Finance Minister, Jim Flaherty, today announced that new mortgage restrictions would be implemented aimed at preventing housing speculators and ensuring that house buyers can handle their debt when interest rates inevitably rise.

Rob Carrick of the Globe and Mail explains further:

Olympics aside, the current favourite Canadian diversion is debating whether there is a bubble in the housing market. Those worried about the market plunging have urged Mr. Flaherty to raise the minimum down payment for a home and reduce the maximum payback period.

But the 35-year amortization, favourite of first-time buyers across this land, remains. So does the 5-per-cent down payment, which is heavily relied upon in high-cost cities like Vancouver, Calgary and Toronto.

All the measures announced by Mr. Flaherty affect mortgages covered by government-backed mortgage insurance, where the buyer puts less than 20 per cent down. The key change for typical home buyers is that, regardless of what term or type of mortgage they choose, they’ll have to be able to afford the five-year rate.

This is a sensible way of building some slack into the system as we look ahead to a cycle of rising interest rates. If someone chooses a variable-rate mortgage, where the interest rate can be as low as 2 to 2.25 per cent today, they’ll have to be able to handle the payment at the current five-year rate. Right now, the posted rate at the big banks is 5.39 per cent.

You won’t have to actually make the higher payments required by the five-year mortgage. You’ll just have to theoretically be able to carry them and still remain within the limitations lenders set out on how much of your gross income can be consumed by debt (it’s 42 to 44 per cent, just so you know).

Another reason why the changes won’t be jarring is that a huge number of homebuyers are actually choosing five-year mortgages these days. A study issued by the Canadian Association of Accredited Mortgage Professionals last month showed that fixed-rate mortgages accounted for 86 per cent of mortgages in set up in 2009 and, of those, 70 per cent were for a five-year term.

People who borrow to buy investment properties to either flip for a quick profit or to generate income are also affected by Today’s announcement. If you buy a property you’re not going to live in, then you’ll have to put down a minimum 20 per cent to qualify for mortgage insurance. That’s up from 5 per cent.

But not all lenders even require clients to have mortgage insurance if they put 20 per cent down. Stiff mortgage insurance premiums already discourage people from putting 5 per cent down on an investment property.

The final mortgage change restricts the ability of existing homeowners to refinance their mortgages to take on more debt. The new ceiling is 90 per cent of the value of your home, compared to the current 95 per cent

According to the second annual Expat Experience survey commissioned by HSBC Bank International, expats in Canada have the best quality of life and found it to be one of the easiest places in the world to integrate with the local population.

If you’re looking to work overseas, head to Canada, Australia or Thailand, as recession-hit Britain was found to be one of the worst locations to live for expatriates.

Australia and Thailand also came in the top three in the survey of 3,146 people working in 30 different industries and 50 countries, even though Thailand was one of the countries worst-hit by the recession for expats.

“We have seen that there is a distinct trade-off between income and overall quality of life, as many of the top performers … scored toward the bottom of this report’s league table (of the best places to make and save money),” said Betony Taylor, spokeswoman for HSBC Bank International.

“What is clear is that the locations where salaries may not be as high, such as Canada and Australia, are where expats are really enjoying not only an increased quality of life but are also finding it easy to fit in to their new communities.”

Last year Germany, Canada and Spain were the top three countries deemed to have the best lifestyle for expats.

This year Britain was one of the lowest ranked locations when it came to lifestyle after being named as one of the most expensive places for expats with the recession taking its toll.

About 44 percent of expats in Britain are considering returning home, compared with only 15 percent of expats overall.

About 41 percent of expats in Britain find it difficult to find somewhere to live, most find the quality of their accommodation drops after moving to Britain, and a third claim their health has deteriorated since moving there.

“Despite this, the UK does hold the crown for being expat entertainment capital of the world, with over half (58 percent) of expats in the UK saying that the quality of entertainment had increased,” said Taylor.

She added that 62 percent of expats also said that employment prospects were the main reason keeping them in the region.

Results from a different section of the survey, which was conducted by research company FreshMinds, released earlier found Russia was home to the highest proportion of expats earning more than $250,000 with 30 percent of international workers there banking that amount, followed by Hong Kong and Japan.

The lowest-paid expats live in Australia and Belgium with the majority — 63 percent and 61 percent respectively — earning less than $100,000.

Source: Reuters

Vancouver is the world’s best place to live, a survey by the Economist Intelligence Unit (EIU) has found.

