The drop in Canadian home prices in September may not be as severe as it seemed, TD Securities said on Wednesday, bolstering the case that the country is not headed for a U.S.-style housing meltdown TD, a unit of Toronto-Dominion Bank, argued in a report that home prices fell 1.3 percent in major Canadian markets in September, not the dramatic 6.2 percent drop that was reported by the Canadian Real Estate Association (CREA) last week.

CREA said the average house price fell to C$315,461 (about $252,000), dragged down by sales declines in Vancouver and Victoria, British Columbia, which offset rebounds in Calgary and Edmonton, Alberta. CREA said the fall came despite year-over-year gains in average home prices in 17 of 25 major Canadian markets.

TD crunched its own numbers and applied a weighting to each major city to fix "compositional shifts", which it said were behind the distorted CREA view. It said the association has acknowledged the problem.

For example, if Vancouver was the only city that reported sales in one month, and the next month Montreal was the only city that reported, then it might seem that prices had fallen in half because Montreal prices are much less expensive than those in Vancouver.

TD fixed the weight of each city to year-earlier sales levels as of September 2007.

"We wanted to get rid of the whole compositional issue. We really just controlled for the allocation. When we did that we ended up with a 1 percent drop instead of a 6 percent drop," said Eric Lascelles, chief economics and rates strategist at TD Securities.

"That's not catastrophically different, but to me that's a number that makes more sense. Yes the housing market is correcting moderately but it does not have the making of a U.S.-style correction."

He said Canadian housing starts may fall below the 200,000 mark, home prices will continue to correct in some inflated cities, but there is no need to brace for big delinquencies or a hard drop in prices.

The TD calculations aren't perfect, Lascelles acknowledged, because they do not eliminate some factors such as type and quality of home in each city.

Canadian housing data has shown signs of softness but nowhere near the slump that hit that United States, stemming from a crisis in the subprime mortgage sector.

It will be difficult to choose the right mortgage strategy for your situation and that will save you the most money without understanding what influences interest rates in the first place (taux hypothecaire).

This is a very complicated subject, the topic of any number of books and business school dissertations. We’ll try to keep it basic here by discussing how the Bank of Canada’s fiscal and monetary policy along with the movements of the debt markets influence rates - pret hypothecaire.

Borrowers sometimes think that the banks make the decision to change rates. To a certain extent, this is correct, but they are doing it in reaction to other factors. In regard to mortgage rates, the variable rate mortgage is controlled by the prime rate and the fixed rate mortgage is controlled by the cost of money for the lenders. (hypotheque)

The base rate is the rate the bank of Canada charges banks, and it dictates the prime rate that the major banks of Canada will set and this in turn will determine the variable rate on mortgages.

Variable Rates:

A lot of people look only at the rate they are offered at the beginning of a variable rate loan. They are thrilled that their variable rate is 4.75% when the rate on a fixed rate loan is 5.4%. They do not see yet that their rate can increase every time the Bank of Canada raises the prime rate, which can happen eight times per year. This is because variable rate mortgages are really determined by the prime, so the rate we spoke about above is .75% below the prime. When the prime goes from 5.5% to 6%, the variable rate will go from 4.75% to 5.25%. (pret hypothecaire)

The Bank of Canada sets the prime rate eight times a year at certain set intervals. Depending on a number of factors, it may raise or lower the rate, or leave it unchanged. Then the it remains at this new rate until the next interval.

The prime rate is used by the Bank of Canada to manage growth and inflation. The consumer price index (CPI) and the gross domestic product (GDP) are the benchmarks that BOC uses to determine the prime rate. (taux hypothecaire)

If the CPI is increasing too quickly, the Bank of Canada will want to stifle inflation by increasing the prime rate to slow things down. The GDP indicates the growth of business activity in the country and if it is growing fast it too will have an influence on inflation.

If the economy is growing weakly and has low inflation, the Bank of Canada will tend to lower rates to encourage growth; if it is growing strongly and has high inflation, it will raise rates to slow things down - taux hypothecaire.

FIXED RATES:

Fixed rates are set by each lender and are also determined by many factors, the most critical of which are the lender’s portfolio earnings and its cost of funds.

