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Notable News of the Week: May 3, 2013

Stephen Poloz named Canada’s next central bank chief – Financial Post

After months of anticipation, Finance Minister Jim Flaherty shocked many by announcing that Stephen Poloz would be taking over Mark Carney’s position as Governor of the Bank of Canada. Most news sources had predicted Flaherty would appoint Tiff Macklem, the bank’s senior deputy governor, as his current position leaves him as the most obvious choice. However, Flaherty believes Poloz is the strongest candidate, as he brings a previous 14-year stretch at the Bank of Canada as well as years working abroad – including stints at the International Monetary Fund in Washington and the Economic Planning Agency in Tokyo. “Mr. Poloz has significant knowledge of financial markets and monetary policy issues and extensive management experience. We are confident Mr. Poloz will make an outstanding contribution to the work of the Bank and uphold its reputation as a leading central bank,” said David Laidley, Chair of the Special Committee of the Board of Directors.

Stuck in traffic: How mortgages could ease congestion – CBC News

A recent Pembina Study found that 80 per cent of residents in the Greater Toronto Area would give up the suburban lifestyle (big house, big car), in order to live in one of the walkable and transit-friendly neighbourhoods in the downtown core. Unfortunately, this tends to be more of a dream than a reality for most people, especially first-time buyers, as downtown property comes at a high cost. But one idea that’s been floating around could make downtown living a reality for more people: the location efficient mortgage (LEM) would allow individuals who do not own a vehicle to be approved for a slightly larger mortgage loan amount. Traditionally, mortgage loan risk is determined by the amount of income and personal debt an applicant has, including car payments. If an applicant has no vehicle debt, and therefore no monthly maintenance fees on said vehicle, their risk level decreases when all other variables remain the same. The LEM project was tested on a short-term basis in the United States and found that buyers could add anywhere from $12,000 to $50,000 to the mortgage loan amount they could apply for.

Analysis: CIBC’s Canada focus raises concerns as growth slows – Reuters

Canadian Imperial Bank of Commerce (CIBC) recently positioned itself as a low-risk, Canada-focused player, which has stabilized its earnings, but some shareholders worry that the record levels of debt and slowdown of the housing market may put CIBC at risk, as their international exposure is so minimal. In 2011, CIBC acquired 41 per cent of American Century Investments, but this acquisition pales in comparison to the large foreign investments recently made by competitors TD Bank and Scotiabank. CIBC Chief Executive Gerry McCaughey believes that, while consumer debt is high, Canadians are acting rationally as they appear to be paying down their high interest debts. CIBC is currently outperforming its competition, with a 7.2 per cent return, and is paying the highest dividend yields amongst the big five in Canada. Still, investors are skeptical about CIBC’s growth prospects as, among the big banks, CIBC’s shares have the lowest price/earnings ratio.


A look at current mortgage rates and 5-year mortgage rate history.

Current Mortgage Rates May 2 2013

The average discounted mortgage rates in Canada in 2013:

Discounted Mortgage Rates May 2 2013

A history of weekly 5-year fixed mortgage rates and 5-year variable mortgage rates.

mortgage rates by: