11 Dec

A shifting market…again

General

Posted by: Angela Calla

The recent data sure has changed the tone of rates in the coming months.

The prime rate – what variable rates are based on, while a few short weeks ago was expected to rise three times in the next 18 months now with the data on the slowing of the market and uncertainty in projects moving forward as expected, there are signs increases could be delayed until next spring.

The bond market- what fixed rates are based on, has dropped, which means rates (after the banks have hung on as much as possible ) should come down slightly.
What does his mean for borrowers? Let’s break it down per segment

1- Homebuyers – more affordability due to the recent dip in prices – pending price category anywhere from 10-30%. Remember, working with an unbiased mortgage professional we do a full look back upon closing to ensure the lowest cost of borrowing.

2. Home sellers – price sharp if you want to sell or else no point in being on the market.

3. Renewals rejoice – payment shock shall be reduced upon renewal.

4. Those carrying debt outside of a mortgage ex: credit cards, car payments, lines of credit – now is your time to see how much money moving that debt into a new restructured mortgage will improve your cash flow. It’s the most effective strategy for protecting your credit.

The most constant theme in everything above: The market is always changing, yesterday’s news is exactly that. Aligning yourself with the front-line experts who will help you with clarity in the ever-changing market. This is why while experts can give you the data on the current market – it’s always subject to change. The decisions a borrower makes is their responsibility to adapt to.

Angela Calla is a 14 year award-winning woman of influence mortgage expert. Along side her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from a sales will help build a new emergency room at Eagle Ridge Hospital. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

11 Dec

How to avoid the Holiday Debt Hangover

General

Posted by: Angela Calla

Let’s face it, the memories we create with people are what last a lifetime. Have you ever sat with someone who said – I wish I could live a longer to have more stuff? Or would they rather have time with loved ones? Here’s a few ideas to make a memory.

1. What are you both passionate about? Food? Volunteer to cook for the Ronald McDonald house or distribute food at SHARE or your local food bank as an example.

2. Print your favourite photo of you and your friend from that year; these are prized possessions from what we see in homes and offices.

3. We are surrounded with beauty living in the most beautiful city in the world. Plan to do the Coquitlam crunch , Stanley park Seawall in Vancouver or Grouse Grind in North Vancouver; plan a date with quality time and health.

4. It’s time to purge for the New Year. Clear the clutter from your house, then donate it to your local mother’s group or society that’s collecting donations. It feels good to give and someone’s “no more” is someone else’s treasure. The Tri-Cities Mom’s Group is great. I’m sure you likely have a local chapter. The Diabetes Association will come to your house to pick up your stuff for free! As you clear the clutter, remember that you are also doing an emotional and spiritual cleanse. This should remind you just how wasteful at times we can be and when we have clutter in our homes, it translates to our minds. We need to make room for more space and clarity to bring more love and opportunities in our lives.

5. Give the gift of education. Knowledge is power and if you are going to buy gifts, look to do so with a social conscience and buy from companies that support the organizations you would like to see supported.

6. As a best-selling author of the Mortgage Code and 70% of Canadians being homeowners and 100% needing somewhere to live, I feel my book is a fabulous investment for your loved ones. The book is empowering and ALL the proceeds go to The Eagle Ridge Hospital and building a new Emergency Room. Group purchases and employee or team benefits available and private signings based on availability.

7. If a material gift is a must, what about your points on your credit cards? If you have points, perhaps you can use them to buy gift cards to help with improving cash flow. Sometimes retailers do a gift with purchase to stretch that dollar even further.

Enjoy the season!

Angela Calla has been a licensed mortgage broker for 14 years. She has been with Dominion Lending Centres since its inception in January 2006. Residing in Port Moody, British Columbia, Angela is a regular expert guest on several news stations, television shows, radio programs and local and national publications. She was the AMP of the year in 2009, and has consistently been one of DLC and the industry’s top performers since 2006. She can be reached at callateam@dominionlending.ca or 604-802-3983

5 Dec

Bank of Canada’s Dovish Tone

General

Posted by: Angela Calla

As was universally expected, the Bank of Canada’s Governing Council held overnight interest rates steady at 1-3/4% as it heralded a weaker outlook for the Canadian economy. The dovish tone in today’s Bank of Canada statement is in direct contrast to its attitude when it last met on October 24. Since that time, the global economy has moderated, and oil prices have fallen sharply. Troubling prospects for Alberta’s energy sector have weighed on the economy as the U.S. has expanded shale oil production. Benchmark prices for “western Canadian oil–both heavy and, more recently, light–have been pulled down even further by transportation constraints and a buildup of inventories”. The Notley government in Alberta ordered production cuts this week leading the Bank to conclude that Canada’s energy sector will be “materially weaker” than expected.

