate cuts and government spending to wind its way into the real economy.

Mr. Marion added that several key indicators, such as surveys of purchasing managers, point to increased levels of production in the economy for the coming months.

The IMF said countries should maintain "supportive" monetary fiscal policy through 2010 until the recovery is in full swing. However, it indicated plans "should be made" to reduce the budget deficits incurred by combating the recession.

Meanwhile, the IMF and Ottawa formally signed a deal Wednesday in which Canada would make US$10-billion available to the global body for emergency purposes. If needed, the IMF could draw up to US$770-million a week to ensure emerging economies and developing countries have the access to capital during the economic crisis. The deal was first announced at last April's meeting of the Group of 20 nations.

July 8th, 2009 -

Economy beginning to heal, indexes show

Alia McMullen, Financial Post

The signs increasingly indicate Canada will be out of recession by the end of the year, if not slightly sooner, even though consumers remain wary and unemployment is ticking higher, new data show.

Two separate economic indexes that gauge the conditions that create economic growth rose Tuesday, suggesting the economy was beginning to heal and growth would resume before the end of the year. However, without consumers on board, that growth is expected to grind along slowly.

The Desjardins Leading Index rose for a second consecutive month in May, to be up 1.1% after a 0.5% rise in April.

"If the DLI continues to rise this summer, the current cycle's trough could be reached as of the fall, allowing a real recovery to materialize after that," said Hélène Bégin, a senior economist at Desjardins.

All components of the index, with the exception of consumption, rose in the month. The financial component became positive, the export component stabilized and the housing group posted a large increase. Despite these improvements, consumers continue to retrench amid the uncertain employment outlook.

Ms. Bégin said the need to rebuild savings and a rising number of bankruptcies, which are up 15% since the start of the year, would weigh on consumption for the remainder of the year.

"A strong comeback is unlikely as households are in a fragile financial situation," she said. "Consumption's coming recovery could be fairly moderate and it will set the tone for the economic recovery overall."

Meanwhile, the Ivey Purchasing Managers Index, an indicator of business activity, jumped more than 20% to 58.2 in June. A reading above 50 indicates an increase in activity. The employment index for June remained at 50, while supplier deliveries rose to 51.9 and prices increased to 60.4. Inventories was the only component to register a decline in activity, slipping to 43.

The improvement in the index was a welcome sign. However, Millan Mulraine, an economics strategist at TD Securities, noted that activity remained weak, particularly when adjusted for seasonal changed. He said headline PMI rose a more modest 11% to 48.4 in May once seasonally adjusted.

"On the whole, with the headline index on a seasonally adjusted basis remaining below the all-important 50-threshold, it suggests that the Canadian economy is continuing to contract, even though at a diminishing pace," he said.

Building permit figures released Tuesday by Statistics Canada were also better than expected and suggested a rise in construction activity in the coming months. The number of building permits issued in May rose a strong 14.8% from the previous month and pushed the value of permits above the $5-billion mark for the first time since October 2008.

July 7th, 2009 -

Home ownership offers emotional, financial rewards

Toronto Star, Sat July 4, 2009 Stephen Dupuis

In the spirit of Canada Day, I wish to share with readers some survey results on home ownership that are as Canadian as saying sorry.

According to Genworth Financial Canada's First-Time Homebuyers Market Monitor, regardless of the ups and downs of the housing market of late, the spirits of potential first-time homebuyers across Canada remain strong.

The national survey of 2,521 Canadians revealed the following highlights:

88 per cent say they would feel more financially secure owning their own home.

85 per cent believe that even though homeownership may mean more work and effort, they'd rather own than rent.

84 per cent of respondents agree with the statement "owning a home provides a greater sense of emotional well-being and security."

84 per cent of respondents feel the value of owning a home goes beyond the financial value.

80 per cent consider a house/condo they own more of a "home" than a house/apartment they rent.

80 per cent say owning a home makes them feel more personally fulfilled.

In many ways, there's nothing particularly earth-shattering about these survey results unless you're surprised that the numbers aren't even higher.

No doubt the renters surveyed were less effusive about home ownership, but that's because they simply have yet to experience its joys.

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