The five-year fixed mortgage at an advertised rate below three per cent has returned to Canada for the first time since last year.

Meridian Credit Union, the largest credit union in Ontario, announced this week it had lowered its benchmark five-year fixed-rate mortgage to 2.99 per cent.

According to market surveys carried out by RateSpy.com and Cannex.com, that is the lowest advertised rate for the popular mortgage term in Canada.

Meridian’s mortgage special is available just in Ontario, but it appears to have few other restrictions.

Earlier this month, MortgageBrokerNews.ca reported that two mortgage brokers — Verico Butler and Advent Mortgage Services — were also offering 2.99 per cent five-year fixed mortgages.

Brokers are often able to get mortgage rates for their clients that are lower than what big lenders offer. But sometimes, super-cheap mortgages have severe restrictions on such things as rate holds and prepayment privileges.

Fixed mortgage rates have been creeping down in the last month at most lenders as Canadian bond yields have been falling. Fixed mortgage rates tend to track bond yields.

The yield on Canada’s five-year government bonds has fallen 33 basis points so far this year to 1.62 per cent.

Last year, some big banks attracted the ire of Finance Minister Jim Flaherty for aggressively pushing 2.99 per cent five-year mortgages. He was worried that cheap financing would stoke a housing market that some economists were calling overheated and overvalued.

Since credit unions are provincially regulated, Flaherty has no formal power to pressure Meridian over its current promotion.

Source: CBC News

Canadian cities, led by Vancouver, dominate North America’s Top Five list for quality of life, according to a survey issued by global business consultant Mercer.

Ottawa, Toronto and Montreal took the next three spots, followed by San Francisco, according to the 2014 Mercer Quality of Living rankings.

The only weakness in ranking Ottawa, Toronto and Montreal compared with Vancouver was their harsher winters, said Luc Lalonde, a principal at Mercer Canada.

“It basically boils down to climate because Vancouver has a relatively mild climate,” Lalonde said Wednesday.

The study also looked at such factors as political stability, crime statistics, public and medical services, consumer goods and recreation. The quality of living index is used by companies to help determine compensation for their employees working abroad.

Ottawa ranked 14th globally, while Toronto was 15th and Montreal 23rd.

Globally, Vienna has been the top ranked city for the last three years, while Vancouver retained its fifth-place spot, Lalonde said.

Zurich was No. 2 worldwide for quality of life, followed by Auckland, New Zealand and Munich, Germany.

Lalonde said the rankings don’t usually change dramatically from year to year.

“Wherever you have stability, good infrastructure and if the environment is politically and socially stable and if you have good public services, these things don’t change overnight.”

Cities with the lowest rankings in North America included Mexico City, financially troubled Detroit, St. Louis, Houston and Miami.

Although Miami and Houston are popular destinations, factors such as crime, air pollution and traffic congestion could have affected their scores, Lalonde said.

The city with the lowest ranking globally was strife-ridden Baghdad, followed by Bangui in Central African Republic and N’djamena in Chad.

Source: LuAnn LaSalle, Canadian Press

Almost a quarter of Canadians say they are planning on using their homes as their primary source of income once they are out of the workforce, according to a survey from Sun Life Financial.

“It’s not something we would recommend per se, it is a bit of a surprise,” says Sadiq Adatia, chief investment officer of Sun Life Global Investments, about the retirement strategy being considered by 24% of Canadians. “People should be counting on their retirement savings and not really looking at their home. A home is something you can have and carry forward with you.”

Any retirement strategy involving accessing the equity of the home could mean selling it or at the very least getting a new mortgage on the property or a reverse mortgage.

Mr. Adatia thinks the downturn in the stock market in 2008 may have affected people’s retirement plans and has them turning to their homes to pick up the slack.

Rising home values have helped many Canadians approaching retirement feel like they have created a pretty big nest egg. The Canadian Real Estate Association said last month the average home in the country sold for $388,553 in January, a new high and a 9.5% increase from a year earlier.

On average, Canadians expect 10% of their retirement income to come from their home. Government pension plans on average are expected to supply 30% of retirement income, 27% is to come from personal savings, 23% from employer plans, 5% from inheritance and 6% from what is called other sources.

