Statistics Canada announced this morning that employment increased in July and the jobless rate fell .2 percentage points to 5.8%–returning to its lowest level since the 1970s posted earlier this year.

The economy added a stronger-than-expected 54,100 net new jobs last month–its most significant advance this year. This gain, however, was driven by increases in part-time work. July’s jobs surge followed the 31,800 rise in June. Both months enjoyed advances well above the 20,000 average monthly gains of the past year.
In the 12 months to July, employment grew by 246,000 (+1.3%), largely reflecting growth in full-time work (+211,000 or +1.4%). Over this period, the total number of hours worked rose by 1.3%.

The job growth last month was primarily in public sector jobs, especially in educational services mainly in Ontario and Quebec. At the national level, the rise was primarily in employment in post-secondary institutions, particularly universities, and was mostly in part-time work. The number of people working in health care and social assistance also rose, mainly in Ontario. In British Columbia, the number of people working increased by 11,000 and the jobless rate was 5.0% (see table below). Job gains were also noted in Newfoundland and Labrador, the first increase since October 2017. The number of workers declined in Saskatchewan and Manitoba, while it was little changed in other provinces.

Manufacturing jobs declined by 18,400 in contrast to the record-high jump of 90,500 in the service sector. The surge in service sector employment, however, likely reflected a technical distortion. The timing of hiring in the education sector has been volatile over the summer months in recent years causing a seasonal adjustment problem. The July spike education jobs will likely be unwound in the next two months.

Wags gains slowed during the month, with average hourly wages up 3.2% y/y compared to 3.6% y/y in June. Wage gains for permanent workers were 3%, the slowest this year.

The Canadian economy continues to run at a stronger pace than long-run potential as the labour markets continue to tighten. The jobless rate of 5.8% is below the full-employment level of 6.0%-to-6.5%. A more robust pace of hiring runs the risk of further increasing excess demand, putting upward pressure on inflation. In consequence, the Bank of Canada will continue to withdraw stimulus by gradually hiking overnight rates.

This report has raised the likelihood of another increase in the benchmark overnight rate of 25 basis points, possibly as soon as the next policy meeting in September. Inflation, however, remains at the Bank of Canada’s target of 2.0%, allowing the Bank to wait until the subsequent meeting in October.

• Dr. Sherry Cooper

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

The province is introducing amendments to strata property regulations in an effort to crack down on strata vacation rentals.

Under the new regulations, which will come into effect Nov. 30, strata corporations will be able to fine owners or residents not complying with short-term rental bans up to $1,000 a day.

Currently, stratas can pass bylaws banning short-term rentals, with a maximum fine of $200 per week.

In B.C., ownership in condominiums, apartments or townhouses sharing common areas is often purchased through an owners’ corporation under a strata title.

The owners elect a council that sets policy for the strata.

Ensure long-term rental stock

The province said the amendment is in part to increase the rental vacancy rate, by discouraging hosts and owners from turning their properties into short-term rentals.

“We’ve all heard the stories of renters losing their homes when units are pulled out of the rental market to be used as short-term rentals,” said Selina Robinson, Minister of Municipal Affairs and Housing.

“With this change, we can ensure there is long-term rental stock for people and families who need them.”

Robinson also said short-term rentals can create “unintended consequences” for the people who make their homes in strata buildings, including “unacceptable levels of noise, damage to common property, and security issues.”

–CBC News

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.

Canada Mortgage and Housing Corp. is making changes intended to make it easier for the self-employed to qualify for a mortgage.

The national housing agency says it’s giving lenders more guidance and flexibility to help self-employed borrowers.

Self-employed Canadians may have a harder time qualifying for a mortgage as their incomes may vary or be less predictable.

CMHC is providing examples of factors that can be used to support the lender’s decision to lend to borrowers who have been operating their business for less than 24 months, or in the same line of work for less than 24 months.

It is also providing a broader range of documentation options to increase flexibility for satisfying income and employment requirements.

The changes, which apply to both transactional and portfolio insurance, will take effect Oct. 1.

CMHC chief commercial officer Romy Bowers said self-employed Canadians represent a significant part of the workforce.

“These policy changes respond to that reality by making it easier for self-employed borrowers to obtain CMHC mortgage loan insurance and benefit from competitive interest rates,” Bowers said in a statement.

