Mortgage Articles

How Your Loans and Spending Habits Are Quietly Shaping Your Credit Score

Fri, 10 Apr 2026 19:51:20 GMT

Your credit score is one of the most important numbers in your financial life — especially when it comes to getting a mortgage. But for most Canadians, how that number actually gets calculated remains a bit of a mystery.

Here's what you need to know.

What Is a Credit Score, Exactly?

A credit score in Canada ranges between 300 and 900 points. It's considered a predictor of how likely you are to pay your debt on time, and it directly affects a lender's decisions on loans, interest rates, and credit limits. The higher your score, the better.

In Canada, Equifax and TransUnion are the two primary organizations that collect data on consumer borrowing and provide credit scores to lenders. While both use similar inputs, their algorithms can differ — which is why your score may vary slightly depending on which bureau a lender checks.

Not All Loans Are Created Equal

You might assume that carrying a mortgage, a car loan, and a credit card all affect your score the same way. They don't.

Revolving credit products — like credit cards or a line of credit — can carry a higher influence on your credit score because they provide more insight into how you manage credit on a day-to-day basis. If you're regularly carrying a high balance or missing payments, that gets noticed quickly.

Instalment loans, such as auto loans, personal loans, or student loans, show your ability to manage a fixed scheduled payment. A mortgage, on the other hand, demonstrates your capacity to manage long-term balance repayment. Each type of credit tells lenders something different about your financial behaviour.

The Factors That Matter Most

Here's a breakdown of what actually moves your credit score:

1. Payment History

The biggest impact on your credit score comes from payment history — whether you're paying on time, and how long any bills have gone unpaid. Even one missed payment can leave a mark.

2. Total Amount Owed

This includes the total you owe across all creditors, how much you owe on specific types of accounts, and how much of your available credit you've used.

3. Credit Utilization

Your debt-to-credit utilization ratio — the amount you're borrowing compared to your total credit limit — matters significantly. Keeping that ratio below 30 to 40 per cent will help your score.

4. Length of Credit History

How long you've had credit products plays a role in your score calculation. This includes the age of your oldest account, your newest account, and the average age of all accounts. Closing old accounts can unintentionally lower your score.

5. Credit Inquiries

A credit inquiry for a new credit card or auto loan stays on your profile for six years. Checking your own score or getting a pre-approval doesn't affect your score — and when shopping for a mortgage, multiple inquiries are typically treated as a single event.

6. Unused Credit

Having a large amount of unused credit available can also negatively affect your score. Even if you don't owe anything on a $50,000 line of credit, a lender still has to factor in the fact that you have the capacity to take on that debt.

What This Means Before You Apply for a Mortgage

Your credit score doesn't just determine whether you're approved — it directly impacts the interest rate you're offered. A stronger score can mean thousands of dollars in savings over the life of your mortgage.

If you're planning to buy, renew, or refinance, it's worth taking a close look at your credit picture well in advance. Small changes — like paying down a credit card balance or avoiding new credit applications — can make a real difference in where your score lands when it counts.

Not sure where to start? Reach out — reviewing your financial profile before you apply is part of how we help you get the best possible outcome.

Have questions about your mortgage options? Get in touch today.

Economic Update March 2026

Tue, 31 Mar 2026 17:00:07 GMT

Current Economic Volatility & Proactive Tips

We're sure you've seen the headlines, we've been keeping an eye on them too. While many of them have been downright fear inducing, let's review the metrics:

Canada 5yr Government Bond is up from 2.604% to 3.139% in 30 days.
Brent Crude oil is up over $112/barrel as of March 30th
The Dow Jones is down over 3300 points in the last 30 days

These numbers are certainly not positive. They aren't the sunshine and rainbows many were hoping for as we head into (hopefully) a busy Spring market. But, they're also something that is entirely out of our control . So, what does this mean for mortgage rates. Well, the short answer is, fixed rates have gone up slightly and variable rates haven't changed... yet.

As a refresher, fixed rates tend to change quickly as they're impacted by the bond market which is in turn (quickly) impacted by global economic activity. Variable rates move with the prime lending rate, which is anchored to the Bank of Canada Policy Rate. This gets reviewed (and possibly adjusted) every ~8 weeks at each scheduled meeting.
In the last 2 weeks, we've seen 5yr fixed rates increase by ~0.30%. For some, this increase may mean savings to be had in a refinance are no longer existent. For others, it's a drop in the bucket and means a few extra dollars a month. What this illustrates to everyone - lenders are are feeling uneasy and rates are reflecting it. This level of uncertainty is not new, which in and of itself is shocking.

The Bank of Canada is now dealing with two opposing forces: a soft labour market in need of stimulation and a potential increase to inflation. Suddenly, there's a discussion on interest rate HIKES. While we are in the early stages, there are early predictions that the Bank of Canada could increase interest rates 2-3 times in 2026 . This is a significant shift from earlier expectations of the Bank of Canada holding the key interest rate through 2026. Keep in mind, these predictions are frequently changing.

Whether you're a current homeowner or just starting to explore the housing market, it's important to evaluate your own risk tolerance.

So, what can we, as consumers, do to best protect ourselves? Be proactive.

Here are a few simple ways to approach your mortgage with that mindset:

Thinking about buying? Reach out sooner than you think to get a pre-approval.
Renewal coming up? Connect asap so we can get a rate held for you.
Other debts building up? Let's review those numbers and see if there's a better strategy we can explore.

The best practice when it come to mortgages is the more time we have, the more options we can explore and the greater the potential benefit for you. If rates drop, excellent, we'll recalculate the mortgage at that time. If rates go up, you'll be extra happy you were prepared!

Remember, volatility is temporary; volatility is the swing of the pendulum. Right now, the swing is hard and fast. Take a breath, ask questions, and let us help you be proactive.

_____________

If you have any questions on the above, or would like to talk strategy, please don't hesitate to reach out!

OAC, E&O

Bank of Canada Rate Announcement March 18, 2026

Wed, 18 Mar 2026 17:28:47 GMT

Policy rate held amidst recent conflict in Middle East

This morning, the Bank of Canada made their second announcement of 2026. Their decision to hold the policy rate was well inline with market expectations. This means the Prime Rate should remain at 4.45%.

As indicated in our previous announcements, the Prime Rate directly impacts those who hold variable or adjustable rate mortgages, as well as those with secured or unsecured lines of credit. These rate announcements do not have a direct correlation to fixed rate mortgages , as fixed rates are priced against the bond market. If you're unsure whether you're impacted by this announcement, please reach out or book a time to chat HERE .

While we dive into the economic updates in greater detail below, if you're looking for a quick summary, look no further:

The Iran War has increased uncertainty and is now leading to higher fuel costs and increased pressure on global inflation;
Canadian bond yields have been increasing, resulting in fixed mortgage rates slightly rising over the last few weeks;
In February, unemployment increased to 6.7% (still a very soft labour market) and CPI inflation decreased to 1.8% (grocery prices are still elevated).

Now, into the meat and potatoes...

The word of the day for the Bank of Canada, and many economists, continues to be uncertainty. One cannot have a conversation, let alone make predictions, without noting the unprecedented levels of uncertainty. This time last year, the reason for the global uncertainty was a result of the United States implementation of tariffs and consistently fluctuating trade policy. And while tariffs are still a major topic of discussion, and a significant factor on the Canadian economic outlook; these last few weeks have seen uncertainty increase further as a result of the Iran War.

After the onset of the Iran War, we saw:

The 5yr Canada bond yield increase from 2.604% on Feb 27th to a peak of 3.045% on March 12th. This has resulted in a slight increase to fixed mortgage rates over the last few weeks.
The price of crude oil increase to over $108/barrel (as of 9:05am March 18th). An increase of over 48% since Feb 27th (when it was $72.87).
The Canadian/US Exchange rate has remained relatively stable overall; albeit a couple peaks and valleys.

As a result, there is a (rightfully) growing concern that global inflation could increase especially if the effective closure of the Strait of Hormuz continues indefinitely. With ~20% of the world's oil unable to pass through the Strait, energy prices are expected to continue to increase, thus, passing along the cost to the consumer.

The Bank of Canada expects "...the Canadian economy to grow modestly as it adjusts to US tariffs and trade policy uncertainty, but recent data suggest that near-term economic growth will be weaker than anticipated in January."

As for additional statistics: in the labour market, unemployment rose to 6.7% in February and CPI inflation decreased further to 1.8% in February. While food inflation slowed, it continues to remain elevated - also contributing to pressures on inflation.

While it is still too early to fully analyze the impact of the Iran War and Middle Eastern conflicts, the Bank of Canada is committed to maintaining and ensuring price stability for Canadians. We will continue to process information in order to appropriately guide our clients forward.

We understand there may still be many questions and concerns amongst our clients and partners. As part of our commitment to providing the most up to date information and comprehensive support, we provide our very own Canadian Mortgage App. Interested in potentially refinancing to make your monthly payments more comfortable? Click HERE to download the app and run various scenarios to see what the best fit may be.

BANK OF CANADA FULL RATE ANNOUNCEMENT

Information note

As always, we are here to help. If you'd like to chat about your scenario and see what options may be available for you, let us know! We will keep you updated as we receive more information about today's announcement. The next announcement and Monetary Policy Report is scheduled to take place on April 29th, 2026.

Most Frequently Asked Questions

Tue, 03 Feb 2026 20:33:58 GMT

The following list provides information on general questions we get asked frequently from clients.

Paying Property Tax

Mon, 02 Feb 2026 18:44:28 GMT

I'm a

BC Homeowner

What do I need to know about

Paying Property Taxes?

HOW DO I PAY MY PROPERTY TAXES?

In British Columbia, property taxes are due on the first business day of July and billed annually. Typically, you can expect to receive a copy of your property tax bill from your municipality (or the province if your property is rural) in late May to mid June.

You can pay your property taxes to your municipality/province in either one lump sum (via online banking, cheque, in-person) or in many cases, you can pay in installments throughout the year.

BC HOME OWNER GRANT

If the property is your primary residence, you are likely eligible for BC’s Home Owner Grant (HOG). The HOG reduces the amount of property taxes you pay each year. It is your responsibility to apply for this grant each year.

APPLY FOR THE HOME OWNER GRANT HERE

HOW DO I PAY IN INSTALLMENTS?

There are two ways you can pay in installments, either through your mortgage lender , or directly with your municipality/province .

While setting up installments with a lender may sound convenient, it is important to understand some of the potential pitfalls. When your lender collects and remits property taxes on your behalf, they are estimating the annual amount and dividing it into installments. If the estimate falls short, or if property taxes increase, this can result in a shortfall in your tax account. In that case, you may be required to make up the difference, incurring unnecessary interest, and higher installments the following year.

Alternatively, most municipalities/province offer a very similar service, allowing you to set up automated installments. A “set it and forget it” option, with much less room for error as your installments are calculated and deposited directly with your tax authority.

HAVE INSTALLMENTS CURRENTLY SET UP WITH YOUR LENDER?

You can always request to be refunded the remaining balance in your property tax account (often by cheque or direct deposit). Then you can decide to set up installments with your municipality/province or set it aside for a lump sum payment come July. Feel free to reach out for assistance in making such a request with your lender.

FINDING YOUR TAX AUTHORITY

Below are links to many municipalities’ installment programs available on Vancouver Island:

Rural BC (including RDN)

Please reach out if you need help finding your tax authority.

PURCHASING A NEW HOME

If you are purchasing a home in January - June (prior to the July due date), you will receive a credit from the sellers for their portion of the property taxes for that year. This will be outlined on your Statement of Adjustments at your solicitor’s office at closing. Among so many other line items (e.g. down payment, deposit, legal fees, etc.), this can be easy to miss.

To avoid surprises, be sure to note the credit amount on your Statement of Adjustments, as you’ll want to set those funds aside. When property taxes come due in July, you will be responsible for the full balance (which includes the amount you were credited).

Information not loading properly?

*OAC, E&O

Bank of Canada Rate Announcement January 28th, 2026

Wed, 28 Jan 2026 23:19:57 GMT

Bank of Canada kicks off 2026 by holding policy rate at 2¼%

This morning, the Bank of Canada made their first announcement of 2026. As was a highly expected decision, they have decided to hold their policy rate. This means the Prime Rate should remain at 4.45%.

This announcement was coupled with the first Monetary Policy Report of 2026. A complete list of the interest rate announcements and Monetary Policy Reports scheduled for 2026 can be found HERE.

As has been noted many times, the Bank of Canada is hesitant to make any significant changes to the Monetary Policy Report (MPR) due the the "unpredictable US trade policies and geopolitical risk".

Monetary policy decisions remain focused on maintaining an inflation rate near the 2% target while also aiding the economy through times of change. Currently, inflation is sitting at 2.4% (as reported in December) and unemployment is at 6.8%. The Bank of Canada has noted that "inflation [is expected] to stay close to the 2% target over the projection period, with trade-related cost pressures offset by excess supply". Unemployment has been hit primarily by US tariffs as sectors saw a significant decrease in production. With the remaining uncertainty surrounding US tariffs, few businesses are showing eagerness to hire more workers in the coming months.

The next policy rate change is influx. Governing Council has reiterated they are ready to make adjustments as necessary but the elevated uncertainty "makes it difficult to predict the timing or direction of the next policy rate change". The upcoming review of CUSMA will be an important marker in forecasting monetary policy.

Information note

As always, we are here to help. If you'd like to chat about your scenario, make sense of what's going on, or see what options may be available for you, please feel free to book a chat !

The next scheduled date for announcing the overnight rate target is March 18th, 2026.

2025 Year in Review

Sat, 20 Dec 2025 00:35:25 GMT

As the year comes to a close, we wanted to take a moment to reflect on 2025 and, more importantly, to say thank you. Our partners play a critical role in the success of our shared clients, and we’re truly grateful for the collaboration, trust, and thoughtful conversations throughout the year.

While the pace of change slowed compared to prior years, 2025 was still impactful, especially looking ahead to 2026. Many clients who secured historically low interest rates in 2021 will be coming up for renewal next year, making early planning and proactive conversations more important than ever.

Education remained a major focus for us this year. We were excited to launch Sensitive Subjects, a course created for VIREB to help REALTORS® better navigate subject removal timelines and financing dependencies. The response has reinforced how valuable industry-specific education can be. If any partners are interested in creating something similar for their own audience, we’d be more than happy to start that conversation.

With that, here’s a snapshot of what stood out in 2025 and what we’re watching as we head into the year ahead.

IMPORTANT POLICY CHANGES

While the pace of policy changes slowed in 2025 compared to 2024, there were still a few meaningful updates. Notably, new GST exemptions were introduced for First Time Home Buyers purchasing newly built homes up to $1M, with partial GST relief extending to $1.5M. We also saw continued real-world use of 30-year amortizations for insured First Time Home Buyers. As always, changes move quickly, and we’ll continue to share updates as they come.

BANK OF CANADA UPDATES

2025 saw three decreases to the Bank of Canada overnight lending rate, bringing the overnight rate to 2.25% and Prime to 4.45%. Looking ahead to 2026, expectations are largely for rates to hold steady. As always, we remind clients and partners that the overnight rate is not the same as consumer lending rates and that fixed and variable mortgages respond to different market forces.

PARTNER NEWSLETTERS

While we've received such positive feedback on our Property Listing Tips newsletter, we've decided to retire it after a successful two year run. Next year we're going to focus our monthly newsletters on a broader range of topics that cover the most frequently asked questions from our partners. From financing strategies and programs, to lender considerations and income calculations, you won't want to miss these industry insights. Click below to ensure you're signed up for our partner newsletters.

EDUCATION

Education remains a core focus for us, and this year we were proud to launch Sensitive Subjects, an accredited course created in partnership with VIREB, worth 3 PDP credits . The course helps REALTORS® better navigate subject removal timelines and how financing intertwines with other subject clauses. We’re excited to bring this course to multiple locations across Vancouver Island in 2026. Once dates are finalized, we’ll send a dedicated email so you can register through your VIREB portal, just like any other PDP course. We may also have additional courses in the works. Confirm your interest in Sensitive Subjects below and we'll keep you up to date.

CANADIAN MORTGAGE APP

We’ve continued to love using our Canadian Mortgage App this year. Not only are the tools helpful for clients to explore on their own, but it has significantly upgraded how information is presented. No more cluttered text heavy emails! Interest rate comparisons, penalty calculations and more can be curated in one clear, easy-to-read document. We encourage you to leverage this tool with your clients, whether they’re buying, refinancing, or simply estimating costs.

CLIENT CARE

Our annual mortgage review and mortgage maturity touch points continue to see strong engagement, and we expect this to remain the case heading into 2026. These conversations highlight just how much clients value proactive strategy, particularly during periods of economic uncertainty. These check-ins also allow us to loop clients back in with their trusted team of professionals, ensuring everyone is aligned and involved in strategic discussions. Below is a link you can give to clients to book a chat.

WHAT TO EXPECT IN 2026

With interest rates stabilizing and home prices showing signs of leveling out, 2026 is shaping up to be an active year. Many clients who secured historically low rates in 2021 will be approaching renewal, making early planning and expectation-setting essential. We expect an increase in strategic conversations around renewals, refinances, and longer-term planning. For buyers, preparation remains key. Having income documents reviewed early and financing letters ready will continue to be a major advantage.

As the year winds down, we hope you’re able to slow the pace, enjoy time with the people who matter most, and head into the holidays feeling proud of all that was accomplished this year. Wishing you a joyful holiday season and a strong, fulfilling year ahead. We’re excited to continue building together in 2026.

- Adam, Pauline, Lindsay, Sam & Leanne

2025 Year in Review

Sat, 20 Dec 2025 00:25:07 GMT

As the year comes to a close, we wanted to take a moment to reflect on 2025 and say thank you for trusting us with such an important part of your financial journey. Whether this year included buying, renewing, refinancing, or simply planning ahead, we’re grateful to have been part of the conversation. This past year brought a mix of change and stabilization, and as we look ahead to 2026, preparation and proactive planning continue to matter more than ever.

Below is a quick snapshot of what stood out this year and what we’re keeping an eye on moving forward.

IMPORTANT POLICY CHANGES

BANK OF CANADA UPDATES

2025 saw three decreases to the Bank of Canada overnight lending rate, bringing the overnight rate to 2.25% and Prime to 4.45%. Looking ahead to 2026, expectations are largely for rates to hold steady. As always, we remind clients and partners that the overnight rate is not the same as consumer lending rates and that fixed and variable mortgages respond to different market forces.

CANADIAN MORTGAGE APP

To help make mortgage decisions clearer and less overwhelming, we’ve continued using our Canadian Mortgage App with clients. Whether you’re buying, refinancing, or simply exploring numbers, the app allows us to walk through different scenarios together in a clear, easy-to-understand way. Instead of long, data-heavy emails, interest rate comparisons, down payment options, and estimated closing costs are now presented in one simple, easy-to-read summary. This helps you understand your options faster and feel more confident in the decisions you’re making.

CLIENT CARE

All clients are automatically enrolled in our annual mortgage review program, where we connect both electronically and by phone to ensure any mortgage-related questions are answered on a yearly basis. These reviews are a great opportunity to action changes as needed — whether that’s adjusting payment frequency, making additional lump-sum payments, exploring refinancing options, or consolidating debt. As life and goals evolve, these check-ins help ensure your mortgage continues to work for you, not the other way around. Have some questions? Book a chat with the link below!

WHAT TO EXPECT IN 2026

As we head into 2026, interest rates appear to be stabilizing and the housing market is showing signs of balance. Many homeowners who secured historically low interest rates in 2021 will be approaching renewal, which may bring changes to payments and overall strategy. This makes early planning especially important. Whether you’re renewing, considering a move, or exploring refinancing options, having conversations ahead of time can help avoid surprises and create better outcomes. Our focus in the year ahead will remain on proactive guidance and clear communication to help you plan with confidence.

Thank you again for the trust you’ve placed in us. We hope the holiday season brings you time to rest, recharge, and enjoy moments with the people who matter most. We’re looking forward to continuing to support you and your goals in the year ahead.

- Adam, Pauline, Lindsay, Sam & Leanne

Bank of Canada Rate Announcement December 10, 2025

Wed, 10 Dec 2025 20:36:59 GMT

Bank of Canada maintains policy rate at 2¼%

The Bank of Canada today reduced its target for the overnight rate by 25 basis points to 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%.

With the effects of US trade actions on economic growth and inflation somewhat clearer, the Bank has returned to its usual practice of providing a projection for the global and Canadian economies in this Monetary Policy Report (MPR). Because US trade policy remains unpredictable and uncertainty is still higher than normal, this projection is subject to a wider-than-usual range of risks.

While the global economy has been resilient to the historic rise in US tariffs, the impact is becoming more evident. Trade relationships are being reconfigured and ongoing trade tensions are dampening investment in many countries. In the MPR projection, the global economy slows from about 3¼% in 2025 to about 3% in 2026 and 2027.

In the United States, economic activity has been strong, supported by the boom in AI investment. At the same time, employment growth has slowed and tariffs have started to push up consumer prices. Growth in the euro area is decelerating due to weaker exports and slowing domestic demand. In China, lower exports to the United States have been offset by higher exports to other countries, but business investment has weakened. Global financial conditions have eased further since July and oil prices have been fairly stable. The Canadian dollar has depreciated slightly against the US dollar.

Canada’s economy contracted by 1.6% in the second quarter, reflecting a drop in exports and weak business investment amid heightened uncertainty. Meanwhile, household spending grew at a healthy pace. US trade actions and related uncertainty are having severe effects on targeted sectors including autos, steel, aluminum, and lumber. As a result, GDP growth is expected to be weak in the second half of the year. Growth will get some support from rising consumer and government spending and residential investment, and then pick up gradually as exports and business investment begin to recover.

Canada’s labour market remains soft. Employment gains in September followed two months of sizeable losses. Job losses continue to build in trade-sensitive sectors and hiring has been weak across the economy. The unemployment rate remained at 7.1% in September and wage growth has slowed. Slower population growth means fewer new jobs are needed to keep the employment rate steady.

The Bank projects GDP will grow by 1.2% in 2025, 1.1% in 2026 and 1.6% in 2027. On a quarterly basis, growth strengthens in 2026 after a weak second half of this year. Excess capacity in the economy is expected to persist and be taken up gradually.

CPI inflation was 2.4% in September, slightly higher than the Bank had anticipated. Inflation excluding taxes was 2.9%. The Bank’s preferred measures of core inflation have been sticky around 3%. Expanding the range of indicators to include alternative measures of core inflation and the distribution of price changes among CPI components suggests underlying inflation remains around 2½%. The Bank expects inflationary pressures to ease in the months ahead and CPI inflation to remain near 2% over the projection horizon.

With ongoing weakness in the economy and inflation expected to remain close to the 2% target, Governing Council decided to cut the policy rate by 25 basis points. If inflation and economic activity evolve broadly in line with the October projection, Governing Council sees the current policy rate at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment. If the outlook changes, we are prepared to respond. Governing Council will be assessing incoming data carefully relative to the Bank’s forecast.

The Canadian economy faces a difficult transition. The structural damage caused by the trade conflict reduces the capacity of the economy and adds costs. This limits the role that monetary policy can play to boost demand while maintaining low inflation. The Bank is focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval.

Information note

The next scheduled date for announcing the overnight rate target is December 10, 2025. The Bank’s next MPR will be released on January 28, 2026.

Upsize My Home

Thu, 04 Dec 2025 23:05:19 GMT

I'm looking to

Upsize My Home

How do I coordinate

my current home and future purchase?

 *ALL OPTIONS ARE RELIANT ON IF YOU CAN QUALIFY

*ALL OPTIONS ARE RELIANT ON IF YOU CAN QUALIFY

OPTION 1: SELLING NOW

If you plan to sell your current home and source your down payment for your new purchase from the sale proceeds, there are a couple of scenarios you may encounter:

If the dates DO line up...

This is the ideal scenario for most, where your sale closes before or on the same day as the closing date for your purchase, so your sale proceeds being used for down payment will simply be handled by your lawyer or notary.

Keep in mind, if you are porting your mortgage from your current home to the new property, your lender may have certain date restrictions (i.e. your sale cannot close more than 30 days before your purchase).

If the dates DON’T line up...

If you have a firm sale agreement (subject-free) on your current home, but it is closing after your purchase, bridge/interim financing may be an option. More info can be found on our Bridge Financing info sheet.

OPTION 2: SELLING LATER

One of the primary considerations in this scenario is where your down payment will be sourced from. Do you need to access equity from your current home?

If yes, we can explore refinancing your current home, provided there is sufficient equity and you are able to qualify.

Depending on when you are planning to sell, we can work together on a strategy to meet your goals.

Keep in mind, even if your down payment will sourced from elsewhere (savings or gifted from family), you will still need to account for any existing mortgage, property taxes, and other expenses, so this can make qualifying more of a challenge in some cases.

OPTION 3: KEEPING AS A RENTAL

AAs with Option 2, you’ll need to consider in this scenario where your down payment will be sourced from.

We can look at refinancing your current home to access equity if needed for down payment, provided you are able to qualify for this. Using rental income (confirmed by a market rent appraisal) can help offset the expenses of the property. Keep in mind, lenders will only consider long-term rental income; they will not consider short-term rental income, even if you are legally able and plan to use the property this way.

You’ll also want to consider whether the property will cashflow . If you are refinancing your home, we can look at extending the amortization out to 30 years to reduce the monthly payments as much as possible, however you will want to ensure you account for all potential costs (property taxes, insurance, strata fees if applicable, repairs, etc).

OTHER CONSIDERATIONS

Be sure to discuss with your accountant and lawyer to ensure you are aware of any potential tax and legal implications.
Keep in mind the closing costs for your purchase, including Property Transfer Tax (more information HERE ) and real estate & legal fees if you are selling your home.
Please note, if breaking mortgage mid-term, a prepayment penalty would be applicable.

Information not loading properly?

*OAC, E&O

Bank of Canada Rate Announcement October 29, 2025

Wed, 29 Oct 2025 20:32:43 GMT

Bank of Canada lowers policy rate to 2¼%

The Bank of Canada today reduced its target for the overnight rate by 25 basis points to 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%.

Information note

The next scheduled date for announcing the overnight rate target is December 10, 2025. The Bank’s next MPR will be released on January 28, 2026.

Bank of Canada Rate Announcement September 17th, 2025

Wed, 17 Sep 2025 16:48:33 GMT

Bank of Canada lowers policy rate to 2½%

This morning, the Bank of Canada made their sixth announcement of 2025 and, for the first time since March, has decided to reduce their policy rate by 0.25%. This means the Prime Rate should now be at 4.70% .

While the probability of a rate cut was looking low for a majority of August, the unemployment figures announced on September 5th - stating the rising unemployment rate to 7.1% and the loss of 66,000 jobs in August - ignited the discussion of a potential cut in September. As outlined by the Bank of Canada these 'job losses have largely been concentrated in trade sensitive sectors'.

The other barometer for determining appropriate policy rate updates is the CPI inflation reading. As reported recently, the CPI Inflation was up to 1.9% in August. While still higher than the previous month's reading, it did come in lower than the anticipated increase which was welcome news. The Bank of Canada articulated that 'a broader range of indicators...continue to suggest underlying inflation is around 2.5%'.

While there is still a level of uncertainty with the disruptive effects of shifts in trade, the Bank of Canada has stated that a reduction in the policy rate was an appropriate decision to better balance the risks - given the economy is in a weaker position with less upside risk to inflation.