The Economist Intelligence Unit’s livability shows cities in Canada, Australia, Austria, Finland and Switzerland as the ideal destinations thanks to a widespread availability of goods and services, low personal risk and an effective infrastructure. The report placed Vancouver as the most livable city in the world, with Vienna taking second place followed by Melbourne, Australia. The survey said “In the current global political climate, it is no surprise that the most desirable destinations are those with a lower perceived threat of terrorism.”

The main uncertainty for people living in those cities was climate-related, the EIU said.

The worst places were Algiers in Algeria, and Port Moresby in Papua New Guinea because “many aspects of daily life present challenges”, the EIU said.

The survey has produced a mixed picture of the world’s cities. London was ranked in the 10th group, on a par with Dublin and Los Angeles, but one place below Manchester, four behind Berlin, five lower than Tokyo, and six off Helsinki, Frankfurt and Stockholm.

In Latin America, “no city manages to present ideal living conditions, neither do any fall into the category where extreme difficulties are faced”, the EIU said.

Montevideo in Uruguay, Santiago in Chile and Buenos Aires in Argentina offer the region’s best conditions. Bogota in Colombia and Caracas in Venezuela score the least favourably.

In Asia, cities in Japan, South Korea, Singapore, China and Taiwan all score well, as do Australia’s main hubs.

Africa and the Middle East fare less well, with the EIU citing concerns about terror attacks, and economic and political instability.

Some of the worst performing cities include Harare in Zimbabwe and Lagos in Nigeria.

Top 10 Cities

Vancouver
Melbourne
Vienna
Geneva
Perth
Adelaide
Sydney
Zurich
Toronto
Calgary

Bottom 10 Cities

Tehran
Douala
Harare
Abidjan
Phnom Penh
Lagos
Karachi
Dhaka
Algiers
Port Moresby

Source: BBC News

The cost of emigrating to the USA has increased by almost a fifth in the past six months alone, according to research from Foreign Currency Direct.

Currency fluctuation has increased the cost of living in Canada by only 3 per cent in the last six months which means that with sterling strengthening against the Canadian dollar, British expats living there are enjoying more for their pound.

The average cost of a property in Canada has risen by only £5,599 in six months, a long way from the £32,303 increase in the US.

The average Spanish property now costs £31,576 more to a British buyer than it did in November last year, yet the cost of living in Canada has gone up by just 3 per cent, representing the smallest change of all expat hot spots.

Britons who are already overseas and receiving income from property or pensions in sterling have seen some serious price hikes.

The pound reached record lows against the euro in January, and living as an expat in Europe is now a fifth more expensive than it was in November last year.

Brits emigrating to or living in the USA have seen the average property price rise by £32,303 since November last year, and the cost of groceries, services, meals out and leisure activities has gone up by £373 over the same period.

In February, British expats were enjoying some cost of living reductions as the pound was stronger against the Australian and New Zealand dollar, but even these expats are now seeing their cost of living rise as sterling struggles against other world currencies.

How much impact these currency fluctuations has had depends on which country you are living in, with the USA and France now the most expensive expat destinations.

Peter S Ellis, chief executive of Foreign Currency Direct, said: “Recent exchange rate fluctuations have had a considerable impact on the cost of buying a property and living overseas.

“Despite the euro maximising exchange rates across Europe, the cost of living still varies considerably across the region, meaning that exchange rate fluctuations have a magnified impact in more expensive regions.

“When considering a move abroad it is important to consider not only current exchange rates, but also any likely future currency changes and the cost of living in your preferred country.”

Mr Ellis added: “In the last year Foreign Currency Direct has seen a 29.3 per cent increase in the number of our clients transferring funds to and from Canada and New Zealand, suggesting that Brits are taking advantage of the increasing affordability of these destinations.

“But many British expats are moving their money and their homes back to the UK from Europe as they can no longer afford to live in Europe and can currently take advantage of the strength of the euro when converting their money back to pounds.”

British expats in Europe and America are struggling to stretch their income to meet their needs as the cost of living abroad rockets on the back of the sterling slump but Canada’s attractiveness as a viable, affordable destination remains high.

2006 was a record year for British emigration to Canada, with a total of 6,542 Brits receiving a permanent residence visa.

This, according to newly released data from Citizenship and Immigration Canada, is the highest since 1997 – from which the current means of collating statistics dates.

