Mortgage, loan and property. What is a mortgage?

A mortgage is putting a property as a guarantee to a lender as a security for a mortgage loan.

While a mortgage in itself is not a liability or a dept, it is evidence of a debt. It is a transfer of an interest in property, from the owner to the mortgage lender, on the condition that this interest will be returned to the owner of the property when the terms of the mortgage have been satisfied or concluded.

In other words, the mortgage is a guarantee for the loan that the lender makes to the borrower. In all but a very few states, a mortgage creates a lien on the title to the mortgaged property.

Monday, August 18, 2008

The decline in the U.S. housing is far from finished

Economists at the Canadian Bank of Nova Scotia believe that it is still really too early to announce the end of the decline in the housing sector in the USA, they also believe that in Canada, the recovery in residential construction is in its infancy.

According to the latest report "Prospects for the property sector", published Monday by Economic Studies Scotia, although sales of new and existing properties in the USA have reached a new cyclical low of 5.4 million units annualized in June and that they have declined by about 35% from their peak in late 2005, the decline has lessened since the spring.

Economists at the Scotia also highlight a modest resumption of sales observed in some regions and that the fall in house prices has also experienced a slowdown.

"However, the possibility that there is a significant recovery in residential sales is limited, given that soaring gasoline prices and rising unemployment exert considerable pressure on household credit," said Adrienne Warren, Senior Economist, Economic Studies Scotia.

"Real wages continue to fall by one year to another since last November and consumer confidence remains at its lowest point since 16 years."

In its report, Economic Studies Scotia suggests further that the recent rise in mortgage rates for the long term mortgages coupled with loan conditions increasingly restrictive will leave potential buyers on the sidelines.

The report also concludes that the return of residential construction to acceptable levels has only just begun in Canada.

Between 2001 and 2006, the Canadian market in housing starts had an average of 222 000 units annualized, far more than the number of households who are trained or 175 000. This oversupply has continued in 2007 and the first half of 2008.

"It is clear that a growing gap between the number of new construction and the formation of households exists. This gap has contributed to the gradual increase in the number of unsold new houses in recent years. "

However, it is noted in the report that, contrary to the situation prevailing in the USA, little evidence suggests a significant oversupply situation in Canada.

"The inventory of all new homes completed but unsold, whose number is growing in most major markets, remains relatively low from a historical point of view for the construction of single-family homes and buildings."

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