BDC's new Operating Line of Credit Guarantee(TM) now available through financial institutions
Eligible companies can obtain up to a 40% increase in their line of
credit
MONTREAL, June 25 /CNW Telbec/ - The Business Development Bank of Canada
(BDC) is pleased to announce that entrepreneurs can now request BDC's
Operating Line of Credit Guarantee from their financial institution. The
Guarantee, which enables eligible companies to obtain up to a 40% increase in
their current operating line of credit, is designed to help creditworthy
Canadian businesses overcome temporary liquidity problems.
"As capital remains scarce in the market, an increasing number of
creditworthy entrepreneurs are finding it difficult to get the credit they
need to finance their operations," said Jean-René Halde, President and Chief
Executive Officer at BDC. "The Operating Line of Credit Guarantee helps fill
that gap. Working together with Canada's financial institutions, BDC will help
ensure that businesses have access to the short-term financing they need to
remain successful and grow in the months ahead."
The Operating Line of Credit Guarantee provides financial institutions
with the option of obtaining a guarantee for a portion of their clients'
operating lines of credit - either to increase or to maintain it. Through the
program, financial institutions and BDC will share the risk while providing
increased support to their clients. To request the guarantee, the financial
institutions contact BDC which acts as a behind-the-scenes partner throughout
the process.
Terms and eligibility criteria
The Operating Line of Credit Guarantee applies to operating Lines of
Credit with authorized limits of a minimum of $400,000 and a maximum of
$40,000,000. The guarantee supports a maximum incremental amount, or portion
of the line of credit, of between 25 and 40%. The guarantee amount ranges
between $50,000 up to a maximum of $5 million. The guarantee is valid for a
period of 12 months and can be renewed annually.
Businesses eligible for the guarantee are those who have an operating
Line of Credit secured by short term assets, such as accounts receivable and
inventory. Among other things, the business must be commercially viable, have
been in operation for two or more years, have had an operating Line of Credit
with the financial institution for at least one year and have a positive
tangible net worth.
The new guarantee is provided through Canadian financial institutions.
Interested businesses can obtain further information by consulting with their
financial institution, or on the BDC Web site.
About BDC
BDC is Canada's business development bank. From 100 offices across the
country, BDC promotes entrepreneurship by providing highly tailored financing,
venture capital and consulting services to entrepreneurs. Visit www.bdc.ca for
more information.
Thursday, June 25, 2009
Monday, June 15, 2009
Don't handcuff your mortgage
Gary Marr, Financial Post Published: Saturday, June 13, 2009
Would you like to pay an extra $300 per month on your mortgage? Not likely.
That hasn't stopped a number of Canadians, with the deal of a lifetime on a variable-rate mortgage, from switching over to a more expensive fixed-rate product and paying the extra freight.
A fear of rising rates is driving the rash decision. But if you've finally managed to pin your banker to the ground, why on Earth would you let him off the mat?
More than 28% of Canadians have a variable-rate product tied to prime, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP). If you negotiated a deal before October of last year, chances are you are now borrowing money for as little as 1.35%. That's based on deals that at one point saw the banks giving 90 basis points off prime. Prime is now 2.25%.
The average sale price of a home last month in Canada was $306,366. Based on a 25% downpayment and a 25-year amortization, your monthly payment would be $962.61 at 1.35%. Convert that to a five-year fixed-rate term and you're probably going to have to consider a 4% mortgage rate and a monthly payment of $1,289.04.
Rates are rising fast. Most major banks upped their five-year rate by 40 basis points this week, although discounters were still offering 4% this past week.
"It's not a mass rush yet, but we are starting to see ... people locking in. But variable rates are still so good," says Joan Dal Bianco, vice-president of real estate-secured lending, TD Canada Trust. She stops short of questioning why a consumer would pull out of these "deals" that are no longer available on the market.
Try to get a variable-rate mortgage today and the best you can probably hope to get is 60 basis points above prime, or 2.85%.
The landscape changed dramatically in October during the credit crunch. As the Bank of Canada lowered rates, the major banks reluctantly lowered prime because of the massive amount of customers with variable-rate products negotiated under the old, higher terms.
"Bonds yields are going up rapidly and people are starting to realize the rates are going to go up," Ms. Dal Bianco says. Throw in the fact the Bank of Canada used the weasel word "conditional"(on inflation rates)when it promised not to raise rates until June, and you can understand why some people think today's record-low prime rate might not hold.