Lenders such as banks and mortgage companies buy and sell the mortgages they originate on a secondary market. They do this routinely to balance their portfolios and try to get the best return for them.

These investors have a choice between bond portfolios and mortgage portfolios, so if the rate in the bond market goes up, lenders will have to have a higher rate on their mortgages to attract these investors. How do they get the higher rate? By raising mortgage rates. If the bond rates come down, the lenders can decrease their rates. The bond market rates are deeply influenced by the rates fixed by the Bank of Canada. - taux hypothecaire

So the interest rates that the man in the street is paying on his mortgage is determined by decisions made by banks and other lenders, investors in the bond market, the Bank of Canada, the CPI and the GDP. All of this sound complicated? It is. They are all linked together. (pret hypothecaire)

The only solution to complicated issue is to work with an accredited mortgage counselor who understands these factors and can use them to help you. A good mortgage counselor will find the right mortgage strategy for you and then will find the best lender to implement that strategy for you at the best rate available - hypotheque.

Nearly one-quarter of Canadians do not agree with the federal government's mortgage lending crackdown, a proportion that rises to nearly a third among non-homeowners, survey results done for a mortgage lending firm suggest.

And only 45 per cent agree with the tighter mortgage lending rules and that the federal government needs to protect Canadian homeowners, a level of support for the changes that falls even further to just one-quarter among non-homeowners, according to the online survey conducted by pollster Angus Reid for ResMor Trust Co.

In an effort to avoid a U.S.-style housing market meltdown, Finance Minister Jim Flaherty last month tightened up the rules governing mortgage lending practices in Canada, including limiting the amortization period for government insured mortgages to 35 years from 40 years, requiring a minimum down payment of five per cent for such mortgages, virtually eliminating zero-down mortgages, and requiring that anybody with an insured mortgage have a minimum credit score.

Those who disagree with the measures said they reduce options for people wanting to buy a home.

However, the results also indicate that 17 per cent do not understand the changes, including 25 per cent of non-homeowners.

Further, the findings suggest that the higher the level of understanding, the lower the level of opposition to the new rules.

"I was surprised that 23 per cent do not agree with the measures," Darren Thompson, vice-president of lending for ResMor Trust, said in an interview.

"This survey clearly demonstrates a need for industry professionals to educate Canadians about the new measures, specifically those entering the market for the first time," he said, adding that's something that the federally licensed trust company is doing.

"The measures are not seriously impacting the ability of consumers to get a mortgage," he said, citing as an example an industry finding that more than half of those who took out 40-year mortgages would have qualified for a 25-year mortgage. "It was just enabling them to get a lower monthly payment but at a much greater interest cost."

Thompson also disagreed with critics of the measures who have warned that the tighter rules will put an added chill on an already cooling housing market.

"There's still lots of financing out there," he said, adding that the measures protect the Canadian taxpayer from having to foot a large bailout if the market goes south as it has in the U.S.

The survey, meanwhile, also revealed a regional divide in the level of support for the tighter rules and the level of understanding of the rules.

Agreement with the new rules in the heated housing markets of the Western provinces and in Ontario is significantly higher than in the Eastern provinces and Quebec, the report said, noting support for the crackdown was 64 per cent in British Columbia, 56 per cent in Alberta, 47 per cent in Saskatchewan and Manitoba, 46 per cent in Ontario, but only 35 per cent in the Atlantic provinces and 34 per cent in Quebec.

The proportion indicating a lack of understanding of the new rules was highest in Quebec and Atlantic Canada, at 23 per cent in both markets, and lowest in British Columbia at only seven per cent, followed by 13 per cent in Manitoba and Saskatchewan, 18 per cent in Alberta, and 16 per cent in Ontario.

The online survey of at least 1,000 adults conducted last month following the release of the new rules is considered accurate within 3.1 percentage points 19 times out 20.

Commute is costly. Off-island residents are having trouble selling their homes.

Single-family homes off the island of Montreal are becoming harder to sell, in part because of high gas prices, and some homeowners are throwing in free cars and SUVs to entice potential buyers.