Even with their optimism over accessing their home equity, only 28% of Canadians expected to be retired by 66. Another 56% of Canadians expect to work past retirement age with 65% of those people saying they will need to.

“The average expected retirement age in Canada has hit its lowest level in four years – it’s 66 this year down from a high of age 69 in 2011,” said Kevin Dougherty, president of Sun Life Financial Canada. “With people living longer and more Canadians expecting to retire sooner, it’s important to look at what savings you will need to be fully prepared.”

Mr. Adatia thinks a retirement plan involving selling your home might work for people who bought a few years ago, it might not work for people buying today.

“I know my own parents bought their home 30 years ago and at an extremely dirt cheap price,” he said, adding the older people can afford to absorb a downtown in the market if it happens. “If you’re 40 and bought your home five years ago, you can’t afford that hit.”

Sun Life’s view on real estate is the market is inflated and there might be a significant decline in prices, making renting a viable option. The company says homes are selling for on average six times personal income, compared to a historical average of four times.

“Do you want to overextend yourself at the peak of the market?” said Mr. Adatia.

The survey was conducted by Ipsos Reid between Nov. 12 to Nov. 20 and is considered accurate to within two percentage points.

Source: Garry Marr, Financial Post

The fourth quarter of 2013 saw a slight improvement in housing affordability in Metro Vancouver, once again due to slight drops in interest rates at some banks, statistical analysis provided to The Vancouver Sun shows.

During the whole of 2013, affordability has become slightly worse for single family houses, particularly in the city of Vancouver and its inner suburbs. In the outer suburbs, affordability levels for all types of housing have remained consistent for the year.

“The numbers are showing that we’re not seeing huge swings up and down, we’re not seeing a bubble and a burst. It’s very stable,” said Anne McMullin, president and CEO of the Urban Development Institute. “Developers are coming up with creative ways to make their homes affordable to people who may not necessarily be able to get into the market.”

She said developers are responding to the stable market with innovative projects, such as a new project by Adera, known as “mingles,” which are condominiums designed for people who want to share a mortgage, but not a bathroom or a bedroom. The first of these projects, called Prodigy, will be launched this spring at the University of B.C.’s Wesbrook Village.

Construction will start this summer on BosaSPACE, homes that adapt with movable furniture built into the suite. For example, some homes have a floating TV panel that slides out of the way to open up a guest bed area, or a kitchen island that slides out to become a desk or a dining room table.

“I think we will see more and more innovation that allows people to live in a smaller place, with all of the amenities of a larger space,” McMullin said. “The designs are starting to change to address the issue of affordability.”

The other change that McMullin noted is the transformation of shopping malls from stores surrounded with large concrete parking lots into gathering places that include shopping, public spaces, restaurants, housing, office space and access to public transit.

New concrete condominiums in Vancouver are slightly more affordable than they were last year, due to an increase in the number of concrete condominiums available for sale, the data shows.

At the same time, new condominiums in the inner suburbs are slightly less affordable than they were a year ago.

Many of the major banks have dropped their best five-year fixed rates down to 3.69 per cent — the average five-year, fixed-rate interest rate from the largest banks for the purposes of this index is now at 3.67 per cent, down from last quarter’s 3.79 per cent.

The data also shows that new home prices have remained relatively steady across the board, while both concrete and wood-frame condominium prices are down slightly for all areas, while townhouse and resale single family home prices increased slightly throughout the region.

The index defines “affordable” as the percentage of households living in a region with the income required to qualify for the mortgage needed to own the property. Typically, a bank wants to see no more than 32 per cent of income going to housing if it is to provide a mortgage.

In Vancouver’s suburbs, more than half of the population can afford to buy either a house, a townhouse or a condo and stay in the same community, the UDI/FortisBC Housing Affordability Index for the fourth quarter of 2013 shows.

The UDI/FortisBC Housing Affordability Index breaks Metro Vancouver into three areas: the city of Vancouver, Inner Metro (West Vancouver, North Vancouver, Burnaby, New Westminster, Richmond, South Delta, Coquitlam, Port Moody, Port Coquitlam) and Outer Metro (Surrey, Langley, North Delta, White Rock, Pitt Meadows and Maple Ridge).

In Vancouver proper, the minimum annual income required to purchase a new unit is $68,636 for a wood-frame condominium. For a single-family home, the minimum required annual income is $163,867.

For resale properties, the numbers are a bit more encouraging: the minimum required income for a resale property is $50,078, which would qualify a buyer for a wood-frame condo.

In Inner Metro, the minimum income required to buy a re-sale wood-frame condo is $37,716, while it is $108,130 for a single family home in the same area.

In Outer Metro, the minimum income required to buy a resale townhouse is just $28,263, while a family earning $64,655 could afford to purchase a detached home.

Source: Tracy Sherlock, Vancouver Sun

Real estate agents in Vancouver say property prices could take a hit, after Canada scrapped a program which allowed wealthy immigrants to fast-track the visa process.

The Immigrant Investor Program, launched in 1986, offered visas to business people with a net worth of at least $1.6 million who were willing to lend $800,000 to the Canadian government — for investment across Canada — for a term of five years.

By 2012, the scheme had to be temporarily frozen due to a huge backlog of applications from wealthy mainland Chinese hoping to come to B.C. Now, the government has announced it will end the program for good and scrap all 59,000 applications backlogged worldwide.

The decision came less than a week after the South China Morning Post published a series of exclusive investigative reports into the controversial scheme.

In West Vancouver, real estate agent Clarence Debelle is still receiving offers from mainland China for luxury property, but he’s concerned the end of the investor program will have an impact on the local economy and the high-end housing market.

“I deal directly with these people who bring a lot of wealth, who are creating lots of jobs for local Canadians — builders, trades, architects, realtors like myself,” said Debelle.

“Most of the buying is coming from Chinese immigrants who are wealthy, so if we make it difficult for them to come into this country, we have killed 80 to 90 per cent of the buying in West Vancouver.”

Immigration lawyer Richard Kurland agrees.

“When you suddenly stave off the intake of literally hundreds of millionaires in the Vancouver property market, prices can only go one way and that’s down,” said Kurland.

Others aren’t so sure. Even with the investor program frozen, housing prices continued to rise.

Tom Davidoff with UBC’s Sauder School of Business says the market is driven by other things like low interest rates and the local and global economies.

“Given that in the last couple of years, we haven’t seen the market cool off, it’s hard to believe that freezing the investor market is going to kill even the high-end in Vancouver,” said Davidoff.

The government has also announced the end of the Entrepreneur Program, a smaller scheme for business people who plan to own and manage a business in Canada.

However, wealthy investors can still come to Canada through the Start-up Visa Program, which encourages immigrant entrepreneurs to partner with private sector organizations to invest in local start-ups.

Source: CBC News

Canadian home prices are likely about 10 percent overvalued given expectations for rising interest rates, TD Bank said in a report yesterday.

However, the bank also noted the overvaluation in markets such as Toronto, Vancouver, Montreal and Ottawa is likely more significant than in others across the country.

“These markets will likely feel the pinch from modestly higher interest rates over the next two years more so than others,” TD economist Diana Petramala wrote in the report.

She noted Montreal, Quebec City and Ottawa have been flooded with an overhang of inventory of unsold condos.

“Home prices weakened in the second half of 2013 as a result and we expect that softness to persist in 2014,” Petramala said. “Toronto is poised to follow their lead, as the number of new condos scheduled to be completed in 2014 and 2015 is elevated relative to history.”

The Canadian market and worries about a real estate bubble have been key concerns for policy-makers for several years. Recent indicators have suggested the market may be headed for a soft landing instead of a bubble bursting, but concerns have persisted.

“Our forecast is consistent with this imbalance unwinding gradually over the next few years through a combination of moderate income growth and a modest home price correction,” Petramala wrote.

“While 2014 is likely to see stable prices on average, prices are expected to edge down by two percent in 2015-16 as the over-building challenge increasingly weighs on the market and as borrowing costs grind higher.”

The Canadian Real Estate Association reported recently that sales through its multiple listings service totalled 457,893 homes for 2013, up eight-tenths of a per cent from 2012.

The national average price for homes sold in December was $389,119, up 10.4 per cent from the end of 2012. Excluding Greater Vancouver and the Toronto region, the year-over-year increase was 4.6 per cent.

