The Bank of Canada kept its trend-setting Bank Rate at 1.25 per cent on January 17 th , 2012. This marks the 11th consecutive policy meeting in which borrowing costs have been left unchanged. While recognizing that the outlook for the global economy had deteriorated and that uncertainty had increased since it released its October Monetary Policy Report (MPR), the Bank also made those same observations at its previous meeting on December 6th.

Effective March 18th, new mortgage rules will apply. Apparently this move is to cull the surge in borrowing by Canadians. Unfortunately people have a very short term memory and the data show that we have not learned much from our southern neighbors. Here are the new rules:

1. Mortgage amortization periods will be reduced from 35 years to 30 years.
2. The maximum amount Canadians can borrow to refinance their mortgages will be lowered from 90% to 85% of the value of their homes.
3. The government will withdraw its insurance backing on lines of credit secured on homes, such as home equity lines of credit.

Its obvious, BOC wants to curb borrowing habits while maintaining historically low interest rates. If this is not done then whatever recovery Canada made over the past 2 years will be washed out if people continue to be irresponsible.

With Toronto City Council scheduled to debate and vote on the City’s proposed 2009 Operating Budget tomorrow, public opinion poll results, released today, show that 65 per cent of Torontonians believe that the Toronto Land Transfer Tax should be repealed. The poll was conducted by the Environics Research Group Ltd. for the Toronto Real Estate Board (TREB). “REALTORS® strongly believe that Toronto City Council should scrap the Toronto Land Transfer Tax, and the public agrees,” said Maureen O’Neill, President of the Toronto Real Estate Board. “The Toronto Land Transfer Tax is not a fair tax and is hurting Toronto’s economy.” The poll also found that 57 per cent of Torontonians believe that the Toronto Land Transfer Tax is hurting the real estate market, and 62 per cent believe that the City has not taken adequate action to help stimulate the economy. “Torontonians want more action from the City on the economy, and they understand that the Toronto Land Transfer Tax is having a negative impact,” said O’Neill. “One of the best ways that the City can take action to help with the current economic situation is to roll back the Toronto Land Transfer Tax.” A recent study conducted by the C.D. Howe Institute and Economics Professors from the University of Toronto determined that the Toronto Land Transfer Tax is having a significant impact on Toronto’s real estate market, reducing housing sales by 16 per cent and values by 1.5 per cent in 2008 alone. A separate recent study, conducted for the Canadian Real Estate Association, found that one out of every 100 jobs depends on spending associated with re-sale housing sales – on things like renovations, furniture, and appliances. This means that approximately 14,000 jobs in Toronto depend on re-sale housing transactions. TREB believes that, by impacting the real estate market, the Toronto Land Transfer Tax is risking these jobs. The Environics poll also found that 60 per cent of Torontonians think that the City is not being run as efficiently as possible. REALTORS® are calling on City Councillors to focus their budget efforts on options recommended over a year ago by an independent blue-ribbon panel of business and labour representatives, appointed by Mayor Miller. “Over a year ago, the Mayor’s Fiscal Review Panel identified, literally, hundreds of millions of dollars in savings and efficiencies that the City could be taking advantage of,” said O’Neill. “The City’s budget efforts should be focusing on fair options, like those recommended by the Mayor’s Fiscal Review Panel.” The poll of 500 Toronto residents aged 18 years or over was conducted by telephone between March 12th and March 15th, 2009, and is considered accurate to within +/- 4.5%, 19 times out of 20.

Despite all the media hoopla associated with Sunday’s vote by Canadian Real Estate Association members to ratify the Competition Consent Agreement, it will be business as usual for real estate professionals across the country. Sellers will continue to seek the service of REALTOR’s with full service to get maximum benefit from their biggest financial decision. 90 per cent of resale housing transactions in the country happens with the help of REALTOR’s. Down south in the US, such a law already exists and still the trend there is towards full service. This proves that most people believe in the established process, believe in the skill and expertise required to buy and sell real estate. Its just not a matter of a “mere posting on the mls” that gets a property sold. As well, its the rigorous training and the ongoing education that keeps a Realtor inline with the latest trends and practices. REALTOR’s [members of organized real estate] have an obligation to act in accordance with the REALTOR® Code. This Code outlines the accepted standard of conduct for all real estate practitioners who are members of a real estate Board or a Provincial Association.Thereby protecting the rights of Buyers and Sellers. Click on the video below and find out what is involved when you hire a REALTOR® to protect your lifetime investments. Critical Role of a Real Estate Agent

Bank of Canada’s earlier projection of a 3.5 % economic growth didn’t happen. Current adjustments are at 3% which made the financial gurus to keep the rate at its past rate of 1%. Next years growth forecast has also been adjusted to 2.% from 2.9%. Keeping the interest rate is a prudent decision which however will not be a long term solution if the market continues in its current trend. By far Canada is better off compared to most western countries hit with recession. But, with globalization comes global effects. The external factors specially the US economy will dictate or maneuver to a larger extent our economic future. Here is a very clear and straight forward article by Former TD Bank chief economist Don Drummond titled “5 big trends that will affect your finances“. He points at the high debt ratio, lack of pension planning, expensive education, compressed earning life and the cooling housing market as serious issues that need to be watched and addressed. I will quote his last point which has lot of substance: “Current economic and market conditions may continue to turn Canadians away from saving. After all, how appealing is it to save and invest when rates of return are likely to be modest? But Canadians are going to have to get used to this. The savings must be done. Now is the time to start.”