But if you're someplace between 60 to 90 basis points below prime, the rate is going to have to go up pretty fast to justify locking in today at 4%, even though that is just slightly above the all-time low hit last month for a five-year term.
"I don't understand why you would lock in," says Jim Murphy, chief executive of CAAMP. "Sure, if they start to rise, but [Bank of Canada governor Mark] Carney says they won't rise, so you've got another year at that prime-minus rate."
Don Lawby, chief executive of Century 21 Canada, says even when rates do start to increase, they are not going to jump significantly right away. You are not going to get 4% on a fixed rate again, but double-digit rates seem unlikely. "The only logic two locking in would be for someone very sensitive to any rate change and they just want to be secure," Mr. Lawby says.
But at what price? If you're using the "feeling secure" logic, why not go for the 10-year fixed-rate product? Rates on that product can be locked at 5.25%, ridiculously low by historical standards. Yet fewer than 10% of Canadians consider a 10-year product.
There are some compromises you can make. For starters, there is nothing to prevent consumers from having a blended mortgage at most Canadian banks. Some banks will let you take half your outstanding debt and lock it in. Diversity is preached for stock portfolios, but few people seem to adhere to the same philosophy when managing their debt.
Consumers might want to take their cue from business. Few companies would want all of their debt coming due at the same time -- it presents too much risk. The other option is knocking down principal: Make payments based on a 4% rate and have that extra $300 go straight to your principal every month.
The bottom line is if you've got a deal on your mortgage, why would you give it back?
Gary Marr, Financial Post Published: Saturday, June 13, 2009
Would you like to pay an extra $300 per month on your mortgage? Not likely.
That hasn't stopped a number of Canadians, with the deal of a lifetime on a variable-rate mortgage, from switching over to a more expensive fixed-rate product and paying the extra freight.
A fear of rising rates is driving the rash decision. But if you've finally managed to pin your banker to the ground, why on Earth would you let him off the mat?
More than 28% of Canadians have a variable-rate product tied to prime, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP). If you negotiated a deal before October of last year, chances are you are now borrowing money for as little as 1.35%. That's based on deals that at one point saw the banks giving 90 basis points off prime. Prime is now 2.25%.
The average sale price of a home last month in Canada was $306,366. Based on a 25% downpayment and a 25-year amortization, your monthly payment would be $962.61 at 1.35%. Convert that to a five-year fixed-rate term and you're probably going to have to consider a 4% mortgage rate and a monthly payment of $1,289.04.
Rates are rising fast. Most major banks upped their five-year rate by 40 basis points this week, although discounters were still offering 4% this past week.
"It's not a mass rush yet, but we are starting to see ... people locking in. But variable rates are still so good," says Joan Dal Bianco, vice-president of real estate-secured lending, TD Canada Trust. She stops short of questioning why a consumer would pull out of these "deals" that are no longer available on the market.
Try to get a variable-rate mortgage today and the best you can probably hope to get is 60 basis points above prime, or 2.85%.
The landscape changed dramatically in October during the credit crunch. As the Bank of Canada lowered rates, the major banks reluctantly lowered prime because of the massive amount of customers with variable-rate products negotiated under the old, higher terms.
"Bonds yields are going up rapidly and people are starting to realize the rates are going to go up," Ms. Dal Bianco says. Throw in the fact the Bank of Canada used the weasel word "conditional"(on inflation rates)when it promised not to raise rates until June, and you can understand why some people think today's record-low prime rate might not hold.
But if you're someplace between 60 to 90 basis points below prime, the rate is going to have to go up pretty fast to justify locking in today at 4%, even though that is just slightly above the all-time low hit last month for a five-year term.
"I don't understand why you would lock in," says Jim Murphy, chief executive of CAAMP. "Sure, if they start to rise, but [Bank of Canada governor Mark] Carney says they won't rise, so you've got another year at that prime-minus rate."
Don Lawby, chief executive of Century 21 Canada, says even when rates do start to increase, they are not going to jump significantly right away. You are not going to get 4% on a fixed rate again, but double-digit rates seem unlikely. "The only logic two locking in would be for someone very sensitive to any rate change and they just want to be secure," Mr. Lawby says.
But at what price? If you're using the "feeling secure" logic, why not go for the 10-year fixed-rate product? Rates on that product can be locked at 5.25%, ridiculously low by historical standards. Yet fewer than 10% of Canadians consider a 10-year product.
There are some compromises you can make. For starters, there is nothing to prevent consumers from having a blended mortgage at most Canadian banks. Some banks will let you take half your outstanding debt and lock it in. Diversity is preached for stock portfolios, but few people seem to adhere to the same philosophy when managing their debt.
Consumers might want to take their cue from business. Few companies would want all of their debt coming due at the same time -- it presents too much risk. The other option is knocking down principal: Make payments based on a 4% rate and have that extra $300 go straight to your principal every month.
The bottom line is if you've got a deal on your mortgage, why would you give it back?
Thursday, June 4, 2009
Tuesday, June 2, 2009
Gen X to flex new purchasing muscle in recreational property markets across Canada, says RE/MAX
Demographic shift underway in 74 per cent of markets surveyed
KELOWNA, BC, June 2 /CNW/ - Generation X purchasers are poised to replace
aging baby boomers as the major force in recreational property markets across
the country, according to a report released today by RE/MAX.
The demographic shift was noted in the 2009 RE/MAX Recreational Property
Report highlighting sales, pricing, trends and developments in 50 Canadian
markets. The report found demand from Gen X (those born between 1965 and 1980)
has nearly doubled over one year ago. Seventy-four per cent of markets
surveyed this year reported a marked trend toward thirty-something buyers
snapping up affordably-priced product, ranging from waterfront cottages to
resort condominiums, compared to just 40 per cent in 2008.
"Much of the activity in the marketplace today has to do with the mindset
of this particular generation," says Elton Ash, Regional Executive Vice
President, RE/MAX of Western Canada. "More important than the investment
aspect is the commitment to lifestyle. The purchase of a waterfront home or a
condominium is more than a simple transaction to Gen X purchasers - owning a
recreational property underscores their dedication to family and balance."
The financial strength of the cohort dovetails well with current market
realities. Sixty-six per cent of recreational property markets surveyed
reported a decline in the number of recreational product sold in the first
four months of 2009, while 22 per cent indicated sales were either up or on
par compared to one year ago. While the combination of inclement weather and a
global recession clearly hampered sales activity earlier in the year, many
major centres are currently experiencing an upswing in activity as the
traditional cottage season gets underway.
"After being priced out of most markets for the better half of the last
decade, Gen X purchasers now have the financial wherewithal to buy
recreational product at virtually every price point," says Michael Polzler,
Executive Vice President, Regional Director, RE/MAX Ontario-Atlantic Canada.
"Gen X is ideally positioned to pick up any slack in recreational property
markets caused by softer demand from baby boomers and retirees. They represent
the next wave of recreational property owners in Canada and they know it."
The time to buy has never been better. With four exceptions, recreational
property prices have softened in most major markets across the country. Only
on the Newfoundland Coast and in Ontario, from Innisfil to Oro, Kingston, and
Beaverton, have values increased this year compared to 2008. Starting prices
remain similar to one year ago and in some cases are even higher.
"While buyer's market conditions exist virtually across the board,
sellers of recreational properties from coast-to-coast are clearly content to
wait out the storm," says Polzler. "They are in no hurry to unload their
product. Many have held on to their properties for generations - they're
fully-owned yet underutilized, which has prompted some aging owners to list
them for sale."
The report also found that while lowball offers are on the rise, very few
meet with success. Through tough negotiations with multiple sign backs,
purchasers who are serious tend to find out the hard way that sellers are
serious too. As a result, the sales-to-list ratio remains relatively high in
most recreational property markets across the country.
"The prospect of greater stability down the road is creating cautious
optimism in the marketplace," says Ash. "Purchasers are seeking to buy quality
product, whether it be situated on lakes, rivers, or ponds, before values
start to once-again edge up."
Highlights:
- Supply is adequate in most markets, but heated activity in the
lower-end has resulted in tight inventory levels for entry-level
product in 18 per cent of markets including: Bancroft, Combermere,
Honey Harbour/Port Severn, West Kawarthas, Orillia, Flesherton, North
Saskatchewan, and Salt Spring Island.
- Older cottage owners, many who own their properties outright, are
selling to younger purchasers with families.
- Some American cottage owners in Canada are taking advantage of the
stronger dollar to cash out of the market.
- American purchasers have largely fallen off the radar, with some
exceptions: Lake Winnipeg, Shediac Bay, and Sault Ste. Marie.