The TD report noted that overvaluation can be measured in several different ways with vastly different results.

“The home price-to-rent ratio points to an over-valuation of 60 percent. However, this measure is skewed by rent controls. It is difficult to know whether prices are too high, or if its rents that are too low,” TD said.

Another indicator, the home price-to-income ratio suggested overvaluation as high as 30 percent, but TD said that depends on how income is defined and what is included.

“Our preferred index of assessing housing overvaluation is affordability, the percent of income an average household must devote to mortgage payments on an average priced home with a conventional mortgage,” the report said.

“While interest rates are not likely to return to their historical norms, the current low level of interest rates is also not sustainable. We expect a modest increase in interest rates.”

Source: Canadian Press

It’s the one room in the house where everyone gathers every day. As the most popular spot in every home, why not make your kitchen the most attractive and inviting room, too? Here are some hot trends in kitchen decor:

The showcase kitchen

Without a doubt, today’s kitchen is much more than a place to prepare food. With the continued emphasis on lifestyle and food, the kitchen is more of a draw than ever. Contemporary design capitalizes on this trend with lots of exciting elements to make the kitchen more of a living space.

Take lighting. Out are those little glass pendants suspended over an island. In are sizeable lighting fixtures that make a splash in the middle of the room. A good example is the drum pendant light fixture now taking center stage in kitchen design centers and magazines. Simply changing your main fixture to one that’s brighter and more prominent may be all it takes to give your kitchen a welcome makeover.

Specialty-focused

Kitchens continue to be focused on features like sustainability, cooking options and ease of use. Trends that favor energy savings are a key development. Touchless faucets save on water and energy-stingy appliances can trim electric bills.

Integrated appliances are another important development. Topping the lists are appliances integrated into the cabinetry, making your kitchen more livable with their furniture-like appearance. Drawer appliances are part of the same trend. Warming drawers have risen in popularity in the past few years, and refrigerated drawers to hold produce or drinks are finding their way into more kitchens. We could even see microwave and dishwashing drawers soon. Such appliances will become more popular due to their ease of use and accessibility.

Countertop shift

While granite and marble remain the standard-bearers, we’ll see more engineered countertops take hold, such as quartz and glass. These surfaces sport an attractive natural look, emphasize sustainability and are easy-care.

Despite granite’s reign as the ultimate countertop material, it’s not easy to keep looking good. The high polishes on granite mean stains, smears and cleaning marks from sponges show up easily. Matte and less-polished finishes will become more popular as homeowners weary of all that rubbing.

Shift to neutral

Wild colors are taking a back seat to the high-contrast black-and-white kitchens rising in popularity. The clean backdrop of black and white makes food and accent colors pop, and the look is timeless. Kitchens will also shift into quiet mode as the trend toward neutral colors continues in other parts of the house. Countertops and cabinets in similar color tones are also trending for their ability to look unified, neat and relaxing.

Source: Kathryn Weber, Tribune Content Agency

The $25,000 Ottawa allows you take out of your retirement fund to buy your first home sure doesn’t go as far as it used to.

Under the home buyers’ plan, Canadians can take $25,000 out of their registered retirement savings plan and pay it back over the next 15 years without incurring any penalty. For a couple that means $50,000.

But the dollar amount has been stuck at $25,000 since 1999 while house prices have continued to escalate. At $50,000, you’re barely making the minimum downpayment if you are buying a home in Vancouver with a mortgage backed by the government.

The Canadian Real Estate Association says the average price of a home will climb to $391,000 next year, meaning that $50,000 is less than 13% and not enough to avoid costly mortgage default insurance.

“I don’t know how effective the plan is now, so I’m not sure what would happen, if you increase the amount,” says Don Lawby, chief executive of Century 21 Canada.

It’s not just the amount. The tax-free savings account is now just as an effective savings vehicle. As of 2014, Canadians were allowed to contribute $31,000 and the amount increases every year. You can also withdraw money from a TFSA and put it an equal amount back later.

“I think you almost need a combination of the two plans together to fund that kind of investment,” said Mr. Lawby, about buying a house. “It depends on where you live in Canada.”

