BIG PLAYERS, BIG MONEY!

Calgary magnet for big players
Claudia Cattaneo
Financial Post; Sept. 26, 2011

Like the rest of the country, Calgary has seen its ups and downs over the past decade, but what hasn't changed is its ability to attract corporate headquarters.

The latest one landed last week, when Aecon Group Inc., the largest publicly traded construction and infrastructure development company in Canada, opened a co-head office in Calgary to support activity in Alberta, British Columbia and Saskatchewan. It mirrors its long-standing legal headquarters in Toronto. Each office will employ 15 to 20 people.

The move, announced in the middle of another scary week in the markets, reinforces a trend that, if it continues, could see Calgary surpass Toronto in the next 10 years in terms of the number of headquarters, said Wilf Gobert, chairman of Calgary Economic Development (CED).

Calgary already boasts Canada's highest concentration of headquarters relative to its population.

The trend seems to be progressing as companies look past fears of a recession and establish roots in the city on long-term expectations that Alberta's energy-based economy will remain vibrant.

"We are involved in three basic sectors - the resources sector, the energy sector and the transportation sector," Aecon chairman and CEO John Beck said in an interview. "We don't see slowdowns in any of those sectors."

Aecon joined Brookfield Residential Properties and Native American Resource Partners in opening headquarters in Calgary this year. Universal Power Corp., Stream Oil & Gas Ltd., Petromanas Energy Inc., Osborne Interim Management made Calgary their home base in 2010.

Calgary's metropolitan area increased its headquarter count by 55.7% between 2001 and 2010 - to 123 from 79, according to figures compiled by CED from FP 500 data.

In contrast, headquarters in Toronto's metropolitan area declined by 18% over the same period - to 260 from 317.

The only other Canadian city that had a bigger growth rate was Edmonton, which grew its headquarters by 64.3% - to 23 from 14, between 2001 and 2010.

"Generally speaking there is a shift from East to West," Mr. Beck said. "We are just part of that shift. We see more growth in the West in terms of population growth, we see growth in terms of exports to Asia. Voting power is moving towards Western Canada. I would say that the normal thing that would follow that shift would be a continued addition of head offices in the West."

The growth in head-office jobs shows up in office leasing, which is moving at a record pace. According to CED, 1.5 million square feet of office space was leased in the first six months of 2011 in downtown Calgary. In contrast, in the Greater Toronto Area, where the leasing market is four times Calgary's size, 1.2 million square feet were leased over the same period.

The leasing reflects the arrival to the Calgary scene of new energy players such as China's state-controlled oil companies. While they may not be part of the head-office tally, they are setting up significant subsidiaries and buying up condos to house their expatriate workers. PetroChina, with offices in the Sun Life Plaza, has the largest presence. Sinopec is in Bow Valley Square. Cnooc Ltd. is flying people in and out, but is expected to have a large permanent office once its acquisition of Opti Canada Inc. is finalized.

The influx of Chinese money is so large there are calls for direct flights between Calgary and Beijing, bypassing Vancouver, even as British Columbia steps up efforts to establish itself as Canada's gateway to Asia.

Aecon opened a Calgary co-headquarter in the city's core to better serve its clients and further develop its business, Mr. Beck said. A third of its $3-billion in annual revenue is coming from projects in Alberta, where its clientele includes Syncrude Canada Ltd., Suncor Energy Inc. and ConocoPhillips.

Mr. Beck doesn't expect a repeat of the oil sands cancellations that resulted from the financial meltdown three years ago.

"That was at US$30-US$35 oil. We are at US$80 to US$90, so I think we are far away from that," he said. "A lot of the commitments that have been made can't be stopped. Production has to continue."

Bruce Graham, president and CEO of CED, said Calgary's exceptional headquarter growth is based on the strength of energy and other commodities and is unique in Canada.

In addition to drawing energy companies, Calgary is attracting industries that are accommodating that growth, such as procurement, finance, construction, he said.

"It demonstrates the optimism and the activity that is happening, despite the somewhat mixed signals that we are getting in the global markets," Mr. Graham said from Montreal, where he was part of a campaign last week with Calgary Mayor Naheed Nenshi to recruit workers and businesses to the city.

But, Mr. Graham said, "We are not an island. Hopefully things settle out globally because obviously we need the marketplace to accommodate the production that we are putting on stream."