We are sure this announcement has been welcomed by many! In a world where most aspects of life are feeling more and more expensive, any bit of reprieve is welcome. That being said, if life is still feeling more difficult that it should be, please reach out. We have many tools available to us that may be able to help make life easier.

Information Note

As always, we are here to help. If you'd like to chat about your scenario, make sense of what's going on, or see what options may be available for you, let us know!

We will keep you updated as we receive more information about today's announcement, that information can be found HERE . If you're interested in reading the Bank of Canada's announcement, please click HERE . The next announcement is scheduled to take place on October 29th, 2025.

OAC, E&O

First Time Home Buyers

Sat, 23 Aug 2025 23:23:50 GMT

HOW MUCH CASH WILL I ACTUALLY NEED?

Down Payment + Property Transfer Tax (PTT) + Closing Costs = Cash Required Up Front

DOWN PAYMENT

A 5% down payment is required for a purchase price of up to $500,000. Anything over $500,000 requires 10% on the portion over $500,000, up to $1,499,999 (as of Dec 2024). For example, a purchase price of $550,000 means a down payment of $30,000 is required, not $27,500.

For example, a purchase price of $550,000 means a down payment of $30,000 is required, not $27,500.

If a down payment of less than 20% is used, this will trigger mortgage loan insurance. This is generally wrapped into the total mortgage. Maximum amortization on a mortgage with mortgage loan insurance was previously 25 years, but FTHBs can now access a 30 year amortization as well with less than 20% down payment. Note, the CMHC insurance premium is 0.2% with a 30 yr amortization.

When do I need to come up with the down payment and where do I actually pay it?

This transaction is completed at your solicitor's office shortly before your closing date.

I don't have my full down payment yet, but will pretty soon. Can I still get a pre-approval to find out my max purchase price while I continue to save?

Yup! Start an application here .

RRSPs

As of April 2024, maximum of $60,000 can be used per person, provided each individual meets the government's First Time Home Buyer criteria. If you've been out of the market for awhile (years), you still may qualify as a FTHB.

Be sure to speak to your Financial Advisor while you are getting your pre-approval in place.

Consider:

Are the funds locked in?
Are there penalties to withdraw funds?
A form ( T1036 ) is required to be submitted to CRA and this typically takes 3-5 business days.
Funds must have been seeded for 90 days before your purchase if using the HBP.

GIFTED FUNDS

Gifted funds from parents, grandparents or siblings can be used. A gift letter will need to be provided confirming there is no expectation for these funds to be paid back.

The letter template will come from your lender during the financing stage of your purchase.

The funds do not need to be in the purchaser's bank account at the time of your accepted offer, but they do need to be transferred before closing.

PROPERTY TRANSFER TAXES

Be sure to confirm with your lawyer or notary on all matters related to Property Transfer Taxes (PTT). For FTHB, there have recently been updates to the exemption limits as of April 1, 2024.

For purchases up to $500,000, FTHB are exempt from any PTT. For purchases up to $835,000, PTT is only payable on the difference above $500,000 at a rate of 2%. Partial exemption is available for purchase prices between $835,000 - $860,000.

Anything above a $860,000 purchase price, the tax must be paid in full. PTT is paid up front and cannot be wrapped into the mortgage.

My spouse is not a FTHB but I am.

Do we still have to pay PTT?

Speak to your lawyer or notary to determine what costs can be expected to incur for your specific situation.

CLOSING COSTS

Closing costs may include lawyer fees, title insurance, appraisals, home inspection, moving costs, buyer's portion of property taxes (if required) and any other costs that may arise during the purchase.

Be sure to contact your lawyer or notary to confirm their fee. We generally budget a minimum of around $2,500 for these costs.

PRE-APPROVALS

Getting a pre-approval in place before you begin house hunting is a smart, buyer-savvy move. As a bonus, your realtor will be thrilled!

You get most of the heavy lifting completed up front, i.e. the paperwork, so that when you get your accepted offer, you don't need to worry about gathering a ton of documents during an inevitably stressful time.

Once your pre-approval is in place, Flawless Financing will provide you a financing letter to be submitted with your bid, to help strengthen your offer.

How long is my pre-approval valid for?

Typically 3 - 4 months.

CAN I GET A BALLPARK FIGURE ON MY MAX PURCHASE PRICE?

Sure can.

Check out our calculator here .

OUR PRE-APPROVAL PROCESS

1. Open a file with us and complete an application .

2. Submit your documents. Once your application is complete through our online portal, a list of required documents will be emailed to you. The documents requested will be tailored to your unique situation.

3. Flawless Financing reviews your file in detail.

4. A follow up chat is scheduled so you can talk through numbers and options.

5. Your file is submitted to secure your rate-hold and pre-approval.

6. Flawless Financing receives your pre-approval back from your lender and will get in touch to review it with you.

7. Happy House Hunting!

With your financing letter now in hand, be sure to keep us in the loop on any properties you are interested in.

HOW DOES QUALIFYING WORK?

Lenders review many factors when determining an applicant's eligibility for a mortgage. The most important pieces are your Gross Debt Servicing Ratio (GDS) and your Total Debt Servicing Ratio (TDS).

GDS takes into consideration the debts associated with making payments on your theoretical home. This includes principal and interest payments on your mortgage, property taxes, heat, and any applicable strata/maintenance fees. This ratio generally cannot exceed 39% of your total annual income.

TDS takes into consideration the above mentioned liabilities as well as any monthly liabilities already incurred (auto loans, credit cards, etc). This ratio generally cannot exceed 44% of your total annual income.

What about the Stress Test?

The stress test is used to ensure that if interest rates were to rise, you as a borrower would still be able to make your mortgage payments. When qualifying for a mortgage, you're required to qualify at the greater of the Mortgage Qualifying Rate (MQR) or your contract rate plus 2%.

GOVERNMENT PROGRAMS

Home Buyers' Plan (HBP) : Withdrawal of RRSPs for use as down payment

First Home Savings Account (FHSA) : Allowing contributions of $8,000 annually

First Time Home Buyers' Program : Reduces or eliminates the amount of Property Transfer Tax you pay

Home Buyers' Tax Credit (HBTC) : Claim a non-refundable tax credit at tax time

*OAC, E&O

Bank of Canada Rate Announcement July 30th, 2025

Wed, 30 Jul 2025 16:33:59 GMT

Bank of Canada held policy rate again

This morning, the Bank of Canada made their fifth announcement of 2025 and, for the third consecutive time, has decided to hold their policy rate steady at 2.75%. This means the Prime Rate should remain at 4.95% .

In addition to the rate announcement, the Bank of Canada released their July Monetary Policy Report . While many can guess what's prompting such a cautious approach, the fact that the report mentions “uncertainty” 79 times and “tariff” 273 times really drives the point home.

The economic future for Canada, and much of the world, is clouded. Global trade conflicts are still unfolding, and with another supposed deadline looming on August 1st, the potential for negative developments is high. Unfortunately, if the ongoing cycle of “tariff on, tariff off” continues, there's a strong chance the Bank of Canada’s cautious stance will continue in parallel.

The Bank of Canada has outlined three potential scenarios:

Current Tariff Levels – GDP contracts slightly in Q2, then rebounds modestly to reach ~1.8% by 2027. Inflation hovers around 2%.

Tariff De-escalation – A reduction in tariffs could spark ~2% growth in late 2025, with inflation dipping before stabilizing near 2% by 2027.

Tariff Escalation – New tariffs drag economic growth down in 2025, with inflation peaking above 2.5% in mid-2026 before easing back to target.

What does this mean right now? Well, if you're one of the many Canadians facing a mortgage renewal or entering a new mortgage, rates aren’t moving… yet. That could change quickly. If you're concerned about what you're being offered at renewal, call us. We can craft a plan that fits your goals and risk tolerance amid the uncertainty.

For our Real Estate partners: Prepare for all possible outcomes. If tariffs drop, expect activity to bubble and strengthen. If tariffs rise, brace for the potential of slower growth.

As we've said before, if anyone tells you they know what's going to happen with the economy or interest rates, they're not being truthful. Even the Chair of the Federal Reserve, Jerome Powell, said on June 24th while presenting to the House Financial Services Committee:

"We do expect to show up — tariff inflation to show up more. But I want to be honest, we really don't know how much of that's going to be passed through to the consumers. We just don't know . And we won't know until we see it. It could be lower than we expect; it could be higher. We have to wait and see, which is kind of what we're doing." ( full article )

We understand there may still be many questions and concerns amongst our clients and partners. As part of our commitment to providing the most up to date information and comprehensive support, we have our very own Canadian Mortgage App. Interested in potentially refinancing to make your monthly payments more comfortable? Click HERE to download the app and run various scenarios to see what the best fit may be.

BANK OF CANADA FULL ANNOUNCEMENT

JULY'S MONETARY POLICY REPORT

Information Note

As always, we are here to help. If you'd like to chat about your scenario and see what options may be available for you, let us know! We will keep you updated as we receive more information about today's announcement. The next announcement is scheduled to take place on September 17th, 2025.

OAC, E&O

Bank of Canada Rate Announcement June 4th, 2025

Fri, 04 Jul 2025 16:42:43 GMT

Bank of Canada held policy rate for second time

This morning, the Bank of Canada made their fourth announcement of 2025 and, for the second consecutive time, has decided to hold their policy rate steady at 2.75%. This means, the Prime Rate should remain at 4.95%.

As indicated in our previous announcements, the Prime Rate directly impacts those who hold variable or adjustable rate mortgages and those who have secured or unsecured lines of credit. These rate announcements do not have a direct correlation to fixed rate mortgages as fixed rates are priced against the bond market. If you are unsure if you are impacted by this announcement, please reach out or book a time to chat HERE !

Let's talk a bit more about what's going on and what this means...

If we had a nickel for every time 'uncertainty' or 'tariff' has been mentioned in the past 6 months, we'd probably have a few dollars in hand. Which doesn't seem like much, but compared to the last 15 years of our time in the industry, it's a lot. Uncertainty is the trend these days and with that, comes difficulty with economic forecasting and predictions. As a result, the Bank of Canada is taking a careful pause as they watch how the economy digests earlier cuts and navigates this growing (unusual) uncertainty.

"...Governing Council decided to hold the policy rate as we gain more information on US trade policy and its impacts. We will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs."

Here's what we're seeing and why it matters:

INFLATION IS COOLING.....kind of

Headline inflation dipped to 1.7% in April, thanks in part to the end of the federal carbon tax. But core inflation (the piece of the puzzle the BoC really pays attention to) is still hovering above 3%. As such, the mission is not quite accomplished... yet.

THE ECONOMY HAS A (small) CAFFEINE BUZZ

GDP grew more than expected in Q1 - 2.2% - but that was mostly due to businesses rushing exports before new tariffs kicked in. We wouldn't consider that sustainable growth.

JOBS ARE STARTING TO WOBBLE

The unemployment rate has crept up to 6.9%, and trade-heavy sectors are feeling the squeeze. With the US President's Executive Order signed on June 3rd, doubling steel and aluminum tariffs to 50%, we may see this number tick up a bit more as jobs in those sectors are impacted again.

TRADE TENSIONS ARE CLOUDING THE SKIES

Tariff and global uncertainty are continuing to make it harder for the Bank of Canada to chart a clear course. As we've seen, they're holding steady while we weather these fluctuations.

If you're following the 'tariff' and 'uncertainty' counter for this email, we're at a total of 10 times...

We understand there may still be many questions and concerns amongst our clients and partners. As part of our commitment to providing the most up to date information and comprehensive support, we have our very own Canadian Mortgage App. Interested in potentially refinancing to make your monthly payments more comfortable? Click HERE to download the app and run various scenarios to see what the best fit may be.

BANK OF CANADA FULL ANNOUNCEMENT

Information Note

OAC, E&O

Summer Mortgage Tips

Wed, 11 Jun 2025 19:37:23 GMT

From Taxes to Travel to Transactions - stay organized

Summer in BC means more than sunscreen and lake days, it also brings deadlines, wildfire risk, and a busy real estate market. As your trusty mortgage team, we’ve rounded up a few hot tips to help keep your summer stress-free and your home financing on track.

1. BC PROPERTY TAXES DUE JULY 2

Mark your calendars homeowners, property taxes in BC are due Tuesday, July 2 . If you’re unsure whether your lender pays your property taxes on your behalf, or if this responsibility falls to you, please reach out to us. A quick check can help you avoid unnecessary penalties or missed payments.

If you haven't yet received your property tax notice, reach out to your municipality, or if you live in a rural area , reach out to the Province of BC at 1-888-355-2700. You may also want to check out the Province of BC's FAQs , City of Nanaimo's FAQs , or your own municipality's website for more info!

If you’re eligible for the BC Home Owner Grant , don’t forget to apply. The grant can reduce the amount of property tax you owe, but it must be claimed annually, and it's your responsibility to apply, even if your lender pays the taxes on your behalf.

2. SUMMER VACATION PLANS? LET US KNOW IN ADVANCE

If you’re buying, refinancing, or renewing, please inform us of any upcoming travel plans as soon as possible . Mortgage documents must be signed in person at the solicitor or notary’s office. Being out of town without proper planning could result in costly delays or missed deadlines. With notice, we can coordinate timelines accordingly and implement creative solutions to avoid any disruptions.

3. SECURE INSURANCE EARLY DURING WILDFIRE SEASON

If you’re purchasing a property this summer, we strongly recommend securing your insurance policy as soon as possible after subject removal. During wildfire season, insurance providers may place temporary restrictions on issuing new policies in certain areas. Early binding can prevent last-minute complications, or even delays in closing.

4. PRE-APPROVAL: YOUR SUMMER SUPERPOWER

Summer is one of the busiest times of the year in real estate. A current pre-approval not only gives you clarity on your budget but also strengthens your position as a buyer. We also provide financing letters that you can include with your offer to show sellers you're serious and qualified. It’s like giving your offer a built-in boost of credibility.

______________

Enjoy the sunshine, but don’t let the season catch you off guard. Whether it’s taxes, timelines, or tackling the market, we’re here to help you stay organized and informed. Let’s keep your summer on track and your mortgage stress-free.

If you have any questions about your taxes, insurance, travel plans, or pre-approval status, don’t hesitate to get in touch.

OAC, E&O

GST Rebate for First Time Buyers

Wed, 28 May 2025 21:52:29 GMT

Canadians estimated to save $3.9 billion in tax over 5 years

On May 27, 2025, the federal government introduced a new housing initiative to support affordability for first-time home buyers in Canada. This policy provides a full or partial GST rebate on newly built homes valued up to $1.5 million, potentially saving buyers up to $50,000.

This measure aims to reduce upfront costs for first-time buyers and encourage the construction and purchase of new housing.

PROGRAM OVERVIEW

Eligible buyers may qualify for:

A 100% rebate on newly constructed homes priced up to $1 million .
A phased rebate on homes priced between $1 million and $1.5 million .

Example: A home valued at $1.25 million would qualify for a 50% GST rebate

No rebate for homes priced above $1.5 million .

Note: This applies only to the federal portion of GST/HST.

WHO'S ELIGIBLE?

To qualify, buyers must:

Be at least 18 years old
Be a Canadian citizen or permanent resident
Not have owned or lived in a home owned by themselves or their spouse/common-law partner in the current or previous four calendar years
Intend to use the home as their primary residence

This rebate can only be claimed once per individual . If your spouse or common-law partner has claimed it before, both of you become ineligible.

WHAT PROPERTIES QUALIFY?

The rebate applies in the following scenarios:

Purchasing a newly built home from a builder
Constructing a new home on owned or leased land ("owner-built")
Buying shares in a co-operative housing project

To be eligible, the agreement of purchase and sale—or the construction start date— must be on or after May 27, 2025 . Construction must begin before 2031 and be substantially completed before 2036.

______________

For many first-time buyers, this rebate could significantly reduce closing costs and improve affordability. While it does not apply to resale homes or properties above $1.5 million, it provides a compelling incentive to consider new construction.

This program may also contribute to increased demand for newly built homes, supporting housing supply in the years ahead.

For more details, read the full federal announcement HERE . We'll continue to share new information as it becomes available.

If you have questions about how this GST rebate fits into your financing options or purchase plans, we’re happy to help you navigate the details!

OAC, E&O

Top 5 Insurance Red Flags

Wed, 21 May 2025 19:42:42 GMT

These red flags could disrupt your mortgage financing or cost you thousands

When it comes to securing mortgage financing, property-specific insurance issues can sometimes be the silent saboteurs. These red flags can cause delays, force costly upgrades, or—worst-case scenario—blow up your financing altogether. Here are five major issues that can raise eyebrows with insurers (and headaches for buyers):

1. Poly-b plumbing

This type of plumbing, common in homes built between the late 1970s and mid-1990s, is considered a higher risk by many insurers.

A few providers may not have an issue, providing there are copper fittings in place and no known losses.

Most insurers will only offer coverage if the Poly-B is updated or replaced prior to possession, or if a satisfactory plumbing inspection is completed before coverage is bound. In some cases insurers will allow replacement within a specified timeframe after purchase with limitations on coverage until replaced.

2. Aluminum Wiring

Homes built in the late 1960s to mid-1970s often contain aluminum wiring, which poses a higher fire risk if not properly maintained.

Only a limited number of insurers will write policies for these homes. Those that do, typically require that all aluminum wiring be properly “pigtailed” with copper connectors and that there are no known electrical losses.

Some insurers may also request a current electrical inspection report, either within a specific timeframe or prior to possession.

3. Underground Oil Tanks

Underground oil tanks are considered an environmental liability, and may still exist (even if no longer in use) in some mobile homes and homes built before the 1960s.

Insurers will generally only require a professional scan to confirm there is no underground oil tank if oil heating is present.

It is highly recommended that you obtain a professional scan regardless, as any environmental damages from an underground oil tank will not be covered on an insurance policy and instead be an out of pocket expense.

4. environmental risks

If the property is in a high-risk zone (wildfires, floods, earthquakes, etc.) be sure to confirm how that could impact your insurance ahead of time to avoid timeline delays. This is especially important during wildfire season as insurers may pause issuing new policies if there is a fire nearby.

Also, keep in mind earthquake insurance may be optional here in BC, however, some mortgage lenders require it .

5. age of major systems

Make sure you know the age of the:

roof
plumbing
hot water tank
electrical
heating system

If homes are older than 20 years, insurers require the year of any updates to these systems, otherwise they are obligated to default to the year the home was built . The older the home, and the fewer the updates, the more limited your insurance options may be and coverage may be restricted.

Tip: During inspection, always ask for the age or estimated update year for these systems. If the inspection report doesn’t list the age, it may delay or limit insurance approvals. You can also try asking the listing realtor for any update history.

Remember, you’ll need insurance in place to secure mortgage financing.

It’s easy to assume that getting an insurance quote will be quick and painless—and because of that, many buyers leave it to the last minute. Unfortunately, that last-minute scramble can backfire. If any issues come up (and trust us, they sometimes do), you’ll lose precious time trying to sort them out.

Since home insurance is required by lenders, any hiccup in securing it can ripple into your mortgage approval—jeopardizing the home you’ve worked so hard to find.

Once your offer is accepted, reach out to your insurance broker right away. Being proactive gives you time to address any potential red flags and keeps your subject removal timeline on track.

________

Need an insurance broker? We know a few insurance wizards we keep on speed dial and we’d be happy to make the intro.

Connect with us to learn more about how insurance issues can impact your financing—and how we can help you stay ahead of them.

Bank of Canada Rate Announcement April 16th, 2025

Wed, 16 Apr 2025 18:22:44 GMT

Policy rate held in the midst of economic uncertainty

This morning, the Bank of Canada made their third announcement of 2025 and has decided to hold their policy rate steady at 2.75%. This means, the Prime Rate should remain at 4.95%.

As indicated in our previous announcements, the Prime Rate directly impacts those who hold variable or adjustable rate mortgages and those who have secured or unsecured lines of credit. These rate announcements do not have a direct correlation to fixed rate mortgages as fixed rates are priced against the bond market. If you are unsure if you are impacted by this announcement, please reach out or book a time to chat HERE !

While the rate itself hasn't changed, the Bank of Canada's messaging was clear - the global economy remains in murky waters and Canada isn't immune. To no one's surprise, at the heart of the uncertainty is the most recent shift in US Trade Policy. The ongoing threat and implementation of tariffs and general unpredictability from Canada's largest trading partner has shaken markets. This has lead to a near inability to implement market predictions and most predications now consist of a vast number of scenarios with contingency plans from A to Z.

While this is a bit of a hyperbole, it's not far from the truth. In the Bank of Canada's second Monetary Policy Report, they have laid out two possible scenarios (we're sure with many 'what if's') for how things could play out in the economy:

In the more optimistic case, tariffs remain relatively limited, and Canada’s economy experiences only a temporary slowdown with inflation staying close to the 2% target.
In a more severe scenario, a prolonged trade war could push Canada into a recession this year , with inflation spiking above 3% next year due to rising costs.

So, what's next for Canadians? As the Bank of Canada reiterated from the March meeting, "Monetary policy cannot offset the impacts of a trade war. What it can and must do is ensure that higher prices do not lead to ongoing inflation." The Bank of Canada's mandate is to protect and maintain inflation. That's why keeping a keen eye on inflationary pressure, like tariffs, is so important. It's clear the Bank of Canada has concern over how the current economic environment will impact inflation in Canada, and is adopting a cautionary response. The Bank of Canada hasn't ruled out future rate cuts; they've simply hit the pause button while things play out with regards to inflationary pressures. Canadian's will have to take on the wait and see approach as well.

We understand there may still be many questions and concerns amongst our clients and partners. As part of our commitment to providing the most up to date information and comprehensive support, we have recently launched our very own Canadian Mortgage App. Interested in potentially refinancing to make your monthly payments more comfortable? Click HERE to download the app and run various scenarios to see what the best fit may be.

BANK OF CANADA FULL ANNOUNCEMENT

APRIL'S MONETARY POLICY REPORT

Information Note

As always, we are here to help. If you'd like to chat about your scenario and see what options may be available for you, let us know! We will keep you updated as we receive more information about today's announcement. The next announcement is scheduled to take place on April 16th, 2025.

OAC, E&O

Interest Rate Misconceptions

Fri, 14 Mar 2025 18:40:07 GMT

How you're being misinformed and why it sets unrealistic expectations.

Every time the Bank of Canada announces a change in its policy interest rate, we often see and hear people sharing the new policy rate without providing proper context. This can and does create unrealistic expectations for consumers. Many people assume the policy rate directly (and immediately) affects mortgage interest rates, but in reality, it doesn’t. When consumers go to a mortgage broker with expectations based on the Bank of Canada’s policy rate, it can cause confusion and disappointment. Whether this information is shared in error or with a specific agenda, it’s important to provide the full picture. At Flawless Financing, we are committed to complete transparency and clear communication, ensuring that our clients and the community have access to accurate, reliable information. We strive to be a trusted resource for anyone seeking factual guidance on interest rates and mortgages.

I thought the bank of canada lowered their rate to 2.75%?

Yes, technically...... but there’s more to it!

On March 12th, 2025 the Bank of Canada lowered their policy rate by 0.25%, making it 2.75%.

This is not the rate you should base your expectations on!

what is the policy rate?

The policy rate, also known as the overnight rate , is used by the Bank of Canada to control inflation. This is the starting point for many interest rates in Canada. One of those interest rates is the prime lending rate (often called “prime” or "prime rate").

what is the prime rate?

The prime rate is the interest rate that banks and lenders use to determine interest rates for loans (such as mortgages and lines of credit). It has a direct impact on variable and adjustable rate mortgages and lines of credit.

This is the rate that you should base your expectations on!

how do you know what the prime rate is?

The prime rate can usually be found on each lenders website, but generally they match the decreases or increases in the policy rate.

For example:

*With the exception of TD, their Prime is 0.15% higher

how does the policy rate control inflation?

The Bank of Canada aims to keep the inflation rate around the 2% target.

why don’t fixed rates move when the policy rate moves?

Fixed rates are based on the bond market and are not tied directly to the Bank of Canada policy rate. The bond market considers the economic forecast and generally takes into account any potential decreases or increases. Fixed rates are usually fast to go up (reactionary to market changes) and slow to come down (wait and see).

______________

Now that everything is cleared up, make sure you know what you’re looking at and what you’re sharing on social media.

The policy rate is important, but the prime rate is what makes the difference!

If you have any questions on interest rates and how they work, please don't hesitate to reach out!

OAC, E&O

Bank of Canada Rate Announcement March 12th, 2025

Wed, 12 Mar 2025 19:52:01 GMT

The fall continues!

This morning, the Bank of Canada made their second announcement of 2025. For the seventh consecutive time since June 2024, the Bank of Canada decided to reduce their policy rate; this time, by 0.25%. This reduction will result in Prime Rate now being 4.95% .

As indicated in our previous announcements, this reduction is welcome news to those who hold variable or adjustable rate mortgages and those who have secured or unsecured lines of credit. This rate cut does not have a direct correlation to fixed rate mortgages as fixed rates are priced against the bond market. If you are unsure if you are impacted by this announcement, please reach out or book a time to chat HERE !

Canada entered 2025 with inflation close to the 2% target and what the Bank of Canada had noted as 'robust GDP growth'; this garnered them to consider Canada's economy in a solid position. Since then, there has been heightened trade tensions that will likely slow the pace of the economy and increase inflationary pressures in Canada.

The first 10 weeks of this year have felt long and arduous. It is difficult to stay up to date on current events due to both the waterfall like frequency they're announced and the subject matter. As a result, this has contributed to a significant amount of economic uncertainty as illustrated in the stock and bond market readings over the last handful of days.

This rate adjustment aims to address this ongoing uncertainty while specifically singling out the potential fallout and consequences of US Tariffs. Bank of Canada Governor, Tiff Macklem, has not ruled out the possibility of additional cuts if the economic conditions show need for further easing (i.e. increased inflationary pressures).

One of the many difficulties facing the economy, and the ability to predict outcomes, is the continuously changing narrative. This has greatly impacted consumer confidence and thus their spending intentions. The Bank of Canada was quoted in their update saying, "Monetary policy cannot offset the impacts of a trade war. What it can and must do is ensure that higher prices do not lead to ongoing inflation."

We understand there may still be many questions and concerns amongst our clients and partners. As part of our commitment to providing the most up to date information and comprehensive support, we have recently launched our very own Canadian Mortgage App. Interested in potentially refinancing to make your monthly payments more comfortable? Click HERE to download the app and run various scenarios to see what the best fit may be.

Information Note

As always, we are here to help. If you'd like to chat about your scenario and see what options may be available for you, let us know! We will keep you updated as we receive more information about today's announcement. The next announcement is scheduled to take place on April 16th, 2025.

OAC, E&O

Secondary Suite Programs in Canada

Wed, 26 Feb 2025 18:16:32 GMT

With higher costs of living and house prices, many homeowners are looking for ways to supplement their income and lower their mortgage payments with rental units. Here in Canada we have a few incentives that have been recently released to assist those wanting to add rental units to their property. Let's take a look!

PROVINCIAL

SECONDARY SUITE INCENTIVE PROGRAM

Introduced in April 2024, this three-year pilot program from BC Housing provides financial support to homeowners for building long-term affordable rental units.

