Mortgage Taps Tighten

For the second time in twelve months, Federal Finance Minister Jim Flaherty and the Department of Finance tightened rules on residential mortgages to help slow the pace of household debt accumulation. Changes include shortening the amortization period to 30 years (which had already been shortened from 40 to 35 years in 2008), withdrawing CMHC insurance on home equity lines of credit (HELOC), and a reduction in the maximum refinance percentage from 90% loan-to-value to 85%. Changes to the amortization period and the refinancing ratio will take effect March 18 and the HELOC change will take effect April 18, 2011.

Key Implications:

The change may alter the ‘quarterly profile’ of the housing market activity as some sales are pulled forward by households. Buyers who are on the fence will make their moves earlier to avoid the risk of not qualifying for a mortgage.

The impact is not expected to be large however, nor does it lead us to alter our annual forecast. Existing home sales were already forecast to weaken by about 8% compared to 2010 (this is also due to another pre-empt surge in 2010 that saw people buy before the HST kicked in on July 1st and those who took advantage of rock bottom interest rates).

The other two changes are more likely to impact consumer durables and housing-related spending. For instance, household usage of HELOCs is mostly directed towards renovations, vehicle purchases, and debt consolidation. Yet, on that front as well, the impact is not expected to be large.

Again these changes are not effective yet. They will most likely be in effect in the next few months and we will have an opportunity to better understand them and their implications before they come into effect. Saying that if you are looking or debating to get in the market now may be as good a time as any to buy or make a move, or refinance.

Feel free to comment or get in touch for more info.

Core Values

The Blok is my baby, it is a part of me and want it to succeed, and since it is a part of me it is only natural it will take on my drives and ambitions. I sat down this past holiday season and decided to set up my goals for 2011. While going through the process I realized that in order for me to see The Blok in the long run, 5, 10, 20 years down the road I first had to define its purpose, its “core ideology” if I may, for The Blok to exist and for people to relate to it. (Damn the cliché that holds true one is to understand them self first before venturing off to pursue their dreams).

After a period of “soul searching’ and since I was writing this stuff down I thought I might as well share it with you. The next few paragraphs might sound technical but I hope they give you a glimpse about what The Blok venture holds true and what it aspires to be. I believe much like a real person The Blok has a set of beliefs you can relate to, it may remind you of the way you carry yourself about or at the very least inspire you to set your own path and goals.

I believe everyone’s belief system has two parts: Values and Purpose.

Values are the set of guiding principles to which you navigate. They require no external justification. They are innate strengths you are aware of, proud of and motivate you every day to keep going. These values will keep you going as time changes and challenges arrive.

Here are The Blok’s strengths and values:

• I am not entitled to anything. Success is based on merit.
• Achieving high results.
• Honesty, integrity and social responsibility above all else.
• Encouraging and inspiring people.

Do you have a set of values you hold true? A way you carry yourself about maybe? A list of values you remember every day on your journey?

Every successful venture company also defines its purpose, and yes you would be surprised to know it goes beyond mere profit. Would Apple Inc. have succeeded if their main purpose was making money rather than “not to settle for anything less than excellence” and “have self-honesty to admit when we are wrong and the courage to change”?

In order for someone to prosper they have to have a purpose. A trick I found to discover one's purpose is to ask yourself ‘why?’ five times so that in the end you arrive at the BIG ‘why?’ For The Blok it went something like this:

Why? To share information with people.
Why? So they can make informed decisions.
Why? To make the moving process easier.
Why? Because people will need the help.
Why?.. And here it was, somewhere in all these answers were the bits and pieces of The Blok’s Big Purpose:

“Making life easier for people by sharing information to eliminate obstacles”.

Take a minute and ask yourself why five times. What is your purpose?

So now we have a Purpose and a set of Values that The Blok subscribes to, and ten years from now when I’m rocking the greys and I am writing about baby wipes and the need for nanny rooms and in-law suites they would still be the same. My strategies and marketing practices might change but my core ideology will not. This is The Blok’s timeless character and will be the glue that holds it together.

Happy 2011 everyone, be safe; now go rediscover your purpose and always keep true to your values.