This month the Office of Superintendent of Financial Institutions for Canada is finalizing changes in legislation that will include requiring those that purchase a home with a minimum down payment of at least 20%, not needing mortgage insurance, to prove they could still afford their mortgage payments if interest rates were 200 basis points (two percentage points) higher than the rate they negotiate.
Jeremy Rudin, the Superintendent of Financial Institutions, told reporters. “But we do know this: Housing prices are still near their all-time highs, and mortgage rates are still near their all-time lows. And while sound underwriting is always important, it’s never been more important than it is now.”
Though OSFI, nor the banks have stated that interested rates are headed 2% higher, the fact that they are stress-testing for this to happen, tells me that they are planning for it to happen.
Meanwhile, the Bank of Canada has already announced that they are expecting to increase interest rates again later this month.
Banks have already tightened their lending policies and I’m getting reports of strong applicants having their mortgage applications turned down by the banks.
Record Toronto home prices may have tipped the scales for those looking to make significant lifestyle changes. A few months ago, when the Toronto housing market was at its hottest, I noticed individuals selling their Toronto homes with no intention of getting back into the market. Instead they were deciding to rent in Toronto and invest their money in recreational properties to enjoy a different lifestyle.
Discussions with real estate professionals in caribbean countries revealed a sharp increase in the proportion of their recreational properties being sold to Torontonians. Word from luxury real estate professionals is that three Toronto families have purchased homes on one street alone at the luxurious Albany Club Resort Community in the Bahamas developed by Joe Lewis. It seems that countries that respect privacy and have reasonable tax structures, such as Belize, Panama and the Bahamas are attracting many well-to-do Torontonians.
A few years ago, many high-income earning Canadians had left Canada to reside in Asian countries with lower taxes. One MetroActive member was able to save over a million dollars in taxes and invested that extra money in Asian recreational rental properties which have been providing him with a net 10% annual return, not including the capital appreciation. He comments, “Why would I pay 54% in income taxes of what I earn above $244,000 and then have to pay 13% in HST when I spend what’s left.”
Recent socio-economic changes in Canada, and specifically Toronto may be adding to the desire to make these lifestyle changes. Concerns over record-level spending at municipal, provincial and federal levels, combined with deterioration of civil rights and legislation to accommodate special interest groups at the expense of the majority may have tipped the cart too far.
For some Canadian families, it is about selling their city residence to purchase their dream cabin or cottage, but for others is about escaping the big cities, which have been going through a socio-cultural shift that now supports a much different lifestyle than that which they prefer. Even in Canada, demand for recreational properties is soaring.
According to a survey by Leger for RE/MAX, 28 per cent of Canadian homeowners with children under 18 would consider selling their primary residence to finance a recreational property. Before you get too excited, understand that the key word is ‘would’ not ‘will you sell your primary residence’.
Retirees and those approaching retirement, are putting most of the equity from the sale of their Toronto or Vancouver home into a recreational property. Torontonians are the largest proportion of Canadian snowbirds in Florida with a large presence in Arizona. Canadians have also been investing in Bahamian recreational properties for years, and more recently have been flocking to Panama and now Belize.
A few years ago, I started talking about the retirement lifestyle strategy. In a nutshell, it takes the equity in your Toronto residence and provides you with a recreational property in a warm climate with the potential for both increased cash flow and capital gains. It isn’t for everyone, but if you have a Toronto home it could be your best option.
Contact me for to arrange a meeting to discuss this option. Baldo Minaudo 416-564-0245.
This Is A Stunning, Solid, Detached Victorian Home In Leslieville! Three (3) Self Contained Units, Renovated Including Mechanics. Beautiful Victorian Detailing…Leaded Glass Windows, High Baseboards, With Soaring Ceiling. Two 1068 SF Self Contained Suites Tenanted ($1420.00 Per Unit), and One 1500 SF, 2 Storey, 3 Bedroom Suite That Can Rent For Approximately $3000.00 per Month (Owner Occupied). Solar Panels That Reduce Hydro Bills. Huge City Lot (23.29’ x 165’) With 6 Car Parking. AMAZING OPPORTUNITY!
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For viewing or more information contact: Baldo Minaudo, Broker, Real Estate Homeward, 416-564-0245.
Home may not appear exactly as shown in picture. Buyer solely responsible to verify all details and information. Not intended to solicit clients under contract with a brokerage.