RISE & REPEAT

Prices rise for repeat home sales in city
By Mario Toneguzzi
Calgary Herald September 29, 2011

A survey of repeat home sales shows Calgary prices increased in July by 2.3 per cent from the previous month.

But the Teranet-National Bank House Price Index, released Wednesday, also indicated Calgary prices are down 0.9 per cent from a year ago - the only centre in the survey to experience a year-over-year price decline.

The index is estimated by tracking observed or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation of the index.

The survey also said Calgary's index is still down 8.8 per cent from its alltime high of August 2007 and down 0.9 per cent from its pre-correction peak of August 2010.

For the six centres surveyed, the index was up 1.3 per cent on a monthly basis and 5.3 per cent on an annual basis.

Monthly increases were experienced in Montreal, 0.5 per cent, Ottawa, 1.0 per cent, Toronto, 1.7 per cent, and Vancouver, 0.9 per cent.

Annual increases were experienced in Halifax, 3.3 per cent, Montreal, 6.0 per cent, Ottawa, 4.1 per cent, Toronto, 4.8 per cent, and Vancouver, 8.5 per cent.

Meanwhile, the latest Global Real Estate Trends report released by Scotia Economics said the renewed slowdown in global economic activity is putting further downward pressure on already-weak residential property markets across much of the developed world.

And while Canada's hot housing market also has begun to cool, it remains a "notable outperformer," said Adrienne Warren, senior economist and real estate specialist with Scotia Economics.

Of the nine major developed markets tracked by Scotia Economics, with available second quarter data, only Canada, France and Switzerland registered positive year-over-year real price growth.

The report said Canada's housing market stands out in its resilience and longevity. Average inflation-adjusted existing home prices were up five per cent year-over-year in the April-June period, on par with the first-quarter's pace of appreciation. Data for July and August point to continued firm but stable sales through the late summer, alongside a levelling out in prices.

"Ultralow interest rates will continue to support affordability in the face of record high prices," said Warren. "Nonetheless, heightened economic uncertainty combined with recent signs of a loss of momentum in Canada's jobs market could keep some potential buyers on the sidelines for the time being. On balance, we anticipate a modest slowdown in the volume of sales transactions heading into year-end, alongside relatively flat prices."

Photo By: Design Inspiration Gallery

CURB YOUR UNRULY BUSH!

Get enthusiastic about curb appeal
By Sheila Brady
Postmedia News September 11, 2011

It doesn't matter if you're just starting out in a new home, thinking about selling, or stayin' put - buffing up the curb appeal of your house is an absolute must. How your home looks from the outside is the first impression viewers get of who lives inside.

And real estate agents will tell you when it comes to selling, there is no bigger turnoff than a messy front yard or sad-looking front door.

The cheapest way to put a shine on the old address is to grab the rake.

Weed, trim edges for a clean appearance and prune and shape overgrown bushes. Snip off lower branches of pines for a good neat factor.

Add mulch or stones under cedars and around flower beds. Just like a new haircut, you will feel lighter by the end of the day.

Think about eliminating fences and using joint walkways, garden beds and plantings on smaller suburban lots, especially when there are bungalow or two storey townhouses, says landscape architect Welwyn Wong.

When it comes to door colour, co-ordinate with trim work and the brick colour, says colour specialist Jasmine Houghton. Avoid shocking colours.

BUYERS LURED!

More buyers attracted to city's condo market
By Mario Toneguzzi
Calgary Herald September 20, 2011

Two high-profile projects will launch into the next phases of their development this weekend, suggesting the city may be poised for a residential condo rebound.

Keynote Urban Village will open its doors to a new show suite for its second tower in the east Beltline area while University City will launch its Building 3 project near the Brentwood LRT Station.

"Activity in the condo market has been gradually improving," said Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp.

"Gains in employment, favourable mortgage rates, and price reductions have attracted buyers to the condo market, especially those looking for their first place."

A majority of Calgary condo sales this year have been for units priced below $300,000, said Cho, who expects to see more apartment-type condos break ground in the coming months. "There has been an uptick in the number of apartment permits issued, signalling the intention of more activity," he said.

According to CMHC figures, the 451 apartment starts in August was the highest monthly total since May 2008.

The 29-storey second Keynote residential tower will include 250 suites.

Possessions are scheduled for summer 2013.

Project sales manager Jeannie Elrafie said sales have been surging during the past eight months and that's "telling us there is an upswing underway in the Calgary real-estate market".

