Loan Approvals Have Risen To Their Highest

Canadians looking to purchase a new car in the second half of 2009 should find it easier than they did a few months ago, according to a new report which gives broadly positive news on the likely availability of car loans for new customers. The report, released this Thursday, 25 June 2009 says that loan approvals have risen to their highest level in more than a year, and since the recession was declared. At the time of the recession’s onset, getting credit for any purpose became a great deal more difficult, with affordable loans comparable to the Golden Fleece for anyone not in possession of a world-beating credit score. With financiers more willing to lend now than they were a year ago, the motorist is getting a green light to secure funding for the vehicle they want.

The main reason for this ease would seem to be the federal government’s move to secure the finance of $12billion worth of car loans which will allow the financing companies to lend to deserving customers who have a decent credit rating. In any recession there will be a reluctance to lend to anyone but the absolute “can’t miss” customers, who often have little need for a loan in order to buy a car and borrow more for convenience than out of necessity. This latest move will open up the chance to buy a new car to a wider range of individuals and allow a greater fluidity of cash through the industry, which will in turn help stimulate an economy in need of some good news as it battles its way through the recession.

The withdrawal of some major lenders from the auto-loan business over the past year is also believed to have played a major part in the absence of credit – with the Bank of Canada being a notable exception. The car companies themselves, though, had in no small part either removed their lending branches or increased the credit score necessary for them to forward credit to new customers. Although there is good reason for being circumspect in giving out new car loans, it did have the effect of creating a vicious cycle which saw fewer customers able to buy cars, and consequently fewer cars being bought.

The overall impression emerging from the latest news is that the credit-worthiness and the intent to buy new is experiencing a rise in Canada and that there will be increased growth in the Canadian auto market as the year progresses. Household credit ratings are improving as the lessons of the recession are learned, and in combination with an increase in the amount of retail and durable goods purchases over recent months, the least that can be said is that the worst of the recession is over. How quickly this translates into growth of a reasonable amount remains to be seen, but it is a relief for any financial commentator to be able to say that better days are very nearly here. How much better depends on how ready people are to believe it.

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A Record Number Of Canadians Now Own Their Own Homes

A Nation of Homeowners – Canada

In the middle of a worldwide recession, would it surprise you to hear that a record number of Canadians now own their own homes? It would surprise just about anyone, surely? But that is the conclusion from a report by the Bank of Nova Scotia, details of which were reported this week. The caveat to this is that the figures refer to households that owned their own home in 2006 (with the belief that the number increased yet further in 2007) and that the full figures for 2008 will not be known for a couple of years. What is indisputable, however, is that there has been a significant increase in ownership compared with the same figures a decade earlier.

The Scotiabank report states that in 2006  a record high 68.4% of Canadian households were owned by the householder, and that there was reason to believe that the percentage increased in 2007. This was in comparison with figures for 1996 that showed a total of 63.6% of householders owning their own homes. How the figures will be effected by the recession still remains to be seen, as the compilation of the figures from a wide range of sources in a wide range of different jurisdictions takes time. It may well be that there has been some fall-off in the last couple of years as people have sought to cash in the capital locked up in their house and begun renting. However, there is little likelihood that this will have taken the numbers beneath those set a decade ago.

Reasons for this rise in the figures must include the fact that “baby boomers” now make up almost the entirety of the 45-64 age group which is considered the prime house-buying section of society. With the birth numbers having been so elevated in the last 60 years, and the improvements in medical science that have been seen in the intervening period, there are now more people than ever who are ready, willing and financially able to buy a house. Aside from this, however, the numbers have increased for those in other demographics buying houses. this can be put down in large part to the desire for owning assets for the purpose of having something to subsidize a pension. People are saving for their retirement earlier and earlier these days, and using more methods than ever before.

In addition to the headline story of the report, there was also some interesting data to be found in that 9% of Canadian households now own a second property, typically used for the purposes of a holiday, compared to 7% in 1999. How this will have been affected by individuals cashing in on their properties in order to ride out the current recession remains to be seen, and certainly it is unlikely that the numbers will rise as quickly over the next few years. Nonetheless, the changing trend towards home ownership seems to suggest that those who rent their homes will stay in the minority for some time yet.

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Government credit bad, Consumer credit good?

As the danger of a third election in four years hangs over a nation considered by the rest of the world to be so stable it is “boring”, it would be entirely understandable if the alarm bells in the brain of every Canadian started to ring right about now. After all, the prospects of the nation trading at a deficit any time soon are at present not amazingly good. This, however, has not stopped the press from suggesting that now is the time, if ever the time existed, to get out there, dust off your credit card and prepare to hit the shops with a vengeance. This advice comes via the newspapers from the Finance Minister Jim Flaherty.

If it sounds a little bit reckless for something a Finance Minister might say, this is with very good reason. The minister’s words were somewhat more considered, but by the time the press had had their way with them, it did sound a little bit more like incitement to spend the inheritance. What he actually said was “positive signs in financial markets give us cause for cautious optimism that a global recovery may not be far behind”. He added that Canada would lead this recovery and be at the front of the queue to boost business. There is, perhaps, some amount of mockery in the words as set out in the press, with some journalists not quite sharing the Minister’s optimism for the future.