–The Canadian Press

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

As expected, the Bank of Canada hiked its key overnight rate this morning by 25 basis points to 1.5%. What wasn’t expected was the hawkish tone of the press release which brushed aside the threat of greater protectionism, instead emphasizing the need for higher interest rates to keep inflation near its target. In today’s Monetary Policy Report (MPR), the Bank maintained its forecast for growth of the global economy. The U.S. economy, however, has proven stronger than expected, “reinforcing market expectations of higher policy rates and pushing up the U.S. dollar. Meanwhile, oil prices have risen. Yet, the Canadian dollar is lower, reflecting broad-based U.S. dollar strength and concerns about trade actions.”

Canada’s economy continues to operate close to full capacity. “Household spending is being dampened by higher interest rates and tighter mortgage lending guidelines.”  The ratio of household debt to disposable income is edging down as household credit growth continues to slow (chart below).

Consumer spending growth has been slowing since mid-2017, led by a pullback in interest-sensitive components such as vehicle purchases, furniture, appliances and dwelling maintenance. With the slowdown in housing purchases, housing-related spending has also slowed.

The sensitivity of consumption and housing to interest rates is estimated to be larger than in past cycles, given the elevated ratio of household debt to disposable income. The impact of higher interest rates likely differs across categories of borrowers, with highly indebted households the most affected.

The Bank said that “Recent data suggest housing markets are beginning to stabilize following a weak start to 2018.”  The July MPR report estimates that housing will contribute a mere 0.1 percentage points to growth this year, with no contribution in 2019 and a slightly negative impact in 2020 (see Table below). The MPR elaborated that residential investment is slowing, reflecting the effects of higher interest rates and tighter mortgage rules. Resale activity contracted when the revised measures went into effect but is anticipated to improve over the next few quarters. Data on resale activity and housing starts suggest that the housing market is beginning to stabilize. The growth of new construction spending is expected to slow over the projection horizon. The new mortgage measures may cause households to purchase less-expensive residences because typical homebuyers are now more constrained in how much they can borrow.

Meanwhile, exports are buoyed by strong global demand and higher commodity prices. “Business investment is growing in response to solid demand growth and capacity pressures, although trade tensions are weighing on investment in some sectors. Overall, the Bank still expects average growth of close to 2% over 2018-2020.” This is somewhat above the Bank’s estimate of noninflationary growth at full capacity, the so-called ‘potential’ growth rate.

Inflation remains near 2%, consistent with an economy close to capacity. The Bank estimates that underlying wage growth is running at about 2.3%, slower than would be expected at full employment. The actual growth rate in wages has recently been boosted by increases in the minimum wage rate in some provinces.

These economic projections take into account the estimated impact of tariffs on steel and aluminium recently imposed by the U.S., as well as the countermeasures enacted by Canada. “Although there will be difficult adjustments for some industries and their workers, the effect of these measures on Canadian growth and inflation is expected to be modest.”

The Bank wrapped up its press release with the following statement: “Governing Council expects that higher interest rates will be warranted to keep inflation near target and will continue to take a gradual approach, guided by incoming data. In particular, the Bank is monitoring the economy’s adjustment to higher interest rates and the evolution of capacity and wage pressures, as well as the response of companies and consumers to trade actions.”

Bottom Line: This rate hike signals that the Bank of Canada is determined to bring its benchmark overnight rate back to more normal levels and that the economy is strong enough to withstand further rate increases. The Bank believes that stronger-than-expected business investment, higher oil prices and a weaker Canadian dollar offset the adverse effect of greater trade uncertainty. Exports have surprised on the upside because of strong global demand.

The mix of growth in Canada has shifted from housing and consumption to exports and business investment–the desired result of the many tightening moves introduced by the government, the central bank and the regulators to slow the rise in household debt.  The Bank believes that this shift in the composition of growth will result in a more sustainable expansion.

Markets expect the Bank to gradually hike the benchmark rate until it reaches 2% or 2-1/4% by the end of 2019–implying another 2 or 3 rate hikes by the end of next year. Governor Poloz said today at the press conference that the Bank’s assessment of the neutral rate for the benchmark is 2-1/2% to 3%, but it is uncertain how quickly we will get there.

The Governing Council of the Bank is scheduled to meet again on September 5. 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 24, 2018.

Dr. Sherry Cooper

The Angela Calla Mortgage Team will work with you personally to ensure you get the best mortgage options contact us directly at 604-802-3983 or callateam@dominionlending.ca it’s never too early or too late to start planning to position yourself best

As expected the Bank of Canada raised its overnight rate .25%, banks are expected to follow.

View the full report here:

https://www.bankofcanada.ca/2018/07/fad-press-release-2018-07-11/

Key Takeaways

1. Canada continues to attract business investment
2. Despite Tariffs Canadian exports are strong
3. More gradual increases to come – The next scheduled date for announcing the overnight rate target is September 5, 2018.- we expect an increase then as well.

