The Canadian economy, thanks to more business confidence and stronger foreign demand, is close to a "tipping point" that will usher in an era of more normal growth, Bank of Canada governor Stephen Poloz said Wednesday.

Poloz also said this growth could likely be accommodated without risk of a boost to inflation.

“Evidence suggests we are now close to the tipping point from improving confidence into expanding capacity,” Poloz told members of the Vancouver Board of Trade. “Stronger investment means more new jobs will be created."

The central bank governor cited data that showed there are now 40,000 more firms in Canada with at least one employee than there were last year at this time.

"This pace is considerably stronger than we would expect in normal, non-recessionary times and suggests that we may be replacing some of the firms that were lost in the recession with new ones," he said. "This is excellent news."

'Growth will become natural'

Also encouraging, he said, were recent private surveys that pointed to signs of a more positive business outlook.

Poloz said the central bank is seeing foreign demand for Canadian goods picking up. He said Canada's export market will benefit from solid increases in U.S. business and residential investment, with the lagging machinery, equipment and wood products sectors enjoying some of the biggest benefits.

"I anticipate that the Canadian economy will normalize and growth will become natural, in contrast to the economic activity of the past six years, which has been fuelled by policy, including record-low interest rates," Poloz said.

"Natural growth will be self-generating and self-sustaining, and the economy will be growing at its potential, as its productive capacity expands."

Statistics Canada reported in late August that growth in the second quarter slowed to an annualized rate of 1.7 per cent. 

The Bank of Canada has maintained its one per cent overnight interest rate for three years. While it has indicated that its key rate will rise at some point in the future, most economists think that point is at least a year away.

CBC News

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This partnership with BC Hydro and FortisBC gives home owners up to $3500 in rebates for energy saving improvements to their homes, including up to:

*   $1200 for exterior wall insulation;

*   $1000 for basement insulation;

*   $600 to install attic insulation; and

*   $400 for air sealling (like weather stripping around doors and draft proofing)

To access rebates, home owners must hire a certified energy advisor to conduct an energy efficiency assesment and provide a customized report showing the home's energy efficiency (EnerGuide) rating and upgrade options by December 31, 2013.

Home owners then choose upgrades and have until March 31, 2014 to make eligible improvements and complete a post-retrofit assessment.  The energy advisor handles all of the paperwork in applying for incentives after the energy assessment.

To find a certified energy advisor visit: www.livesmartbc.ca/incentives/efficiency-home/step.html

 

Did you know?

Since 2008, the LiveSmart BC Program has helped more than 100,000 home owners in communities throughout BC improve the energy efficiency of their home.  Efficiency incentive program participants save an average of 15-28% on their energy bills after completing the  program.

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When Chris Kiskuna bought her first house in 1985, she was so anxious to close the deal quickly, she skipped the home inspection - a decision she paid for the first time she turned on the tap in the bathroom sink.

"The water's running and I'm hearing it run everywhere and thinking, 'What's happening here?' And I look under the sink: no pipe."

 

Ms. Kiskuna, a regional sales manager at Royal Bank of Canada, says jumping into a deal is one of the most common mistakes first-time home buyers make. They fall in love with a property, worry about losing out, and throw caution to the wind or spend more than they should.

A house is one of the biggest investments most Canadians ever make, so it's important to plan ahead, to think about what you need in a home and what you can afford.

Getting pre-approved for a mortgage is a great way to budget for a home and signal that you're a serious buyer. However, keep in mind that the amount for which you are approved is the maximum amount the lender feels you can afford based on your income and projected property expenses. That figure doesn't account for other expenses you may face, such as renovations or emergency home repair, as well as regular household costs.

"You know best ... what your costs are, so my advice would be look at what your paycheque is net, line up all those costs, including what you're being told on the calculator is affordable for you, and see what is left at the end of the month," Ms. Kiskuna says. "The last thing you want to do is hang yourself out to dry with [mortgage]payments that are simply too high to carry."

Here are some other mistakes first-time buyers make, and how to avoid them:


Not knowing your credit score

A credit rating is a record of your credit history and current financial situation. A good credit rating can improve your ability to get loans, so if your score is low, you may want to work on improving it before you apply for a mortgage.


Not budgeting for the costs of home ownership

Being a homeowner brings new expenses, including property taxes, higher insurance costs, regular upkeep and an emergency fund for repairs. Don't forget to factor in the cost of any renovations your new home may need.


Not researching down payment choices

Lenders typically require CMHC mortgage loan insurance if you make a down payment of less than 20 per cent, and premiums for that insurance can be as high as 3.25 per cent of the value of the loan. Under the Home Buyers' Plan, first-time buyers can use up to $25,000 in RRSP savings ($50,000 for a couple) for a down payment. A higher down payment will save thousands of dollars in interest over the life of your mortgage.


Focusing too much on interest rates

First-time home buyers rush in to the market when interest rates are low. While rates are important, other things have a greater bearing on the overall cost of home ownership, including the cost of the house, the type of mortgage, the amortization period and payment options.


Not choosing your own payment schedule

Paying off your mortgage sooner saves you interest costs, while a longer amortization period reduces your regular payment and frees up cash flow. You can save thousands of dollars in interest by choosing a shorter amortization period, paying fortnightly instead of monthly, or increasing the amount of payments by even a small amount. Use an online mortgage calculator to run the numbers.


Forgetting about closing costs

When calculating closing costs, assume you will need an additional 1.5 to 2.5 per cent of the purchase price to cover such things as the home inspection, legal fees, land transfer tax, property tax, property insurance, utility hook-ups and moving costs.

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Vancouver, BC – September 16, 2013.  TheBritish Columbia Real Estate Association (BCREA) reports that a total of 6,863 residential sales were recorded by the Multiple Listing Service® (MLS®) in BC during August, up 28.6 per cent from August 2012. Total sales dollar volume was 39.7 per cent higher than a year ago at $3.66 billion. The average MLS® residential price in the province was $533,400, up 8.6 per cent from August 2012.

"After sitting on the sidelines for much of 2012, home buyers were out in force during the summer months,” said Cameron Muir, BCREA Chief Economist. “Fear of a housing market hard landing has given way to a sense of urgency to lock-in a mortgage at a low interest rate."

While higher mortgage interest rates are on the horizon, BCREA forecasts the five-year posted mortgage rate to be 50 basis points higher a year from now. The impact on consumer demand is expected to be largely offset by stronger economic conditions and the associated employment growth.

Year-to-date, BC residential sales dollar volume was up 1.5 per cent to $26.5 billion, compared to the same period last year. Residential unit sales were down 0.6 per cent to 49,849 units, while the average MLS® residential price was up 2 per cent at $532,130.

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