Qualified homeowners could be eligible for a forgivable loan covering 50% of construction costs, up to $40,000, for installing a new long-term rental unit. For the loan to be forgiven the unit must be rented out at below-market rates, set by BC Housing, for a minimum of five years. Check Homeowner Eligibility .

Must be rented out at below-market rates for at least five years (rates set by BC Housing)

The rental unit must be on the property of your primary residence

Can either be a secondary suite or a detached unit (garden suites, laneway homes, carriage house, etc.)

The rental unit must be a complete unit with its own entrance, kitchen, washroom, and sleeping area, please see Nanaimo Secondary Suite Guidelines .

Some important considerations are:

Confirming costs

Researching a rental plan

Obtaining a building permit

Obtaining an occupancy permit upon completion

For more information and program criteria, please see BC Housing’s Program Guide .

________

FEDERAL

CANADA SECONDARY SUITE LOAN PROGRAM

This program is set to launch in ”early 2025”, and has yet to be released. It will allow qualified homeowners to access a low interest loan, of up to $80,000, at 2% interest over 15 years. See this 2024 Fall Economic Statement for the most recent announcements.

More information to come.

MORTGAGE REFINANCING FOR SECONDARY SUITES

Though the federal government has released details and parameters for this new incentive, most lenders and insurers have yet to pick up this program. When refinancing, qualified homeowners will have the ability to borrow up to 90% of their property’s projected value, to build or complete up to 3 additional rental units on the property of their primary residence or second home.

Mortgage will be an insured mortgage, allowing selection of the best rates and the option of a 30 year amortization (note, an insurance premium will be added to the mortgage)

Additional units must be legal, please see Nanaimo Secondary Suite Guidelines .

________

If you have any questions on the above programs, please don't hesitate to reach out!

OAC, E&O

Bank of Canada Rate Announcement January 29th, 2025

Wed, 29 Jan 2025 18:46:38 GMT

A good start to 2025!

We hope your first month of 2025 has been off to a fantastic start and this news of yet another Bank of Canada rate decrease finds you well! This morning, the Bank of Canada made their first announcement of 2025. For the sixth consecutive time since June 2024, the Bank of Canada decided to reduce their policy rate; this time, by 0.25%. This 0.25% reduction will result in Prime Rate now being 5.20% .

The Bank of Canada also released their first of four Monetary Policy Reports (MPR) . Within this report, there are details surrounding the Bank's decision to finish its quantitative tightening cycle and restart the process of normalizing their balance sheet with asset purchasing.

While the last handful of weeks have been tumultuous at best, economists are encouraged by this decision. As has been discussed frequently in the media, there is a lot of economic uncertainty on the horizon. The impending decision on tariffs imposed on Canadian goods being imported to the United States is one of the many factors currently driving interest rate decisions and the fluctuation in forecasting models.

The United States Federal Reserve also made their interest rate decision today and have held for the second consecutive time. While this doesn't have direct impact on Canadian mortgage holders; it is valuable information as we continue to have close economic ties to the United States which in turn has an impact on our dollar and bond yields.

We understand there may still be many questions and concerns amongst our clients and partners. As part of our commitment to providing the most up to date information and comprehensive support, we have recently launched our very own Canadian Mortgage App. Interested in potentially refinancing to make your monthly payments more comfortable? Click HERE to download the app and run various scenarios to see what the best fit may be.

Information note

As always, we are here to help. If you'd like to chat about your scenario and see what options may be available for you, let us know! We will keep you updated as we received more information about today's announcement. The next announcement is scheduled to take place on March 12th, 2025.

OAC, E&O

Downsize My Home

Sat, 25 Jan 2025 17:52:10 GMT

I'm looking to

Downsize My Home

How do I coordinate

my current home and future purchase?

DOWNSIZING IS MORE THAN SQUARE FEET

Downsizing isn’t always about moving to a smaller home. In many cases, the strategy behind the move is just as important as the decision itself. It can also be a solution for:

Reducing monthly expenses
Eliminating or lowering mortgage payments
Accessing equity for retirement
Moving closer to family or amenities
Reducing maintenance and upkeep

PREPARING TO DOWNSIZE

Taking a few small steps early can make the transition smoother and help ensure the process feels more organized, thoughtful, and aligned with your long-term plans.

Clarify your long-term lifestyle goals
Think about what you want the next stage of life to look like - less maintenance, a smaller home, closer proximity to family, or easier access to amenities and healthcare.
Understand the equity in your current home
Your home may be your largest asset. Knowing its approximate value, remaining mortgage balance and upcoming maturity date can help determine when and what options may be available.
Begin decluttering early
Downsizing often means moving into a smaller space. Sorting belongings gradually can make the eventual move much less overwhelming.
Talk with family and trusted advisors
Discuss your plans with family members, financial advisors, or professionals involved in the process so everyone can be aligned with your goals.
Give yourself time to explore options
Starting the conversation early allows you to evaluate housing choices, financial strategies, and timing without feeling rushed.

SELLING HOME NOW

If you plan to sell your current home and source your down payment for your new purchase from the sale proceeds, there are a couple of scenarios you may encounter:

If the dates DO line up...

This is the ideal scenario for most, where your sale closes before or on the same day as the closing date for your purchase, so your sale proceeds being used for down payment will simply be handled by your lawyer or notary.

If the dates DON’T line up...

SELLING HOME LATER

One of the primary considerations in this scenario is where your down payment will be sourced from.

Depending on when you are planning to sell and if you need a mortgage in the end, we can look at different strategies that may be available, including:

Accessing Equity
Home Equity Line of Credit (HELOC)
Interim Private Financing
Payment-Optional/Reverse Mortgage

It is important to note, these strategies can provide flexibility, but they typically require sufficient equity and may have additional qualification requirements.

PAYMENT-OPTIONAL MORTGAGES

For homeowners 55+, a payment-optional mortgage (also known as a reverse mortgage) may be another strategy to consider for accessing equity from your current home before it has sold.

As a short-term financing solution, open terms are available, allowing you to pay out or reduce your mortgage balance without penalty when your current home eventually sells.

Not only does a payment-optional mortgage provide flexibility while you transition between properties, but you could also choose to set up a long-term solution (without having to incur new legal fees). To learn more about how a payment-optional mortgage works when used as a long-term solution, see our ‘Payment-Optional Mortgage’ info sheet.

FREQUENTLY ASKED QUESTIONS

Can I still defer my property taxes?

Outstanding property taxes will need to be settled going in to the new mortgage. After the new mortgage starts, you can start deferring property taxes again.

Do I have to end up with a mortgage?

Not necessarily. We can look at interim/short-term strategies that won’t leave you with a “long-term” mortgage.

How much are closing costs?

Closing costs will depend on the exact financing solution, and whether or not you have to pay a mortgage penalty if breaking your current term early. Once we have an idea on the solution, we can give you a better estimate.

What if I don’t want to sell, but need access to funds?

We can definitely look at different strategies to access the equity in your current home so that you can avoid selling.

QUALIFICATION REQUIREMENTS

Even when downsizing, qualification is still required, but will vary depending on your income/net worth, and strategy.

For a traditional mortgage, lenders typically look at:

Your income (such as employment, pensions, or investments)
Any existing debts or monthly payments
Your credit history
Details for the home you want to purchase

If you plan to purchase before selling your current home, lenders may also need to confirm that you can temporarily carry both properties.

For a payment-optional/reverse mortgage, income is not considered. Instead, lenders typically look at:

Age of the borrowers
Home value and available equity
Property location and type

Reach out to see if you can qualify!

ADDITIONAL CONSIDERATIONS

Consult your REALTOR®
If you need a recommendation, we have REALTOR ® partners who specialize in this scenario.
Consult your accountant and lawyer
Ensure you are aware of any potential tax and legal implications.
Closing costs
Keep in mind the closing costs for your purchase, including Property Transfer Tax (more information HERE ) and the costs associated with selling your home.
Mortgage penalties
Please note, if breaking mortgage mid-term, a prepayment penalty may be applicable.
Estate planning
Changes to your home ownership or mortgage structure may impact your estate plan.

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*OAC, E&O

BC Home Flipping Tax

Tue, 21 Jan 2025 20:25:55 GMT

If you are selling a BC property after January 1, 2025 and have owned the property for less than 2 years (730 days), then you may be required to pay the new BC Home Flipping Tax . Completely separate from the federal property flipping rule , this tax is collected by the BC Provincial Government and applies to all sellers of taxable BC property, no matter where the seller lives.

You must file a BC home flipping tax return within 90 days of the sale , if either of the following applies:

Sold your property within 90 days of purchasing it and are not eligible for any exemptions

Your exemption applies only after you file a return.

QUICK FACTS

Tax applies to the net taxable income from a sale of a taxable BC property

Effective January 1, 2025 (applies to any sales completed henceforth)

Seller must own the property for less than 730 days

Seller does not have to be a BC resident (may reside anywhere in the world)

Tax is separate from the Federal Property Flipping Rule

Applies to residentially zoned property or the right to acquire such property

Tax rate is 20% until after 365 days of ownership, then the rate will decrease until 0% at 730 days.

There are various exemptions to the tax

TAXABLE PROPERTIES

Properties with a housing unit

Properties zoned for residential use

The right to acquire the above properties, such as pre-sale contracts (see more HERE )

The tax will not apply to exempt property locations or the leasing or sale of a leasehold interest in a property.

SEE MORE INFORMATION ON TAXABLE PROPERTIES

TAX CALCULATION

The tax rate is 20% of net taxable income earned from a property sold within 365 days, and the rate decreases over the next 365 days, until 730 days, where the tax no longer applies

SEE MORE INFORMATION ON TAX CALCULATION

TAX EXEMPTIONS

There are various exemptions from this tax including:

Life circumstance

Builders and developers

Renovation or construction of additional housing units (suites, carriage house, etc.)

Property sales between related persons

Property location

Property use

Ownership structure

SEE MORE INFORMATION ON TAX EXEMPTIONS

OAC, E&O

Think Your BC Assessment Value is Out of Whack?

Wed, 08 Jan 2025 20:00:04 GMT

Think your BC Assessment value is out of whack? A few years ago, I did, and here is how I got it reduced...

Disclaimer #1: Bringing more scrutiny to your assessed value may INCREASE your value as well. Maybe you don't want them looking that much closer at your property in comparison to your neighbours. In my case, I felt I had enough of a case to make it worthwhile having it reviewed, but you do take on that risk.

Disclaimer #2: I am in support of paying our fair share of taxes. I also very much acknowledge it's a luxury to even own a home to pay taxes on, so please don't construe this as whining. Also, these are people doing their jobs, so being cordial and empathetic is always helpful, and is just the right thing to do.

Everyone loves being told their house is worth more than they expected, except when it comes to assessment/tax time (or sometimes when dividing assets in a divorce, but that's for another post). When our BC Assessment came out a number of years ago, we were shocked to see a significant increase over the previous year, especially when it was a high value that didn't seem to make sense with comparable sales in our area. I did some digging through their website on what you should do to prepare, and put together a guide to make the process easier:

1) Collect some data to support your perspective - There was a good chance I could be wrong, so I better have facts to support my thought process. This could be:

- Intangible information, such as a neighbouring property that was listed but didn't sell, any details about your property that doesn't show up on the current assessment, etc.

- Examples of inequity, such as comparable properties or sales that highlight an unusual discrepancy with your own.

- Market evidence, such as finding sales that have similar land and building size, and comparing them to your own. Consider using a per square foot comparison for a common benchmark and registering an account with www.BCAssessment.ca to make it easier to compare your assessment to others.

2) Have a conversation with the appraiser - Find out who the appraiser responsible for your area is and speak to them directly. They have the autonomy to make a decision about your situation and could help you out. This eliminates spinning your wheels too much in the month of January and potentially satisfies your situation without having to file a formal complaint. Remember all formal appeals have to be filed by Jan 31st. You can find out your jurisdiction on the Assessments Map

3) Be Compassionate - Nobody likes being complained to, and I'm sure the appraisers at BC Assessment spend their entire January being told by the public that they didn't do their job well. I would hate that. You would hate that.

4) Be Understanding - Try to understand their rationale and their process. It's not an exact science, and much of it is done with a sample of market appraisals, from which larger regional determinations are extrapolated.

5) Provide the facts - Provide all the facts and information you gathered non-confrontationally and as clearly as possible.

Here is what I wrote to the BC Assessment Appraiser responsible for my area:

"Good morning *****,

I wanted to connect with you directly (just left you a quick voicemail), as the assessed value on our home (**** Rd) has jumped this year substantially, and it would be great to review it with you first, prior to getting into any sort of formal appeal (if there is even a case to be made). I'm sure this part of the job isn't the most fun, so I can empathize with the challenge of dealing with complaints about this stuff.

January must be busy for you with stuff like this, but if you could please let me know if we could set up a quick phone call just to go over the information I've gathered so far (**comparable sale address**, **comparable sale address** my next door neighbour trying to sell for $*** and not getting it), that would be much appreciated.

I look forward to speaking with you, if you want to give me a call at 250-591-9959, that would be lovely."

In my situation, the appraiser called me back and we discussed the properties I had identified in the email, and some information regarding my property that wasn't being factored in on the most recent assessment. During our discussion, the appraiser was able to update the information and significantly reduce the increased assessment value initially given. They said if I was comfortable with that result, they could put that in the system and send me an updated assessment in the mail. Or, if I felt there should be a more significant reduction, that I was entitled to file a formal complaint.

For me, this result was acceptable and what I hoped for. It brought the assessed value more in line with what I figured the house and property were worth, and so I decided there was no need to pursue anything further.

If you found any of this helpful, pass it along to friends or family that would like a glimpse inside the machine!

Have you ever had your assessment changed, filed a formal complaint, or gone before the Property Assessment Review Panel (PARP)? Do you have questions or concerns about your BC Assessment? I would love to discuss this topic, so please feel free to call or email us!

2024 Year in Review

Tue, 17 Dec 2024 20:04:27 GMT

As the year comes to a close (and what a year it has been!), we take a moment to reflect on the significant changes that have shaped the Canadian mortgage landscape. From the Bank of Canada’s key decisions on interest rates to various policy adjustments, the impact has been felt across the country. After a period of uncertainty, we've seen inflationary pressures begin to ease, as well as signs of stabilization in the housing market, providing some relief to homeowners and potential buyers alike. In the final newsletter of 2024, we would like to highlight some of the notable changes we have seen, as well as provide some insight as to what you can expect from us, your friendly mortgage brokerage, in 2025.

IMPORTANT POLICY CHANGES

A number of changes were announced this year with significant implications for Canadians, both homebuyers and current homeowners, including changes to property transfer tax exemptions for first-time homebuyers, expanded access to 30-year amortizations, and an increase in the insured mortgage threshold. Stay informed with our brief summaries linked below.

BANK OF CANADA UPDATES

On June 5th, 2024, Canadians felt their first bit of reprieve when the BoC reduced their policy interest rate by 0.25%. This was the first rate decrease since the economic tightening cycle began in March 2022. The BoC has since gone on to reduce the policy interest rate by a total of 1.75% in 2024. We will continue to provide economic updates for each of the Bank of Canada’s interest rate announcements.

CANADIAN MORTGAGE APP

As part of our commitment to keep our clients educated and informed, we've launched our partnership with the Canadian Mortgage App! Whether you're buying, refinancing, or estimating costs, leverage the app’s tools to quickly determine comprehensive calculations, explore multiple scenarios, and make informed decisions.

CLIENT CARE

We are here to support you throughout the life of your mortgage, ensuring every touchpoint supports your financial success. We connect electronically and by phone both annually and during time of maturity to make sure your mortgage aligns with your goals. Annual reviews provide guidance on potential adjustments like payment frequency, lump sum payments, or refinancing, while maturity calls ensure you explore all options at the end of your term.

SOCIAL MEDIA

In addition to our email mailing lists, our social media platforms are a great source for up-to-date information, news, and helpful financing tips. This past year, we introduced several new series, including a comparison of current monthly mortgage payments—based on the latest interest rates and VIREB statistics—versus those from a year ago. Keep an eye out for continuations of our existing series and more in 2025!

WHAT TO EXPECT IN 2025

2025 is gearing up to a busy year in real estate! With interest rates reaching a place of stabilization and numerous mortgage policy changes, the market is creating an encouraging environment for potential buyers to start making moves! If you're house hunting, make sure you are prepared by submitting your income documents in advance and securing your pre-approval letter, so you are ready to make competitive offers.

Wishing you a joyful and restful holiday season filled with peace, happiness, and time with loved ones. Here's to a prosperous 2025, we can't wait to help you achieve your financial goals in the new year!

- Adam, Michelle, Pauline, Lindsay, Sam, & Leanne

2024 Year in Review

Tue, 17 Dec 2024 20:04:09 GMT

IMPORTANT POLICY CHANGES

BANK OF CANADA UPDATES

PROPERTY TIPS

Last year, we compiled tips on financing unique properties to help set our partners apart from the competition, covering topics like unauthorized suites, remediation, grow-ops, and by-law contraventions. Each month, we explored one or two scenarios from our info sheet in depth. If you found this information helpful, let us know and share any additional topics you'd like to see discussed in our 2025 series. Subscribe to our mailing list to ensure you receive upcoming property tips and/or market updates!

FEATURE SHEETS

Elevate your open house game in 2025! Our feature sheets, paired with your branding, provide detailed information about your listing and available financing options, giving prospective buyers immediate access to reliable numbers. Have a unique listing? We can include special program information tailored to your property, such as purchase plus improvements for a 'fixer-upper,' informing potential buyers about the strategies available to them.

CANADIAN MORTGAGE APP

As part of our commitment to keep our clients (and partners!) educated and informed, we've launched our partnership with the Canadian Mortgage App! Whether you have clients that are buying, refinancing, or estimating costs, leverage the app’s tools to quickly determine comprehensive calculations, explore multiple scenarios, and make informed decisions.

CLIENT CARE

We support our clients throughout the entire life of their mortgage, confirming at every touchpoint that it continues to meet their evolving needs. When clients wish to explore new options, we refer them back to their trusted team of professionals, maintaining continuity in their relationships and ensuring they receive personalized, ongoing support. Below is a link you can give to clients to book a chat.

SOCIAL MEDIA

WHAT TO EXPECT IN 2025

2025 is gearing up to a busy year in real estate! With interest rates reaching a place of stabilization and numerous mortgage policy changes, the market is creating an encouraging environment for potential buyers to start making moves! Make sure your clients are prepared by having their income documents submitted ahead of time and having their pre-approval letter issued and ready to be used for their offers.

Wishing you a joyful and restful holiday season filled with peace, happiness, and time with loved ones. Here's to a prosperous 2025, we're looking forward to continue working together in the new year!

- Adam, Michelle, Pauline, Lindsay, Sam, & Leanne

Bank of Canada Rate Announcement December 11, 2024

lindsay@flawlessfinancing.ca (Lindsay MacDowell) — Wed, 11 Dec 2024 20:00:45 GMT

Holiday miracle, policy rate reduced again

What a way to end 2024! This morning, the Bank of Canada made their final rate announcement of the year. For the fifth consecutive time since June, the Bank of Canada decided to reduce their policy rate; this time, by 0.50%. This 0.50% reduction will result in Prime Rate now being 5.45% .

As indicated in our previous announcements, this reduction is welcome news to those who hold variable or adjustable rate mortgages and those who have secured or unsecured lines of credit. This rate cut does not have a direct correlation to fixed rate mortgages as fixed rates are priced against the bond market. If you are unsure if you are impacted by this announcement, please reach out or book a time to chat HERE !

Up until late last week, the consensus among economist was that the Bank of Canada would likely reduce rates by 0.25% - providing a small amount of reprieve as we approach 2025. Just a handful of days later, the probabilities had shifted to a 90% chance of a 0.50% cut. There were a myriad of economic happenings over the weeks leading up to the Bank of Canada decision. This included, but was not limited to, the Federal Government's GST holiday announcement, President-Elect Trump's possible tariffs on Canadian exports, mortgage rule changes coming into effect on Dec 15th, and the increased unemployment figures that were released for November 2024. This goes to show that economic predictions are still very much a nebulous thing that are changing daily (if not hourly). For a market that is still very much sensitive to these changes, this means that while predictions also change rapidly, strategy must change with it.

Interest rates continue to be a large topic of discussion as many Canadians work to return to a place of affordability in their lives. This announcement will no-doubt allow for some reprieve and hopefully will be a small step towards financial certainty in the future.

The Bank of Canada continues to reaffirm their commitment to balance sheet normalization. Should the Bank of Canada continue to see inflation close to the middle of the 1-3% target range and see the need to continue to support growth, there are increased chances that we will continue to see further reductions in in the policy rate in 2025. As has been previously stated, decisions are guided on everchanging, incoming information and can be adjusted swifty.

The past three months have been heavy in updates and policy changes. If you need a quick summary of the most recent changes affecting First Time Home Buyers, increased cap for insured mortgages, and the utilization of unused/vacant land, click HERE to read our blog posts outlining the changes in easy to read language.

We understand there may still be many questions and concerns amongst our clients and partners. As part of our commitment to providing the most up to date information and comprehensive support, we have recently launched our very own Canadian Mortgage App. Interested in potentially refinancing to make your monthly payments more comfortable? Click HERE to download the app and run various scenarios to see what the best fit may be.

Information note

As always, we are here to help. If you'd like to chat about your scenario and see what options may be available for you, let us know! We will keep you updated as we received more information about today's announcement. The next announcement and Monetary Policy Report is scheduled to take place on October 23rd, 2024.

OAC, E&O

Changes We Saw in 2024

Wed, 04 Dec 2024 19:22:11 GMT

Throughout this past year, we saw a number of new changes announced in the mortgage industry and housing. Here are a few highlights:

April 1st: Changes to Property Transfer Tax Exemptions

The Province of BC announced increased sliding scales for the property transfer tax exemptions, both for First Time Home Buyers and for new construction. Read more about this on our website HERE and from the province HERE .

April 16th: Increased RRSP Withdrawal Limit under the Home Buyers’ Plan

Previously $35,000, for those eligible, the withdrawal limit under the Home Buyers’ Plan was increased to $60,000. Read more about this announcement HERE and the Home Buyers’ Plan HERE .

August 1st: 30 year Amortization for First Time Home Buyers Purchasing New Construction

In June 2024, the federal government announced that First Time Home Buyers’ purchasing a newly constructed home would have access to a 30 year amortization with less than 20% down payment. Read more about this announcement HERE . Availability of a 30 year amortization with less than 20% down payment has been since further expanded (see below).

November 21st: No Stress Test for Uninsured Mortgage Transfers

Following the February 2024 announcement with regards to no stress test/mortgage qualifying rate (MQR) requirement for insured mortgage transfers, the opportunity has now been applied to uninsured mortgages. This allows for an uninsured mortgage to be transferred to a new lender without having to qualify at the stress test (rate +2%). The criteria for any mortgage transfer is: mortgage amount increase is limited to $3,000, the original registered amortization minus elapsed time applies, only for standalone mortgages, not eligible for stand alone HELOCs.

December 15th: Insured Mortgage Cap Increased to $1.5M

In a surprising move, the federal government announced the insured mortgage cap would be increasing for the first time since 2012 to $1.5M. This means, any home buyer (not just a first time home buyer) can purchase a home for $1.5M with as little as $125,000 for down payment. Previously, a purchase price of $1.5M would have required a down payment of at least $300,000. The goal of this change is to get more Canadians into homes in their local communities without having to continue to save for much larger down payments or relocate to lower priced markets. Read more on this HERE .

December 15th: 30 Year Amortization for all FTHBs AND all buyers of New Construction

In the same press release, the federal government announced the eligibility for 30 year amortization would be extended to both first time home buyers AND all buyers of new construction. While 30 year amortizations do increase the overall interest cost during the lifetime of a loan, it does help bring down monthly payments to help with day to day cashflow and qualification. Read more on this HERE .

Bank of Canada Rate Announcement Oct 23, 2024

Wed, 23 Oct 2024 18:27:59 GMT

Bank of Canada continues rate reduction after inflation target reached

It was a welcome news alert this morning announcing that for the fourth consecutive time, the Bank of Canada has reduced the current policy rate. This 0.50% reduction will result in Prime Rate now being 5.95%.

As indicated in our previous announcements, this reduction is welcome news to those who hold variable or adjustable rate mortgages and those who have secured or unsecured lines of credit. This rate cut does not have a direct correlation to fixed rate mortgages as fixed rates are priced against the bond market. If you are unsure if you are impacted by this announcement, please reach out or book a time to chat HERE !

While interest rates are higher than in past years, this reduction in the Bank of Canada's policy rate is a further (and more substantial) step towards rate normalization and stabilization. This is excellent news to nearly all Canadians who are continuing to live in a world of increasing expenses and increased cost of living. For folks who are coming up for mortgage renewal or looking to enter the housing market for the first time; this announcement continues to ensure housing/shelter costs continue to move in the direction of affordability rather than move more and more out of grasp.

One of the main points of concern within the Governing Council of the BoC was the requirement for inflation to return to a point of stability after ballooning to 8.1% in June 2022. Over the past two years, inflation has been steadily declining (albeit with a handful of upticks) and as of the September 2024 reporting period, was announced at 1.6%. This inflationary reading was due in part to "lower energy prices and weaker underlying inflationary pressures". This reading was well within the BoC's acceptable band of 1%-3% and was one of the reasons for the rate reduction. It is worth noting, the Bank of Canada noted in their press release "If the economy evolves broadly in line with our latest forecast, we expect to reduce the policy rate further."

At the time of this newsletters publication, it is widely speculated that we may see an additional 0.50% cut at the BoC's meeting on December 11th, 2024. As always, this is purely speculation and these predictions are poised to change at the drop of a hat.

Accompanying the rate announcement today, the Bank of Canada also released their final Monetary Policy Report of 2024. The report itself is a succinct 57 pages that is available for reading in the link above. In an effort to highlight a few pieces for easy digestion:

Over the projection horizon, inflation is expected to remain close to the 2% target
The Canadian economy continues to be in excess supply. The labour market has softened, with increases in unemployment concentrated among newcomers and youth. Wage growth remains elevated relative to productivity.
Canada’s economic growth is expected to pick up gradually and average 2¼% over 2025 and 2026. Consumer spending and business investment are anticipated to strengthen, supported by decreases in interest rates.

The past two months have been heavy in updates and policy changes. If you need a quick summary of the most recent changes affecting First Time Home Buyers, increased cap for insured mortgages, and the utilization of unused/vacant land, our posts can be found HERE .

We understand there may still be many questions and concerns amongst our clients and partners. As part of our commitment to providing the most up to date information and comprehensive support, we have recently launched our very own Canadian Mortgage App. Interested in potentially refinancing to make your monthly payments more comfortable? Click HERE to download the app and run various scenarios to see what the best fit may be.

Information note

We understand that there may still be many questions and concerns amongst out clients and partners. If you're feeling stretched by monthly payments, are anxious about an upcoming renewal, or just want to chat, please reach out so we can talk. We will keep you updated as we received more information about today's announcement. The next announcement is scheduled to take place on July 24th, 2024. The final announcement of 2024 is scheduled to take place on December 11th, 2024.

OAC, E&O

Utilization of Unused & Vacant Land in Canada

Thu, 10 Oct 2024 18:04:14 GMT

To address the housing demand and increase housing affordability, the federal government announced on October 8th, 2024 new initiatives to utilize the many vacant and underused properties in Canada, including federal government owned land. This is another step (outlined in the 2024 Budget ) towards their goal of building 4 million homes by 2031.