The home buyers’ plan was launched with a $20,000 withdrawal limit and it jumped to $25,000 in 2009.

One of the arguments against increasing the limit is it will encourage young Canadians to rob their retirement savings to buy a first home. Paying the money back over 15 years — there are significant penalties if you don’t — means you might not have the money to make current contributions.

Vince Gaetano, a principal of monstermortgage.ca, says the home buyers’ program is mostly being used by people as a tax loophole.

“This is the most popular time of the year to do it. They manipulate the system to deliver a tax return on the downpayment they will [already be] making on their purchase,” he says.

If you know you are buying your first home in the next 90 days, you make a $25,000 contribution or $50,000 for two people. That means a big refund in April. You then withdraw the $25,000 or $50,000 to pay for that initial home.

“Most people have the RRSP room. If you are buying a house by June and you have the downpayment in cash, you make the contribution to trigger the the refund,” said Mr. Gaetano, noting the $25,000 has to be in the plan for 90 days before you can take it out.

“You can garner $20,000 in refunds,” said Mr. Gaetano, pointing out it will depend on what your marginal tax rate is.

Source: Garry Marr, Financial Post

Metro Vancouver house prices will increase by an average of 4.4 per cent this year to $801,000, according to the latest Royal LePage house price survey.

But Vancouver real estate experts suggested Thursday the forecast might be slightly optimistic.

“I’m expecting price increases in the one-to-two-per-cent range,” B.C. Real Estate Association chief economist Cameron Muir said in an interview. “Market conditions are fairly balanced now, which suggests fairly limited upward pressure on prices.

“I really don’t expect to see sales levels reach the point where prices are going to accelerate in any significant way.”

Sandra Wyant, president of the Real Estate Board of Greater Vancouver, noted most Vancouverarea housing prices increased by about two per cent last year – with the benchmark price for a detached home climbing 2.5 per cent to $927,000 while townhouse prices increased by 1.2 per cent to $456,100. Condominium prices rose by two per cent to $367,800.

“If we have pent-up demand this year, (Royal LePage) may very well be correct,” she said, noting the price-increase forecast is higher than other surveys. “It depends on how buyers are affected by certain events, such as interest rates and job growth.”

Royal LePage said confidence crept back into the Vancouver real estate market last year and it expects that momentum to carry over into 2014. The firm predicts total Metro Vancouver housing sales to increase from 28,700 in 2013 to 30,000 this year.

Royal LePage president Phil Soper said the national housing market emerged from a year-long correctional cycle of slow sales volumes last year.

“In the absence of some calamitous event or material increase in mortgage financing costs, we expect this positive momentum to characterize 2014,” he said in a statement.

Soper said talk of a “soft landing” for Canada’s real estate market this year is misguided.

“We expect no landing, no slowdown and no correction in the near-term,” he said. “Conditions are ripe for as strong a market as we saw in the post-recessionary rebound of the last decade.”

Muir noted the value of Metro Vancouver detached homes rose higher than other housing types last year and he expects that trend to continue in 2014.

“Condo prices have been quite flat while the price of single detached homes has accelerated, particularly in some of the tonier markets,” he said. “Eighty per cent of housing starts today are multi-family units so single detached homes will garner an increasing premium over time.”

Muir expects mortgage rates will remain “relatively unchanged” this year, with five-year rates increasing by about half a percentage point by the end of the year.

He said the U.S. economy could pose a risk to that forecast if it grows faster than expected this year, which could fuel inflation concerns and put more upward pressure on interest rates.

Wyant said job growth will play a big role in B.C. real estate values this year, noting the northern B.C. real estate market continues to perform well due to strong employment trends.

The Royal LePage survey said Calgary will have the highest house-price increases in Canada this year, with the average price increasing 5.1 per cent to $461,000. Vancouver’s 4.4-per-cent increase to $801,000 was second while Toronto came in third, with prices there expected to climb by 3.9 per cent this year to $545,000.

Across Canada, the average price is expected to increase by 3.7 per cent to $396,500.

Source: Bruce Constantineau, Vancouver Sun

What’s hot – and not – in housing for 2014? Below is a look at some of the trends, including what colours and accessories the best homes will be sporting this year.