To learn more about what to do if you have a variable or fixed rate see our April insiders report here http://angelacalla.ca/general/insiders-update-april-2018/

Any questions?  We are here to help.

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.

With the Bank of Canada holding rates steady this April, the same is not the case for the bond market, which impacts fixed rates.

In every interest-rate market there are many factors leading to an increase and we are hoping to provide a little bit of clarity on what is happening and what it means to you and your loved ones.

At this time, we see fixed rates increasing as the bond market increases, and our economists anticipate two more Bank of Canada increases of prime rate by the end of 2018.

The full report can be viewed here: http://angelacalla.ca/general/poloz-holds-rates-sees-room-growth-rising-inflation/ & http://angelacalla.ca/general/td-bank-raises-5-year-posted-mortgage-rate-royal-bank-also-upping-rate/

Why do we note this information and how does it relate to you?

If you are in a variable rate, you will want to: 

1. Review your lock-in options by contacting us or your lender directly. Knowing it’s unlikely the prime rate will reduce and fixed rates are on the rise, there could be a sweet spot to review your options now.
2. If you decide not to lock in, it’s time to review your discount to see if a higher one can be obtained elsewhere.

Locking in won’t be for everyone, especially if you are making higher payments and your mortgage is below $300,000, which most people fit and will continue on that path. Locking in will be around 1% higher rate than you are likely presently paying.

If however rates raising another half of a percent this year and knowing you can likely lock in around 4% now is most attractive to you, this may be your time. The next announcement from the BOC on Prime Rates is May 30^th 2018

If you are in a fixed rate:

1. If you obtained your mortgage in the last year, stay put.
2. If you are looking to move up the property ladder or consolidate debt, get your application in to us ASAP so we can hold options for up to 120 days.
3. If you are up for renewal this year or know someone who is, secure your options now with us to weight out the savings prior to renewal with us keeping a watchful eye on the market.

Please reach out to us so we can help ensure you or a loved is on the right path in our ever changing market.

The Angela Calla Mortgage Team gives you clarity on the best mortgage by being transparent, unbiased free mortgage advice with choice. We are here to help you personally with your mortgage at 604-802-3983 or callateam@dominionlending.ca

Some of the last round of changes from the government regarding qualifying for a mortgage were that if you have a balance on your unsecured line of credit, then to qualify for mortgage the lenders require that we use a 3% payment of the balance of the line of credit.

Simple math is,  if you owe $10,000 we have to use $300 as your monthly payment regardless of what the bank requires as a minimum. Given that the banks hand out lines of credit on a regular basis it is not uncommon for us to see $50,000 lines of credit with balances in the $40,000 range. That amount then means we have to use $1,200 a month as a payment even though the bank may require considerably less.

So what if it is a secured line of credit? Again we have clients telling us that they don’t have a mortgage only to realize they do have a Home Equity Line of Credit (HELOC). A home equity line of credit by all definition is a loan secured by property, the actual definition of a mortgage.

Again, it’s something the bank will require little more than interest payment on because it is secured. The calculation here can also upset the calculation for your next mortgage, as what is required by many lenders is to take the balance of the HELOC. Let’s say the balance is $200,000 and you convert it to a mortgage at the bench mark rate, which today is 5.34% with a 25-year amortization. That without any fees today is equal to $1202.22 per month, so what in the client’s mind may be a $400 or $500 dollar interest payment for the purpose of qualifying will be almost three times higher.

This one change to supposedly safe guard the Canadian consumer has lately been the thing we have seen stop more mortgages than just about anything else. If you have any question, contact a Dominion Lending Centres mortgage professional for answers.

Len  Lane

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.

HELOC, Refinance or Second/Third Mortgages? Which one should you choose to go with? If you have decided to tap into the equity in your home, the three can seem to be interchangeable at times and for many consumers can be a difficult decision on which one to select. We have laid out seven questions to guide you through the decision, for your unique situation. We’ve also broken this down into three categories, Equity, Payment and Availability.

PAYMENT

1. HOW WILL I RECEIVE THE MONEY?
• HELOC: Home Equity Line of Credit-withdraw as needed
• Refinance: Lump Sum
• Private Second/Third Mortgages: Lump Sum

2. WHAT IS THE INTEREST RATE?
• HELOC: Prime Rate + premium 0.5%-1.5%
• Refinance: Best fixed or variable rate (dependent on what you and your broker decide)
• Private Second/Third Mortgages: 6.95%-19.95% typically with lender/broker fees

HOW IS THE INTEREST CALCULATED?
• HELOC: interest accrues on what you withdraw from your home’s equity.
• Refinance: interest accrues on the full loan amount that was taken out.
• Private Second/Third Mortgages: interest accrues on the full loan amount that was taken out.