MORTGAGE REFINANCING FOR SECONDARY SUITES - Effective January 15, 2025

Ability to refinance an insured mortgage for the purpose of secondary suites (up to 3 additional units on a primary residence or second home)
Access to financing of up to 90% of the home value (inclusive of secondary suite value)
Ability to refinance with a 30 year amortization
Insured home price cap of $2 million
Constructed suites must be legal, see Nanaimo guidelines (many municipalities have similar guidelines)
See more parameters HERE

*Many details and logistics need to be sorted and we will continue to update as our lenders, insurers and governing bodies disclose more information

CONSULTATION ON VACANT LAND TAX

The federal government is seeking input from stakeholders and provincial / territorial / municipal governing bodies on taxing vacant land.
A vacant land tax is to encourage landowners to develop housing or list the property.
View more information or submit feedback HERE

UNLOCKING FEDERAL PROPERTIES FOR HOUSING

14 additional federal properties have been added to the Canada Public Land Bank for a total of 70 federal properties available to developers.
The government aims to convert unused or underused federal properties into 250,000 new homes.

FULL PRESS RELEASE HERE

OAC, E&O

Big Updates for Canadian Economy & Mortgage Policy

Thu, 19 Sep 2024 19:00:04 GMT

October 10, 2024 Update:

Expansion of the insured mortgage threshold for FTHBs and qualification for a 30 year amortization have been dominating the headlines (at least in our world) over the last few weeks. There have been some recent updates that have come out with regards to these policy changes that we would like to clarify. Remember, these new rules take effect December 15th, 2024 .

The new insured mortgage price cap ($1.5 million) applies to two situations:

1. FIRST TIME HOME BUYER

A first time home buyer can be defined as:

The borrower has never purchased a home before;
In the last 4 years, the borrower has not occupied a home as a principal place of residence that either they themselves or their current spouse or common-law partner owned; or,
The borrower recently experienced the breakdown of a marriage or common-law partnership. (the regulations will follow the approach that the Canada Revenue Agency has taken with respect to the Home Buyers’ Plan)

2. NON FIRST TIME HOME BUYER PURCHASING NEW CONSTRUCTION

To be considered a new construction home:

The new home must not have been previously occupied for residential purposes. (this requirement is not intended to exclude newly constructed condominiums where there has been an interim occupancy period)

INSURED MORTGAGE MINIMUM DOWN PAYMENT CALCULATION

The minimum down payment required for a purchase below $1,500,000 is as follows:

5% on the first $500k

10% on the balance remaining

Calculation Example:

A client wants to purchase a $1,200,000 house. The minimum down payment would be calculated as:

$500,000 x 5% = $25,000 (5% on the first $500k)

$1,200,000 - $500,000 = $700,000 (remaining balance)

$700,000 x 10% = $70,000 (10% on the balance remaining)

$95,000 = Minimum down payment for a purchase price of $1,200,000

Let's assume the client has a minimum down payment of $95,000 for a purchase of $1,200,000.

$1,200,000 Purchase Price

- $95,000 Minimum Down Payment

+ $44,200 CMHC Insurance

$1,149,200 Total Mortgage Amount

At current 5yr fixed insured rates of 4.39%, amortized over 30 years, this would mean monthly payments of $5,721.11/m. Not inclusive of property taxes, hydro, insurance, or utilities.

For more context, in order to qualify for a mortgage of $1,149,200, assuming minimal debts, clients would need to have a household income of approximately $253,000.

Run your own scenarios with our Purchase Calculator ! It will even calculate your CMHC insurance automatically. Make sure you tick the box that says “Enable December 15th Rules” for accurate results.

____________________________________________________________________________________________________________________________

On September 17th, 2024, Canada's inflation figures for August revealed a significant drop to 2.0%, for the first time since 2021. This was well under market expectations and was followed the next day by announcements out of the United States that their FED had cut their key interest rate by 0.50%. These announcements now have economists predicting more Bank of Canada rate cuts (some speculating cuts at every meeting between now and the Summer 2025). This quite significant news on its own.

MORTGAGE POLICY UPDATES

On September 16, 2024, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, announced the most substantial update to Canada’s mortgage policy in over a decade. Aiming to make homeownership more accessible for younger Canadians and those in high-cost housing markets, the new reforms include raising the price cap for insured mortgages and broadening eligibility for 30-year amortization . Let’s explore what these two major changes will mean for Canadian homebuyers.

HIGHER INSURED MORTGAGE PRICE CAP

Current price cap for insured mortgages is $1 million.

Starting December 15, 2024 the new price cap will be $1.5 million .

A higher insured mortgage price cap means more people should be able to enter higher-priced housing markets with less than 20% down payment. It's important to note that as of publication there has not been much comment from Canadian Mortgage Insurers' on these changes.

30 YEAR AMORTIZATION ELIGIBILITY EXPANDED

Currently only FTHB that purchase new construction homes are eligible for 30 year amortizations.

Starting December 15, 2024 all FTHB purchases are eligible for 30 year amortizations.

Starting December 15, 2024 all borrowers purchasing new construction are eligible for 30 year amortizations.

A longer amortization period essentially means lower monthly mortgage payments or increased maximum purchase price, making it easier for more people to qualify

By increasing the insured mortgage cap to $1.5 million and expanding 30-year amortization eligibility, the government seeks to reduce financial barriers and support more Canadians in buying homes. These changes, effective December 15, 2024, build on recent measures to address housing affordability and encourage new construction.

You can find the government's announcement of these changes and additional information HERE .

We will continue to keep our clients and partners informed as more details are brought to light; especially from lenders and mortgage insurers. Keep up to date on our social media where we will continue to post updates.

If you have questions on this, please feel free to reach out for more information!

OAC, E&O

Bank of Canada Rate Announcement Sept 4, 2024

Wed, 04 Sep 2024 18:38:54 GMT

Bank of Canada reduces policy rate, again

As was widely anticipated, the Bank of Canada for the third consecutive time has reduced the current policy rate by 0.25%. As such, Prime Rate will now be 6.45%.

This is welcome news to those who currently hold variable or adjustable rate mortgages and to those who have s ecured or unsecured lines of credit . While interest rates remain higher than in past years, this is a step in the right direction to improve the cost of living for Canadians across the country. For folks who are coming up for renewal or looking to enter the housing market for the first time, this announcement marks a commitment to ensuring housing costs move back to a place of relative affordability.

This rate cut does not have a direct correlation to fixed mortgage rates as fixed rates are priced against the bond market. If you are unsure if you are impacted by this announcement, please book a time to chat HERE !

In the press release , the Bank of Canada noted many positive economic trends including the slow of inflation in July at 2.5%. They also noted while shelter price inflation (driven in part by high mortgage borrowing rates) is still high(er), it is also starting to show signs of slowing. This is partially due to the continued Bank of Canada rate decreases over the past few months.

As has been continually indicated by the Bank of Canada, "monetary policy decisions will be guided by incoming information and [their] assessment of their implications for the inflation outlook". Currently, economist are pricing in further decreases for the year, though the amount of those decreases are still up for deliberation and can change quickly and dramatically.

We understand there may still be many questions and concerns amongst our clients and partners. As part of our commitment to providing the most up to date information and comprehensive support, we have recently launched our very own Canadian Mortgage App. Interested in potentially refinancing to make your monthly payments more comfortable? Click HERE to download the app and run various scenarios to see what the best fit may be.

Information note

As always, we are here to help. If you'd like to chat about your scenario and see what options may be available for you, let us know! We will keep you updated as we received more information about today's announcement. The next announcement and Monetary Policy Report is scheduled to take place on October 23rd, 2024.

OAC, E&O

After a Pre-Approval

Tue, 03 Sep 2024 17:52:48 GMT

I have a

Pre-Approval!

What can I do to make my purchase go as

smooth as possible?

GENERAL TIPS

Don't make any adjustments to your employment status. This means, don't change your employer, role, or compensation structure. If in doubt, call us!
Don't make any adjustments to your debt load. If you're thinking about doing anything that would result in more debt, call us!
Call us before adding your spouse, parent(s), or friend(s) to your purchase, unless they are already included in your pre-approval.
When saving for down payment, don't move your money around unnecessarily! See "Down Payment Tips" below for further details.
Let us know when you're going to look at a property so we can preview the listing for any potential red flags. See "Property Tips" below for more details.

DOWN PAYMENT TIPS

Don't move your money around between accounts unnecessarily!

To remain compliant with Anti-Money Laundering regulations, lenders must verify all funds being used for your deposit and down payment. This means a three month history of funds are required to be provided. If your money has moved around between accounts, this means more paperwork will be required! More info HERE .

Any large deposits that cannot be correlated as pay deposits from pay stubs may require further documentation.

PROPERTY TIPS

While you have been approved as a borrower, the next big hurdle is having your home approved too.

Be sure to let us know what properties you're interested in so we can take an initial look at the listing. Red flags for lenders can include: non-cosmetic repairs, title issues, unique utilities, uncommon property features, etc.

If you've been pre-approved to purchase a detached home, this does not mean the same interest rates, payments, and approval will be applicable to a mobile/modular home, condo, or raw land. Be sure to let us know if you start looking at different dwelling types!

BUILD YOUR TEAM

This is a great time to put together 'your team'. If you need any help, we have lots of trusted professionals we can recommend!

Accountant
REALTOR®
Solicitor / Notary
Financial Planner / Life Insurance Broker
Home Insurance Broker

Information not loading properly?

*OAC, E&O

Bank of Canada Rate Announcement July 24, 2024

Wed, 24 Jul 2024 17:05:35 GMT

Bank of Canada reduces policy rate, second time since tightening cycle

As anticipated, the Bank of Canada has reduced the current policy rate by 0.25% for the second time since the tightening cycle began on March 2020. As such, Prime Rate will now be 6.70%.

Direct impact to this announcement will be felt by mortgage holders with variable or adjustable rate mortgages and by those who have secured or unsecured lines of credit that are priced against the prime rate. This rate cut does not have a direct correlation to fixed mortgage rates as fixed rates are priced against the bond market. If you are unsure if you are impacted by this announcement, please book a time to chat HERE !

Along with the rate announcement, the Bank of Canada also released their quarterly Monetary Policy Report. If you're looking for some light summer reading, click HERE to see the report in its entirety.

In their announcement, the Bank of Canada touched on the June CPI inflation reading. After increasing in May, the June reading came in at 2.7%, increasingly closer to the Bank of Canada's target 2% reading. It was encouraging to see the Bank of Canada indicate that CPI is nearing what they call the historical norm and that the biggest contributor to total inflation is Shelter price (driven by rent & mortgage interest cost).

The Bank of Canada indicated that their decision was supported by broad price pressures continuing to ease and inflation expectations continuing to move closer to 2%. A strong eye will be kept on "price pressures in some important parts of the economy -- notably shelter and some other services -- holding inflation up".

This is welcome news to many (if not all) Canadians who have been doing their best to stay above water while the cost of living has grown across most of the country. While there is still much work to be done to return to more day-to-day stability, this is certainly a moment where a collective sigh of relief can be made.

Information note

We understand that there may still be many questions and concerns amongst out clients and partners. If you're feeling stretched by monthly payments, are anxious about an upcoming renewal, or just want to chat, please reach out so we can talk. The next announcement is scheduled to take place on September 4th, 2024. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR on October 23, 2024.

New Tenancy Notice Periods

Wed, 17 Jul 2024 18:03:41 GMT

UPDATE: In response to CMBA-BC's advocacy efforts, effective August 21, 2024 , the notice period required when a landlord issues a notice to end tenancy on behalf of a purchaser will be reduced to three months , with a dispute period of 21 days. This amendment fortunately negates the previously discussed ramifications regarding rate hold timelines and potential buyer appeal.

____________________________________________________________________________________________________________________________

Good morning,

British Columbia is introducing new changes to The Residential Tenancy Act that will come into effect as of July 18, 2024 . While the government's motive is to hopefully better protect renters and provide clearer guidelines for landlords, there are notable ramifications for homebuyers requiring financing; specifically regarding rate holds and pre-approvals.

In the case of a sale-purchase transaction, a tenancy can only be terminated if the landlord, purchaser, or close family member intends on occupying the rental space, OR the space will be converted to a different use, majorly renovated or demolished.

CHANGES TO THE RESIDENTIAL TENANCY ACT

If a landlord, purchaser, or close family member is moving into the rental space, the amount of notice the landlord is required to give has increased from 2 months to 4 months . If the space will be converted to a different use, majorly renovated, or demolished, the amount of notice the landlord is required to give has increased from 2 months to 4 months .
Notice countdown starts on the next rental period (ex. notice was given July 22 for a month-to-month tenancy that starts on the 1st of each month, the tenant is not required to vacate the property until November 30)
The amount of time a tenant has to dispute a tenancy termination and apply for a resolution has increased from 15 days to 30 days .
The stated purpose for ending a tenancy must be initiated within a reasonable amount of time after the tenant vacates, and be used for the stated purpose for a minimum of 12 months (previously 6 months), otherwise the vacated tenant may be eligible for compensation.

IMPACT ON MORTGAGE FINANCING

Rate holds and Preapprovals

Typically, a rate hold or pre-approval is held for 120 days. After the 120 days have lapsed (or if a buyer is closing outside of that guarantee window), a buyer is required to requalify at current rates. Meaning, buyers may not know the ultimate rate and whether they can truly qualify at the time of entering into an offer.

Owner - Occupied Purchase

Most lenders will not allow an owner-occupied purchase if there is an existing tenant. If an existing tenant remains after the date of possession, the home is deemed a rental property. There are some exceptions to this rule that may be specified on a case-by-case basis.

Mortgage Insurance

Purchasing a home with an existing tenant will likely result in it being classified as a rental property by the lender and therefore may impact the ability to qualify for an insured mortgage (when purchasing with less than 20% down).

Find more information about these upcoming changes HERE .

If you'd like to run through specific situations we would be more than happy to help. If you have any questions regarding the changes to the Residencial Tenancy Act we recommend you connect with a lawyer who specializes in tenancy law.

OAC, E&O

BC Property Tax Guide 2024

Thu, 13 Jun 2024 22:54:46 GMT

Good morning,

It's that time of year again, so we wanted to share some important dates and links you might find handy this property tax season! Most municipalities will be sending out property taxes notices in mid-May to early June , and advise that you reach out to your municipality if you haven't received your property tax notice by mid-June. If you are eligible for the Home Owner Grant , you can apply to claim it anytime throughout the tax year through the Province of B.C., though it is recommended to apply between when you receive your property tax notice in the mail and the July 2nd deadline .

If your lender has been collecting for your property taxes each month:

You will still need to apply to claim the Home Owner Grant and inform your lender, if you have not already, that you live in the property and are claiming the grant. On the July 2nd due date, your lender will remit your collected property taxes to your municipality on your behalf. After your property taxes have been paid, your lender will let you know how much they are budgeting for you for next year, taking into consideration estimated increases in taxes due, increased property values, and if you were short in your contributions for the year past.

Important Dates:

- Mid-May to Early June: Property tax notices sent out

- Mid-June: If you haven't yet received your property tax notice, reach out to your municipality, or if you live in a rural area , reach out to the Province of B.C. at 1-888-355-2700

- July 2: Deadline to pay property taxes, to apply for Home Owner Grant (without late penalties), and to apply to defer your property taxes (without late penalties)

Helpful Links & Resources:

- Not sure if you're eligible to claim the Home Owner Grant? Find out HERE

- Wondering how to apply to claim the Home Owner Grant? Start HERE

- Want to learn about deferring your property taxes? Learn more HERE

You may also want to check out:

- The Province of B.C.'s FAQs HERE

- City of Nanaimo's FAQs HERE , or your own municipality's website for more info!

If you have any questions or want to chat about this topic more, please feel free to reach out!

Bank of Canada Rate Announcement June 5, 2024

Wed, 05 Jun 2024 17:31:52 GMT

Bank of Canada reduces policy rate, first time since March 2020

In a much anticipated announcement, the Bank of Canada has reduced the current policy rate by 0.25% for the first time since the tightening cycle began on March 2, 2022 (the first cut since March 2020). As such, Prime Rate will now be 6.95%.

The Bank of Canada had noted time and time again that in order to start exploring a cutting cycle, the core inflation (amongst other measures) would need to show stability within a 1-3% band, likely around their 2% target. Well, after 26 months of rate tightening, we saw inflation plunge to 2.7% in April, down from 3.0% previously, and as such our first rate cut in over four years on June 5th, 2024.

While inflation is still not at the 2% target the Bank of Canada would like to see, they noted in their press release HERE, that there are four indicators that are increasingly pointing to sustained easing:

CPI inflation has eased from 3.4% in December to 2.7% in April (there have been 8 straight months of CPI deceleration)

our preferred measures of core inflation have come down from about 3.5% last December to about 2.75% in April

the 3-month rates of core inflation slowed from about 3.5% in December to under 2% in March and April

the proportion of CPI components increasing faster than 3% is now close to its historical average, suggesting price increases are no longer unusually broad-based

In broad terms, this means the last 26 months of rate tightening and restrictive monetary policy is working to relieve price pressures. The Bank of Canada also noted "monetary policy no longer needs to be as restrictive...it is appropriate to lower our policy interest rate".

Information note

We understand that there may still be many questions and concerns amongst out clients and partners. If you're feeling stretched by monthly payments, are anxious about an upcoming renewal, or just want to chat, please reach out so we can talk. We will keep you updated as we received more information about today's announcement. The next announcement is scheduled to take place on July 24th, 2024. The Bank will also publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR on July 24, 2024.

Bank of Canada Rate Announcement April 10, 2024

Wed, 10 Apr 2024 15:51:25 GMT

Bank of Canada maintains policy rate, continues quantitative tightening

The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening.

The Bank expects the global economy to continue growing at a rate of about 3%, with inflation in most advanced economies easing gradually. The US economy has again proven stronger than anticipated, buoyed by resilient consumption and robust business and government spending. US GDP growth is expected to slow in the second half of this year, but remain stronger than forecast in January. The euro area is projected to gradually recover from current weak growth. Global oil prices have moved up, averaging about $5 higher than assumed in the January Monetary Policy Report (MPR). Since January, bond yields have increased but, with narrower corporate credit spreads and sharply higher equity markets, overall financial conditions have eased.

The Bank has revised up its forecast for global GDP growth to 2¾% in 2024 and about 3% in 2025 and 2026. Inflation continues to slow across most advanced economies, although progress will likely be bumpy. Inflation rates are projected to reach central bank targets in 2025.

In Canada, economic growth stalled in the second half of last year and the economy moved into excess supply. A broad range of indicators suggest that labour market conditions continue to ease. Employment has been growing more slowly than the working-age population and the unemployment rate has risen gradually, reaching 6.1% in March. There are some recent signs that wage pressures are moderating.

Economic growth is forecast to pick up in 2024. This largely reflects both strong population growth and a recovery in spending by households. Residential investment is strengthening, responding to continued robust demand for housing. The contribution to growth from spending by governments has also increased. Business investment is projected to recover gradually after considerable weakness in the second half of last year. The Bank expects exports to continue to grow solidly through 2024.

Overall, the Bank forecasts GDP growth of 1.5% in 2024, 2.2% in 2025, and 1.9% in 2026. The strengthening economy will gradually absorb excess supply through 2025 and into 2026.

CPI inflation slowed to 2.8% in February, with easing in price pressures becoming more broad-based across goods and services. However, shelter price inflation is still very elevated, driven by growth in rent and mortgage interest costs. Core measures of inflation, which had been running around 3½%, slowed to just over 3% in February, and 3-month annualized rates are suggesting downward momentum. The Bank expects CPI inflation to be close to 3% during the first half of this year, move below 2½% in the second half, and reach the 2% inflation target in 2025.

Based on the outlook, Governing Council decided to hold the policy rate at 5% and to continue to normalize the Bank’s balance sheet. While inflation is still too high and risks remain, CPI and core inflation have eased further in recent months. The Council will be looking for evidence that this downward momentum is sustained. Governing Council is particularly watching the evolution of core inflation, and continues to focus on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour. The Bank remains resolute in its commitment to restoring price stability for Canadians.

Information note

The next scheduled date for announcing the overnight rate target is June 5, 2024. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR on July 24, 2024.

Bank of Canada Rate Announcement March 6, 2024

Wed, 06 Mar 2024 16:47:30 GMT

Bank of Canada maintains policy rate, continues quantitative tightening

The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening.

Global economic growth continues to slow, with inflation easing gradually across most economies. While growth in the United States has been stronger than expected, it is anticipated to slow in 2024, with weakening consumer spending and business investment. In the euro area, the economy looks to be in a mild contraction. In China, low consumer confidence and policy uncertainty will likely restrain activity. Meanwhile, oil prices are about $10 per barrel lower than was assumed in the October Monetary Policy Report (MPR). Financial conditions have eased, largely reversing the tightening that occurred last autumn.

The Bank now forecasts global GDP growth of 2½% in 2024 and 2¾% in 2025, following 2023’s 3% pace. With softer growth this year, inflation rates in most advanced economies are expected to come down slowly, reaching central bank targets in 2025.

In Canada, the economy has stalled since the middle of 2023 and growth will likely remain close to zero through the first quarter of 2024. Consumers have pulled back their spending in response to higher prices and interest rates, and business investment has contracted. With weak growth, supply has caught up with demand and the economy now looks to be operating in modest excess supply. Labour market conditions have eased, with job vacancies returning to near pre-pandemic levels and new jobs being created at a slower rate than population growth. However, wages are still rising around 4% to 5%.

Economic growth is expected to strengthen gradually around the middle of 2024. In the second half of 2024, household spending will likely pick up and exports and business investment should get a boost from recovering foreign demand. Spending by governments contributes materially to growth through the year. Overall, the Bank forecasts GDP growth of 0.8% in 2024 and 2.4% in 2025, roughly unchanged from its October projection.

CPI inflation ended the year at 3.4%. Shelter costs remain the biggest contributor to above-target inflation. The Bank expects inflation to remain close to 3% during the first half of this year before gradually easing, returning to the 2% target in 2025. While the slowdown in demand is reducing price pressures in a broader number of CPI components and corporate pricing behaviour continues to normalize, core measures of inflation are not showing sustained declines.

Given the outlook, Governing Council decided to hold the policy rate at 5% and to continue to normalize the Bank’s balance sheet. The Council is still concerned about risks to the outlook for inflation, particularly the persistence in underlying inflation. Governing Council wants to see further and sustained easing in core inflation and continues to focus on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour. The Bank remains resolute in its commitment to restoring price stability for Canadians.

Information note

The next scheduled date for announcing the overnight rate target is March 6, 2024. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR on April 10, 2024.

Monoline Lenders

Mon, 04 Mar 2024 20:57:59 GMT

What is a

Mortgage Penalty?

What do I need to know about breaking my mortgage?

WHAT IS A MONOLINE LENDER?

Monoline lenders (e.g. RMG, Strive, MCAP, and First National) specialize in only one type of lending: mortgages. In lieu of “brick-and-mortar” buildings, they are able to offer competitive mortgage interest rates, favourable penalty calculations, vast product options, and robust electronic infrastructure for their clients.

Instead of employing internal ‘mortgage specialists’ to bring in clientele, they rely on external mortgage brokers to place mortgages with them. Mortgage brokers then act as the primary point of contact and can assist with concerns throughout your mortgage term, answering questions and offering solutions faster.

ARE MONOLINE LENDERS SECURE?

Monoline lenders are heavily regulated and comply with both provincial and federal financing standards. Their mortgages are funded and backed by billions of dollars from institutions spread across North America, making them exceptionally secure. Additionally, monoline lenders rely on brokers (who carry strict licensing and compliance obligations) the quality of the mortgages they fund is consistently very high, adding to the strength of security.

FEATURES OF A MONOLINE LENDER

User-Friendly Client Portal - The client portal can be used to make any additional payments, change your payment frequency, check your balance, or make any applicable changes.

Allows Broker Assistance - Removing the need for in-branch appointments or meetings - this is especially helpful during mortgage maturity. Most monoline lenders allow us to liaise with them to obtain renewal offers in order to compare those offers with other current market offerings. This takes the stress and uncertainty out of the equation for you, the client.

Competitive Pre-Payment Options - Not only do monoline lenders offer some of the best pre-payment options on the mortgage market, they also make it easy to take advantage of them with their client portal. There’s no need to go to a branch or call a servicing department to make any changes.

Favourable Penalty Calculations - This is one of the most important and often overlooked parts of a mortgage. More than half of Canadians break their mortgage for some reason or another, and not all lenders calculate penalties the same way - especially Interest Rate Differential (IRD) penalties.

IRD PENALTY CALCULATIONS

Lenders like the Big 5 Banks offer discounts on their posted rates, unlike monoline lenders, which use lower contract rates upfront. “Discounts” can come back to haunt you, as they are used in the IRD penalty calculation, and the difference can cost clients thousands in interest. Find more information on our Mortgage Penalties info sheet.

In this example, the original contract rate is 4.59% . At the time of breaking the mortgage, the current balance is $400,000 with 3 years remaining. With a monoline lender, this would result in $26,400 in savings compared to a Big Bank.

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*OAC, E&O

Bank of Canada Rate Announcement - January 24, 2024

Wed, 24 Jan 2024 16:42:20 GMT

Bank of Canada maintains policy rate, continues quantitative tightening

The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening.

Information note

Your 2024 BC Assessment

Mon, 15 Jan 2024 20:54:44 GMT

Good afternoon,

The latest BC Assessment results have now been published for a couple of weeks. Usually at this time of year I send out my "Think Your BC Assessment Value is Out of Whack?" article, but similar to last year, I think we need to focus on a different tone: your BC Assessment may be higher than the current market value of your home right now, and that's not a mistake.

The latest BC Assessment is based on market values as of July 1, 2023, NOT today's value. BC Assessment has noted that "most home owners can expect only modest changes in the range of -5% to +5%". They've also noted that assessment changes are notably less than previous years as it has become apparent that the overall housing market has seemingly stabilized in value.

July 2023 saw significant inflationary pressures that resulted in a slowing real estate market through the second half of 2023. Higher than expected inflation numbers and increased interest rates tamped down a real estate market that had been in a boom for the preceding 18 - 24 months.

Remember, if your assessed value has increased, it doesn't necessarily mean your property taxes will go up. Increases to taxes generally only take place if your assessed value increased at a rate higher than the rest of the properties in your geographical area. You can find more information about how your assessment may affect your property taxes HERE .

Before you try to challenge your BC Assessment this year, give us a call!

My advice when considering challenging a BC Assessment.

An article on an interesting BC Assessment appeal from 2022.

Bank of Canada Rate Announcement December 6, 2023

Wed, 06 Dec 2023 16:04:41 GMT

Bank of Canada maintains policy rate, continues quantitative tightening

The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening.

The global economy continues to slow and inflation has eased further. In the United States, growth has been stronger than expected, led by robust consumer spending, but is likely to weaken in the months ahead as past policy rate increases work their way through the economy. Growth in the euro area has weakened and, combined with lower energy prices, this has reduced inflationary pressures. Oil prices are about $10-per-barrel lower than was assumed in the October Monetary Policy Report (MPR). Financial conditions have also eased, with long-term interest rates unwinding some of the sharp increases seen earlier in the autumn. The US dollar has weakened against most currencies, including Canada’s.