Much of the implication behind the press reaction to what Minister Flaherty has said seems to be that the minister is saying everything he can think of in order to stimulate consumer spending in a time when the nation’s financial sector could do with a helpful push or two. This is not exactly an untried initiative, of course, but the average family may well be heartened by what they hear from the government. The theory of consumer spending stimulating the economy is a self-perpetuating one. Sure, it’ll boost the flow of cash through businesses. It will, however, only operate that way if it is allowed to, and this means that banks need to be as willing to lend as customers are to spend.

The next year to eighteen months will be interesting for those who like to read the global response to financial situations. Many countries in the developed world, including the United Kingdom, are due to hold general elections to decide on the makeup of their next government. Good governmental marshalling of the global economies in the next year and a half will see more incumbent governments re-elected, but to drop the ball now would be to almost guarantee and end to a government’s hold on power. Indeed, with one country’s economy affecting those of its neighbours, it could be that decisions taken in one country affect the election in another. Should you go out and spend, spend, spend in order to keep a few governments in their seats? Well, only if you can afford it. Now is still not the time for major borrowing.

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The Spring 2009 Toronto Small Press Book Fair

A is For Amortization

Meet Award Winning Author A. Dawn At The Toronto Reference Library

Taking out a mortgage is something that most of us do, sooner or later. There is a lot of fear and uncertainty attached to the idea of taking out a mortgage, not least because the term of a loan taken out to buy a house will generally be longer than if it were taken to buy something a bit smaller. Typically, the term for a mortgage will be in the region of 25 years – a very long time by anyone’s estimation, and a time in which so many things can change. Think about it – the average length of time an individual spends in a job these days has fallen to about three years. Although the average does not apply to everyone, and takes into account that people will spend a very short time in some jobs, it still offers the possibility that you will change jobs more than a couple of times during the term of your loan.

In addition, mortgages are considered to be a little bit nerve-wracking by some because of the jargon which is so often used by those who are selling a mortgage or by the financial experts discussing what the future holds for mortgage owners on the daily news – something of a motif of the age, it has to be said. Maybe most people just about understand what a mortgage is but beyond that, all bets are off. Take the average person (someone without a mortgage, as a preference) and ask them what a “principal” is. Someone who works in a school, or an actor in a lead role? That’s likely to be the response. Even if you mention that you’re talking about money, you’re still more likely to get a confused frown than an accurate reply.

When things get even more complicated, therefore, the average consumer is likely to become still more confused. Ask the average individual, mortgage holder or not, to tell you what “amortization” is, and the eyes will begin to glaze over before you have even mentally added the question mark. This is a pretty important part of a mortgage account, and there are still several people who will be unable to tell you what it is. The reason? No-one has thought to tell them. It could be argued that this kind of thing should be taught in schools, because money smart kids will be less likely to get wrapped up in debt later on.

Amortization is defined as “the allocation of a lump sum amount to different time periods”, and an amortization schedule forms part of any mortgage agreement you may have or take out in future. On a typical amortization schedule, the amount you pay each month towards your mortgage account will be detailed both in terms of how much will go to paying down your principal and how much will pay off the interest on your loan. As time goes on, assuming your loan has positive amortization, you will find that more of your payments are going towards paying off the balance of the loan. The kind of amortization you have will be influential in how efficiently you can pay off your mortgage, so ask any mortgage advisor to take you through your options.

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I will be at the Toronto Reference Library participating in The Spring 2009 Toronto Small Press Book Fair. For more details, visit this link –

MEET YOUR AUTHOR A DAWN AT THE TORONTO REFERENCE LIBRARY

Hope to see you all.

Save Money Easily

Saving money is a necessity – now more than ever. As the world becomes enmeshed in more and longer financial struggles, there is inevitably a knock-on effect on consumers, even if your income remains constant or improves. House prices are falling, and the value of the dollar in your pocket is dropping too. This is no terminal decline, but it is still quite troublesome for any of us. Unless you live in a forest and survive by hunting, gathering and bartering, the global financial crisis will affect you in one way or the other. As much as we are being encouraged to get out there and spend our pay checks, it is entirely understandable that many of us are taking that advice with a pretty huge pinch of salt.

If you have money to spend and there are things that you need, certainly there’s no reason you shouldn’t get out there and help stimulate the economy. That is undeniable, but at the same time there is no reason you should over-extend yourself in doing this kind of patriotic duty. Looking for ways to make a saving is not treason – it is simple common sense. Keeping it simple is the best way of doing this in any case. For example, are you taking advantage of existing discounts and special offers which are relevant to you?

Supermarkets and clothes shops will often have discount cards for students or other concessions. What is wrong with enlisting the student in your household to help you take advantage of these special offers? This can get you a cut of up to 15% on the cost of necessary purchases, making your dollar go further. Additionally, things like gas cards and loyalty programs with set outlets can result in a large saving for you, if you manage them correctly.

Often supermarkets or other outlets will have big discounts on food that has a long shelf-life. Building up a stock of the things you need and will use is always a good idea, and frees up money for the long term – often making a quite pronounced difference in the bottom line on your shopping bills.

Saving money does not need to mean opening a savings account, but it is obvious that the two naturally go hand in hand. One way that you can demonstrate to yourself the advantages of saving is to use your savings account every time you spend less than you had budgeted. No matter how much or how little the difference, if you put that money in the savings account every time it will quickly build up and accrue interest which benefits you.

Now, no-one is about to advise you to re-use old tea bags or anything like that, but there are tons of little things like those mentioned above which can make all the difference in seeing out the recession in better financial shape than might otherwise have been the case. If you do things correctly you can end up with a healthier bank balance and have the necessary spare cash to make you comfortable.

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