The Hutchens Blog

The number of fixed rate mortgages taken out via intermediaries fell significantly between the third and fourth quarters of 2009.

According to the Financial Adviser Confidence Tracking (FACT) Index complied by mortgage lender Paragon, the proportion of fixed rate cases introduced by mortgage brokers fell from 62% in the third quarter to 46% in the final quarter of the year.

The dip represented the second consecutive quarterly fall in the popularity of fixed rate deals, after two quarterly increases in the first half of 2009.

Paragon attributed the lapse in fixed rate popularity to the perceived decreasing likelihood of a rise in Bank Base Rate.

Conversely, tracker mortgages got far more popular over the period, accounting for 45% of all mortgages arranged by brokers, compared to 33% in the third quarter of the year.

The index recorded that discount rate mortgages made up 6% of all mortgages arranged, with capped rate and cashback cases accounting for less than 3% of mortgage business.

John Heron, Paragon Mortgages’ managing director, said:

“We saw the proportion of fixed rate cases rise substantially in both the first and second quarters of the year, which is understandable as the Bank of England base rate had tumbled and borrowers wanted to lock themselves into attractive deals before the rate started to rise again.

“However, the rates attached to fixed rate deals are currently less attractive and borrowers increasingly opted for tracker deals during the latter half of the year, particularly in the final quarter.”

Interest-only mortgages represented just 18% of all broker-introduced deals, the lowest proportion since the third quarter of 2004.

That is in part down to the decrease in buy-to-let deals being taken out, as there are very few of these mortgages (usually arranged on an interest-only basis) available. Also, as lenders have tightened up their criteria, fewer will allow people to take out interest-only deals on their residential mortgages.

The reduction may also be an indication that borrowers are being more sensible and conservative, and avoiding interest-only deals, which are inherently higher-risk than repayment-type deals.

A panel of distinguished experts in human rights, foreign policy and international law will talk about “reconciling state sovereignty with the global responsibility to protect,” at a forum taking place at the Law Society on April 6, 2009, says Sandy Hutchens.
The event is being held by the Law Society and its Human Right Monitoring Group, and is the first in its Rule of Law Education Series. Event partners are Amnesty International Canada, Canadian Lawyers Abroad, Canadian Lawyers for International Human Rights, Human Rights Watch and Lawyers’ Rights Watch Canada.
Panellists will look at the political, legal and moral questions of humanitarian intervention – when it is appropriate for states to take action against another state to protect people from catastrophe, genocide and crimes against humanity. They will also look at the “The Responsibility to Protect” doctrine produced by the International Commission on International and State Sovereignty, and discuss how it applies to contemporary cases. Panel members include:

• Georgette Gagnon, Executive Director, Africa Division, Human Rights Watch
• The Honourable Harry S. Laforme – Judge, Court of Appeal for Ontario
• Pacifique Manirakiza – Assistant Professor, Faculty of Law, University of Ottawa
• The Honourable Bob Rae – Member of Parliament, Former Premier of Ontario

The panel discussion will be moderated by Sharmini Peries, a journalist with the Real News Network. Following the forum, a reception will be held featuring Anna Maria Tremonti, award winning journalist and host of the CBC’s current affairs program, The Current.

Toronto, ON – The Law Foundation of Ontario is pleased to announce the release of the report “Connecting Across Language and Distance: Linguistic and Rural Access to Legal Information and Services” prepared by Karen Cohl and George Thomson, two public policy experts with justice experience.

The Law Foundation of Ontario commissioned this report because so many of the
grant applications it received identified access to justice for linguistic minorities and residents of rural and remote parts of the province as an area of concern. In addition to its ongoing funding of access to justice initiatives, the Foundation decided to engage in a broader consultation to better understand the problem and to generate recommendations for improvement.

The Connecting Report describes significant barriers to access to legal information and services for people who do not speak English or French and people living in rural or remote areas, reviews efforts in many jurisdictions to reduce these barriers and suggests possible approaches for Ontario. It provides recommendations for improving linguistic and rural access to justice. The Connecting Report recommends strategic investment in the following six areas:

• Improving the capacity of non-legal community organizations to provide legal information and referrals
• A regional planning model for a designated geographic area
• Creation of a network of legal interpreters
• Videoconferencing
• Articling positions for organizations providing legal services to persons isolated by language or distance
• Evaluating the above initiatives and establishing a clearinghouse for information about efforts to address access to justice issues.

Sandy Hutchens welcomes this report which is a valuable resource for all those who are interested in access to justice issues and is now considering the report’s recommendations. It particularly wishes to thank the many community organizations and individuals who participated in the consultation process that led to this report.