In Canada, economic growth stalled through the middle quarters of 2023. Real GDP contracted at a rate of 1.1% in the third quarter, following growth of 1.4% in the second quarter. Higher interest rates are clearly restraining spending: consumption growth in the last two quarters was close to zero, and business investment has been volatile but essentially flat over the past year. Exports and inventory adjustment subtracted from GDP growth in the third quarter, while government spending and new home construction provided a boost. The labour market continues to ease: job creation has been slower than labour force growth, job vacancies have declined further, and the unemployment rate has risen modestly. Even so, wages are still rising by 4-5%. Overall, these data and indicators for the fourth quarter suggest the economy is no longer in excess demand.

The slowdown in the economy is reducing inflationary pressures in a broadening range of goods and services prices. Combined with the drop in gasoline prices, this contributed to the easing of CPI inflation to 3.1% in October. However, shelter price inflation has picked up, reflecting faster growth in rent and other housing costs along with the continued contribution from elevated mortgage interest costs. In recent months, the Bank’s preferred measures of core inflation have been around 3½-4%, with the October data coming in towards the lower end of this range.

With further signs that monetary policy is moderating spending and relieving price pressures, Governing Council decided to hold the policy rate at 5% and to continue to normalize the Bank’s balance sheet. Governing Council is still concerned about risks to the outlook for inflation and remains prepared to raise the policy rate further if needed. Governing Council wants to see further and sustained easing in core inflation, and continues to focus on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour. The Bank remains resolute in its commitment to restoring price stability for Canadians.

Information note

The next scheduled date for announcing the overnight rate target is January 24, 2023. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR at the same time.

Listing Tips

Thu, 30 Nov 2023 21:44:05 GMT

INTENDED FOR PARTNER USE AND NOT FOR CLIENT DISPERSION

This series is designed to support our REALTOR® partners during a buyers' market by highlighting unique property types and financing solutions. We hope to provide you with knowledge that will set you apart from the rest of the field and arm you with tools to use for your future listings.

Have a unique listing that may be challenging to obtain financing for? Reach out! We're happy to preview listings and arm you with the information you need from a lender's perspective.

ACREAGES

Watch out for limitations on: loan to value, number of acres accepted in an appraisal, number of buildings/outbuildings to be allowed in the appraisal, or allowable farming activity.
Many lenders will look at ALR.
Farming Activity:
Case-by-case; many lenders will not allow any farming income to be included in the application.

MOBILE/MANUFACTURED/MODULAR HOMES

More financing options are available for homes on owned land.
Age of home is considered and may rule out lender options.
CMHC Insurance likely to be required.
Not able to be refinanced.
Home Insurance (replacement cost) can be difficult to obtain if the home is too old. This can directly impact financing.

MICRO UNITS

Location dependent but a handful of lender options available that will finance as small as 300 sqft.
Many options available for units as small as 500 sqft.

LIMITED ACCESS PROPERTIES

Lenders are limited if there is only seasonal road or water only access.

RAW LAND

Many lenders will only look at raw land when presented with a construction mortgage.
A few lenders will look at fully serviced (electricity, water, and sewer to the lot) land up to 75% loan to value. If it's not fully serviced, max 65% loan to value.

LOG HOMES

Lender pool is limited. There may be limitations on loan to value. Generally, the home needs to make sense for the area.

FOUNDATIONS

Most common foundation type is concrete.
Pressure treated wood foundations are considered by a handful of lenders depending on the age and condition.

SEASONAL PROPERTIES

Limited lender pool but can be considered when there is not fractional ownership involved.
Can be considered in cases where the property is involved in short term renting but the rental income cannot be considered in the application.

LEASED LAND

More and more lenders are offering financing on these types of properties.
Depends on the length of the lease (and time remaining).
Often an approved list of developments that can be considered.

GROW-OPs

Limited lending options. Likely require CMHC approval.
Full remediation report, air quality test, city approval/permits, title insurance, appraisal, Level 1 Environmental Assessment, and RCMP report likely required.
Purpose of purchase to be considered - likely only to be considered for owner-occupancy.

REMEDIATION FOR VERMICULITE/ASBESTOS

If vermiculite is disclosed on a PDS, this will often trigger requirements for remediation and/or proof of previous remediation.
An air quality test will be required.

SUITES (AUTHORIZED vs UNAUTHORIZED / LEGAL vs ILLEGAL)

New appraisal guidelines now require the differentiation between a suite that is authorized or unauthorized (legal or illegal).
If a suite is authorized or legal, an appraiser can complete a market rent analysis if it is required by the lender for financing purposes.
If a suite is unauthorized or illegal, a market rent analysis cannot be completed and only a Consulting Report can be completed. A Consulting Report can only verify if the reported rents or leases are reasonable. Depending on the financing scenario, a Consulting Report may not provide the necessary information.

UNIQUE WATER SOURCES

Any water source that isn't a traditional municipal or private well, may limit the lender pool available. Potential unique water sources include (but are not limited to): shared well, cistern, river, stream, artisanal well, lake or spring.
Additional documentation may be required for a shared well in the form of a water well certificate and an agreement between parties confirming long term use and maintenance of the well & pump. For surface water, may require a copy of the provincial water license.
Likely a requirement for additional title insurance in lieu of water testing or in addition to water quality testing.

PARTIALLY FINISHED HOMES

Depending on the level of completion, a client may be eligible for a purchase plus improvements program. This would require quotes from a builder/contractor as well as cash or credit on hand for the client to complete the improvements before being reimbursed after they are completed. See our Purchase Plus Improvements Info Sheet HERE .
If the level of completion is low, a client may be required to enter into a construction loan. This would involve a draw process and an equity requirement to ensure there is liquid cash on hand to fulfill the obligations of the draw process. Construction Info Sheet HERE .

PROPERTIES WITH MULTIPLE PIDs

The physical location of the home on the property will have a determining factor on which lenders will and will not entertain.
A site survey may be required to determine the position of the building(s).
Not all lenders will entertain with multiple PIDs.

HERITAGE HOMES

Home that are listed on the Heritage Home Registry will have a limited lender pool. If your client is pre-approved, ensure the lender they are approved with allows Heritage Homes to be financed through them.

BYLAW CONTRAVENTIONS

Homes that have a bylaw contravention notice on title will have a limited lender pool. If your client is pre-approved, ensure the lender they are approved with allows a property with a bylaw contravention to be financed through them.

*OAC, E&O

When We'll See Rates Come Down

Wed, 22 Nov 2023 21:24:34 GMT

Yesterday morning there were no surprises as the inflation reports for Canada depicted a similar scene to the US reports released last week. The reports show the rate of inflation (3.1%) is still slowly coming down from its peaks in the summer of 2022. This brings us closer to the Bank of Canada’s (BoC) target inflation range (1% - 3% year over year).

From a mortgage holder perspective, this is good news. Combined with a technical recession and increasing unemployment figures, it helps build a better case for the BoC to reduce rates. Assuming that's what happens here, the next guess is how far and how fast will those rates drop?

Currently, the market is pricing in a 76% chance of a rate cut by March 2024. Keep in mind these odds change almost daily depending on what is going on in the markets and global economy.

If we look at the last four rate cycles, when rates drop, they drop significantly and quickly:

Fixed rates also have space to potentially drop due to bond yields decreasing from their highs in October. We've seen a number of lenders slightly dropping rates over the last couple of weeks. If this bond yield trend continues, we expect significant cuts to come.

Now is a great time to take stock of your financial situation. Where are your weaknesses? What sort of problem could put you on the ropes? How will these economic changes affect your family’s circumstances?

We work hand-in-hand with a number of professionals who share our values in helping guide clients through their options. Our goal is to always figure out how to keep you and your family in as positive of a situation as possible. If you think you could benefit from the assistance of an independent financial advisor, accountant, or insurance broker, we would be happy to connect you with someone to grow your financial team.

This cycle of rate increases is hopefully behind us as we enter a new stage of economic development and uncertainty. While this is great news for mortgage interest rates, this also foreshadows difficulty to come in the form of economic recession. We aim to always provide clients with valuable information and insight especially when times are difficult to decipher. If you have any questions about how these latest developments and figures could impact you, please reach out.

Payment-Optional Mortgage

Wed, 25 Oct 2023 21:56:56 GMT

I'm tired of making my

Mortgage Payments

What is a

Payment-Optional Mortgage?

ONLY AVAILABLE TO HOMEOWNERS 55 YEARS AND OLDER

EXAMPLE ILLUSTRATION

We will provide you with a customized report specific to your individual situation.

WHAT IS A PAYMENT-OPTIONAL MORTGAGE?

Just like a conventional mortgage, this loan is secured against the value of your home, with the difference being that the mortgage payments are optional . If you choose not to make payments, the interest that accumulates is added to your mortgage balance (this will never exceed your home's value).

You can opt for a lump sum to pay off debts, prepare for any large upcoming purchases/expenses, or simply give yourself a buffer for retirement. In addition, you can choose to take monthly advances to help supplement your income. Interest will only accumulate on the funds advanced at that point in time. If you have an existing mortgage or home equity line of credit, this will be paid out with the new mortgage funds.

This type of mortgage, also known as a reverse mortgage , allows you to access equity while staying in your home and community, without having to sell/downsize.

OUR PROMISE

We understand this can be overwhelming. Our top priority is to help address your concerns and answer your questions.

We promise to always:

✓ Listen carefully

✓ Speak clearly and offer useful information

✓ Respect you and your privacy

✓ Never apply pressure

WHAT DOES THE PROCESS LOOK LIKE?

1️⃣ Discuss your options & needs

We will sit down together to chat through what makes sense for you and answer any questions you may have.

2️⃣ Confirm your home's value

The lender will order an appraisal on your behalf to confirm the value of your home and determine how much you can access.

3️⃣ Review your commitment

We will review this together and assist you with the paperwork.

4️⃣ Obtain legal advice

We can help arrange an appointment with one of our trusted partners, or you are welcome to use your own lawyer.

EXAMPLE ILLUSTRATION

We will provide you with a customized report specific to your individual situation.

FREQUENTLY ASKED QUESTIONS

Will the bank own my home?

No, you maintain title and ownership of your home. Keeping your property taxes and home insurance in good standing and maintaining your property is all that is required.

Will my government benefits be affected?

No, any government benefits you receive like OAS and CPP will not be affected by your reverse mortgage.

Are the funds received from my reverse mortgage taxable?

No, the lump sum and/or monthly advances you receive from your reverse mortgage are non-taxable.

If one spouse passes, does the remaining spouse have to pay the balance?

No, if one spouse passes away, the other may remain in the home without having to make a repayment unless they decide to move or sell.

Can my mortgage balance ever exceed the value of my home?

No, your mortgage balance will never exceed the fair market value of your home. The vast majority of borrowers will have substantial remaining equity from their home after repaying their reverse mortgage.

How much equity can I access?

You can access up to 55% of the appraised value of your home, depending on your age, location, and type of home.

How much will my monthly payments be?

Payments are optional. If you choose not to make payments, the accrued interest is added to your balance, which is repaid when you move or sell.

How much are the closing costs?

Closing costs will include the legal fees of $1,795 - $2,495 and an estimated $500 - $900 for independent legal advice (this varies depending on your lawyer). Both of these costs will be deducted from the mortgage proceeds. The appraisal cost may need to be paid in advance (approx. $500).

What documents will I need to provide?

You will be asked to provide 2 pieces of ID, a copy of your current home insurance policy, your most recent property tax statement (with proof of payment or deferral), a void cheque, and a current mortgage/HELOC statement (if applicable).

Information not loading properly?

*OAC, E&O

Bank of Canada Rate Announcement October 25, 2023

Wed, 25 Oct 2023 15:38:24 GMT

Bank of Canada maintains policy rate, continues quantitative tightening

The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening.

The global economy is slowing and growth is forecast to moderate further as past increases in policy rates and the recent surge in global bond yields weigh on demand. The Bank projects global GDP growth of 2.9% this year, 2.3% in 2024 and 2.6% in 2025. While this global growth outlook is little changed from the July Monetary Policy Report (MPR), the composition has shifted, with the US economy proving stronger and economic activity in China weaker than expected. Growth in the euro area has slowed further. Inflation has been easing in most economies, as supply bottlenecks resolve and weaker demand relieves price pressures. However, with underlying inflation persisting, central banks continue to be vigilant. Oil prices are higher than was assumed in July, and the war in Israel and Gaza is a new source of geopolitical uncertainty.

In Canada, there is growing evidence that past interest rate increases are dampening economic activity and relieving price pressures. Consumption has been subdued, with softer demand for housing, durable goods and many services. Weaker demand and higher borrowing costs are weighing on business investment. The surge in Canada’s population is easing labour market pressures in some sectors while adding to housing demand and consumption. In the labour market, recent job gains have been below labour force growth and job vacancies have continued to ease. However, the labour market remains on the tight side and wage pressures persist. Overall, a range of indicators suggest that supply and demand in the economy are now approaching balance.

After averaging 1% over the past year, economic growth is expected to continue to be weak for the next year before increasing in late 2024 and through 2025. The near-term weakness in growth reflects both the broadening impact of past increases in interest rates and slower foreign demand. The subsequent pickup is driven by household spending as well as stronger exports and business investment in response to improving foreign demand. Spending by governments contributes materially to growth over the forecast horizon. Overall, the Bank expects the Canadian economy to grow by 1.2% this year, 0.9% in 2024 and 2.5% in 2025.

CPI inflation has been volatile in recent months—2.8% in June, 4.0% in August, and 3.8% in September. Higher interest rates are moderating inflation in many goods that people buy on credit, and this is spreading to services. Food inflation is easing from very high rates. However, in addition to elevated mortgage interest costs, inflation in rent and other housing costs remains high. Near-term inflation expectations and corporate pricing behaviour are normalizing only gradually, and wages are still growing around 4% to 5%. The Bank’s preferred measures of core inflation show little downward momentum.

In the Bank’s October projection, CPI inflation is expected to average about 3½% through the middle of next year before gradually easing to 2% in 2025. Inflation returns to target about the same time as in the July projection, but the near-term path is higher because of energy prices and ongoing persistence in core inflation.

With clearer signs that monetary policy is moderating spending and relieving price pressures, Governing Council decided to hold the policy rate at 5% and to continue to normalize the Bank’s balance sheet. However, Governing Council is concerned that progress towards price stability is slow and inflationary risks have increased, and is prepared to raise the policy rate further if needed. Governing Council wants to see downward momentum in core inflation, and continues to be focused on the balance between demand and supply in the economy, inflation expectations, wage growth and corporate pricing behaviour. The Bank remains resolute in its commitment to restoring price stability for Canadians.

Information note

The next scheduled date for announcing the overnight rate target is October 25, 2023. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the Monetary Policy Report at the same time.

Bank of Canada Rate Announcement September 6, 2023

Wed, 06 Sep 2023 15:46:29 GMT

Bank of Canada maintains policy rate, continues quantitative tightening

The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank is also continuing its policy of quantitative tightening.

Inflation in advanced economies has continued to come down, but with measures of core inflation still elevated, major central banks remain focused on restoring price stability. Global growth slowed in the second quarter of 2023, largely reflecting a significant deceleration in China. With ongoing weakness in the property sector undermining confidence, growth prospects in China have diminished. In the United States, growth was stronger than expected, led by robust consumer spending. In Europe, strength in the service sector supported growth, offsetting an ongoing contraction in manufacturing. Global bond yields have risen, reflecting higher real interest rates, and international oil prices are higher than was assumed in the July Monetary Policy Report (MPR).

The Canadian economy has entered a period of weaker growth, which is needed to relieve price pressures. Economic growth slowed sharply in the second quarter of 2023, with output contracting by 0.2% at an annualized rate. This reflected a marked weakening in consumption growth and a decline in housing activity, as well as the impact of wildfires in many regions of the country. Household credit growth slowed as the impact of higher rates restrained spending among a wider range of borrowers. Final domestic demand grew by 1% in the second quarter, supported by government spending and a boost to business investment. The tightness in the labour market has continued to ease gradually. However, wage growth has remained around 4% to 5%.

Recent CPI data indicate that inflationary pressures remain broad-based. After easing to 2.8% in June, CPI inflation moved up to 3.3% in July, averaging close to 3% in line with the Bank’s projection. With the recent increase in gasoline prices, CPI inflation is expected to be higher in the near term before easing again. Year-over-year and three-month measures of core inflation are now both running at about 3.5%, indicating there has been little recent downward momentum in underlying inflation. The longer high inflation persists, the greater the risk that elevated inflation becomes entrenched, making it more difficult to restore price stability.

With recent evidence that excess demand in the economy is easing, and given the lagged effects of monetary policy, Governing Council decided to hold the policy interest rate at 5% and continue to normalize the Bank’s balance sheet. However, Governing Council remains concerned about the persistence of underlying inflationary pressures, and is prepared to increase the policy interest rate further if needed. Governing Council will continue to assess the dynamics of core inflation and the outlook for CPI inflation. In particular, we will be evaluating whether the evolution of excess demand, inflation expectations, wage growth and corporate pricing behavior are consistent with achieving the 2% inflation target. The Bank remains resolute in its commitment to restoring price stability for Canadians.

Information note

Bank of Canada Rate Announcement July 12, 2023

Wed, 12 Jul 2023 16:23:05 GMT

Bank of Canada raises policy rate 25 basis points, continues quantitative tightening

The Bank of Canada today increased its target for the overnight rate to 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank is also continuing its policy of quantitative tightening.

Global inflation is easing, with lower energy prices and a decline in goods price inflation. However, robust demand and tight labour markets are causing persistent inflationary pressures in services. Economic growth has been stronger than expected, especially in the United States, where consumer and business spending has been surprisingly resilient. After a surge in early 2023, China’s economic growth is softening, with slowing exports and ongoing weakness in its property sector. Growth in the euro area is effectively stalled: while the service sector continues to grow, manufacturing is contracting. Global financial conditions have tightened, with bond yields up in North America and Europe as major central banks signal further interest rate increases may be needed to combat inflation.

The Bank’s July Monetary Policy Report (MPR) projects the global economy will grow by around 2.8% this year and 2.4% in 2024, followed by 2.7% growth in 2025.

Canada’s economy has been stronger than expected, with more momentum in demand. Consumption growth has been surprisingly strong at 5.8% in the first quarter. While the Bank expects consumer spending to slow in response to the cumulative increase in interest rates, recent retail trade and other data suggest more persistent excess demand in the economy. In addition, the housing market has seen some pickup. New construction and real estate listings are lagging demand, which is adding pressure to prices. In the labour market, there are signs of more availability of workers, but conditions remain tight, and wage growth has been around 4-5%. Strong population growth from immigration is adding both demand and supply to the economy: newcomers are helping to ease the shortage of workers while also boosting consumer spending and adding to demand for housing.

As higher interest rates continue to work their way through the economy, the Bank expects economic growth to slow, averaging around 1% through the second half of this year and the first half of next year. This implies real GDP growth of 1.8% in 2023 and 1.2% in 2024. The economy will move into modest excess supply early next year before growth picks up to 2.4% in 2025.

Inflation in Canada eased to 3.4% in May, a substantial and welcome drop from its peak of 8.1% last summer. While CPI inflation has come down largely as expected so far this year, the downward momentum has come more from lower energy prices, and less from easing underlying inflation. With the large price increases of last year out of the annual data, there will be less near-term downward momentum in CPI inflation. Moreover, with three-month rates of core inflation running around 3½-4% since last September, underlying price pressures appear to be more persistent than anticipated. This is reinforced by the Bank’s business surveys, which find businesses are still increasing their prices more frequently than normal.

In the July MPR projection, CPI inflation is forecast to hover around 3% for the next year before gradually declining to 2% in the middle of 2025. This is a slower return to target than was forecast in the January and April projections. Governing Council remains concerned that progress towards the 2% target could stall, jeopardizing the return to price stability.

In light of the accumulation of evidence that excess demand and elevated core inflation are both proving more persistent, and taking into account its revised outlook for economic activity and inflation, Governing Council decided to increase the policy interest rate to 5%. Quantitative tightening is complementing the restrictive stance of monetary policy and normalizing the Bank’s balance sheet. Governing Council will continue to assess the dynamics of core inflation and the outlook for CPI inflation. In particular, we will be evaluating whether the evolution of excess demand, inflation expectations, wage growth and corporate pricing behaviour are consistent with achieving the 2% inflation target. The Bank remains resolute in its commitment to restoring price stability for Canadians.

Information note

The next scheduled date for announcing the overnight rate target is September 6, 2023. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the Monetary Policy Report on October 25, 2023.

Interest Rate Roller Coaster Survival Tips

Thu, 29 Jun 2023 00:23:58 GMT

Good evening,

At the fair earlier this summer, at the insistence of our eldest child, I was reintroduced to carnival rides. I now know that even the teacup ride will make me seriously ill, so I had to find some coping mechanisms to get me back on track. As it turns out, there's some similarities to surviving the interest rate and inflation roller coaster we're on as well.

For those wanting a quick synopsis:

- Inflation is coming down (yay!)

- Deflation is yet to be seen

(prices of goods and services have not come down)

- Interest rates are still high (boo!)

- Due to various factors it is too early to predict how long interest rates will remain high

The latest Canadian inflation (CPI) numbers came out this week for May at 3.4%, a welcome number compared to the slight, worrisome uptick the previous month.

This CPI report indicates that inflation is on it's way to becoming under control, although we haven't felt any price decreases in our day-to-day lives, since we haven't seen much price deflation yet.

The market is still pricing in another rate increase by the Bank of Canada at their next meeting in July , especially if the job market numbers come in relatively strong again, despite mortgage interest costs increasing by over 29% year-over-year; Of that 3.4% CPI inflation rate, 0.9% was mortgage interest cost (25% of the overall inflation increase!).

While this seems like overkill, the central bank is still hyper-focused on ensuring inflation gets stomped out, by any means necessary. And the bond market is anticipating higher rates for longer:

Current interest rates start around 5% almost across the board as of today, with posted rates well into the 6% and 7% range for retail bank lenders.

So here are some of the tips that may help for your own roller coaster:

1) Choose your seat wisely - Make the decision that fits you best, especially if you've been on this ride before.

2) Focus your eyes on a fixed point - This will be over eventually, and keeping your eyes on the horizon or the car in front of you may help you get through.

3) Avoid spicy food - I refuse to follow this advice, I love my Curry Point and I apologize to the passenger beside me.

4) Don't get on the ride at all, or sit this one out - some people will have this option, or will consider it at least, and I can respect that.

We've had hundreds of conversations over the last year and a half, helping people navigate this tricky time, and are always willing to have more. If you or someone you know is thinking they might toss their cookies, please have them reach out and maybe we can help.

Cheers,

Adam Hawryluk

Bank of Canada Rate Announcement June 7, 2023

Wed, 07 Jun 2023 15:27:22 GMT

Bank of Canada raises policy rate 25 basis points, continues quantitative tightening

The Bank of Canada today increased its target for the overnight rate to 4¾%, with the Bank Rate at 5% and the deposit rate at 4¾%. The Bank is also continuing its policy of quantitative tightening.

Globally, consumer price inflation is coming down, largely reflecting lower energy prices compared to a year ago, but underlying inflation remains stubbornly high. While economic growth around the world is softening in the face of higher interest rates, major central banks are signalling that interest rates may have to rise further to restore price stability. In the United States, the economy is slowing, although consumer spending remains surprisingly resilient and the labour market is still tight. Economic growth has essentially stalled in Europe but upward pressure on core prices is persisting. Growth in China is expected to slow after surging in the first quarter. Financial conditions have tightened back to those seen before the bank failures in the United States and Switzerland.

Canada’s economy was stronger than expected in the first quarter of 2023, with GDP growth of 3.1%. Consumption growth was surprisingly strong and broad-based, even after accounting for the boost from population gains. Demand for services continued to rebound. In addition, spending on interest-sensitive goods increased and, more recently, housing market activity has picked up. The labour market remains tight: higher immigration and participation rates are expanding the supply of workers but new workers have been quickly hired, reflecting continued strong demand for labour. Overall, excess demand in the economy looks to be more persistent than anticipated.

CPI inflation ticked up in April to 4.4%, the first increase in 10 months, with prices for a broad range of goods and services coming in higher than expected. Goods price inflation increased, despite lower energy costs. Services price inflation remained elevated, reflecting strong demand and a tight labour market. The Bank continues to expect CPI inflation to ease to around 3% in the summer, as lower energy prices feed through and last year’s large price gains fall out of the yearly data. However, with three-month measures of core inflation running in the 3½-4% range for several months and excess demand persisting, concerns have increased that CPI inflation could get stuck materially above the 2% target.

Based on the accumulation of evidence, Governing Council decided to increase the policy interest rate, reflecting our view that monetary policy was not sufficiently restrictive to bring supply and demand back into balance and return inflation sustainably to the 2% target. Quantitative tightening is complementing the restrictive stance of monetary policy and normalizing the Bank’s balance sheet. Governing Council will continue to assess the dynamics of core inflation and the outlook for CPI inflation. In particular, we will be evaluating whether the evolution of excess demand, inflation expectations, wage growth and corporate pricing behaviour are consistent with achieving the inflation target. The Bank remains resolute in its commitment to restoring price stability for Canadians.

Information note

The next scheduled date for announcing the overnight rate target is July 12, 2023. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the Monetary Policy Report at the same time.

BC Property Tax Guide 2023

Wed, 17 May 2023 20:14:08 GMT

Good morning,

It's that time of year again, so we wanted to share some important dates and links you might find handy this property tax season! Most municipalities will be sending out property taxes notices in mid-May to early June, and advise that you reach out to your municipality if you haven't received your property tax notice by mid-June. If you are eligible for the Home Owner Grant, you can apply to claim it anytime throughout the tax year through the Province of B.C., though it is recommended to apply between when you receive your property tax notice in the mail and the July 4th deadline.

If your lender has been collecting for your property taxes each month:

You will still need to apply to claim the Home Owner Grant and inform your lender, if you have not already, that you live in the property and are claiming the grant. On the July 4th due date, your lender will remit your collected property taxes to your municipality on your behalf. After your property taxes have been paid, your lender will let you know how much they are budgeting for you for next year, taking into consideration estimated increases in taxes due, increased property values, and if you were short in your contributions for the year past.

Important Dates:

- Mid-May to Early June: Property tax notices sent out

- Mid-June: If you haven't yet received your property tax notice, reach out to your municipality, or if you live in a rural area, reach out to the Province of B.C. at 250-591-9959

- July 4: Deadline to pay property taxes, to apply for Home Owner Grant (without late penalties), and to apply to defer your property taxes (without late penalties)

Helpful Links & Resources:

Not sure if you're eligible to claim the Home Owner Grant? Find out HERE

Wondering how to apply to claim the Home Owner Grant? Start HERE

Want to learn about deferring your property taxes? Learn more HERE

You may also want to check out:

The Province of B.C.'s FAQs HERE

City of Nanaimo's FAQs HERE , or your own municipality's website for more info.

If you have any questions or want to chat about this topic more, please feel free to reach out!

Bank of Canada Rate Announcement April 12, 2023

Wed, 12 Apr 2023 16:27:58 GMT

Bank of Canada maintains policy rate, continues quantitative tightening

The Bank of Canada today held its target for the overnight rate at 4½%, with the Bank Rate at 4¾% and the deposit rate at 4½%. The Bank is also continuing its policy of quantitative tightening.

