Some lenders such as TD, have begun to make it a policy to only register a collateral mortgage charge instead of a regular mortgage when you finance with them.  Why?  Well because most lenders won’t accept a transfer of a collateral mortgage from another institution.  It also allows the lender to book up to 125% of the value of the property, alleviating them the necessity of re-registering a new mortgage if you need more financing down the  road.  This circumvents the federal governments guidelines for lenders for traditional mortgages.   This is dangerous as you’ve no doubt gathered.  It also allows them in many cases to put on a registered interest rate of P + 10%!!!!   That might not be the contract rate but since a collateral mortgage is a promissory note secured by a mortgage then they can change the rate on your mortgage after closing up to that amount!!!

Some are referring to this type of mortgage as a mousetrap because should you try to seek financing elsewhere because you don’t qualify for more financing with the existing lender (they may have changed their qualifying rules) no other lender will lend you money as long as that collateral mortgage is there.

So when offered it, don’t take it.  Pretty simple.  If that’s the only option as it seems it is at TD, then go elsewhere…. heck ask me and I’ll find you lenders that don’t force you to take on a collateral mortgage!

Some lenders, especially bank lenders are raising their rates on their adjustable rate mortgages.  According to an article written in today’s Globe and Mail, by Tara Perkins, RBC is trading off market share for profitability.  I’ve noticed some of the other bank lenders doing this as well.  What does it mean for you? If you’re dealing with a broker for your mortgage which you should be, they can still find you better discounts such as Prime – .75 to Prime – .9%!!!!   That’s worth it!

So what’s the importance if any, of this ratio for those that watch the 2 precious metals’ prices?

First off, this ratio was first used in the 1500′s in Europe to reflect the commercial marketability of the 2 metals.  Since then, the ratio has been all over the map.  The problem in using it, is that it can be misleading, in and of itself as there are many factors that determine the price of each one, independent of the other.

So those using the ratio as a relative measure and signal to determine the favor of one metal over the other, must use caution.

What’s the lesson?  Buy both and / or what you can afford.

The following is an excerpt from Sean Goldsmith of Stansberry and Associates who makes a great point about the ban on short selling.  Governments will vilify anyone to take away the focus from themselves and those who they are in cahoots with.

“The problem with this partial ban is it will simply redirect short sellers’ efforts. Instead of shorting the troubled banks directly, they will look for other banks with heavy exposure to Italy, Spain, and France. Short-selling expert Jim Chanos, founder of Kynikos Associates, explained other consequences of the ban.

“EU policy makers don’t seem to understand the law of unintended consequences,” he told Bloomberg. “The vast majority of short-selling financial shares is by other financial institutions, hedging their counterparty risks, not speculators. The interbank lending market froze up completely in October to December 2008 – after the short-selling bans.”

In other words, banks are constantly lending huge sums of money between themselves. And they sell short shares of banks they’re doing business with for protection. If they can’t hedge their risks, the banks will stop lending money.

This from the NY Post:

“Early this month Labor reported that 216,000 new jobs were created in March. It was better than Wall Street expected. But the figure included 117,000 jobs that the department thinks, but can’t prove, were created by newly formed companies that might not even exist. In fact, the department is getting so optimistic about the labor market that it increased this imaginary job count from just 81,000 in March, 2010.” Be careful what you read and be aware that government statistics are often changed and manipulated to create an image that compliments them.

Here’s a comical quote from US Treasury boss Tim Geithner… not sure what he’s smoking but no matter how you slice it, it’s incredible how government people think.

“Increasing the limit “does not increase the obligations we have as a nation; it simply permits the Treasury to fund those obligations that Congress has already established,” Geithner said. “There is no alternative to enactment of an increase in the debt limit.”

He’s talking about the ‘need’ to increase the US government’s debt limit which is already somewhere north of $14 trillion. Take a moment and think about what he’s saying. They are ‘in the hole’ for $14 trillion, Congress has approved more spending from what they don’t have and the Treasury boss states that because they’ve made these commitments in Congress, thanks to Obama’s new world of hope, that they must be paid…. again from what since they are in the hole….

Gold and silver dear readers…… Gold and silver…..

A lot has happened this last week.  How about a catastrophe in Japan, the world’s third largest economy?   It hasn’t affected our rates here in Canada though.  In fact, if anything due to reduced oil prices it’s diminished the probability that the Bank of Canada will raise rates so as not to quash a fragile Canadian economy. So how does that help you? It keeps rates low.

Up to now, the US dollar has been the world’s reserve currency.  Most things are quoted in terms of US dollars.  The US currency has ascended to that position because of the size of the economy behind it.  However prolifigat spending by the US government and a population mired in too much debt, is starting to cause a re-thinking of this standard.  The Chinese for example are taking baby steps already to circumvent the US dollar in its transactions.  It has already struck up contracts in its own currency and the Brazilian currency.  Here’s another instance from Reuters:

“The World Bank issued its first yuan-denominated bond, raising $76 million and trying to promote the use of the Chinese currency in international markets at a time when China’s stake in the institution is about to increase. The World Bank’s 500 million yuan bond issue arrived when China’s shareholding in the World Bank is about to increase, potentially making China the third-largest stakeholder in the lender after the United States and Japan.”

According to a recent  Bloomberg survey of economists, the Bank of Canada may raise it’s lending rate as early as next quarter.  They say that inflation is rising here and that the Bank of Canada has held fast to it’s current rate, citing our strong link to a weakened US economy.

Some mortgage rates could rise as a result.

House prices in Canada stand 6.6 per cent above their pre-recession peak, but growth is slowing, a fresh measure shows.

Home prices rose 0.2 per cent in August from a month earlier, according to the Teranet-National Bank National Composite House Price Index, though results differed from city to city. Prices rose in Toronto, Montreal, Halifax and Ottawa, but dipped in Calgary and Vancouver.

“August’s rise in the composite index is the weakest over a string of 16 consecutive monthly gains that began in May 2009,” said NationalBank senior economist Marc Pinsonneault.

“Looking ahead, prices are likely to fluctuate without tendency over the next few years. At the national level, current market conditions, close to the boundary between balanced market and buyers’ market … herald a deceleration in home price inflation.”

from todays Globe and Mail.

The important thing I noticed was the statement that, …” prices are likely to fluctuate without tendency over the next few years”.   So don’t count on the price of real estate to necessarily rise!