The figure is an 11 per cent increase over figures for 2005, and made the United Kingdom the seventh-biggest source country for immigrants entering Canada in 2006. This increase was despite a 4 per cent decrease in the overall numbers admitted through Canada’s immigration programme – from 262,239 in 2005 to 251,649 in 2006 – and a massive 22 per cent drop – to 33,080 – in the number of Chinese nationals becoming permanent residents of Canada, although the country did still head the 2006 league table of source countries.

In fact, considering that there’s been a well-publicised increase in the visa processing times at the Canadian High Commission (CHC) in London, which deals with visa applications from Brits, the increase could be considered something of a surprise.

As is well documented in the Vancouver media, one of the main sources for keeping the real estate market in Vancouver buoyant, is immigration from countries such as the UK where the exchange rate, even with the strong Canadian dollar, continues to be favourable.

The Conference Board of Canada reports that the Metro Vancouver economy will increase by a solid 3.3% in 2008, despite higher housing prices, which puts it in 4th place alongside Abbotsford. Last year, Vancouver’s economy grew by 3%. The reason, according to the Board, is non-residential activity, such as retail sales (predicted to grow by 6.7%), employment and personal income.

Western Canada had the top 5 spots in this year’s growth forecast, with Calgary (4.2%), Edmonton (4%), Winnipeg (3.4%), Vancouver (3.3%), Abbotsford (3.3%). Strong energy demand, furious construction activity and robust consumer spending continue to drive Calgary’s outlook. A strong employment market in Winnipeg is helping to attract more immigrants. Toronto placed 7th on the list with a growth forecast of 2.8% with, again, consumer spending helping to balance out the decimated manufacturing sector. Victoria comes in at 9th on the list with 2.7%, Ottawa-Gatineau at 11th and Saskatoon at 12th.

Michael Kane of the Vancouver Sun writes that the Calgary-based Canada West Foundation predicts that British Columbia can expect continuing prosperity despite a tight labour market and troubles in forestry and tourism.

In their report, Let the Good Times Roll, foundation economist Brett Gartner forecasts that B.C. will enjoy growth of 3.1 per cent for 2007 and 3.2 per cent for 2008. A large number of industrial, institutional and transportation projects will ensure the construction sector remains “very active” beyond the 2010 Winter Olympics. Sustained economic growth is also being supported by high levels of business investment, an educated and skilled workforce, continuing strength in worldwide demand for base metals and other commodities, and growth in China and India, which will all play an important role in the shift of economic dominance from Central Canada to the West. He was confident B.C.’s growth will outperform the national average for the next couple of years, as it has for the past five years.

It helped that personal income tax cuts announced in the 2007 budget give B.C. the lowest provincial income tax rates in Canada for people earning up to $108,000.

The implementation of the B.C.-Alberta Trade, Investment, and Labour Mobility Agreement, has created Canada’s second-largest economic region after Ontario, giving businesses and workers in both provinces access to more opportunities. “The West is emerging as more of an economic powerhouse, and B.C. and Alberta joining forces will help solidify the West’s place in the Canadian economy as a driving force,” Gartner said.

He adds that competition for skilled labour will be strong which will serve to drive up compensation costs. But this results in market mechanisms coming into play, as they have in Alberta, where things are slowing from really, really high growth to just high growth.

The report notes that B.C. is leading the country in job growth in 2007, after bettering the national average for the past four years.

Mercer’s overall ranking for quality of living has revealed that Zurich again ranks as the world’s top city, with a rating of 108.1. The city narrowly out-ranks Geneva, which scores 108. Vancouver and Vienna follow in joint third place and score 107.7. However, the 2007 Worldwide Quality of Living Survey by Mercer Human Resource Consulting has found that four of the world’s five top-scoring cities for health and sanitation are in North America. Calgary ranks top with a score of 131.7, followed by Honolulu, which scores 130.3. Ottawa and Minneapolis take fourth and fifth places with scores of 127.2 and 125.7 respectively. Montreal and Vancouver both rank in 10th place (score 123.7). Toronto is at position 21 with a rating of 122.4. Scores are based on the quality and availability of hospital and medical supplies and levels of air pollution and infectious diseases. The efficiency of waste removal and sewage systems, water potability and the presence of harmful animals and insects are also taken into account. Cities are ranked against New York as the base city which has an index score of 100. The analysis is part of Mercer’s Worldwide Quality of Living Survey, covering 215 cities, which is conducted to help governments and major companies to place employees on international assignments. The analysis is based on an evaluation of 39 quality of living criteria for each city including political, social, economic and environmental factors, personal safety and health, education, transport and other public services.