Colour

Purple is the colour of the year for 2014. Unless it’s blue. Or maybe yellow.

Radiant orchid is the big one, says the international colour authority Pantone Color Institute. It’s showing up everywhere from wallpaper to accessories. The institute touts purple as inducing creativity, confidence and other good things.

It complements olive, deeper hunter greens, turquoise, teal, light yellows, grey and other colours, the institute says.

Which is good, since Sico earlier this year earmarked yellow as a dominant colour, while blue continues to be high on the Color Marketing Group’s favourites list.

“We’re seeing blue in a lot of new fabrics,” says Catherine Pulcine of Decorating Den Interiors in Ottawa. “It’s tending to cobalt blue, which ties into orchid. We’ve been seeing pretty vibrant colours over the past few years.”

Hello, walls

Once the stuff of Grandma’s house, wallpaper has made a big comeback in recent years, whether for an accent wall in a powder or dining room or cosily surrounding you in a bedroom.

Geometric patterns and radiant orchid, sometimes in tandem, are among wallpaper trends.

Wallpaper “adds panache to a space, but you have to ask yourself if it’s something you’re going to get tired of,” Pulcine says. It’s an important question: The stuff can get pricey and isn’t always easy to remove.

Wallpaper, mouldings and wall tiles all add texture, says Suzanne Dimma, editor-in-chief of House & Home magazine. “It gives so much more character and an architectural feel than just the drywall you get in a builder house.”

So-called statement walls, including those with handpainted murals, number among the magazine’s top 10 trends for 2014. Also on the list: painting trim and walls the same bold colour to eliminate contrast and increase the sense of spaciousness.

Recipes for a trendy kitchen Dramatic and sophisticated, black countertops in granite and quartz are zipping up the kitchen hit parade, according to the online real estate information service Zillow. Marble and light-grey counters in the same room provide contrast.

Also hot, Zillow says: open shelves, glass-fronted cabinetry and dark colours such as copper and deep red (because they make rooms feel smaller, such colours work best as accents).

“Glass (in doors) is popular, but what’s very trendy is frosted glass,” designer Dominique Girard says. “Most people don’t want to display everything.”

She says high-gloss cabinetry in PVC and other manufactured materials as well as sleek, linear lines – discreet cabinet door handles are becoming de rigueur – are also trending.

“The biggest trend is larger refrigerators. Samsung supports the fresh food craze with its

T9000 model ($4,200): it has two fridge and two freezer doors, but one freezer compartment converts to a refrigerator on demand.

Stainless steel remains No. 1 in finishes, but Businessweek.com reports that appliance makers are softening that with lessaustere designs, matte finishes, rounded edges and furniturelike handles.

Furnishings and accessories

We’re increasingly viewing furniture as an investment rather than disposable fashion items, Dimma says. If there’s a trend at all, it’s toward traditional or modern classic styles that will work for years.

Pulcine says the industrial look is fading. “People like to add warmth to their space, particularly for us who have to deal with winter.” That warmth is showing up, for example, in rustic items such as tables with barnboard tops and black or grey-black iron bases.

Some accessories are taking their hint from what Dimma calls the Woodstock Revival. Sears’s spring 2014 home collection, for example, includes owl lanterns that look like they’re made of macramé, as well as cheery, folk-art inspired cushions and table napkins. Boomers should totally relate.

To that list, those in the know add sculptural light fixtures, animal prints such as crocodile and zebra, and furnishings and accessories inspired by classical Greece and Rome.

Other top trenders

Watch for hot new tiles in bathrooms and elsewhere. They include patterned floor tiles in keeping with the geometric patterns emblazoning everything from fabrics to wall hangings.

Persian rugs: “Hot, hot, hot!” House & Home’s Dimma says.

Fancified basements with curved bulkheads, mini brew pubs, luxurious home theatres.

Outside, look for resortstyle backyards inspired by Canadians’ love of winter jaunts to Mexico and Cuba, landscape designer Welwyn Wong says. We’ll be capturing a bit of that southern paradise feel by surrounding our pools with lush island plantings, little bridges and rock outcroppings, she says.

Source: Patrick Langston, The Ottawa Citizen