"We're getting a lot more demand than we ever were," she said.

The Keynote development, which encompasses nearly an entire city block on 1st Street S.E., already includes a 26-storey residential tower comprising 179 units, and a 14-storey office tower that includes 40,000 square feet of retail space, occupied by the likes of Sunterra Market, Starbucks, and an RBC Royal Bank branch.

The city's subdivision and development appeal board last week approved construction of the first two condo highrises for the University City project.

An invitation for this weekend's VIP launch of the third building says 400 condos sold in five days for the project's first two buildings.

A public launch is expected to be announced next week.

The first two towers are 18-storeys, each with 216 units.

The University City website states the project's third and fourth phases will consist of 12-to 14-storey buildings.

The planned fifth phase will be four storeys.

THE SIMPLE LIFE

Small, simple, smart
By Pedro Arrais
National Post · Sept. 16, 2011

The combination of an aging population, first-time buyers and rising real estate costs has created the trend toward downsized living areas, with the resulting challenge of how to do more with less.

Smaller rooms have folks rethinking their furniture needs. Disposing of some items is an option, but the solution many people are turning to is multi-functional furniture.

Some pieces have long been multifunctional. In many homes, a dining room chair is moved to another room - a home office, for example - to serve as an occasional chair until needed for large dinner parties.

In many households, the dining table functions as a task desk by the family before and after dinner.

"People expect their furniture to do more," says Dana Wright, merchandising manager for La-Z-Boy Furniture. "They are looking for a simpler life."

She says the trend toward multi-functional furniture began when home sizes began to get smaller. Interior changes, such as a move away from separate living and family rooms to a great room in houses, created a need to reduce visual clutter.

Nowadays, ottomans invariably double as storage bins, and coffee tables have drawers for remotes and magazines.

"It is an ongoing evolution," Ms. Wright says. "At one time there was only a television to contend with. Now we have large flatscreen televisions and gaming consoles. All those components and controllers need to be hidden away."

It is easier to adapt to small living spaces if the furniture is smaller as well. An average sofa is about 216 centimetres long. A condo-size sofa can be 198 centimetres.

"Manufacturers typically put straight and narrow armrests instead of wider, more traditional rests on condo-size couches. That makes the difference in width not that noticeable but it fits better in smaller spaces," says Love Dodd of Dodd's Furniture in Victoria. "Some bottoms flip up to reveal storage underneath, some have a chaise on one end and others can recline. It is all about catering to different needs."

Even the traditional sofa bed, the original multi-functional piece of modern furniture, has evolved.

"Our hide-a-bed couch separates into two chairs, which can face each other, turn and swivel," says Chris Morton, assistant manager at Nood Furniture, a chain of stores in Western Canada. "We carry furniture with more European sizing, with smaller dining chairs and slipper chairs with no arms."

Also in an effort to declutter, people are looking for elegant solutions to recharging their electronic devices. Complex docking stations with hidden power bars are now built into bedroom night stands or kitchen sideboards.

Furniture is not the only item that is being asked to do more. Increasingly, interior designers are also being tasked with coming up with multipurpose rooms.

"It comes up all the time," says Cydney Hellier Gray, principal of an interior design business that bears her name in Victoria. "The classic scenario is for a condo's only extra room to be a TV room, a den, an office and a guest room when called upon."

She advises people to build more custom cabinetry to take advantage of dead space in a room. But she also warns multi-functional pieces should be used in proportion to a room's dimensions.

"I am not a fan of wall beds," she says. "They tend to make a room look smaller because of their bulk." She tries to keep furniture less than 91 cm in height because it visually preserves a sense of volume in a room when a person can see the wall. Any higher and that piece dominates the room because it eats up a person's sight lines and makes a small room look smaller. She says Murphy beds work better in larger spaces.

"It all comes down to a sense of balance and proportion." PH

OIL & REAL ESTATE

House prices to get burst of energy
Strengthening oil sector to boost real estate
By Marty Hope
Calgary Herald September 17, 2011

Where oil goes, so goes Calgary.

As much as we like to say the city isn't as dependent on black gold for its health and prosperity, the fact is, we are.

With oil prices regaining strength and with hiring happening in the oilfields, the economy is beginning to strengthen - and it's pulling consumer confidence along with it.

A real estate axiom says that when the economy is good, the pace of home sales at the higher end of the market increases.

People in those income brackets aren't likely to buy if there is an indication the economy is headed south.