- Pent-up demand is a factor in the marketplace, as those purchasers
who had intended on buying recreational properties in the latter half
of 2008 deferred their purchases to 2009.
- Older Canadians continue to seek secondary homes in warmer parts of
the U.S such as Florida, Arizona, California, and Nevada.
- Generation X purchasers are prepared to spend their hard-earned
dollars on recreational properties, but at the end of the day, they
want to know that they've negotiated the best deal possible.
- The upper-end has somewhat softened in markets across the country.
RE/MAX is Canada's leading real estate organization with over 17,600 sales associates situated throughout its more than 677 independently-owned and operated offices across the country. The RE/MAX franchise network, now in its 36th year, is a global real estate system operating in more than 70 countries.
Over 6,700 independently-owned offices engage nearly 100,000 member sales
associates who lead the industry in professional designations, experience and
production while providing real estate services in residential, commercial,
referral, and asset management. For more information, visit: www.remax.ca.
Starting Prices for Recreational Properties(*)
-------------------------------------------------------------------------
Market 2008 2009
-------------------------------------------------------------------------
British Columbia - Gulf Islands
- Salt Spring Island(xx) $1,300,000 $890,000
-------------------------------------------------------------------------
Comox Valley -
Mt. Washington(xx) $480,000 - $800,000 $500,000
-------------------------------------------------------------------------
Vancouver Island - Ucluelet(xx) $649,000 $555,000
-------------------------------------------------------------------------
Tofino (including inlet
waterfront)(xx) $869,000 $789,000
-------------------------------------------------------------------------
Fraser Valley - Cultus
Lake/Harrison Lake $750,000 $450,000
-------------------------------------------------------------------------
Okanagan Valley - South
Okanagan $1,000,000 $800,000
-------------------------------------------------------------------------
North Okanagan/Shuswap -
Vernon $1,500,000 $1,200,000
-------------------------------------------------------------------------
Shuswap $800,000 $800,000
-------------------------------------------------------------------------
Central South Cariboo(xxx)(*) $140,000 $135,000
-------------------------------------------------------------------------
Whistler N/A $1,000,000
-------------------------------------------------------------------------
Lake Windermere $1,300,000 $1,200,000
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(*) Starting price for a three-bedroom, winterized recreational property
on a standard-sized waterfront lot
(xx) Oceanfront Property
(xxx) Two-Bedroom Condominium
(xxx)(*) Seasonal property
For further information: Marie Selby, RE/MAX of Western Canada, (250)
860-3628; Eva Blay/Charlene McAdam, Point Blank Communications, (416)
781-3911
Demographic shift underway in 74 per cent of markets surveyed
KELOWNA, BC, June 2 /CNW/ - Generation X purchasers are poised to replace
aging baby boomers as the major force in recreational property markets across
the country, according to a report released today by RE/MAX.
The demographic shift was noted in the 2009 RE/MAX Recreational Property
Report highlighting sales, pricing, trends and developments in 50 Canadian
markets. The report found demand from Gen X (those born between 1965 and 1980)
has nearly doubled over one year ago. Seventy-four per cent of markets
surveyed this year reported a marked trend toward thirty-something buyers
snapping up affordably-priced product, ranging from waterfront cottages to
resort condominiums, compared to just 40 per cent in 2008.
"Much of the activity in the marketplace today has to do with the mindset
of this particular generation," says Elton Ash, Regional Executive Vice
President, RE/MAX of Western Canada. "More important than the investment
aspect is the commitment to lifestyle. The purchase of a waterfront home or a
condominium is more than a simple transaction to Gen X purchasers - owning a
recreational property underscores their dedication to family and balance."
The financial strength of the cohort dovetails well with current market
realities. Sixty-six per cent of recreational property markets surveyed
reported a decline in the number of recreational product sold in the first
four months of 2009, while 22 per cent indicated sales were either up or on
par compared to one year ago. While the combination of inclement weather and a
global recession clearly hampered sales activity earlier in the year, many
major centres are currently experiencing an upswing in activity as the
traditional cottage season gets underway.
"After being priced out of most markets for the better half of the last
decade, Gen X purchasers now have the financial wherewithal to buy
recreational product at virtually every price point," says Michael Polzler,
Executive Vice President, Regional Director, RE/MAX Ontario-Atlantic Canada.