TORONTO – June 14, 2017 – Home Capital Group Inc. (“Home Capital”) is pleased to announce it has reached two agreements which together comprise a global settlement with the Ontario Securities Commission (the “Commission”) and with respect to the putative class action commenced in February 2017 by Claire R. McDonald, Action No. 349/17CP (the “Class Action”) relating to allegations of misleading disclosure. The settlements are subject to approval (by the Commission and by the Ontario Superior Court of Justice respectively) and each settlement is conditional upon the approval of the other. The main terms of the two settlements for which approval is being sought are set out below. It is expected that full copies of both agreements will be publicly filed if both agreements receive final approval. Home Capital expects to fund substantially all of the costs of such settlements through available liability insurance.
Under its proposed settlement with the Commission, Home Capital will make a payment of $10 million and reimburse Commission costs in the amount of $500,000. Gerald Soloway (“Soloway”) will be reprimanded, prohibited from acting as a director or officer of any reporting issuer for a period of four years and pay an administrative penalty in the amount of $1 million. Each of Robert Morton (“Morton”) and Martin Reid (“Reid”) will be reprimanded, prohibited from acting as a director or officer of any reporting issuer for a period of 2 years and pay an administrative penalty in the amount of $500,000.
Of the $12 million (other than costs) being paid by the respondents in the Commission Settlement, $10 million will be paid by Home Capital directly for the benefit of Home Capital investors who comprise the proposed class in the Class Action (the “Class”). $2 million will be paid to the Commission. Staff of the Commission will recommend that $1 million be allocated to the Class and the remaining $1 million be allocated or used by the Commission in accordance with the Securities Act.
Home Capital will make a payment of $29.5 million to be distributed (net of costs and other expenses) to the Class as defined in the Class Action, all subject to the approval of the Superior Court of Justice as to certification of the Class for settlement purposes (as well as leave under the Securities Act) and after notice to the Class of the proposed settlement, review and approval of the settlement by the Court. The $29.5 million includes $11 million of the payments being made in the Commission Settlement. Releases of all defendants and dismissals in the usual form are part of this settlement. There will be no deduction for legal fees of counsel for the class plaintiff in respect of the $11 million being paid in the Commission Settlement.
The Commission has issued a Notice of Hearing for a date to be set by the Commission, at which time the Commission will consider whether it is in the public interest to approve and give effect to the settlement agreement by making certain orders against Home Capital, Soloway, Morton and Reid as described therein. The parties to the Class Action are in the process of obtaining a date for the initial court hearing.
Brenda Eprile, Chair of the Home Capital Board, stated that “These settlements will enable us to move forward with regaining the confidence of our depositors and shareholders and creating value for all our stakeholders.” She noted, as indicated below, “Home Capital will accept full responsibility for failing to meet its disclosure obligations to the marketplace and appreciates the importance of the serious concerns raised by the Commission with respect to continuous and timely disclosure.” Eprile continued, “The Company also acknowledges that the Commission is not to blame for the events of recent months involving its liquidity position.” Upon final approval by both the Commission and the Ontario Superior Court of Justice, Home Capital believes that it will have taken full and appropriate responsibility for this matter.
Pursuant to the terms of the settlement agreement with the Commission, Home Capital will not be making any further statements on this matter outside of the approval proceedings.
This press release contains forward-looking information within the meaning of applicable Canadian securities legislation. Please refer to the Home Capital’s 2016 Annual Report, available on Home Capital’s website at www.homecapital.com, and on the Canadian Securities Administrators’ website at www.sedar.com, for Home Capital’s Caution Regarding Forwardlooking Statements.
Home Capital Group Inc. is a public company, traded on the Toronto Stock Exchange (HCG), operating through its principal subsidiary, Home Trust Company. Home Trust is a federally regulated trust company offering residential and non-residential mortgage lending, securitization of insured residential mortgage products, consumer lending and credit card services. In addition, Home Trust offers deposits via brokers and financial planners, and through its direct to consumer deposit brand, Oaken Financial. Home Trust also conducts business through its wholly owned subsidiary, Home Bank. Licensed to conduct business across Canada, Home Trust has offices in Ontario, Alberta, British Columbia, Nova Scotia, Quebec and Manitoba.
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154 Pitt Avenue in Clairlea Neighbourhood of Toronto Listed For Sale at $989,900 Rare Opportunity In the Clairlea Neighbourhood of Toronto For This Spacious, Solid-Brick, 5-Level Backsplit With 4+3 Bedrooms, 3 Bathrooms, 2 Kitchens and Huge 50 Foot by 106 Foot Lot Size!! Double-Car Garage With Plenty Of Private Parking. Good Size Back & Side… Continue Reading