"That's probably true," says Norb Park, managing broker with Sotheby's International Realty Canada. "The businessminded are probably saying the economy is heading in the right direction, the oilpatch is in good shape, so this isn't a bad time to deal."

Resale housing statistics from the Calgary Real Estate Board tend to agree.

From the start of the year to the end of August, 948 homes priced at $700,000 and more changed hands, up from 779 for the same eight-month period in 2010.

In August, sales in that price range totalled 104 compared with 67 for the same month a year ago.

"There's a mindset that when oil is doing well, then the economy must be good," says Park. "That, in turn, increases consumer optimism - and right now, people are feeling positive."

But not all of us can afford homes that expensive.

Matter of fact, nearly 50 per cent of single-family homes sold this year and last were priced between $300,000 and $450,000.

"With Calgary's energy sector slated to grow, it is expected to lift the city's employment, income and in-migration - and in turn help contribute to growth in the resale market," says Sano Stante, president of the Calgary Real Estate Board. In-migration refers to the migration of people to the city.

"We expect price growth to improve as we approach the end of 2011 and move into 2012," he says, adding the market is seeing a boost in sales at both ends of the market.

"Improving economic conditions, coupled with affordability and price stability, has given Calgary a boost in buyers for upperend homes and entry-level condos," he says.

CREB also reports the average price for singlefamily resale homes reached $468,051 by the end of August, a one-per-cent increase compared to last year.

Taking a page from the RBC affordability reports, Stante says: "When looking at Canada's major cities, Calgary is one of the most affordable regions for homeownership in the country. Buyers are benefiting from improved selection at all price ranges in the market."

The single-family home market had 1,106 sales in August, an increase of 28 per cent when compared to the same month last year - which, by the way, was the lowest for August since 1994.

Sales of 9,485 for the start of the year to the end of August are 10-per-cent higher than the same period last year.

Condo sales totalled 468 units in August 2011, with a year-to-date total of 3,885 - similar to levels recorded in the first eight months of 2010.

Photo By: Mr. Alejandro Zeta

THEN THERE WERE TWO...BUT IN THE MEANTIME...

Home buying help for singles
By Helen Morris
National Post

Purchasing a home alone can be daunting but help is at hand to make the most of your single income.

"Get pre-approved -with a single income, many times people are looking at condominiums. The condo fees and taxes need to be included, and, of course, the mortgage payment," says Kevin Suddaby a mortgage broker with Invis in Calgary. "Make sure you've got a complete assessment of what you can afford. Get an interest rate held, so that you are protected while you are looking for a home."

The new mortgage rules effective March 18 need consideration.

"We don't have access to the 35-year amortization anymore. This is impacting singles more than couples who have dual incomes," Mr. Suddaby says. "You can qualify for less property now."

One option may be to ask a co-signer, such as a parent, to help you qualify for the mortgage.

"By co-signing or guaranteeing the debt the parent is obligated as much as their son or daughter with the payments," says Stan Falkowski, senior vice-president, Mortgage Intelligence in Toronto. Helping with the down payment may make more sense.

"We're looking at the baby boomers. Their kids are now buying homes. If parents can afford it and they have assets, it wouldn't be a bad time to gift a down payment," Mr. Falkowski says.

With only your income under consideration, putting together a healthy deposit is more important than ever.

"For those who are looking to buy in the next two or three years, it's a good point to max out on their RRSPs every year if they can," Mr. Falkowski says.

"They can in turn use those funds for the down payment."

If you meet the Canada Revenue Agency criteria as a first-time buyer, you can withdraw up to $25,000 from RRSPs to buy or build a qualifying home. Mr. Suddaby says you may also borrow funds to put into an RRSP and then withdraw those after 90 days to generate a down payment.

"The borrowed loan affects your total debt service," Mr. Suddaby says. "If you contributed to an RRSP earlier this year, there's a chance you would get a tax refund that can also be used as a down payment."

If you are receiving child or spousal support, these can count as income. Mr. Suddaby says many clients come to him too soon after they become single. The separation must be legally documented and the lender needs to see a clear record of payments. Mr. Suddaby says a home with a separate rental unit can generate more income, but it is critical to get good advice on all the expenses involved and work out if the additional time and effort is worth it. If you do not qualify now Mr. Falkowski says don't give up, have a plan.

