Canada’s Budget 2010 aims to take advantage of  Canada’s economic recovery and prepare it for the future.
The budget plan has three main broad aims.

1. It confirms $19 billion in new federal stimulus under Year 2 of Canada’s Economic Action Plan, to create and maintain jobs complemented by $6 billion from provinces, territories, municipalities and other partners.
2. It invests in a limited number of new, targeted initiatives to build jobs and growth for the economy of tomorrow, strengthen Canadian innovation, and make Canada a destination of choice for new business investment.
3. Budget 2010 charts a course to bring Canada’s finances back to balance over the medium term and well before any other Group of Seven (G7) country.

The Canadian brand will be based on competitive taxes, renewed infrastructure and skills, a strong head start in clean energy, a tariff advantage, less red tape, and a more prominent voice as a global financial sector leader.

All of these measures will contribute to maintain and sustain Canada’s fiscal health, which according to the Department of Finance is the envy of the world.

As far as the mortgage industry us concerned the 2010 federal budget includes new regulations to standardize mortgage prepayment disclosure and the elimination of the Insured Mortgage Purchase Program (IMPP).

Under the Insured Mortgage Purchase Program, Canada Mortgage and Housing Corporation (CMHC) purchased securities comprised of pools of insured residential mortgages from Canadian financial institutions to provide long-term stable funding to lenders and help them continue lending to Canadian consumers and businesses.

Of the $125 billion available, as of September 21, 2009, $64.2 billion had been disbursed through 16 reverse auctions: $43.3 billion through 10 fixed-rate reverse auctions and $20.9 billion through six floating-rate reverse auctions. 19 different financial institutions participated directly in the program, including banks, non-bank deposit-taking institutions, and life insurance companies.

Some bankers argue that the program should remain in place as a safeguard. However, recent figures suggested that bank interest had dwindled with just $65.9 billion worth of mortgages having been disbursed. Just a few weeks ago the government offered to buy up to $4-billion of mortgages, but banks only sold it $1.4-billion worth. One last purchase is scheduled for March 24.

The government also says that it will introduce legislation setting out a framework for covered bonds, a type of bond that remains on a banks’ balance sheet and can be backed by assets such as mortgages. They are similar to Canada Mortgage Bonds, except for the fact that they remain on the banks’ balance sheets and that they do not carry the government’s guarantee. A number of Canadian banks have already begun issuing covered bonds during the last two years, and have been successful in selling them to investors.

• http://www.budget.gc.ca/2010/plan/chap1-eng.html
• http://canada-money-affairs.blogspot.com/2010/03/canadas-federal-budget-2010.html

Although there was a sales surge of home sales in the Edmonton area during February, prices didn’t raise significantly, according to the Multiple Listing Service’s (MLS) figures released last Tuesday.

While the average single-family house price was $369,573 for February, up 1.4 per cent from January, or 5.6 per cent from a year ago, condominium prices actually dropped 3.8 per cent in February to $231,530 from $240,686 and duplex and row house prices rose 3.3 per cent to $315,390.

Sales figures for February showed even more extreme monthly and yearly increases.

“While prices remained stable through February, the increase in sales activity indicates that there is a demand for housing in the Edmonton area,”

said Larry Westergard, president of the Realtors Association of Edmonton.

There were 1,184 housing sales in February — up 33.9 per cent compared to January. This number was up 7.6 per cent from a year earlier.

“The upcoming changes to mortgage qualification rules and impending mortgage rate increases may prompt some buyers to enter the market earlier and cause some additional slowdown in the third quarter,”

Westergard said.

Concerns about inventory falling short were also allayed by 2,505 residential listings added during the month for a total inventory of 5,449 homes, while the average number of days on market was 10 days down to 47.

The sales-to-listings ratio, a key indicator of market conditions, was 47 per cent, which suggests a balanced market.

Source:

Edmonton Journal

The Canadian Bankers Association has recently released the Mortgages in Arrears statistics through December.

Worth noting that the previous record high in November for the province of Alberta has been surpassed , and is now sitting at 0.75% (up from 0.72% in November, and 0.40% a year prior).

For the whole of Canada the rate was up just slightly, now sitting at 0.45% (up from 0.33% a year ago).

Most of the other provinces fluctuated within a mere 0.01%, except Saskatchewan, where it climbed 0.02%, but is still a national low, 0.29% (up from 0.23% a year prior).

The Atlantic provinces continue to have the second highest rate (a distant second behind Alberta), sitting at 0.51% (up from 0.42% a year prior).

British Columbia continues their slow but steady climb, and sit at 0.40% as of December, up from 0.23% a year ago.

However,  when viewed in perspective, it appears that the absolute number of arrears in Canada is still very low when compared to other countries, with less than 5 out of 1,000 Canadian mortgagors being late on payments.

Also, it must be taken into account that although there are 5,699 more borrowers in arrears than a year ago, 91,986 more mortgages have been processed during that same period, out of four million active mortgages in total. These numbers show that on an absolute basis, arrears have not been excessively high in Canada.

The single factor that has always most influenced the rate of mortgage arrears is employment,  more even than rising interest rates.
The chart below from Will Dunning Economic Research illustrates the relationship between Canadian employment rate and the percentage of mortgage arrears:

As it can easily be seen, when employment goes up, arrears go down, and when employment goes down, arrears go up, which makes perfect sense.  It isn’t very surprising that when mortgage takers are employed they have no difficulties honoring their debts and when there are more people employed there is a larger pool of people who qualify for mortgages.