Inflation in many countries is easing in the face of lower energy prices, normalizing global supply chains, and tighter monetary policy. At the same time, labour markets remain tight and measures of core inflation in many advanced economies suggest persistent price pressures, especially for services.

Global economic growth has been stronger than anticipated. Growth in the United States and Europe has surprised on the upside, but is expected to weaken as tighter monetary policy continues to feed through those economies. In the United States, recent stress in the banking sector has tightened credit conditions further. US growth is expected to slow considerably in the coming months, with particular weakness in sectors that are important for Canadian exports. Meanwhile, activity in China’s economy has rebounded, particularly in services. Overall, commodity prices are close to their January levels. The Bank’s April Monetary Policy Report (MPR) projects global growth of 2.6% this year, 2.1% in 2024, and 2.8% in 2025.

In Canada, demand is still exceeding supply and the labour market remains tight. Economic growth in the first quarter looks to be stronger than was projected in January, with a bounce in exports and solid consumption growth. While the Bank’s Business Outlook Survey suggests acute labour shortages are starting to ease, wage growth is still elevated relative to productivity growth. Strong population gains are adding to labour supply and supporting employment growth while also boosting aggregate consumption. Housing market activity remains subdued.

As more households renew their mortgages at higher rates and restrictive monetary policy works its way through the economy more broadly, consumption is expected to moderate this year. Softening foreign demand is expected to restrain exports and business investment. Overall, GDP growth is projected to be weak through the remainder of this year before strengthening gradually next year. This implies the economy will move into excess supply in the second half of this year. The Bank now projects Canada’s economy to grow by 1.4% this year and 1.3% in 2024 before picking up to 2.5% in 2025.

CPI inflation eased to 5.2% in February, and the Bank’s preferred measures of core inflation were just under 5%. The Bank expects CPI inflation to fall quickly to around 3% in the middle of this year and then decline more gradually to the 2% target by the end of 2024. Recent data is reinforcing Governing Council’s confidence that inflation will continue to decline in the next few months. However, getting inflation the rest of the way back to 2% could prove to be more difficult because inflation expectations are coming down slowly, service price inflation and wage growth remain elevated, and corporate pricing behaviour has yet to normalize. As it sets monetary policy, Governing Council will be particularly focused on these indicators, and the evolution of core inflation, to gauge the progress of CPI inflation back to target.

In light of its outlook for growth and inflation, Governing Council decided to maintain the policy rate at 4½%. Quantitative tightening continues to complement this restrictive stance. Governing Council continues to assess whether monetary policy is sufficiently restrictive to relieve price pressures and remains prepared to raise the policy rate further if needed to return inflation to the 2% target. The Bank remains resolute in its commitment to restoring price stability for Canadians.

Information note

The next scheduled date for announcing the overnight rate target is June 7, 2023. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR on July 12, 2023.

Mortgage Penalties

Tue, 14 Mar 2023 21:17:31 GMT

What is a

Mortgage Penalty?

What do I need to know about breaking my mortgage?

WHY ARE MORTGAGES BROKEN?

To break a mortgage, is to change or terminate your mortgage contract before the end of your term. Many people have no intention of breaking their mortgage, but in reality more than half of Canadians do.

The reasons for this vary immensely and may include:

to obtain a lower interest rate
to move (upsizing/downsizing)
to access equity (renovations, big purchases, etc.)
to consolidate debts
to remedy unexpected life events

*Not all mortgages can be broken without selling your home. Check with your lender!

By building a strategy around this, we can potentially save you tens of thousands of dollars.

WHAT IS A MORTGAGE PENALTY?

A penalty is incurred when a mortgage is broken before the end of your term. This is how the lender makes back some of the lost interest from the remainder of your term. The calculation for penalties is dependent on the original lender, mortgage product and rate type.

For variable rate mortgages , this penalty is calculated as:

the sum of 3 months interest.

For fixed rate mortgages , this penalty is calculated as the greater of either

the sum of 3 months interest; or
an Interest Rate Differential (IRD) penalty

*There may be other fees associated with breaking your mortgage. Check with your lender!

IRD PENALTY CALCULATIONS

How an IRD penalty is calculated varies between lenders, and the cost difference can be staggering!

Lenders like the Big 5 Banks offer discounts on their posted rates upfront. That “discount” can come back to haunt you, as it is used in the IRD penalty calculation. As a mortgage broker, we have access to other lenders where this is not a concern. No posted rates or discounts; what you see is what you get.

In this example calculation table, the original contract rate in both scenarios is 4.59% . At the time of breaking the mortgage the current balance is $400,000 with 3 years remaining .

The difference in IRD penalty calculations equals $26,400!

Information not loading properly?

*OAC, E&O

How Failing U.S. Banks Affect Your Mortgage

Mon, 13 Mar 2023 23:25:49 GMT

In the last week, we've seen two significant events impacting Canadian mortgage holders and potential purchasers:

1) The Bank of Canada (BoC) did not increase the overnight rate at their meeting on Wednesday March 8th. This was largely expected to be the case, with the BoC effectively announcing an upcoming pause in their previous update on January 25th. Nonetheless, it was a welcome relief for all of us with variable rate mortgages. This was following eight consecutive increases since early March 2022.

Everyone can take a collective breath.

2) Bond yields have dropped over the last handful of days. This is a result of three U.S. banks failing late last week (Silicon Valley Bank, Silvergate Bank and Signature Bank). Subsequent turmoil has spread to other regional US banks as investors worry about the stability of their financial institutions. Over the weekend the FDIC and the U.S. Federal Government have assured the deposits held by these institutions will be made whole, but fears of these issues contaminating other banks have halted the trading of dozens of banks today.

The situation in the U.S. has pushed Canada Bond yields down, which in turn can lower fixed mortgage rates sooner than anticipated (if bond yields continue to trend downwards).

This is a far cry from a week ago, when there were thoughts we may see another possible BoC increase in 2023. It's too early to tell for sure, but as of today, the market is pricing in two possible BoC RATE DROPS before July.

Just another example of how hard the future is to predict. If you have any questions on any of this, please reach out. We will be sure to update as more information and trends become available.

Bank of Canada Rate Announcement March 8, 2023

Wed, 08 Mar 2023 16:53:40 GMT

Bank of Canada maintains policy rate, continues quantitative tightening

The Bank of Canada today held its target for the overnight rate at 4½%, with the Bank Rate at 4¾% and the deposit rate at 4½%. The Bank is also continuing its policy of quantitative tightening.

Global economic developments have evolved broadly in line with the outlook in the January Monetary Policy Report (MPR). Global growth continues to slow, and inflation, while still too high, is coming down due primarily to lower energy prices. In the United States and Europe, near-term outlooks for growth and inflation are both somewhat higher than expected in January. In particular, labour markets remain tight, and elevated core inflation is persisting. Growth in China is rebounding in the first quarter. Commodity prices have evolved roughly in line with the Bank’s expectations, but the strength of China’s recovery and the impact of Russia’s war in Ukraine remain key sources of upside risk. Financial conditions have tightened since January, and the US dollar has strengthened.

In Canada, economic growth came in flat in the fourth quarter of 2022, lower than the Bank projected. With consumption, government spending and net exports all increasing, the weaker-than-expected GDP was largely because of a sizeable slowdown in inventory investment. Restrictive monetary policy continues to weigh on household spending, and business investment has weakened alongside slowing domestic and foreign demand.

The labour market remains very tight. Employment growth has been surprisingly strong, the unemployment rate remains near historic lows, and job vacancies are elevated. Wages continue to grow at 4% to 5%, while productivity has declined in recent quarters.

Inflation eased to 5.9% in January, reflecting lower price increases for energy, durable goods and some services. Price increases for food and shelter remain high, causing continued hardship for Canadians. With weak economic growth for the next couple of quarters, pressures in product and labour markets are expected to ease. This should moderate wage growth and also increase competitive pressures, making it more difficult for businesses to pass on higher costs to consumers.

Overall, the latest data remains in line with the Bank’s expectation that CPI inflation will come down to around 3% in the middle of this year. Year-over-year measures of core inflation ticked down to about 5%, and 3-month measures are around 3½%. Both will need to come down further, as will short-term inflation expectations, to return inflation to the 2% target.

At its January decision, the Governing Council indicated that it expected to hold the policy interest rate at its current level, conditional on economic developments evolving broadly in line with the MPR outlook. Based on its assessment of recent data, Governing Council decided to maintain the policy rate at 4½%. Quantitative tightening is complementing this restrictive stance. Governing Council will continue to assess economic developments and the impact of past interest rate increases, and is prepared to increase the policy rate further if needed to return inflation to the 2% target. The Bank remains resolute in its commitment to restoring price stability for Canadians.

Information note

The next scheduled date for announcing the overnight rate target is April 12, 2023. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the Monetary Policy Report at the same time.

Bank of Canada Rate Announcement January 25, 2023

Wed, 25 Jan 2023 17:00:01 GMT

Bank of Canada increases policy interest rate by 25 basis points, continues quantitative tightening

The Bank of Canada today increased its target for the overnight rate to 4½%, with the Bank Rate at 4¾% and the deposit rate at 4½%. The Bank is also continuing its policy of quantitative tightening.

Global inflation remains high and broad-based. Inflation is coming down in many countries, largely reflecting lower energy prices as well as improvements in global supply chains. In the United States and Europe, economies are slowing but proving more resilient than was expected at the time of the Bank’s October Monetary Policy Report (MPR). China’s abrupt lifting of COVID-19 restrictions has prompted an upward revision to the growth forecast for China and poses an upside risk to commodity prices. Russia’s war on Ukraine remains a significant source of uncertainty. Financial conditions remain restrictive but have eased since October, and the Canadian dollar has been relatively stable against the US dollar.

The Bank estimates the global economy grew by about 3½% in 2022, and will slow to about 2% in 2023 and 2½% in 2024. This projection is slightly higher than October’s.

In Canada, recent economic growth has been stronger than expected and the economy remains in excess demand. Labour markets are still tight: the unemployment rate is near historic lows and businesses are reporting ongoing difficulty finding workers. However, there is growing evidence that restrictive monetary policy is slowing activity, especially household spending. Consumption growth has moderated from the first half of 2022 and housing market activity has declined substantially. As the effects of interest rate increases continue to work through the economy, spending on consumer services and business investment are expected to slow. Meanwhile, weaker foreign demand will likely weigh on exports. This overall slowdown in activity will allow supply to catch up with demand.

The Bank estimates Canada’s economy grew by 3.6% in 2022, slightly stronger than was projected in October. Growth is expected to stall through the middle of 2023, picking up later in the year. The Bank expects GDP growth of about 1% in 2023 and about 2% in 2024, little changed from the October outlook.

Inflation has declined from 8.1% in June to 6.3% in December, reflecting lower gasoline prices and, more recently, moderating prices for durable goods. Despite this progress, Canadians are still feeling the hardship of high inflation in their essential household expenses, with persistent price increases for food and shelter. Short-term inflation expectations remain elevated. Year-over-year measures of core inflation are still around 5%, but 3-month measures of core inflation have come down, suggesting that core inflation has peaked.

Inflation is projected to come down significantly this year. Lower energy prices, improvements in global supply conditions, and the effects of higher interest rates on demand are expected to bring CPI inflation down to around 3% in the middle of this year and back to the 2% target in 2024.

With persistent excess demand putting continued upward pressure on many prices, Governing Council decided to increase the policy interest rate by a further 25 basis points. The Bank’s ongoing program of quantitative tightening is complementing the restrictive stance of the policy rate. If economic developments evolve broadly in line with the MPR outlook, Governing Council expects to hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases. Governing Council is prepared to increase the policy rate further if needed to return inflation to the 2% target, and remains resolute in its commitment to restoring price stability for Canadians.

Information note

The next scheduled date for announcing the overnight rate target is March 8, 2023. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR on April 12, 2023.

2023 BC Assessments

Fri, 06 Jan 2023 19:56:58 GMT

The latest BC Assessment results have now been published. Usually at this time of year, I send out my "Think Your BC Assessment Value is Out of Whack?" article, but this year I think we need to focus on a different tone: your BC Assessment value may be higher than the current market value of your place right now, and that's not a mistake.

The latest BC Assessment is based on market values as of July 1, 2022 , NOT today's value.

Many Real Estate pundits identify July 2022 as near the tail end of the large increase in property values throughout the pandemic. With six months of rising interest rates and slowing home sales since then, today's market values are notably lower than the 2023 BC Assessment values.

Remember that just because your assessed value has increased, it doesn't necessarily mean your property taxes will go up. It's only if your assessed value increased at a higher rate than the rest of the properties in your classification. You can find more information about how your assessment may affect your property taxes HERE .

So before you try to challenge your BC Assessment this year, think about what the property was probably worth back in July.

You can find my advice when considering challenging a BC Assessment HERE , and an article on an interesting BC Assessment appeal from 2022 HERE .

Bankruptcy or Consumer Proposal

Thu, 05 Jan 2023 00:37:36 GMT

What are the mortgage impacts of previously entering

Bankruptcy or Consumer Proposal?

IMPACT ON CREDIT SCORE

In British Columbia, bankruptcies remain as a public record on a credit bureau for 6 years after the date of completion and consumer proposals for 3 years . Please note, this information is specific to BC and varies province to province

Public records account for 10% of a credit score, however this may not be the only factor having a negative impact. Learn more about how credit scores are calculated HERE on our website.

It is not uncommon for reporting errors to drag a score down; fixing these errors can have a significant, positive impact very quickly. Perhaps an account involved in a consumer proposal or bankruptcy is incorrectly reporting a balance owing, or has not been properly cleaned up after discharge. We can assist in fixing such issues through an Equifax Investigation.

If there are significant credit concerns following a bankruptcy or consumer proposal, or many errors requiring resolution, our trusted partners can help. Click HERE for more information.

KEY TAKEAWAYS

Life happens, a bankruptcy or consumer proposal does not rule out ever qualifying for a mortgage again

Know how long you’ve been discharged - most lenders require at least 2 years of being discharged

Establish fresh, clean credit post discharge

Consider obtaining a secured credit card to start rebuilding credit

Ensure all payments are made in full and on time

IMPACT ON MORTGAGE FINANCING

A bankruptcy or consumer proposal in the past does not rule out all mortgage options; however, options may be limited. There are specific criteria most ‘A’ lenders require:

2 Re-established Tradelines - opened after a bankruptcy or consumer proposal has been discharged (e.g. credit cards, lines of credit, or secured loans).
Ensure the credit limit is more than $2,500 and has a clean re-payment history (no late/missed payments) for 24 months after discharge .
If down payment is more than 20% or there is a strong family co-signer, lenders may accept a minimum of 1 re-established account with a clean re-payment history for 12 months after discharge.

Bankruptcy or Consumer Proposal Documents - that outlines and confirms what was included.
Some lenders require that there was no real estate involvement.

Reason for Bankruptcy or Consumer Proposal (e.g. business failure, marital split, etc.).

Down Payment Funds - sourced from personal resources with 90 days history (i.e. own savings, confirmed via 3 months bank statements).
Some lenders will allow down payment funds gifted from family.

There may also be ‘B’ lender or private lending options if the above criteria are not met; however, these options come at higher costs and often require higher minimum down payments.

Please reach out for more information on what options may be available to you.

Information not loading properly?

*OAC, E&O

Bank of Canada Rate Announcement December 7, 2022

Wed, 07 Dec 2022 16:58:18 GMT

Bank of Canada increases policy interest rate by 50 basis points, continues quantitative tightening

The Bank of Canada today increased its target for the overnight rate to 4¼%, with the Bank Rate at 4½% and the deposit rate at 4¼%. The Bank is also continuing its policy of quantitative tightening.

Inflation around the world remains high and broadly based. Global economic growth is slowing, although it is proving more resilient than was expected at the time of the October Monetary Policy Report (MPR). In the United States, the economy is weakening but consumption continues to be solid and the labour market remains overheated. The gradual easing of global supply bottlenecks continues, although further progress could be disrupted by geopolitical events.

In Canada, GDP growth in the third quarter was stronger than expected, and the economy continued to operate in excess demand. Canada’s labour market remains tight, with unemployment near historic lows. While commodity exports have been strong, there is growing evidence that tighter monetary policy is restraining domestic demand: consumption moderated in the third quarter, and housing market activity continues to decline. Overall, the data since the October MPR support the Bank’s outlook that growth will essentially stall through the end of this year and the first half of next year.

CPI inflation remained at 6.9% in October, with many of the goods and services Canadians regularly buy showing large price increases. Measures of core inflation remain around 5%. Three-month rates of change in core inflation have come down, an early indicator that price pressures may be losing momentum. However, inflation is still too high and short-term inflation expectations remain elevated. The longer that consumers and businesses expect inflation to be above the target, the greater the risk that elevated inflation becomes entrenched.

Looking ahead, Governing Council will be considering whether the policy interest rate needs to rise further to bring supply and demand back into balance and return inflation to target. Governing Council continues to assess how tighter monetary policy is working to slow demand, how supply challenges are resolving, and how inflation and inflation expectations are responding. Quantitative tightening is complementing increases in the policy rate. We are resolute in our commitment to achieving the 2% inflation target and restoring price stability for Canadians.

Information note

The next scheduled date for announcing the overnight rate target is January 25, 2023. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR at the same time.

Bank of Canada Rate Annoucement October 26, 2022

Wed, 26 Oct 2022 16:52:41 GMT

Bank of Canada increases policy interest rate by 50 basis points, continues quantitative tightening

The Bank of Canada today increased its target for the overnight rate to 3¾%, with the Bank Rate at 4% and the deposit rate at 3¾%. The Bank is also continuing its policy of quantitative tightening.

Inflation around the world remains high and broadly based. This reflects the strength of the global recovery from the pandemic, a series of global supply disruptions, and elevated commodity prices, particularly for energy, which have been pushed up by Russia’s attack on Ukraine. The strength of the US dollar is adding to inflationary pressures in many countries. Tighter monetary policies aimed at controlling inflation are weighing on economic activity around the world. As economies slow and supply disruptions ease, global inflation is expected to come down.

In the United States, labour markets remain very tight even as restrictive financial conditions are slowing economic activity. The Bank projects no growth in the US economy through most of next year. In the euro area, the economy is forecast to contract in the quarters ahead, largely due to acute energy shortages. China’s economy appears to have picked up after the recent round of pandemic lockdowns, although ongoing challenges related to its property market will continue to weigh on growth. Overall, the Bank projects that global growth will slow from 3% in 2022 to about 1½% in 2023, and then pick back up to roughly 2½% in 2024. This is a slower pace of growth than was projected in the Bank’s July Monetary Policy Report (MPR).

In Canada, the economy continues to operate in excess demand and labour markets remain tight. The demand for goods and services is still running ahead of the economy’s ability to supply them, putting upward pressure on domestic inflation. Businesses continue to report widespread labour shortages and, with the full reopening of the economy, strong demand has led to a sharp rise in the price of services.

The effects of recent policy rate increases by the Bank are becoming evident in interest-sensitive areas of the economy: housing activity has retreated sharply, and spending by households and businesses is softening. Also, the slowdown in international demand is beginning to weigh on exports. Economic growth is expected to stall through the end of this year and the first half of next year as the effects of higher interest rates spread through the economy. The Bank projects GDP growth will slow from 3¼% this year to just under 1% next year and 2% in 2024.

In the last three months, CPI inflation has declined from 8.1% to 6.9%, primarily due to a fall in gasoline prices. However, price pressures remain broadly based, with two-thirds of CPI components increasing more than 5% over the past year. The Bank’s preferred measures of core inflation are not yet showing meaningful evidence that underlying price pressures are easing. Near-term inflation expectations remain high, increasing the risk that elevated inflation becomes entrenched.

The Bank expects CPI inflation to ease as higher interest rates help rebalance demand and supply, price pressures from global supply disruptions fade, and the past effects of higher commodity prices dissipate. CPI inflation is projected to move down to about 3% by the end of 2023, and then return to the 2% target by the end of 2024.

Given elevated inflation and inflation expectations, as well as ongoing demand pressures in the economy, the Governing Council expects that the policy interest rate will need to rise further. Future rate increases will be influenced by our assessments of how tighter monetary policy is working to slow demand, how supply challenges are resolving, and how inflation and inflation expectations are responding. Quantitative tightening is complementing increases in the policy rate. We are resolute in our commitment to restore price stability for Canadians and will continue to take action as required to achieve the 2% inflation target.

Information note

The next scheduled date for announcing the overnight rate target is December 7, 2022. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR on January 25, 2023.

Upcoming Rate Increases

Mon, 24 Oct 2022 16:46:42 GMT

This is a storm without a doubt, but the big questions are "when will this storm pass?" and "how big is this storm going to get?". The Bank of Canada has said in no unclear words that they will continue to raise rates (regardless of the economic pain it causes) until inflation is brought back down to target levels.

The Bank of Canada is aggressively trying to cool off inflation using the only tool they have at their disposal right now: continuous and significant interest rate hikes. As Benjamin Tal told us at the Mortgage Professionals Canada conference last week: "... given the option of recession or inflation, they will take the recession any day".

While some of the indicators they/we watch ( CPI , for one) seem to be going in the right direction, but not drastically enough and haven't been heading in that direction for long enough for them to back off their rate hikes right now. So this means we're probably going to see another 0.75% rate hike up to 6.20% on Wednesday, their next meeting date, and probably another increase when they meet again in December. Some say it will be a 0.25% increase at that time, others think more, but it will depend on the information that comes in between now and then.

I've had more conversations with clients over the last couple of weeks who are nervous about where rates are going, that their budget could get stretched too far. I can understand the stress and anxiety increasing mortgage payments cause, which can far outweigh the question of "will rates come back down eventually and will I kick myself for locking in now?".

You need to do what's right for you and your family, and that can change regularly. You may feel that things are fine until they don't feel fine anymore. That is understandable and normal. Changing your mind based on new information, or even a new feeling about information you already had, is healthy and normal.

If you want to lock into a fixed interest rate with your current lender, there are no requalifying questions required, just reach out to your current lender and sign the paper they provide when you request it. If you don't know who your current lender is, reach out to us and we'd be happy to provide that information.

If you want to lock into a fixed rate and want to see if you could get a better offer from another lender, get a quote from your current lender, then reach out to us and we'd be happy to compare that to what is on the market from other lenders.

To everyone: if you can, I recommend increasing your monthly/bi-weekly mortgage payments by 20% to reduce increased payment shock down the line. This has the added benefit of paying down your mortgage principal by every extra dollar, so it's a win-win if you can afford it on a monthly basis.

I am here weathering the storm with you, so please reach out when you have questions or concerns.

Bank of Canada Rate Announcement September 7, 2022

Wed, 07 Sep 2022 15:58:07 GMT

Bank of Canada increases policy interest rate by 75 basis points, continues quantitative tightening

The Bank of Canada today increased its target for the overnight rate to 3¼%, with the Bank Rate at 3½% and the deposit rate at 3¼%. The Bank is also continuing its policy of quantitative tightening.

The global and Canadian economies are evolving broadly in line with the Bank’s July projection. The effects of COVID-19 outbreaks, ongoing supply disruptions, and the war in Ukraine continue to dampen growth and boost prices.

Global inflation remains high and measures of core inflation are moving up in most countries. In response, central banks around the world continue to tighten monetary policy. Economic activity in the United States has moderated, although the US labour market remains tight. China is facing ongoing challenges from COVID shutdowns. Commodity prices have been volatile: oil, wheat and lumber prices have moderated while natural gas prices have risen.

In Canada, CPI inflation eased in July to 7.6% from 8.1% because of a drop in gasoline prices. However, inflation excluding gasoline increased and data indicate a further broadening of price pressures, particularly in services. The Bank’s core measures of inflation continued to move up, ranging from 5% to 5.5% in July. Surveys suggest that short-term inflation expectations remain high. The longer this continues, the greater the risk that elevated inflation becomes entrenched.

The Canadian economy continues to operate in excess demand and labour markets remain tight. Canada’s GDP grew by 3.3% in the second quarter. While this was somewhat weaker than the Bank had projected, indicators of domestic demand were very strong – consumption grew by about 9½% and business investment was up by close to 12%. With higher mortgage rates, the housing market is pulling back as anticipated, following unsustainable growth during the pandemic. The Bank continues to expect the economy to moderate in the second half of this year, as global demand weakens and tighter monetary policy here in Canada begins to bring demand more in line with supply.

Given the outlook for inflation, the Governing Council still judges that the policy interest rate will need to rise further. Quantitative tightening is complementing increases in the policy rate. As the effects of tighter monetary policy work through the economy, we will be assessing how much higher interest rates need to go to return inflation to target. The Governing Council remains resolute in its commitment to price stability and will continue to take action as required to achieve the 2% inflation target.

Information note

The next scheduled date for announcing the overnight rate target is October 26, 2022. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR at the same time.

Rental Properties

Wed, 24 Aug 2022 17:05:01 GMT

DOWN PAYMENT

Currently, a minimum of 20% down payment is required on rental properties. Since a 20% down payment is applied, rental properties can qualify for 30-year amortization as it doesn't trigger mortgage insurance.

Can I use equity in my current owner occupied home to purchase a rental property?

Yes, you can! Book an initial chat here so we can look at your specific situation.

Can I use gifted funds for a down payment on a rental property?

In most cases, lenders will not consider a gifted down payment for a rental property. However if you are considering using gifted funds, there may be options available.

Can I borrow from my HELOC to pay the down payment in part or full?

Yes. Lenders will consider all of your liabilities and apply this to your debt servicing ratios.

RENTAL INCOME

Each lender will utilize a certain percentage of the rental income to help offset the cost of the mortgage, property taxes, and additional expenses incurred. Typically this percentage is between 250-591-9959% and varies from lender to lender.

For example, a lender who uses a 50% addback on a property that rents for $2,000/m, would allow $12,000/yr (not $24,000/yr) to be added to the qualifying income.

I have plans to use the rental unit for an Air B&B. Can I use the money I will receive from the Air B&B to qualify?

No, lenders will not consider Air B&B, single room rentals, or even short term rentals as qualifying income as it can be inconsistent and unreliable. What is done instead is called a Market Rent Analysis . This is a specific type of report that identifies the hypothetical monthly rental income of the desired unit. This is the figure many lenders will use for qualifying.

The suite within the rental property is unauthorized. How does this affect my financing?

Lender guidelines are regional and property-specific. If there are concerns, it is best to verify with your mortgage broker if this will impact financing, as it will depend on your lender's policy.

ADDITIONAL CONSIDERATIONS

If the rental property is a new build, GST may be applicable. GST can be wrapped into the mortgage and does not need to be paid up front.
If the rental property is an existing construction, Property Transfer Tax may be applicable. PTT is paid up front and out of pocket.
Purchasers should budget an estimated $2,500 for legal fees .
If you are a First Time Home Buyer, you lose your ability to avoid PTT if you choose to buy a rental property as your first purchase.
Other considerations include property taxes , homeowner's insurance for rental properties , and utilities .
Legal or tax discussions or questions should be immediately directed to your respective lawyer/accountant.

*OAC, E&O

Co-Signing

Thu, 18 Aug 2022 20:42:47 GMT

WHY CO-SIGNERS?