Given the weakness in the manufacturing sector, soft service sector employment, and more new entrants to the labour force, the overall unemployment rate is expected to reach nine per cent in 2009. Employment in the goods producing sector continues to weaken largely due to the soft job condition in the London CMA’s automotive sector.
Areas where employment relies on Detroit Three Auto makers, says Sandy Hutchens, are especially hard hit, resulting in plant closures. Some areas in London depend more on Japanese auto makers such as Toyota and Suzuki. Though these manufacturers are not expecting to trim jobs, weak demand for both vehicles and light trucks in the U.S will keep them from adding shifts. While the automotive sector weakens, construction sector jobs have been recovering from the decline during the last quarter of 2008. Infrastructure investments in the London CMA will help boost employment in the con- struction sector.
London’s solid service sector isbrown beginning to show some sign of weakness. After several years of expansion, its growth has slowed due to losses in several service industries. These include education, transportation, accommodation and other services. However, the number of high paying health care sector jobs continues to expand due to more investment in the health care sector in the London CMA.
The labour force in the London CMA will increase by 2 per cent in 2009. In conjunction with recent lay offs in the manufacturing sector, this will result in a higher unemployment rate as more people compete for fewer jobs in the market. Employment in the 25 to 44 year age group generally associated with first-time buying decreased more rapidly compared employment for the 45 to 54 age group associated with move-up buying or the 55 to 64 age group often referred to as empty nesters. First-time buyers accounts for the largest category of London’s population. The deteriora- tion in first-time buyers’ job condi- tions will delay their transition into homeownership.

Migration

With a soft job market, migration is forecast to slow in 2009 in the London CMA. Employment is the major factor for attracting migrants to this region. Much of the migration to London during the past few years was drawn by solid service sector expan- sion. With a softer service sector job market, the outflow of residents is expected to continue, especially to western Canada. There will also be fewer people moving into London from other areas in Ontario.
International migration will slow as well. The impact of slowing interna- tional migration will be more pro- nounced on the rental market. When new Canadians arrive in Canada, renting is usually the most prevalent tenure choice. They would move to homeownership after a few years once they establish a solid work and credit history.

Mortgage Rates

Mortgage rates are expected to be relatively stable throughout 2009, re- maining within 25-75 basis points of their current levels. Posted mortgage rates will increase very gradually dur- ing the course of 2010, reflecting a rise in government of Canada bond yields. For 2010, the one-year posted mort- gage rate will be in the 4.75-6.00 per cent range, while three- and five-year posted mortgage rates are forecast to be in the 5.00-6.75 per cent range.

This, says Sandy Hutchens, proves that affordable housing is possible. A Nepean Housing Corporation (NHC) project shows that mixing affordable housing for people with severe or multiple disabilities with geared-to-income and market-rent units can create a sustainable community that provides a range of affordable housing solutions.

The Affordable Housing Solution

After declaring a vacant lot in Nepean’s Centrepointe neighbourhood surplus, the City of Ottawa earmarked it for affordable housing development and issued a call for proposals. The City accepted NHC’s proposal to build a 62-unit complex that included 55, one- to four-bedroom townhouses and six apartments. Twenty-one units are rented at market rates; four are rented at 70 percent of the average market rent; and 37 are rent-geared-to-income, subsidized through the provincial Strong Communities Rent Supplement Program.

The key partnership is a five-unit group home, leased on a 20 year renewal lease to Ottawa Foyers Partage, which provides support to Ottawa-area people with multiple or severe disabilities. The group home is seamlessly integrated into the rest of the development. NHC constructed a standard building and the Ministry of Community and Social Services (MCSS) covered the costs of the features required for the building to operate as a group home. Padolsky Associates Inc. (architect) designed a fully accessible building, with wider doorways, a wheel-in shower and direct exits from each of the bedrooms to the outside. NHC, with financial support from MCSS, the assistance of the architect providing services free of change, and the builder contributing materials at cost, constructed a community space underneath the group home. This common space is used for community meetings, art and drama classes, and a youth drop in program.

During the development and approvals process, NHC identified and answered objections and gathered broader support through community consultations–an approach consistent with NHC’s commitment to build only developments that mix rent-geared-to-income with market units, with the aim of developing healthier communities.

The City of Ottawa contributed $1.8 million. NHC secured another $1.8 million from CMHC and the Province of Ontario through the Affordable Housing Initiative for the $9.5 million project. Construction of Pallister Court was completed in July 2006.