Now is the best possible time for Canadians to make money from equity in their home

Author: Fisher Price

Author: Fisher Price

The Good, The Bad and The Ugly

The mortgage, toronto mortgage, canada business, canada mortgage must soon decreewhether or not to increase interest rates. It is the Canadian Housing Market, the American Dollar and the American Consumer, that will have great influence over this decision in 2010.

This decision will not be easy.

The stream of rhetoric from the Bank of Canada and our Federal Government over the past several months illustrates that there are few tools left to influence our economy short of increasing interest rates. The Governor of the Bank of Canada and the Minister of Finance are warning of a real estate bubble, we are being told that mortgage rates are too low and perhaps that some of the tools provided to Canadians to buy homes may be taken away but this is far from likely. These attempts to cool an overheating housing market are not working; interest rates will have to be increased, but how about the strength of our dollar? (Have a look at the related interview of Marcus on CBC's, The National, available on our website.)

As our currency increases relative to the American Dollar the goods we sell become more expensive in the US. This leads to fewer Canadian goods being purchased south of the border. This decreases our exports and reduces the demand for labor domestically.

If the Worlds' economy continues to go over speed bumps, such as the recent problems in Greece, Spain, Italy and Portugal, or the credit problems experienced by Dubai, the uncertainty that The Governor of the Bank of Canada and the Minister of Finance find themselves in, will likely ebb.

If these problems with sovereign debt continue to surface around the world the USD will become the best of the worst options for investors worldwide. Regardless of the extremely low rate of return paid out by its Government on debt, investors will flock to its safety for lack of a better option.

If the world begins once again to see the United States of America as a ray or light in a dark and stormy world economy, The Bank of Canada will be able to increase interest rates without worrying about the relative appreciation that this causes in the Canadian Dollar and therefore further erosion to our export numbers and already struggling GDP.

Now we must see how efficiently this capital was absorbed by the economy.

If 2010 brings us an American economy that continues to fire on all cylinders, as it has been for the last part of 2009, interest rates will go up faster than anticipated.

There is an argument to be made that there are only so many clunkers that can be bought for cash, and a person can only take advantage of home buying incentives so many times. Eventually the mounting consumer debt load will have to be addressed and with unemployment at record highs someone will have to pay for the government stimulus. Although the American economy seems to be chugging along right now, as evidenced by the ever increasing stock market and claims that the recession is long gone, the American's have promises to keep, and many miles before they sleep.

With rates still so low, but an economy somewhat on it's way back, it's time to capitalize. An equity take-out from your home to place into ETF's or funds with a higher return is nothing short of brilliant.

We as mortgage, toronto mortgage, canada business, canada mortgage holders must continue to be careful as we always are. We do not see interest rates increasing dramatically in 2010, but caution that if some of the events discussed in this newsletter occur we could very well see fixed rates and variable rates move to the upside.

Thanks for your continued support! Please do not hesitate to contact us with any questions.

All the best for 2010!About the Author:

Duane Sale is a mortgage broker in Toronto with Mortgage Alliance. He has a decade of experience in the industry.

duane sale dot com

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