"Gen X is ideally positioned to pick up any slack in recreational property
markets caused by softer demand from baby boomers and retirees. They represent
the next wave of recreational property owners in Canada and they know it."
The time to buy has never been better. With four exceptions, recreational
property prices have softened in most major markets across the country. Only
on the Newfoundland Coast and in Ontario, from Innisfil to Oro, Kingston, and
Beaverton, have values increased this year compared to 2008. Starting prices
remain similar to one year ago and in some cases are even higher.
"While buyer's market conditions exist virtually across the board,
sellers of recreational properties from coast-to-coast are clearly content to
wait out the storm," says Polzler. "They are in no hurry to unload their
product. Many have held on to their properties for generations - they're
fully-owned yet underutilized, which has prompted some aging owners to list
them for sale."
The report also found that while lowball offers are on the rise, very few
meet with success. Through tough negotiations with multiple sign backs,
purchasers who are serious tend to find out the hard way that sellers are
serious too. As a result, the sales-to-list ratio remains relatively high in
most recreational property markets across the country.
"The prospect of greater stability down the road is creating cautious
optimism in the marketplace," says Ash. "Purchasers are seeking to buy quality
product, whether it be situated on lakes, rivers, or ponds, before values
start to once-again edge up."
Highlights:
- Supply is adequate in most markets, but heated activity in the
lower-end has resulted in tight inventory levels for entry-level
product in 18 per cent of markets including: Bancroft, Combermere,
Honey Harbour/Port Severn, West Kawarthas, Orillia, Flesherton, North
Saskatchewan, and Salt Spring Island.
- Older cottage owners, many who own their properties outright, are
selling to younger purchasers with families.
- Some American cottage owners in Canada are taking advantage of the
stronger dollar to cash out of the market.
- American purchasers have largely fallen off the radar, with some
exceptions: Lake Winnipeg, Shediac Bay, and Sault Ste. Marie.
- Pent-up demand is a factor in the marketplace, as those purchasers
who had intended on buying recreational properties in the latter half
of 2008 deferred their purchases to 2009.
- Older Canadians continue to seek secondary homes in warmer parts of
the U.S such as Florida, Arizona, California, and Nevada.
- Generation X purchasers are prepared to spend their hard-earned
dollars on recreational properties, but at the end of the day, they
want to know that they've negotiated the best deal possible.
- The upper-end has somewhat softened in markets across the country.
RE/MAX is Canada's leading real estate organization with over 17,600 sales associates situated throughout its more than 677 independently-owned and operated offices across the country. The RE/MAX franchise network, now in its 36th year, is a global real estate system operating in more than 70 countries.
Over 6,700 independently-owned offices engage nearly 100,000 member sales
associates who lead the industry in professional designations, experience and
production while providing real estate services in residential, commercial,
referral, and asset management. For more information, visit: www.remax.ca.
Starting Prices for Recreational Properties(*)
-------------------------------------------------------------------------
Market 2008 2009
-------------------------------------------------------------------------
British Columbia - Gulf Islands
- Salt Spring Island(xx) $1,300,000 $890,000
-------------------------------------------------------------------------
Comox Valley -
Mt. Washington(xx) $480,000 - $800,000 $500,000
-------------------------------------------------------------------------
Vancouver Island - Ucluelet(xx) $649,000 $555,000
-------------------------------------------------------------------------
Tofino (including inlet
waterfront)(xx) $869,000 $789,000
-------------------------------------------------------------------------
Fraser Valley - Cultus
Lake/Harrison Lake $750,000 $450,000
-------------------------------------------------------------------------
Okanagan Valley - South
Okanagan $1,000,000 $800,000
-------------------------------------------------------------------------
North Okanagan/Shuswap -
Vernon $1,500,000 $1,200,000
-------------------------------------------------------------------------
Shuswap $800,000 $800,000
-------------------------------------------------------------------------
Central South Cariboo(xxx)(*) $140,000 $135,000
-------------------------------------------------------------------------
Whistler N/A $1,000,000
-------------------------------------------------------------------------
Lake Windermere $1,300,000 $1,200,000
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(*) Starting price for a three-bedroom, winterized recreational property
on a standard-sized waterfront lot
(xx) Oceanfront Property
(xxx) Two-Bedroom Condominium
(xxx)(*) Seasonal property
For further information: Marie Selby, RE/MAX of Western Canada, (250)
860-3628; Eva Blay/Charlene McAdam, Point Blank Communications, (416)
781-3911
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