Monday Mortgage & Market News September 13, 2010 - Edmonton and Calgary

First Foundation Best Rates to open the week:

1 Year 2.60%
2 Year 3.04%
3 Year 2.90%
4 Year 3.54%
5 Year 3.60%
7 Year 4.85%
10 Year 5.19%

ARM / Variable 2.05%
Line of Credit 3.25%

Prime Rate 3.00%
Qualifying Rate 5.39%

Toronto’s main stock index finished higher on Monday at 52.77 points, or 0.4 percent, at 12,149.86, with six of its 10 main sectors higher. Resources got a lift from robust Chinese economic data but the big story was in the financial sector as it was boosted by an agreement on new global rules for bank capital reserves.

The rules, known as Basel III, were announced today after a meeting over the weekend of global bank regulators in Basel, Switzerland. Markets across the globe responded jubilantly as the new capital rules that, while tighter than before, were not as harsh as some had feared.

The new rules require banks to hold top-quality capital totaling 7% of their risk bearing assets, a big increase from the previous 2% requirement, but banks are being given more time than expected to comply with the rules – in some cases until 2019.

This is actually really interesting stuff because many of the world’s major banks already meet or exceed these requirements, including Canada, where reports put recent percentages at 12-16% in some cases. Many banks are elated because it’s even possible that some will actually be able to cut the amount of capital they hold, which would lead to well needed release of new capacity back into the lending markets. Hence the positive reaction in the world’s major markets.

According to an article from Reuters, Canadian Finance Minister, Jim Flaherty, said today that the certainty over the new capital requirements, “will be is an assurance to the Canadian financial industry.”

However, Flaherty goes on to issue a warning to the Canadian public that they need to be mindful that rates are currently at a historical low and that they will be going up so we should all be careful about the amount of debt we take on, including mortgage debt.

Check out the links below for many interesting articles in the worlds newspapers in response to the new rules – for instance, in the UK, the government is calling the country’s major banks out. Now that the new capital rules have been announced and like Canada, many UK banks already meet or nearly meet the new standards, the Government is putting pressure on the lenders to get out there and start lending again. They particularly want to see the banks increase lending in the corporate sector to help improve the unemployment numbers.

Bloomberg Business Week RE: The US

Bloomberg Business Week Re: Germany

The Guardian Re: The UK

Contact one of our Mortgage Brokers if you wish to discuss the current rates – we can help you decide if it’s an appropriate time for you to purchase or refinance a home.