"If they take a look at their financial situation: They can't get a gifted down payment; their RRSPs are a little low; it's never too late as long as they put a plan in action," Mr. Falkowski says. " 'With what I can put away, I can buy a place in two, three years or whatever.' In the time frame that they're actually starting to save they could meet someone and they could start saving together."

APARTMENT SALES ENLARGEMENT

Mondo condo sales for 2011
Lisa Van De Ven,
National Post, Sept. 10, 2011

If you ask Ben Myers, 25,000 is the magic number. There may still be a few months left of 2011, but Mr. Myers, executive vicepresident and editor at real estate research firm Urbanation, already has his forecast for the year. He expects there will be 25,000 new condominium sales by the end of 2011. If he's right, it'll be a new record, surpassing 2007's previous record of about 22,500 new condo sales.

"We're certainly on pace to have the most condominium sales in any one year in 2011," Mr. Myers says. And with the Toronto new-condo market coming off a busier-than-normal summer and a record-setting second quarter, he's not surprised.

Urbanation recently released its second-quarter results. From April to June, Mr. Myers says, 9,455 new condo units were sold in the Toronto CMA. That's a record in itself; the previous best quarter was 2007's second quarter, when 6,997 units were sold. That wasn't the only Q2 number to be beat, though. The quarter also set records for the number of active projects, the number of active units, the number of new condominium launches and the number of projects and units under construction.

"There was a huge number of new projects coming on line," Mr. Myers says. "And surprisingly, even with all of this extra supply, they had the highest absorption rate ever of new product. Even in the face of all this additional supply, they sold better than any other new release that we had in a quarter."

But Mr. Myers is quick to dispel any talk that the Toronto market might be in the middle of a real estate bubble. Prices, he says, have remained "pretty consistent" over the past five years, with 7% to 9% increases in the new condo market from year to year.

"A bubble is characterized by rapid increases in prices, and we haven't seen that," he says. "That's the type of thing you obviously saw in the United States and you even saw in Calgary a few years ago, where you saw 20% and 25% increases year over year, and in our market in the '80s where we saw prices double in three years."

Developers, he says, have been doing their homework and "setting fairly moderate pricing." They're also, it seems, paying less attention to the sales seasons of the past. Whereas spring and fall are still the prime selling times, more developers decided to release their projects in the summer this year. Since the market is being driven by investors more than ever, Mr. Myers says, there was less need to wait out the summer season, when end users are typically on holiday and less focused on condo buying.

According to the Building Industry and Land Development Association (BILD, using data provided by RealNet Canada), 1,490 new condo units were sold throughout the Greater Toronto Area in July, up almost 20% from last year. "Forget the old conventions of a spring and fall market," says Stephen Dupuis, BILD's president and CEO. "The market's that much bigger now - it's active all the time."

Photo By: GalleryLoftsCA

REACH FOR A GREAT GRADE!

Homebuying 101
Take into consideration all of the costs
By Marnie Bennett
Postmedia News September 6, 2011

Perhaps you are one of those fortunate first-time homebuyers for whom making the big decision to buy came easily. And then again, maybe you aren't. For many, the decision is difficult.

It's a decision that requires careful consideration. You may have concerns about financial obligations, the responsibility of upkeep or even the idea of being "tied down." Maybe you've just landed your first significant job and the idea of home ownership has only recently taken root in your imagination.

Or, like many people, you've been renting for what feels like forever and dread the thought of writing yet another cheque to help pay down your landlord's mortgage.

Numerous factors will influence your decision, but I'd encourage the fence-sitters among you to consider two overarching questions.

First, how strongly do you feel about owning your own home? While it's possible to live perfectly well while renting a good space, many of us find home ownership important to our sense of comfort, security and identity.

Certainly, there's also a sense of satisfaction in watching your home equity increase with every mortgage payment. As a solid investment, a home is hard to beat: How many investments provide shelter and comfort to the investor?

There is a big payoff - ultimately, you will own your home outright and monthly payments will be a distant memory. That is a luxury renters simply do not have.

This brings us to the second, more crucial, question: Can you afford it?

Remember, your first home need not be a palace. Assuming that you're steadily employed and do not plan to move again in the near future, the purchase of a modest home or condominium is nearly always a smart move. You may even find mortgage payments surprisingly affordable and not a far cry from your monthly rent.

It is paramount to consider the additional costs of ownership. Things like property taxes, utilities, condo fees, insurance and mainte-nance can add up and force you way over your budget. I strongly suggest you speak with a mortgage broker or bank representative for help designing a realistic home budget.