Montreal mortgage brokers and real estate agents say most buyers are looking for homes on the island.

"Off-island houses, like in Hudson or in the swank neighbourhoods of St. Lazare, are not selling,". "People don't want to commute all the way to downtown and pay for soaring gas prices." To sell their houses faster, some homeowners are offering buyers the keys to their SUVs to "seal the deal." A Canadian Real Estate Association survey made public in March found that "the distance to work is the biggest 'driving' factor in consumer consideration of buying a home." And the survey, by IPSOS Reid, was conducted before gas prices spiked in April.

Montrealers might be interested in moving closer to where they work because of gas prices, but the evidence is anecdotal.

Homeowners willing to commute into town will make up for the price of gas with the lower real estate taxes, off-island home owner Dan Loiselle said.

"The taxes here (in St. Lazare) are a fraction of what you'd be paying in Beaconsfield or Kirkland," Loiselle said.

His 4,000-square-foot home in St. Lazare, complete with an in-ground pool, has been on the market since 2005. The price has fallen to $795,000 from $925,000.

"It's the quality of life in St. Lazare that will sell the house," said Loiselle, who plans to keep living in the off-island town. "There are parks, beaches, sand dunes, trails - things you would not find close to downtown." Loiselle said he knows someone in the neighbourhood who threw in a BMW 325 to close a deal on his house.

"I'm not giving away a car. If someone can afford an $800,000 house, I don't think a used car will make a big difference. But I have included a $2,500 gas card on top of the normal commission for the agent who sells my house,"

"If we're having trouble selling, it's because less people are buying homes priced above half a million," . "Many new development projects are building houses (priced) between $350,000 and $400,000. That's the bread-and-butter market of construction now." David Meyers, a real-estate agent with Remax who is responsible for several homes in the St. Lazare area, said the cost of gas will start affecting the housing market only once it reaches $2 a litre.

"At the moment, I don't see any clear trends," Meyers said. "But consumer confidence in Canada is at an all-time low" because of the ripple effects of the sub-prime mortgage crisis in the United States and other economic factors.

But I think it's too soon to tell if high gas prices have hit the housing market." Experts say gas prices won't ease any time soon: CIBC World Markets predict gas will hit about $1.86 a litre within the next two years.

Gas prices might influence not only how far people are willing to commute to work, but also how far they'll travel on vacation.

A poll made public Thursday by Royal LePage in Toronto found that one in five cottage owners in Ontario would consider selling their vacation property if gas prices continue to rise.

Basics

There are a few simple steps that you will want to take when getting ready to apply for a home Montreal mortgage, whether this is you are a first time home buyer or an experienced home buyer. They include; credit preparation, acquiring the services of a Montreal loan specialist (especially important if you are a first time home buyer), establishing a relationship with a real estate lawyer, researching title (Title company) insurance, finding a property appraiser.

Credit preparation

You will want to get a recent copy of all three of the major credit bureau reports and your scores before applying for a home mortgage loan. Your credit score can make many thousands of dollars of difference in the cost of your home. You will want to go over each report line by line to make sure it is accurate. Then you will want to see what you can do to improve your score. Decreasing the total amount of debt owed is one of your most important steps to take. Along with decreasing debt load, making sure that your payments are in on time, insuring that you do not miss the dead line is a small step that will help in acquiring the better loan rates. It is very important to make at least the minimum payment due on all outstanding creditors. This is essential in improving and maintaining a good credit score.

Loan Specialist

A loan specialist is important for understanding the types of home loans that are available to you. Their expertise in finding good rates that you are eligible for can not be overstated. The specialist should inform you of not only the types of home mortgage loan that is available in the immediate market but also what documentation is required for each type of loan or lender. This specialist needs to be someone who will take the time to understand your needs and goals. They should be open to the many different creative financing techniques that can save you time and money.

Real estate lawyer and title insurance

A lawyer is required to insure that there are no clauses in the loan home mortgage loan that could go against you. They will be the one to insure that the proper documentation and paperwork says what you need it to say to protect your interests. This is a step you do not want to try and save money by avoiding. Title insurance is the legal forum that keeps your property cleared from unscrupulous or missing documentation that might mean that someone else could make a claim against your property causing you court and lawyer fees along with the real possibility of losing all that you had invested.

