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2005 Moves Ahead
Excerpt of Article in Market Watch, November 7, 2005 Edition

With two months to go and 73,514 properties having changed hands through the TorontoMLS system, TREB President John Meehan announced today that 2005 is currently running just ahead of the 10 month total (73,202) recorded last year. "The residential resale market could exceed the record 83,501 transactions seen in 2004," said the President. "This year may well put in Toronto's best annual performance ever."

There were 7,174 properties sold in the month of October alone, Mr. Meehan went on to note. This is up eight per cent over October 2004, and the second best total for the month ever recorded. Meanwhile prices rose to $342,450, a one per cent increase over September and up six per cent over the $324,215 recorded in October of 2004.

Breaking down the total, 2,759 sales were reported in TREB's 28 West districts and averaged $320,875.

'November Market Review'
by Andy MacDonald,
November 2, 2005
this article is posted on www.moneysense.ca/spending/home_mortgage

Interest rates in Canada have dropped to levels not seen since the post-war era and house prices have been on a tear over the last few years. If you are a home owner you would think this combination would be akin to hitting the jackpot — so why are so many Canadians floundering in debt?

Anyone who has tried to buy a home recently has been kicking themselves for not getting into the market earlier. The only saving grace has been that interest rates have been falling over the same period and mortgage lenders in Canada have made it easy for consumers to qualify for a mortgage.

First time buyers have been driving the market — enticed by low down payment programs, cash back and variable rate mortgages that keep payments low. There have also been new lenders entering the market place that have catered to people who would have normally been declined by the big banks. These new entrants have focused on people who have had credit issues or self employed individuals that could not prove their income. As competition for customers has heated up, mortgage lenders have loosened their lending guidelines allowing more and more Canadians to enter the housing market.

Once you buy a home you soon discover that home ownership does not come cheaply. The mortgage payment is just one part of the equation. You need to furnish your home, decorate it, purchase appliances, lawnmowers and shovels. You might plan for all the big ticket items but it's the $5, $20 and $100 items that add up quickly. Many consumers have taken advantage of "Do Not Pay" programs or have used credit cards and lines of credit to purchase these goods. Then the furnace breaks down and the roof starts to leak — it can feel like a never ending cycle of debt and before you know it you are having a hard time keeping up with the payments.

Some Canadians have felt what has been referred to as "the wealth effect." They see that the value of their home has risen dramatically, so they begin to feel wealthy and decide to spend as if they were rich. Many have tapped into their home equity to pay for a new addition, a new car or even a cottage. The banks and mortgage lenders have been happy to leverage them to the hilt and a good number of Canadians have chosen to "let it ride" by choosing a variable rate mortgage to keep their payments low.

Will Canadians be able to repay this debt? If interest rates remain low and house prices remain high the answer is probably yes. But if interest rates continue to rise over the coming months and house prices begin to level off or decline it could be a messy sight as Canadians are no longer floundering in their debt but are actually drowning in it.

I think the time is ripe for consumers to deal with their debt situation in a prudent manner. It is clear that interest rates are heading higher so you need to evaluate your finances to determine if you can afford higher interest rates. If you are proactive you can convert high interest rate debt into your mortgage and lock in a stable interest rate that is affordable for the long term.

Mortgage Rates
as at November 29, 2005 - as posted on the KCR Mortgage Services website

KCR Posted Variable Rate: 3.95%

These rates are subject to change at any time without notice.