The Canadian economy grew at a 2% annual rate in the third quarter, mainly in line with the Bank’s expectation, however, September data suggest significantly less momentum going into Q4. The biggest disappointment was the plunge in business investment, which likely reflected trade uncertainty (see chart below). Business investment outside of the oil sector is likely to improve with the signing of the new trade agreement USMCA, the new federal tax measures to improve capital depreciation write-offs, and ongoing capacity constraints.

Household credit appears to be stabilizing following a significant slowdown in recent months. However, the rise in interest rates this year has had a more substantial impact on credit-sensitive spending than many had expected. For example, plunging car sales add to evidence that higher borrowing costs are dampening economic activity possibly to a more significant extent than the central bank expected. Light vehicle sales dropped 9.4% in November, the most since 2009. As well, Bank of Canada data show growth in residential mortgages decelerated to 1.4% in September on an annualized three-month basis, the weakest pace since 1982.

The Bank has raised borrowing costs five times since July 2017. New home building declined for the third consecutive quarter, down an annualized 5.9% in Q3. Moreover, according to the Toronto Real Estate Board (TREB), Toronto’s housing market posted its biggest monthly sales decline since March while prices remained little changed. Sales in Canada’s largest city fell 3.4% in November from the previous month TREB reported today (see chart below).

The housing market in the Toronto region has been stabilizing after a slowdown in sales and prices earlier this year amid more stringent mortgage-lending rules. The market picked up its pace through the summer, though sales have declined for the third month in a row.

The drop in sales could in part be attributed to a decline in new listings, which fell 26% year-over-year. “New listings were actually down more than sales on a year-over-year basis in November,” Garry Bhaura, the president of the board, said in a statement. “This suggests that, in many neighbourhoods, competition between buyers may have increased. Relatively tight market conditions over the past few months have provided the foundation for renewed price growth.”

Here is a sampling of other factors that highlight some of the headwinds confronting the Canadian economy:

Economic data have been coming in below expectations according to Citibank’s Surprise Index, which tracks the difference between market expectations for economic indicators and their actual values. This index has trended downward since last summer and has been below zero since mid-October–around the time of the Bank of Canada’s last Monetary Policy Report (MPR) and the most recent rate hike.

The Macdonald Laurier Institute’s Leading Indicator fell 0.1% in October. The composite gauge’s first decline since January 2016 was primarily driven by a pullback in S&P/TSX Composite Index, which fell 6.5% on the month, as well as marked decreases in commodity prices.

As well, inflation pressures have diminished. For example, gasoline prices have tumbled by about 25 Canadian cents back toward a dollar a litre since October. The latest policy statement says, “CPI inflation, at 2.4% in October, is just above target but is expected to ease in coming months by more than the Bank had previously forecast, due to lower gasoline prices. Downward historical revisions by Statistics Canada to GDP, together with recent macroeconomic developments, indicate there may be additional room for non-inflationary growth. The Bank will reassess all of these factors in its new projection for the January MPR.”

Bottom Line: “Governing Council continues to judge that the policy interest rate will need to rise into a neutral range to achieve the inflation target,” the bank said in the statement, adding the appropriate pace of increases will depend on the “effect of higher interest rates on consumption and housing, and global trade policy developments.”

“The persistence of the oil price shock, the evolution of business investment, and the Bank’s assessment of the economy’s capacity will also factor importantly into our decisions about the future stance of monetary policy,” the bank said.

As recently as October, investors were expecting at least three more rate hikes in 2019. Currently, those expectations have lessened to no more than two. The Bank had previously estimated the “neutral” range for overnight rates at between 2.5% and 3.5%. Today’s more dovish statement might well indicate that rate hikes over the next year will be to levels well below this neutral range.

-Dr. Sherry Cooper

Angela Calla, Mortgage Expert, AMP of the Year in 2009 has been helping British Columbian families save money with the best mortgage strategy for over a decade from her Port Coquitlam office location. She is a regular contributor to national and regional media outlets and long-time host of The Mortgage Show on CKNW Saturdays at 7pm, and sits on many advisory boards for mortgage lenders and insures.