BoC rate cut no ‘game changer’ for housing market: TD + MORE Jul 22nd

Bargain hunters know they can save money by buying a fixer-upper. And, as prices continue to grow in Canada’s hottest markets, buyers are increasingly seeking properties that need a little TLC – and that occasionally includes residential properties once used for illegal marijuana grow operations or drug labs. The attached stigma of these homes means they go on the market for a discount, but buyers need to be aware that insuring and financing such a property can be difficult.
What’s The Problem?
Growing or manufacturing illegal drugs is, obviously enough, illegal. But when the operation takes place in a house, there are a number of ways the property can be significantly impacted.
Indoor grow ops typically use hydroponics, which require large amounts of electricity. Knowing that the authorities monitor hydro bills for excessive usage, illegal growers often illegally (and dangerously) splice into main power lines to bypass the meter. The equipment also requires more power outlets than a typical home, so additional wiring is often added that will most certainly have not been inspected for safety…

Q: I am getting a small windfall soon. The money would pay off the rest of my mortgage which is just under 3%. It would also be enough to pay off my credit card debt, leaving a couple thousand to buy American dollars for my travel account. Should I play it safe and do the above or should I be opening up a TFSA account and contributing also to my RRSPs? Or should I be looking at purchasing a rental condo? I am 52 and my wife and I have both good jobs.
– Ed
A: I think that one of the best things you can do with a sudden windfall, Ed, is nothing. People often feel compelled to act right away. Or they are made to feel that way by financial advisors who have something to gain. Take your time and evaluate your options.
I think paying off your credit card debt is an easy one. I’d do that for sure.
Beyond that, the decision to pay down your mortgage is a tough one. You have a low-rate mortgage that may be even lower now given the rate cut last week by the Bank of Canada–if you have a variable rate mortgage…

OTTAWA – TD Bank says the Bank of Canada’s latest decision to cut its key interest rate will not be a “game changer” for the country’s housing market.
Some have raised concerns about what the interest rate cut by the central bank could mean for an already hot housing market.
TD said Friday the central bank’s decision resulted in a small move lower for variable rate mortgages, but added the posted five-year fixed rate is the most important factor for the housing market.
“It is the rate that borrowers must be income tested against to qualify for a mortgage, and it most closely follows the five-year government bond yield,” said the report.
How the Bank of Canada influences mortgage rates »

With the yield on five-year government bonds sitting near record lows, TD said there is little room to drop further.
“In fact, we think global forces will pull Canadian bond yields slightly higher as the year rolls forward, as rate hikes in the U.S. draw closer and global conditions improve,” TD said…