With house prices increasing, government qualifying rules tightening, and income documentation becoming more onerous from banks and lenders, more and more Canadians are enlisting the help of a Co-Signer (or co-purchaser, these titles can be used interchangeably) to make the purchase of a home possible. A Co-Signer helps support the income qualification on paper for an applicant, by going on the property title and mortgage as well.

THE MECHANICS OF CO-SIGNING

Application taken, documents collected, and credit checked just like the main borrower.

Co-Signer signs the mortgage documents and is registered on title with the borrower (in some cases, title can be registered 99% in the borrowers' name and 1% in the Co-Signers name in order to use 99% of the First Time Home Buyer benefits if applicable, but talk to a lawyer about the risks/benefits of this).

WHAT MAKES A GOOD CO-SIGNER?

An individual with strong credit and low monthly debts compared to their monthly income is ideal for Co-Signing. Also, a high degree of trust is required, since the Co-Signer will also be liable for the debt if it is not paid on time and in full, so in many cases a Co-Signer is a family member.

WHEN CAN A CO-SIGNER BE REMOVED?

A rule of thumb is that any lender will allow a Co-Signer to be removed from the title/mortgage during a mortgage term after 12 months (often a $350 covenant change fee will be charged, in addition to legal fees charged by your solicitor). If the original borrower can then qualify for the mortgage on their own (on paper) or if there is another borrower who wishes to replace the original Co-Signer. At the time of sale, a Co-Signer would be released as well.

THINGS TO CONSIDER

Financial transparency between all parties is critical as any mortgage commitment received will outline the qualifying income for each applicant. Both parties will need to be comfortable with this level of disclosure.

Independent Legal Advice is always a good idea before co-signing.

The debt is the Co-Signers debt too, so trust is extremely important. The Co-Signer is responsible on paper, even though they most likely won't make any of the actual payments. The debt would be considered in any future borrowing calculations.

Speak with your accountant about any tax / capital gains considerations.

Consent will be required from any spouse not signed on as an additional Co-Signer, to be arranged at your solicitor's office.

CO-SIGNERS VS. GUARANTOR

When an applicant needs help with the income aspect of their loan application, a Co-Signer is required (and put on title, with a claim to the property). When an applicant has satisfactory income but tarnished or thin credit, then a guarantor may be suitable (not on title, no claim to the property).

MY PARENTS ARE RETIRED, CAN THEY CO-SIGN?

Yes! Retirement income does qualify and there is no age limit, so your retired co-signers are still an excellent option.

*OAC, E&O; this is not legal advice. Consult your lawyer and/or accountant for any additional considerations.

Construction Financing

Wed, 17 Aug 2022 22:05:29 GMT

LAND

For a fully serviced lot , you will need down payment of at least 25% on the land value. Fully serviced means the lot has power, water/well & sewer/septic.

For a partially serviced lot , you will need a down payment of at least 35% on the land value. Partially serviced means the land is missing at least one of the above services.

Already own the land?

An equity take out may be completed on the land as your first draw, up to 75% of the appraised land value , less fees.

REQUIRED DOCUMENTS FOR PRE-APPROVAL

Building Plans
Cost estimate sheet from your builder
Signed building contract
All other income verifying documents from applicants ie: T4's, Taxes, Job Letters, Pay Stubs, Bank Statements, etc.

APPRAISAL

A construction appraisal will be required as part of the financing process. It confirms the following:

The current value of your land.
The as-completed value of your new home, based on your construction drawings and builder's cost worksheet.
Future potential rental income (if applicable).

Flawless Financing will order the appraisal on behalf of the lender.

HOW IT WORKS

Construction mortgages are cash-intensive. You must fund the project first with your own money to add value, then the bank reimburses you a percentage of those costs at various stages of the construction. An inspection is required at each stage before funds are released.

Your construction financing is broken into 4 or 5 stages (draws) and is funded on a cost-to-complete basis.

Costs are reimbursed to you at various stages throughout your build generally at a reimbursement rate of 65% of the budgeted costs, not incurred costs. At your final draw (completion), up to 95% of your budgeted cost is reimbursed.

Lenders will require proof of the following funds available:

25% down payment for serviced lot or 35%+ down payment for partially serviced lot
25% of budgeted build costs (per builder's cost worksheet)
10% of appraised end value of construction (to buffer for cost overruns)

Additional construction documentation required:

Building permit
Course of construction insurance
Home warranty insurance/HPO
Health permits (if applicable)
Occupancy permit at completion

FAQ'S

When do I have to start making payments on the construction mortgage?

Once your first draw is made, interest accrues at a rate as low as Prime + 2% and payments remain interest-only during

construction. Interest only payments are made on the funds that have been advanced at any given time.

What if I already have a land mortgage?

If you have recently purchased a lot and are making mortgage payments on the land, you would continue making those (per your existing mortgage commitment) until your first draw is made, which will pay out the existing mortgage on the land.

Can I use a secured line of credit (HELOC) to finance my construction?

Yes, keep in mind any borrowed money will be factored into your debt servicing ratios on your pre-approval.

Can I use gifted funds from family?

Yes, proof of funds deposited along with a signed gift letter must be provided.

Why does the bank only reimburse 65% of the estimated cost at each stage?

It's no secret, cost overruns on new construction are a common occurrence. Your lender must mitigate their risk on a partially completed home. This is done by reimbursing only a percentage of estimated costs until the final stage.

How long are terms on construction mortgages?

Construction loans are generally offered on a 9-18 month term.

If property transfer taxes must be paid up front, how does that work with new construction?

Please consult your lawyer or notary for any questions regarding PTT.

Are there any other fees to be aware of?

Yes, additional additional fees can include but are not limited to:

0.25% minimum construction fee on the requested mortgage amount
Appraisal costs (+/- $1,000)
Progress inspection/draw fees
Legal fees
Discharge fees
Title insurance

*All figures noted are estimates only

*OAC, E&O

Credit Scores

Wed, 17 Aug 2022 20:08:34 GMT

What is a

Credit Score

What do I need to know about

how they are calculated?

WHAT IS A CREDIT SCORE?

A credit score is a three digit number designed to predict the likelihood that an individual will pay their bills as agreed upon. It is a tool available for financial institutions to determine your creditworthiness. In Canada, there are two companies that provide credit adjudication, Equifax & TransUnion.

Consumer facing scores and lender facing scores are often different as they are taking into consideration different modeling data. Don't be surprised if they vary.

CAN I FIX MY SCORE IF IT IS LOW?

There are many things one can do to help improve their credit score:

If there are errors on your report, we can assist with having them investigated and revised.
Ensure all payments are up to date and made in full.
Ensure all revolving credit is below 75% of the limit.
If there are substantial credit concerns, we have partners who specialize in fixing & strengthening credit.

WHAT FACTORS ARE INVOLVED IN CALCULATING A CREDIT SCORE?

There are five main factors involved in calculating a credit score:

1️⃣ Payment history (35%):

Information on how current credit has been repaid. This would include if any payments were late or not paid in full. Details would be available for credit cards, lines of credit, installment loans, auto loans, student loans, finance company loans, home equity loans, and any mortgages. If any payments were late, the scoring model would take into consideration how late the payment was, how much was owed, and how recently the payment was missed.

2️⃣ Used Credit vs Available Credit (30%):

This would take into consideration how much of the total available credit is being used, as well as any other revolving lines of credit. This is also often referred to as credit utilization. A good rule of thumb is to keep is to keep your utilization at ~75% of the total limit. A revolving line of credit is a type of loan that allows you to borrow, repay, and then reuse the credit line up to its available limit (i.e. credit cards or lines of credit).

3️⃣ Length of Credit History (15%):

This section provides information on how long each credit account has been in existence. Generally speaking, creditors like to see that credit has been handled properly over a period of time.

4️⃣ Any Public Records (10%):

Any bankruptcy, consumer proposal, collection, or derogatory public record would be noted and may have a negative impact on credit score.

5️⃣ Inquiries (10%):

Each time a credit file is accessed, the request for info is logged on file as an inquiry. Only a significant number of recent inquiries, in combination with other warning signals on the credit file should lead to a decline in credit score.

Information not loading properly?

*OAC, E&O

Bridge Financing

Wed, 17 Aug 2022 17:44:39 GMT

I am

Selling + Buying

What do I need to know about

Bridge Financing?

WHAT IS A BRIDGE LOAN?

When there is an unconditional offer to sell and purchase at the same time , then a bridge loan can be considered.

As the name suggests, a bridge loan helps borrowers to "bridge" the gap between the sale of one home and the purchase of another, when the proceeds of sale are needed for down payment, but won't yet be available. Bridge financing allows the down payment to be accessed early from the equity in your home, however, to reiterate, there must be a subject-free sale contract in place.

Bridge financing would be available to you through the lender providing your mortgage financing on your new purchase, as a convenience to help facilitate your longer term financing needs. For those looking only for a short term solution (i.e. downsizing, with plans to pay off any balance owing from the proceeds of sale), other options may be available and better suited to your needs.

Typically, all parties on title of the home being sold must be on the bridge loan as well, so if there will be changes to who is on title for your new purchase (i.e. divorce, co-signers), please be sure to let us know.

NICE TO KNOWS

Bridge loans are only offered by the mortgage lender providing financing on the home purchase.

Confirmation that both the Sale & Purchase are subject free is required via signed contracts and addendums.

The disbursement of funds takes place at the lawyer/notary's office and is handled directly by them.

Costs incurred are calculated and administered by the lawyer/notary.

There is a maximum length on the term of bridge loans. This varies lender to lender, but often ranges from 45 - 120 days.

If there will be changes to who is on title from the property being sold to the property being purchased, this may cause issue; typically all parties on title for the home being sold must be on the bridge loan as well.

WHAT COSTS MAY BE INCURRED?

Bridge Administration Fees

(varies lender to lender)

This type of financing usually requires a fee paid to the lender ($400 - $600).

Interest Accrual Rates

(varies lender to lender)

Interest is accrued daily on the funds that are lent out. Rates range from Prime + 2.0% to Prime + 5.0%.

Legal Fees

Depending on the size of the loan and bridge financing, this may range from $2,000 to $5,000. Please confirm with your lawyer or notary.

ALTERNATIVES

If bridge financing is not an option, other possibilities could include:

Gift from family

Utilizing a HELOC

Private Financing

Inter-Alia (application dependent)

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*OAC, E&O

Separation & Divorce

Tue, 16 Aug 2022 17:21:13 GMT

I'm going through a

Separation or Divorce

What are

my mortgage options?

EARLY IN THE PROCESS

Dividing assets and navigating this stressful process takes time. While still in the midst of sorting things out, remember to continue making existing mortgage payments . All parties on a mortgage and title are responsible for regular payments being made on time, even during a separation or divorce. This applies to other joint bills as well.

REQUIRED DOCUMENTS

In addition to standard income qualifying documents, in cases of separation or divorce, lenders will require a finalized separation agreement or court order. This must outline division of assets, including the family home, and any support payments (or confirmation of no support). If support payments are being received and used as income to qualify, confirmation of deposits may be required

If using a spousal buyout program, lenders may also require a purchase contract prepared by a solicitor/notary.

If buying out your spouse with savings of gifted funds, lenders may require verification of these funds.

OPTIONS TO KEEP YOUR HOME

Typically when the family home is being kept by one party, that party will have to buy out their ex-spouse per a separation agreement or court order. If you plan to pursue this option, consider:

How much will you owe your ex-spouse to buy them out?

This must be outlined in your separation agreement or court order.

Will there be ongoing spousal and/or child support?

How much you may owe (or receive) as ongoing spousal and/or child support must be outlined in your separation agreement or court order. This must be taken into consideration when qualifying.

Where will you be sourcing the funds to buy them out? Perhaps:

Savings or gifted funds from a family member
In this case, you may be able to remove your spouse from the existing mortgage and title via a covenant change. Note, you will need to be able to qualify for the existing mortgage on your own or with a co-signer.

Equity from the home
This may be possible through:

Spousal Buyout (treated as a purchase but only allows access to funds required to buyout the ex-spouse; any penalty, fees, or closing cost cannot be wrapped into the mortgage if not outlined in the separation agreement or court order)

Refinance (allowing access to additional funds; any penalty, closing costs, or other debts can be wrapped into the mortgage if desired)

Second Mortgage (allowing an existing first mortgage to be left in place)

Note that all of these options require qualification without the ex-spouse. On a single income, this may be more challenging, so a co-signer may be required. See our Co-Signer Info Sheet

OPTIONS TO PURCHASE AFTER SEPARATION

Again, qualifying on a single income and at current rates is often more challenging and a co-signer may be required. See our Co-Signer Info Sheet on our website Resource page. Down payment funds may be sourced from:

Spousal buyout/proceeds of sale of the family home
Savings
Gifted funds from family
Possibly your RRSP under the Home Buyers’ Plan (confirm eligibility with your solicitor/notary)
Note, if your principal place of residence is a home owned and occupied by a new spouse or common-law partner, you would not be eligible to make a HBP withdrawal.

More information on purchasing can be found in our First Home Buyers’ Info Sheet on our website Resource page.

Note, a separation agreement or court order will be required to confirm any child and/or spousal support payments.

COSTS TO ANTICIPATE

Legal Fees: whether refinancing, removing someone from title, or selling the home, there will be legal fees to keep in mind.

Existing Mortgage Penalty: if breaking an existing mortgage term early (refinancing or selling), a penalty will be incurred. The existing mortgage lender will be able to provide a quote outlining what penalty and fees to expect

REALTOR® Fees: if the family home will be sold.

Property Transfer Tax: if purchasing a new home.

Appraisal Costs: may be required by the lender to confirm value of home.

FREQUENTLY ASKED QUESTIONS

What if I don’t have a separation agreement yet?

We can still take a look at preliminary numbers for you to give you a better sense of your options, using hypothetical figures for child/spousal support, however it’s important to be aware that lenders will not allow us to fund a new mortgage without a finalized separation agreement or court order.

What if I’m not on the mortgage or title for the family home?

In some cases, there are tools that can be used to prevent your spouse from taking action while your separation agreement or court order is being finalized. Reach out to your lawyer to discuss your options in these circumstances.

What if they aren’t cooperating?

Be aware that these proceedings often take more time to be finalized in cases where a separation is not amicable. Reach out to your lawyer to discuss your options if your ex-spouse is not cooperating.

What if my parents gifted us funds towards our purchase?

If there was no co-habitation agreement signed, this will need to be explicitly outlined in your separation agreement. Discuss with your lawyer.

When should I see a lawyer? How long will this process take?

As soon as possible. Even if a separation is amicable, and both parties have all of their ducks in a row, finalizing a separation agreement can still take at least a month.

What should I have ready when I go to see a lawyer?

Your lawyer will confirm this, but to streamline the process, they will likely request your income documents like tax returns upfront.

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*OAC, E&O; please direct any legal questions to your lawyer; this is not legal advice

Mortgage Maturity

Mon, 15 Aug 2022 18:44:56 GMT

I'm almost at

Mortgage Maturity

What do I need to know

about my options?

WHAT DOES "MORTGAGE MATURITY" MEAN?

A mortgage maturity occurs at the end of your mortgage term. Mortgage terms are generally around 5 years, but can range anywhere from 1 to 10 years. At the end of your term, you are required to renew your mortgage into a new term and new interest rate. You can either complete this by signing your renewal offer from your existing lender or can explore your options elsewhere.

WHAT ARE MY OPTIONS AT RENEWAL?

At maturity, you can:

Renew with your existing lender: you can simply sign the offer sent to you by your lender. Renewing directly with your lender (no changes to your principal amount owing or amortization) does NOT require requalification.

Transfer to a different lender: you can use this opportunity to ensure you're still in the best product and rate available. You can explore moving your mortgage to a different lender while maintaining the same amount owing and amortization. Transferring to a different lender requires requalification

Refinance: you can use this opportunity to evaluate your financial situation. Thinking about renovations? A trip? Consolidating some debt? Now is a great time to consider wrapping in some extra funds! Refinancing requires requalification.

Not sure what makes sense for you? Click HERE to find out what option may be best for your situation!

WHEN SHOULD I LOOK INTO MY OPTIONS?

About 4 months prior to your maturity date allows you ample time and opportunity to explore your options. If you are an existing client of ours, we will be in touch annually to make sure you are aware of when your mortgage is maturing.

WHAT FEES ARE ASSOCIATED?

Generally speaking, you shouldn't have a penalty to complete any of the below listed options, provided you are completing your transfer or refinance on your maturity date. Legal fees (~$2,000) and an appraisal (~$500) may be applicable depending on the situation.

MY MORTGAGE MATURES NEXT WEEK... HELP!

Not to worry, we can get things started or you and let you know what option would be best for your situation and goals. If time is not on your side, most lenders allow us to request your mortgage be temporarily renewed into an "open" mortgage. This will allow you to renew your mortgage after your maturity date without incurring a penalty. An open mortgage is typically at a higher interest rate, so is best if there is a fixed end date in mind to have it moved over to a different lender and product.

IF I LOOK INTO OTHER OPTIONS, DO I LOSE MY ABILITY TO RENEW WITH MY CURRENT LENDER?

No! We are able to explore options for you and present them alongside your current renewal options. If it is best for you to stay with your current lender, we will happily present that as your ideal option .

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*OAC, E&O

Down Payment Verification

Mon, 01 Aug 2022 21:57:10 GMT

YOU DID IT! NICE WORK!

YOUR DOWN PAYMENT

Down payment verification is an incredibly important but also tedious part of your financing process.

Lenders are required to confirm that funds being used for down payment and closing costs are being sourced from your own savings (or gifted) and are not borrowed.

There are federal Anti-Money Laundering regulations that must be followed in order to ensure the previous requirements are being fulfilled.

ACCEPTABLE FORMS OF DOWN PAYMENT AND CLOSING COSTS

�� Chequing/Savings

�� Gifted Funds

(owner occupied purchase)

�� Investments

(RRSP, TFSA, or other investments)

THINGS TO KNOW

The actual transaction (payment of your closing costs and down payment) occurs at your solicitor's office shortly before your closing date.
Taking money out of investments may have tax implications.
Your deposit presented with your offer forms part of your down payment and must also be verified.

VERIFICATION OF CHEQUING/SAVINGS

Three months history of bank statements.
Statements must be un-redacted and show your name, or account number with a way to correlate ownership to your name.
Internet statements are acceptable as long as we're able to correlate account ownership to the account number.
Any large deposits , that cannot be correlated as pay deposits from pay stubs, may require further documentation . This is to remain compliant with Anti-Money Laundering regulations.
Any transferred funds from other accounts or savings/investments will require 3 months of history from the savings/investment account and confirmation of withdrawal .

VERIFICATION OF GIFTED FUNDS

Signed gift letter. Flawless Financing will send you a copy of the gift letter to be signed. We will need the following: giftor's name, address, phone number, and relationship to the borrower as well as the amount being gifted/not repayable.
Gifted funds need to be from immediate family members.
A bank statement will confirm the amount outlined on the gift letter has been deposited to your bank account and that it is currently available. This will be confirmed via a current bank statement.

VERIFICATION OF INVESTMENTS

Confirmation of the current balance .
Most recent quarterly statement OR most recent three months statements.
Statements must be un-redacted and show your name, or account number with a way to correlate ownership to your name.

*OAC, E&O

Purchase + Improvements

Sat, 30 Jul 2022 23:35:42 GMT

PROCESS

1️⃣ Prior to subject removal, obtain quotes from a contractor/third party outlining the work to be completed for the improvements.

2️⃣ Work is to be completed after the purchase is finalized and funded via personal cash or credit.

3️⃣ Improvement funds are held in trust by the solicitor until they are confirmed complete.

4️⃣ Once the work is finished, the lender will require confirmation that the outlined work was completed as originally outlined. Depending on the lender and renovations, this may include paid invoices/receipts or an inspection (and permits if appl.).

5️⃣ Funds are released by the solicitor and in some cases can be released directly to the contractor.

HOW MUCH CAN BE ACCESSED?

Some lenders allow a maximum of $40,000 or 20% of the as-is value, released as a single advance. Others allow up to $100,000 , spread across up to 3 draws.

For example, if the total cost of renovations was quoted at $40,000 to re-do the kitchen and $10,000 to update a bathroom, this could be accessed over 2 draws (i.e. first the kitchen, then the bathroom).

In most cases costs will be incurred upfront and only

reimbursed after the work is complete. The improvements do also need to make sense for the area and home.

WHAT RENOVATIONS CAN BE DONE?

This program is most commonly used for cosmetic renovations (kitchen/bathroom upgrades, etc). Some lenders do allow other more unique applications, like:

Putting in a basement suite
note: most lenders will not allow hypothetical rental income from the suite to be used to help qualify
Structural repairs/upgrades or remediation
i.e. if the rood needs to be replaced, or asbestos/vermiculite is found and needs remediation
Mechanical systems
i.e. heating/cooling

OTHER CONSIDERATIONS

Allow extra time during the financing subject removal to gather quotes for the work that is being planned. The lender will require these quotes upfront as a condition of financing.

Any permit applications or additional costs are to be applied for and covered by the client.

The work quoted, is the work that must be completed in order to receive reimbursement (i.e. do not gather quotes for a bathroom renovation and instead replace the flooring in the living room). If changes are necessary, notify your mortgage broker (that's us!) so the lender can approve the changes ahead of time (rather than after the work is already completed.

Any changes to the building envelope (windows, roof, etc) or heating/cooling may be eligible for rebates through CMHC's Eco Rebate Program

FAQ's

Can I do the work myself?

Some lenders allow this, yea, however you would only be reimbursed for your materials costs (not your labour/time).

How long do I have to complete the work?

This varies from lender-to-lender, but typically ranges from 4 - 12 months. An extension can be possible in certain circumstances (i.e. supply chain issues).

What if I decide not to complete the work?

In that case, the funds held in trust would be applied to your mortgage principal rather than being released to you.

What if I have to make changes to the work I had planned?

Reasonable changes (i.e. change of contractor) can often be accommodated, but it's far easier to have changes approved by the lender upfront rather than after the work is completed, so be sure to keep us updated along the way!

EXAMPLE

Let's say you are looking at a home with a $400,000 purchase price , looking to put 5% down . You'd like to access $20,000 to update the kitchen in one draw, and $10,000 to update the bathrooms in a second draw.

$400,000 Purchase Price

+ $30,000 Improvements

$430,000 Total As-Improved Value

- $21,500 Down Payment (5% of as-improved value)

+ $16,340 CMHC Mortgage Insurance (because down payment is less than 20%)

$424,840 Total End Mortgage

Note that the required minimum down payment is calculated based on the as-improved value, not the original purchase price (5% of $430,000, not $400,000) .

95% of the quoted improvement costs, in this case $28,500 , would be held in trust at the solicitor's office un til the work is completed.

You would put in the $20,000 (of your own funds) to complete your kitchen renovation upfront. When the kitchen is complete (confirmed by an inspection and/or paid invoices depending on your lender requirements), $19,000 would be released to you by the solicitor (95% of the $20,000) as your first draw.

You would then complete your bathroom renovation, and once confirmed, the remaining $9,500 would be released.

*OAC, E&O

Bank of Canada Rate Announcement July 13, 2022

Wed, 13 Jul 2022 16:22:01 GMT

Bank of Canada increases policy interest rate by 100 basis points, continues quantitative tightening

The Bank of Canada today increased its target for the overnight rate to 2½%, with the Bank Rate at 2¾% and the deposit rate at 2½%. The Bank is also continuing its policy of quantitative tightening (QT).

Inflation in Canada is higher and more persistent than the Bank expected in its April Monetary Policy Report (MPR), and will likely remain around 8% in the next few months. While global factors such as the war in Ukraine and ongoing supply disruptions have been the biggest drivers, domestic price pressures from excess demand are becoming more prominent. More than half of the components that make up the CPI are now rising by more than 5%. With this broadening of price pressures, the Bank’s core measures of inflation have moved up to between 3.9% and 5.4%. Also, surveys indicate more consumers and businesses are expecting inflation to be higher for longer, raising the risk that elevated inflation becomes entrenched in price- and wage-setting. If that occurs, the economic cost of restoring price stability will be higher.

Global inflation is higher, reflecting the impact of the Russian invasion of Ukraine, ongoing supply constraints, and strong demand. Many central banks are tightening monetary policy to combat inflation, and the resulting tighter financial conditions are moderating economic growth. In the United States, high inflation and rising interest rates are contributing to a slowdown in domestic demand. China’s economy is being held back by waves of restrictive measures to contain COVID-19 outbreaks. Oil prices remain high and volatile. The Bank now expects global economic growth to slow to about 3½% this year and 2% in 2023 before strengthening to 3% in 2024.

Further excess demand has built up in the Canadian economy. Labour markets are tight with a record low unemployment rate, widespread labour shortages, and increasing wage pressures. With strong demand, businesses are passing on higher input and labour costs by raising prices. Consumption is robust, led by a rebound in spending on hard-to-distance services. Business investment is solid and exports are being boosted by elevated commodity prices. The Bank estimates that GDP grew by about 4% in the second quarter. Growth is expected to slow to about 2% in the third quarter as consumption growth moderates and housing market activity pulls back following unsustainable strength during the pandemic.

The Bank expects Canada’s economy to grow by 3½% in 2022, 1¾% in 2023, and 2½% in 2024. Economic activity will slow as global growth moderates and tighter monetary policy works its way through the economy. This, combined with the resolution of supply disruptions, will bring demand and supply back into balance and alleviate inflationary pressures. Global energy prices are also projected to decline. The July outlook has inflation starting to come back down later this year, easing to about 3% by the end of next year and returning to the 2% target by the end of 2024.

With the economy clearly in excess demand, inflation high and broadening, and more businesses and consumers expecting high inflation to persist for longer, the Governing Council decided to front-load the path to higher interest rates by raising the policy rate by 100 basis points today. The Governing Council continues to judge that interest rates will need to rise further, and the pace of increases will be guided by the Bank’s ongoing assessment of the economy and inflation. Quantitative tightening continues and is complementing increases in the policy interest rate. The Governing Council is resolute in its commitment to price stability and will continue to take action as required to achieve the 2% inflation target.

Information note

The next scheduled date for announcing the overnight rate target is September 7, 2022. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR on October 26, 2022.

Bank of Canada Rate Announcement June 1, 2022

Wed, 01 Jun 2022 17:35:23 GMT

Bank of Canada increases policy interest rate by 50 basis points, continues quantitative tightening

The Bank of Canada today increased its target for the overnight rate to 1½%, with the Bank Rate at 1¾% and the deposit rate at 1½%. The Bank is also continuing its policy of quantitative tightening (QT).

Inflation globally and in Canada continues to rise, largely driven by higher prices for energy and food. In Canada, CPI inflation reached 6.8% for the month of April – well above the Bank’s forecast – and will likely move even higher in the near term before beginning to ease. As pervasive input price pressures feed through into consumer prices, inflation continues to broaden, with core measures of inflation ranging between 3.2% and 5.1%. Almost 70% of CPI categories now show inflation above 3%. The risk of elevated inflation becoming entrenched has risen. The Bank will use its monetary policy tools to return inflation to target and keep inflation expectations well anchored.

The increase in global inflation is occurring as the global economy slows. The Russian invasion of Ukraine, China’s COVID-related lockdowns, and ongoing supply disruptions are all weighing on activity and boosting inflation. The war has increased uncertainty and is putting further upward pressure on prices for energy and agricultural commodities. This is dampening the outlook, particularly in Europe. In the United States, private domestic demand remains robust, despite the economy contracting in the first quarter of 2022. US labour market strength continues, with wage pressures intensifying. Global financial conditions have tightened and markets have been volatile.