Property appraisal

A property appraisal is a requirement for a home mortgage loan. This accurately establishes the value of the home. Most lenders insist on an accurate and up to date property appraisal before determining the amount of the loan that you can obtain. You also should plan on investing in a property inspection for your protection regarding the condition of the property.

Finding the best information and resources possible should be a definite part of the preparation for your home loan. You can find accurate hints and tips at Multi-Prets Montreal mortgage specialist or Quebec Mortgage Loan.

Buying a home is an expensive endeavor so getting the best possible mortgage rate should be one of your main priorities. By deciding to get the best mortgage rate in Montreal possible you will be making a positive decision to help you for many years to come. However, just deciding to get the best Canadian mortgage rate available is not going to get you the best mortgage rate available. Instead, you will need to learn the tips and tricks for negotiating with your mortgage lender in order to receive the best possible mortgage rate for your personal situation.

Mortgage Rate Tip #1
Your mortgage rate might be low in your mind, but you must take the origination fee into account as well because this can increase your APR. Lenders frequently charge 1%, but you can always negotiate the mortgage rate origination fee lower. Also, if the origination fee is much higher than 1% you need to either negotiate it down, or find another lender with a more favorable overall mortgage rate.

Mortgage Rate Tip #2 Lock in the Rate
When negotiating your mortgage rate, make sure your lender is prepared to lock in your rate for at least 30-60 days. This way you will be guaranteed a particular rate even if rates skyrocket the next day. Another not trick many individuals are not aware of is to include a clause that also will allow you to take a lower rate if rates fall during this period. This is a great mortgage rate tip because you get your mortgage rate locked in so it can’t go any higher, but if the average mortgage rate goes lower you receive the lower rate.

Mortgage Rate Tip #3 Fight
If the mortgage rate drops significantly and you have already signed a deal locking in a particular mortgage rate and don’t have a clause that ensures you will receive the lower rate, then you need to fight. You simply need to call your lender and say that while you signed the lock in agreement you want the lower rate. This will take some negotiating, but your lender wants you business and might be willing to negotiate the mortgage rate with you.

Homebuyers have several loan options. Hence, purchasing a new home has never been easier. Individuals who cannot afford a down payment or closing costs may take advantage of loan programs that offer assistance. Furthermore, those hoping to obtain a low rate mortgage may consider a loan with an adjustable rate. Because of the initial low cost of adjustable rate mortgages, monthly mortgage payments are also lower. However, low rate mortgages are short term. To avoid an interest rate hike, homeowners should refinance before rates begin to increase.

Advantages of Adjustable Rate Mortgages

There are several advantages to accepting an adjustable mortgage. For starters, a low rate mortgage allows buyers to purchase pricier homes, while maintaining an affordable monthly payment. Moreover, because of record low rates, homebuyers who obtain an adjustable rate mortgage can enjoy falling rates without refinancing their mortgage. Thus, they avoid closing costs and other fees.

Adjustable rate mortgages are also ideal for individuals who plan on moving in a few years. Some people enjoy the stability of living in one place for many years. In this case, refinancing for a fixed rate is a wise choice. However, if you prefer the flexibility of moving every three to five years, you will save money with an adjustable rate.

Pitfalls of Adjustable Rate Mortgages Montreal

While adjustable rates offer many attractive features, one major drawback is that low rates are temporary. If interest rates continue to fall, you will not be subjected to the dangers of these loans. However, if rates begin to climb, so will your mortgage payment. Homebuyers who cannot afford an increased mortgage are at risk of losing their home. Thus, if your goal is to remain in your current home for many years, refinancing for a fixed rate will offer predictable mortgage payments.

How Soon Can You Refinance a Mortgage?

Fortunately, home mortgage loans can be refinanced whenever you like. Some lenders suggest allowing the loan to mature at least 12 months. However, if you detect a change in market trends, refinancing shortly after purchasing your home is a smart maneuver. Those contemplating refinancing must be prepared to pay additional closing fees. Moreover, contact your current lender and inquire of prepayment penalties.