If home ownership is close to your heart, you'll find a way.

Marnie Bennett is a leading broker with Keller Williams VIP Realty in Ottawa, with more than 30 years' experience in real estate.

LOCK IT OR FLOAT IT? THAT IS THE QUESTION.

Is it time to lock in mortgage?
Garry Marr
Financial Post · Aug. 31, 2011

The gap between short-term and long-term rates has shrunk enough that it might be time for anyone renewing a mortgage to consider locking in.

Moves last week by the major banks to reduce the discount on variable-rate mortgages comes as the discounts for long-term mortgages have gotten as steep as they have ever been.

"What seems to be happening is they are focusing their attention on fixed rates. We are starting to see some aggressive competition on four-and five-year products," says Gary Siegle, a mortgage broker and Invis Inc. regional manager in Calgary.

How aggressive? Try as much as 190 basis points. A five-year, fixed-rate mortgage with a posted rate of 5.39% is now being offered for 3.49%.

For whatever reason, the four-year, fixed-rate mortgages are being priced even more aggressively.

Mr. Siegle says he can lock consumers into a four-year, fixed mortgage for as low as 3.09%.

The discounting comes as variable-rate products, linked to prime, have become more expensive. Short-term money has become more expensive in the bond market, forcing banks to reduce discounts.

The banks traditionally move their prime rate with the Bank of Canada rate. With no flexibility there and existing customers getting huge discounts based on old deals, banks are forced to raise rates for new loans as short-term money gets more expensive.

The trend began in April when FirstLine Mortgages, a subsidiary of Canadian Imperial Bank of Commerce known for its low rates, cut its discount on variable rates.

Others banks were slow to follow, hoping to make money on volume. But refinancings have dried up under tougher mortgage rules and sales have slowed, creating the need to tighten profit margins on variable-rate products.

Today, the discount on a variable-rate mortgage is about 55 basis points off the prime rate of 3% - in other words, 2.45%. Compare that to 3.09% on a four-year mortgage and the premium to lock in is not that much.

"This gap is about as narrow as it goes," says CIBC deputy chief economist Benjamin Tal. "It reflects a flat yield curve, which makes it difficult to make money in this business."

Mr. Tal says variable-rate mortgages tend to be more attractive when there are inflation expectations not yet expressed in short-term rates. This time, he says, the bond market is depressed, anticipating recession, and that has shrunk spreads dramatically.

The one thing keeping people in short-term money is the sense that there is no urgency to move because the U.S. Federal Reserve Board has pledged not to raise rates for two years, which also effectively ties the hands of the Bank of Canada.

"We know the five-year rate is attractive, but we also know short-term rates are not raising," Mr. Tal says.

What does that mean on a practical, dollars-and-cents basis?

Let's use the Canadian Real Estate Association's 2011 average sale price forecast of about $360,000 and assume a 20% down payment and a $288,000 mortgage.

At 2.45%, your monthly mortgage payment based on a 25-year amortization would be $1,282.98. At 3.09%, your monthly payment rises to $1,376.28.

But even at the gap, you would pay about an extra $7,000 in interest to lock in over four years.

Ultimately, the $7,000 amounts to an insurance policy. You get payment certainty for four years, but at a price.

If rates climb 200 basis points on your variable-rate mortgage, it could cost you $22,000 more in interest over four years. The reality is that rates wouldn't jump at once and, therefore, increases would likely be gradual.

Moshe Milevsky, the York University finance professor who wrote the oft-quoted study that variable-rate mortgages do better than fixedrate mortgages 88% of the time, said if you start thinking about it like insurance, it comes down to your risk tolerance.

"There are people who pay a lot for protection on their portfolio; there are people who pay a lot for life insurance," Prof. Mr. Milevsky says. "If the premiums are low enough, you might say, 'Sure, I'll pay.' But if you have a tight budget, every basis point counts, and it might not be worth it."

To me, he still has the ultimate answer for the tough decision whether or not to lock in.

"I still don't get why more Canadians don't split their mortgage," Prof. Milevsky says. In other words, locking in half of the mortgage and floating with prime on the other half.

"When is a bank going to come to the realization Canadians hate making this choice?"

He's right. Even with rates this low and the gap between short-term and long-term rates this narrow, it is still a tough call.

Photo By: Accretion