Canadian economic activity is strong and the economy is clearly operating in excess demand. National accounts data for the first quarter of 2022 showed GDP growth of 3.1 percent, in line with the Bank’s April Monetary Policy Report (MPR) projection. Job vacancies are elevated, companies are reporting widespread labour shortages, and wage growth has been picking up and broadening across sectors. Housing market activity is moderating from exceptionally high levels. With consumer spending in Canada remaining robust and exports anticipated to strengthen, growth in the second quarter is expected to be solid.

With the economy in excess demand, and inflation persisting well above target and expected to move higher in the near term, the Governing Council continues to judge that interest rates will need to rise further. The policy interest rate remains the Bank’s primary monetary policy instrument, with quantitative tightening acting as a complementary tool. The pace of further increases in the policy rate will be guided by the Bank’s ongoing assessment of the economy and inflation, and the Governing Council is prepared to act more forcefully if needed to meet its commitment to achieve the 2% inflation target.

Information note

The next scheduled date for announcing the overnight rate target is July 13, 2022. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR at the same time.

Property Transfer Tax

Sun, 01 May 2022 22:08:26 GMT

I'm interested in

Property Transfer Tax

What do I need to know about

British Columbia's Exemptions?

SLIDING SCALE

BC's UPDATED RULES

Previously, First Time Home Buyers (FTHBs) in BC qualified for a Property Transfer Tax (PTT) exemption up to a purchase price of $500,000 and were partially exempt on a sliding scale up to a purchase price of $525,000. PTT was fully payable on a purchase price higher than this.

Now, as of April 1, 2024, FTHBs will qualify for:

A purchase price up to $500,000, a full PTT exemption.

A purchase price between $500,000 - $835,000, an exemption of PTT on the first $500,000. 2% PTT will be payable on the remaining balance between $500,000 and $835,000.

A purchase price between $835,000 - $860,000, there will be a reduction of the PTT exemption in the amount of $320.80 for each $1,000 between $835k and $860k.

KEYS TO QUALIFY

Only applicable to FTHBs

Must be a Canadian Citizen or a Permanent Resident
Must have lived in BC for at least a year prior to the date of property registration OR filed at least two income tax returns as a BC resident in the last six taxation years
Have never owned a property anywhere in the world at any time
There are other ways to potentially qualify for a PTT Exemption listed HERE

EXAMPLE

For a purchase price of $800,000, as a FTHB:

Prior to April 1, 2024, the full PTT would be payable, $14,000

After April 1, 2024, the first $500,000 is exempt. PTT is payable on the remaining balance, $300,000, for a total of $6,000, meaning a savings of $8,000 in this case for FTHBs.

BC's UPDATED RULES

Now, as of April 1, 2024, FTHBs will qualify for:

A purchase price up to $500,000, a full PTT exemption.

A purchase price between $500,000 - $835,000, an exemption of PTT on the first $500,000. 2% PTT will be payable on the remaining balance between $500,000 and $835,000.

A purchase price between $835,000 - $860,000, there will be a reduction of the PTT exemption in the amount of $320.80 for each $1,000 between $835k and $860k.

EXAMPLE

For a purchase price of $800,000, as a FTHB:

Prior to April 1, 2024, the full PTT would be payable, $14,000

After April 1, 2024, the first $500,000 is exempt. PTT is payable on the remaining balance, $300,000, for a total of $6,000, meaning a savings of $8,000 in this case for FTHBs.

KEYS TO QUALIFY

Only applicable to FTHBs

Must be a Canadian Citizen or a Permanent Resident

Must have lived in BC for at least a year prior to the date of property registration OR filed at least two income tax returns as a BC resident in the last six taxation years

Have never owned a property anywhere in the world at any time

There are other ways to potentially qualify for a PTT Exemption listed HERE

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*OAC, E&O

Bank of Canada Rate Announcement April 13, 2022

Wed, 13 Apr 2022 16:55:20 GMT

Bank of Canada increases policy interest rate by 50 basis points, begins quantitative tightening

The Bank of Canada today increased its target for the overnight rate to 1%, with the Bank Rate at 1¼% and the deposit rate at 1%. The Bank is also ending reinvestment and will begin quantitative tightening (QT), effective April 25. Maturing Government of Canada bonds on the Bank's balance sheet will no longer be replaced and, as a result, the size of the balance sheet will decline over time.

Russia's ongoing invasion of Ukraine is causing unimaginable human suffering and new economic uncertainty. Price spikes in oil, natural gas and other commodities are adding to inflation around the world. Supply disruptions resulting from the war are also exacerbating ongoing supply constraints and weighing on activity. These factors are the primary drivers of a substantial upward revision to the Bank's outlook for inflation in Canada.

The war in Ukraine is disrupting the global recovery, just as most economies are emerging from the impact of the Omicron variant of COVID-19. European countries are more directly impacted by confidence effects and supply dislocations caused by the war. China's economy is facing new COVID outbreaks and an ongoing correction in its property market. In the United States, domestic demand remains very strong and the US Federal Reserve has clearly indicated its resolve to use its monetary policy tools to control inflation. As policy stimulus is withdrawn, US growth is expected to moderate to a pace more in line with potential growth. Global financial conditions have tightened and volatility has increased. The Bank now forecasts global growth of about 3½% this year, 2½% in 2023 and 3¼% in 2024.

In Canada, growth is strong and the economy is moving into excess demand. Labour markets are tight, and wage growth is back to its pre-pandemic pace and rising. Businesses increasingly report they are having difficulty meeting demand, and are able to pass on higher input costs by increasing prices. While the COVID-19 virus continues to mutate and circulate, high rates of vaccination have reduced its health and economic impacts. Growth looks to have been stronger in the first quarter than projected in January and is likely to pick up in the second quarter. Consumer spending is strengthening with the lifting of pandemic containment measures. Exports and business investment will continue to recover, supported by strong foreign demand and high commodity prices. Housing market activity, which has been exceptionally high, is expected to moderate.

The Bank forecasts that Canada's economy will grow by 4¼% this year before slowing to 3¼% in 2023 and 2¼% in 2024. Robust business investment, labour productivity growth and higher immigration will add to the economy's productive capacity, while higher interest rates should moderate growth in domestic demand.

CPI inflation in Canada is 5.7%, above the Bank's forecast in its January Monetary Policy Report (MPR). Inflation is being driven by rising energy and food prices and supply disruptions, in combination with strong global and domestic demand. Core measures of inflation have all moved higher as price pressures broaden. CPI inflation is now expected to average almost 6% in the first half of 2022 and remain well above the control range throughout this year. It is then expected to ease to about 2½% in the second half of 2023 and return to the 2% target in 2024. There is an increasing risk that expectations of elevated inflation could become entrenched. The Bank will use its monetary policy tools to return inflation to target and keep inflation expectations well-anchored.

With the economy moving into excess demand and inflation persisting well above target, the Governing Council judges that interest rates will need to rise further. The policy interest rate is the Bank's primary monetary policy instrument, and quantitative tightening will complement increases in the policy rate. The timing and pace of further increases in the policy rate will be guided by the Bank's ongoing assessment of the economy and its commitment to achieving the 2% inflation target.

Information note

The next scheduled date for announcing the overnight rate target is June 1, 2022. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR on July 13, 2022.

A market notice providing operational details for QT will be published this morning on the Bank's web site.

Bank of Canada Rate Announcement March 2, 2022

Wed, 02 Mar 2022 16:58:18 GMT

Bank of Canada increases policy interest rate

The Bank of Canada today increased its target for the overnight rate to ½ %, with the Bank Rate at ¾ % and the deposit rate at ½ %. The Bank is continuing its reinvestment phase, keeping its overall holdings of Government of Canada bonds on its balance sheet roughly constant until such time as it becomes appropriate to allow the size of its balance sheet to decline.

The unprovoked invasion of Ukraine by Russia is a major new source of uncertainty. Prices for oil and other commodities have risen sharply. This will add to inflation around the world, and negative impacts on confidence and new supply disruptions could weigh on global growth. Financial market volatility has increased. The situation remains fluid and we are following events closely.

Global economic data has come in broadly in line with projections in the Bank’s January Monetary Policy Report (MPR). Economies are emerging from the impact of the Omicron variant of COVID-19 more quickly than expected, although the virus continues to circulate and the possibility of new variants remains a concern. Demand is robust, particularly in the United States. Global supply bottlenecks remain challenging, although there are indications that some constraints have eased.

Economic growth in Canada was very strong in the fourth quarter of last year at 6.7%. This is stronger than the Bank’s projection and confirms its view that economic slack has been absorbed. Both exports and imports have picked up, consistent with solid global demand. In January, the recovery in Canada’s labour market suffered a setback due to the Omicron variant, with temporary layoffs in service sectors and elevated employee absenteeism. However, the rebound from Omicron now appears to be well in train: household spending is proving resilient and should strengthen further with the lifting of public health restrictions. Housing market activity is more elevated, adding further pressure to house prices. Overall, first-quarter growth is now looking more solid than previously projected.

CPI inflation is currently at 5.1%, as expected in January, and remains well above the Bank’s target range. Price increases have become more pervasive, and measures of core inflation have all risen. Poor harvests and higher transportation costs have pushed up food prices. The invasion of Ukraine is putting further upward pressure on prices for both energy and food-related commodities. All told, inflation is now expected to be higher in the near term than projected in January. Persistently elevated inflation is increasing the risk that longer-run inflation expectations could drift upwards. The Bank will use its monetary policy tools to return inflation to the 2% target and keep inflation expectations well-anchored.

The policy rate is the Bank’s primary monetary policy instrument. As the economy continues to expand and inflation pressures remain elevated, the Governing Council expects interest rates will need to rise further. The Governing Council will also be considering when to end the reinvestment phase and allow its holdings of Government of Canada bonds to begin to shrink. The resulting quantitative tightening (QT) would complement increases in the policy interest rate. The timing and pace of further increases in the policy rate, and the start of QT, will be guided by the Bank’s ongoing assessment of the economy and its commitment to achieving the 2% inflation target.

Information note

The next scheduled date for announcing the overnight rate target is April 13, 2022. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR at the same time.

Bank of Canada Rate Announcement January 26, 2022

Thu, 27 Jan 2022 16:11:44 GMT

Bank of Canada maintains policy rate, removes exceptional forward guidance

The Bank of Canada today held its target for the overnight rate at the effective lower bound of ¼ %, with the Bank Rate at ½ % and the deposit rate at ¼ %. With overall economic slack now absorbed, the Bank has removed its exceptional forward guidance on its policy interest rate. The Bank is continuing its reinvestment phase, keeping its overall holdings of Government of Canada bonds roughly constant.

The global recovery from the COVID-19 pandemic is strong but uneven. The US economy is growing robustly while growth in some other regions appears more moderate, especially in China due to current weakness in its property sector. Strong global demand for goods combined with supply bottlenecks that hinder production and transportation are pushing up inflation in most regions. As well, oil prices have rebounded to well above pre-pandemic levels following a decline at the onset of the Omicron variant of COVID-19. Financial conditions remain broadly accommodative but have tightened with growing expectations that monetary policy will normalize sooner than was anticipated, and with rising geopolitical tensions. Overall, the Bank projects global GDP growth to moderate from 6¾ % in 2021 to about 3½ % in 2022 and 2023.

In Canada, GDP growth in the second half of 2021 now looks to have been even stronger than expected. The economy entered 2022 with considerable momentum, and a broad set of measures are now indicating that economic slack is absorbed. With strong employment growth, the labour market has tightened significantly. Job vacancies are elevated, hiring intentions are strong, and wage gains are picking up. Elevated housing market activity continues to put upward pressure on house prices.

The Omicron variant is weighing on activity in the first quarter. While its economic impact will depend on how quickly this wave passes, it is expected to be less severe than previous waves. Economic growth is then expected to bounce back and remain robust over the projection horizon, led by consumer spending on services, and supported by strength in exports and business investment. After GDP growth of 4½ % in 2021, the Bank expects Canada’s economy to grow by 4% in 2022 and about 3½ % in 2023.

CPI inflation remains well above the target range and core measures of inflation have edged up since October. Persistent supply constraints are feeding through to a broader range of goods prices and, combined with higher food and energy prices, are expected to keep CPI inflation close to 5% in the first half of 2022. As supply shortages diminish, inflation is expected to decline reasonably quickly to about 3% by the end of this year and then gradually ease towards the target over the projection period. Near-term inflation expectations have moved up, but longer-run expectations remain anchored on the 2% target. The Bank will use its monetary policy tools to ensure that higher near-term inflation expectations do not become embedded in ongoing inflation.

While COVID-19 continues to affect economic activity unevenly across sectors, the Governing Council judges that overall slack in the economy is absorbed, thus satisfying the condition outlined in the Bank’s forward guidance on its policy interest rate. The Governing Council therefore decided to end its extraordinary commitment to hold its policy rate at the effective lower bound. Looking ahead, the Governing Council expects interest rates will need to increase, with the timing and pace of those increases guided by the Bank’s commitment to achieving the 2% inflation target.

The Bank will keep its holdings of Government of Canada bonds on its balance sheet roughly constant at least until it begins to raise the policy interest rate. At that time, the Governing Council will consider exiting the reinvestment phase and reducing the size of its balance sheet by allowing roll-off of maturing Government of Canada bonds.

The next scheduled date for announcing the overnight rate target is March 2, 2022. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the Monetary Policy Report on April 13, 2022.

Bank of Canada Rate Announcement December 8, 2021

Wed, 08 Dec 2021 18:39:50 GMT

Bank of Canada maintains policy rate and forward guidance.

The Bank of Canada today held its target for the overnight rate at the effective lower bound of ¼ percent, with the Bank Rate at ½ percent and the deposit rate at ¼ percent. The Bank’s extraordinary forward guidance on the path for the overnight rate is being maintained. The Bank is continuing its reinvestment phase, keeping its overall holdings of Government of Canada bonds roughly constant.

The global economy continues to recover from the effects of the COVID-19 pandemic. Economic growth in the United States has accelerated, led by consumption, while growth in some other regions is moderating after a strong third quarter. Inflation has increased further in many countries, reflecting strong demand for goods amid ongoing supply disruptions. The new Omicron COVID-19 variant has prompted a tightening of travel restrictions in many countries and a decline in oil prices, and has injected renewed uncertainty. Accommodative financial conditions are still supporting economic activity.

Canada’s economy grew by about 5½ percent in the third quarter, as expected. Together with a downward revision to the second quarter, this brings the level of GDP to about 1½ percent below its level in the last quarter of 2019, before the pandemic began. Third-quarter growth was led by a rebound in consumption, particularly services, as restrictions were further eased and higher vaccination rates improved confidence. Persistent supply bottlenecks continued to inhibit growth in other components of GDP, including non-commodity exports and business investment.

Recent economic indicators suggest the economy had considerable momentum into the fourth quarter. This includes broad-based job gains in recent months that have brought the employment rate essentially back to its pre-pandemic level. Job vacancies remain elevated and wage growth has also picked up. Housing activity had been moderating, but appears to be regaining strength, notably in resales. The devastating floods in British Columbia and uncertainties arising from the Omicron variant could weigh on growth by compounding supply chain disruptions and reducing demand for some services.

CPI inflation is elevated and the impact of global supply constraints is feeding through to a broader range of goods prices. The effects of these constraints on prices will likely take some time to work their way through, given existing supply backlogs. Gasoline prices, which had been a major factor pushing up CPI inflation, have recently declined. Meanwhile, core measures of inflation are little changed since September. The Bank continues to expect CPI inflation to remain elevated in the first half of 2022 and ease back towards 2 percent in the second half of the year. The Bank is closely watching inflation expectations and labour costs to ensure that the forces pushing up prices do not become embedded in ongoing inflation.

The Governing Council judges that in view of ongoing excess capacity, the economy continues to require considerable monetary policy support. We remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In the Bank’s October projection, this happens sometime in the middle quarters of 2022. We will provide the appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation target.

Information note

The next scheduled date for announcing the overnight rate target is January 26, 2022. The Bank will publish its full outlook for the economy and inflation, including risks to the projection, in the Monetary Policy Report at the same time.

Title Insurance

Mon, 01 Nov 2021 19:10:57 GMT

WHAT IS TITLE INSURANCE?

In its simplest form, title insurance protects the lender and homeowner against a number of risks related to the property’s title or ownership.

What began as a more timely alternative and eventual replacement for obtaining a survey certificate; title insurance, has now become standard practice for real estate purchases and refinances. Simply put, title insurance protects both the lender and the homeowner against a variety of risks related to home ownership and property title.

While the Assurance Fund of the Land Title Office may reimburse the true property owner from fraudulent instances or errors, title insurance is usually a quicker process and less expensive, saving both time and financial headache.

GOOD TO KNOWS

There are no annual premiums for title insurance, it is a one-time cost.

Title insurance is purchased at the solicitor's office and will be included in your lawyer or notary's breakdown of your closing costs.

WHAT DOES TITLE INSURANCE COVER?

While title insurance covers many instances of property registration errors, the main coverage for lenders, and clients, is fraud. Given the uptick in identity theft over the years, title insurance would cover cases where a fraudster impersonates a property owner and secures loans without their knowledge against the property. Title insurance would also cover spousal impersonation and lawyer fraud.

In addition to protecting against title fraud, title Insurance can cover:

violations of municipal by-laws;
encroachments onto an adjoining property;
property tax arrears;
existing work orders;
lack of legal access to the property;
unpaid strata assessments;
zoning and setback non compliance;
forced removal by a governmental authority of a structure built without a required building permit;
legal status of any septic system;
gap coverage.

HOW MUCH DOES IT COST?

A lender policy typically costs $175 and an owner policy typically costs $50, though for properties valued over $1,000,000 this cost is increased (by $0.90 per $1,000 above the $1,000,000 threshold).

IS IT REQUIRED?

The vast majority of lenders will require a lender policy to be purchased at the solicitor's office as a condition of your mortgage funding. Whether you choose to purchase an owner policy in addition to the lender policy is up to you.

*OAC, E&O; This is not legal advice. Please consult your solicitor for individual advice.

Bank of Canada Rate Announcement October 27, 2021

Wed, 27 Oct 2021 20:30:05 GMT

Bank of Canada maintains policy rate and forward guidance, ends quantitative easing.

The Bank of Canada today held its target for the overnight rate at the effective lower bound of ¼ percent, with the Bank Rate at ½ percent and the deposit rate at ¼ percent. The Bank’s extraordinary forward guidance on the path for the overnight rate is being maintained. The Bank is ending quantitative easing (QE) and moving into the reinvestment phase, during which it will purchase Government of Canada bonds solely to replace maturing bonds.

The global economic recovery from the COVID-19 pandemic is progressing. Vaccines are proving highly effective against the virus, although their availability and distribution globally remain uneven and COVID variants pose risks to health and economic activity. In the face of strong global demand for goods, pandemic-related disruptions to production and transportation are constraining growth. Inflation rates have increased in many countries, boosted by these supply bottlenecks and by higher energy prices. While bond yields have risen in recent weeks, financial conditions remain accommodative and continue to support economic activity.

The Bank projects global GDP will grow by 6½ percent in 2021 – a strong pace but less than projected in the July Monetary Policy Report (MPR) – and by 4¼ percent in 2022 and about 3½ percent in 2023.

In Canada, robust economic growth has resumed, following a pause in the second quarter. Strong employment gains in recent months were concentrated in hard-to-distance sectors and among workers most affected by lockdowns. This has significantly reduced the very uneven impact of the pandemic on workers. As the economy reopens, it is taking time for workers to find the right jobs and for employers to hire people with the right skills. This is contributing to labour shortages in certain sectors, even as slack remains in the overall labour market.

The Bank now forecasts Canada’s economy will grow by 5 percent this year before moderating to 4¼ percent in 2022 and 3¾ percent in 2023. Demand is expected to be supported by strong consumption and business investment, and a rebound in exports as the US economy continues to recover. Housing activity has moderated, but is expected to remain elevated. On the supply side, shortages of manufacturing inputs, transportation bottlenecks, and difficulties in matching jobs to workers are limiting the economy’s productive capacity. Although the impact and persistence of these supply factors are hard to quantify, the output gap is likely to be narrower than the Bank had forecast in July.

The recent increase in CPI inflation was anticipated in July, but the main forces pushing up prices – higher energy prices and pandemic-related supply bottlenecks – now appear to be stronger and more persistent than expected. Core measures of inflation have also risen, but by less than the CPI. The Bank now expects CPI inflation to be elevated into next year, and ease back to around the 2 percent target by late 2022. The Bank is closely watching inflation expectations and labour costs to ensure that the temporary forces pushing up prices do not become embedded in ongoing inflation.

The Governing Council judges that in view of ongoing excess capacity, the economy continues to require considerable monetary policy support. We remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In the Bank’s projection, this happens sometime in the middle quarters of 2022. In light of the progress made in the economic recovery, the Governing Council has decided to end quantitative easing and keep its overall holdings of Government of Canada bonds roughly constant.

We will continue to provide the appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation target.

Information notes

A market notice outlining details of the reinvestment phase will be published on the Bank’s web site at 10:30 am ET today.

The next scheduled date for announcing the overnight rate target is December 8, 2021. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on January 26, 2022.

Bank of Canada Announcement September 8, 2021

Wed, 08 Sep 2021 16:30:58 GMT

Bank of Canada maintains policy rate, continues forward guidance and current pace of quantitative easing

The Bank of Canada today held its target for the overnight rate at the effective lower bound of ¼ percent, with the Bank Rate at ½ percent and the deposit rate at ¼ percent. The Bank is maintaining its extraordinary forward guidance on the path for the overnight rate. This is reinforced and supplemented by the Bank’s quantitative easing (QE) program, which is being maintained at a target pace of $2 billion per week.

The global economic recovery continued through the second quarter, led by strong US growth, and had solid momentum heading into the third quarter. However, supply chain disruptions are restraining activity in some sectors and rising cases of COVID-19 in many regions pose a risk to the strength of the global recovery. Financial conditions remain highly accommodative.

In Canada, GDP contracted by about 1 percent in the second quarter, weaker than anticipated in the Bank’s July Monetary Policy Report (MPR). This largely reflects a contraction in exports, due in part to supply chain disruptions, especially in the auto sector. Housing market activity pulled back from recent high levels, largely as expected. Consumption, business investment and government spending all contributed positively to growth, with domestic demand growing at more than 3 percent. Employment rebounded through June and July, with hard-to-distance sectors hiring as public health restrictions eased. This is reducing unevenness in the labour market, although considerable slack remains and some groups – particularly low-wage workers – are still disproportionately affected. The Bank continues to expect the economy to strengthen in the second half of 2021, although the fourth wave of COVID-19 infections and ongoing supply bottlenecks could weigh on the recovery.

CPI inflation remains above 3 percent as expected, boosted by base-year effects, gasoline prices, and pandemic-related supply bottlenecks. These factors pushing up inflation are expected to be transitory, but their persistence and magnitude are uncertain and will be monitored closely. Wage increases have been moderate to date, and medium-term inflation expectations remain well-anchored. Core measures of inflation have risen, but by less than the CPI.

The Governing Council judges that the Canadian economy still has considerable excess capacity, and that the recovery continues to require extraordinary monetary policy support. We remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In the Bank’s July projection, this happens in the second half of 2022. The Bank's QE program continues to reinforce this commitment and keep interest rates low across the yield curve. Decisions regarding future adjustments to the pace of net bond purchases will be guided by Governing Council's ongoing assessment of the strength and durability of the recovery. We will continue to provide the appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation objective.

Information note

The next scheduled date for announcing the overnight rate target is October 27, 2021. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR at the same time.

Bank of Canada Rate Announcement July 14, 2021

Wed, 14 Jul 2021 18:58:44 GMT

Bank of Canada maintains policy rate and forward guidance, adjusts quantitative easing program

The Bank of Canada today held its target for the overnight rate at the effective lower bound of ¼ percent, with the Bank Rate at ½ percent and the deposit rate at ¼ percent. The Bank is maintaining its extraordinary forward guidance on the path for the overnight rate. This is reinforced and supplemented by the Bank’s quantitative easing (QE) program, which is being adjusted to a target pace of $2 billion per week. This adjustment reflects continued progress towards recovery and the Bank’s increased confidence in the strength of the Canadian economic outlook.

The global economy is recovering strongly from the COVID-19 pandemic, with continued progress on vaccinations, particularly in advanced economies. However, the recovery is still highly uneven and remains dependent on the course of the virus. The recent spread of new COVID-19 variants is a growing concern, especially for regions where vaccination rates remain low.

Global GDP growth is expected to reach 7 percent this year and then moderate to about 4 ½ percent in 2022 and just over 3 percent in 2023. This is a slightly stronger forecast than the one in the Bank’s April Monetary Policy Report (MPR) and primarily reflects a stronger US outlook. Global financial conditions remain highly accommodative. Rising demand is supporting higher oil prices, while non-energy commodity prices remain elevated. The Canada-US exchange rate is little changed since April.

In Canada, the third wave of the virus slowed growth in the second quarter. However, falling COVID-19 cases, progress on vaccinations and easing containment restrictions all point to a strong pickup in the second half of this year. The Bank now expects GDP growth of around 6 percent in 2021 – a little slower than was expected in April – but has revised up its 2022 forecast to 4 ½ percent and projects 3 ¼ percent growth in 2023.

Consumption is expected to lead the recovery as households return to more normal spending patterns, while housing market activity is projected to ease back from historical highs. Stronger international demand should underpin a solid recovery in exports. As domestic and foreign demand increases and confidence improves, business investment will gain strength. Employment has once again begun to rebound, and we expect the hardest-hit segments of the labour market to post strong gains as the economy re-opens. However, the pace of the recovery will vary among industries and workers, and it could take some time to hire workers with the right skills to fill jobs. The aftermath of lockdowns and ongoing structural changes in the economy both mean that estimates of potential output and when the output gap will close are particularly uncertain.

CPI inflation was 3.6 percent in May, boosted by temporary factors that include base-year effects and stronger gasoline prices, as well as pandemic-related bottlenecks as economies re-open. Core measures of inflation have also risen but by less than the CPI. In some high-contact services, demand is rebounding faster than supply, pushing up prices from low levels. Transitory supply constraints in shipping and value chain disruptions for semiconductors are also translating into higher prices for cars and some other goods. With higher gasoline prices and on-going supply bottlenecks, inflation is likely to remain above 3 percent through the second half of this year and ease back toward 2 percent in 2022, as short-run imbalances diminish and the considerable overall slack in the economy pulls inflation lower. The factors pushing up inflation are transitory, but their persistence and magnitude are uncertain and will be monitored closely.

The Governing Council judges that the Canadian economy still has considerable excess capacity, and that the recovery continues to require extraordinary monetary policy support. We remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In the Bank’s July projection, this happens sometime in the second half of 2022. The Bank's QE program continues to reinforce this commitment and keep interest rates low across the yield curve. Decisions regarding further adjustments to the pace of net bond purchases will be guided by Governing Council's ongoing assessment of the strength and durability of the recovery. We will continue to provide the appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation objective.

Information note

The next scheduled date for announcing the overnight rate target is September 8, 2021. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on October 27, 2021.