3. WHAT IS MY PAYMENT?
• HELOC: You pay back the interest only, however, most banks will have a minimum rule so even if your HELOC value is $0 you will still have to pay a nominal fee each month.
• Refinance: You will pay the interest, plus the principle principal loan amount.
• Private Second/Third Mortgages: You can pay interest only payment or pay the interest plus the principle principal loan amount.

EQUITY

4. HOW MUCH EQUITY DO I NEED TO HAVE IN MY HOME IN ORDER TO ACCESS IT?
• HELOC: 20% minimum
• Refinance: 20% minimum
• Private Second/Third Mortgages: 5-10% minimum

5. HOW MUCH EQUITY CAN ACCESS?
• HELOC: You can access up to 80%
• Refinance: 80% of your home’s equity is accessible
o HELOC portion can be up to 65% of your home’s equity
o Mortgage portion must be 15% – as per Bank of Canada guidelines
• Private Second/Third Mortgages: 1st mortgage + 2nd/3rd mortgages up to 95% of home value

AVAILABILITY

6. ARE THERE FEES ASSOCIATED WITH IT?
• HELOC: No fees associated with it
o At times
Appraisal fees
Legal fees
• Refinance: Prepayment penalty of Interest Rate Differential or 3 months interest* depends on your current mortgage terms.
o At times
Appraisal fees
Legal fees
• Second/Third Mortgage: There are several fees associated with a second mortgage including:
• Appraisal fees
• Legal fees
• Lenders fees
• Broker Fees

***One final note on refinancing: With the new stress-testing you will have to qualify at a higher rate and you will also have to consider that lenders can no longer insure the product… meaning there are many different rates with different lenders.

Once you answer each of these questions and review your options, you can decide which one is best suited for your needs. You can also always call a Dominion Lending Centres Mortgage Broker and discuss it. DLC brokers are well versed in each of these options and can direct you towards the best option for your situation. We’ve seen a variety of situations with our clients and have helped each of them reach their goals.

Geoff Lee

The Angela Calla Mortgage Team gives you clarity on the best mortgage by being transparent, unbiased free mortgage advice with choice. We are here to help you personally with your mortgage at 604-802-3983 or callateam@dominionlending.ca.

It’s always a pleasure giving back to the community.  Glad we could put a smile on some little kids faces this year!

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.

You have a family member that doesn’t qualify for a mortgage on their own and needs a co-signor. Since you’re a nice person, and of course would like to see your son/daughter/parent/sibling in a better position, you agree to co-sign for the mortgage.

If I had a dollar for anytime I’ve heard the phrase “but I’m only co-signing right, they can’t come after me for the money or touch my house?” I’d be rich!

There are many common myths around co-signing. Here’s only a few and the truths associated with each one…

• I’m only co-signing for my family member to get the mortgage and that I won’t have to ever make payments. False: You are equally responsible for making the payment on the mortgage. If the borrowers default, you will be required to pay.
• I can’t be sued for non-payment since it’s not my mortgage. False: The lender has all legal collection methods available to them to collect payment from you, including obtaining judgment in court and possible garnishment of wages and bank accounts.
• The bank can’t take my house if the borrower loses theirs. False: As per the second myth above, judgment action can also involve seizure and sale of any of your assets including and not limited to your own home.
• I’m only a co-signor or a guarantor so I’m protected from not having to pay. False: Whether you are the borrower, co-signor, or guarantor, you are fully responsible for the debt.
• Co-signing on this debt won’t affect my ability to obtain credit in the future. False: Not only will you legally have to declare the co-signed debt when you apply for credit, but also most lenders in Canada are now reporting to the credit bureau and it will appear when you apply. Either way, the mortgage payment must be factored into your debt service ratio.
• Since this is only a five-year term, I am automatically released from this mortgage in five years. False: Regardless of term, you remain on the mortgage until it is paid in full or released only with approval from the lender.

Here’s a few tips and questions to ask before agreeing to co-sign on a mortgage…

• Know the borrowers’ situation. What is there credit like? Are they drowning in debt? Why exactly is a co-signor required?
• Is there an exit strategy to have your name released and how long will that take?
• Add your name to title of the property so that the borrower cannot add a second mortgage to it. This is an asset that you have an interest in and therefore should protect it.
• Get independent legal advice about your obligations as a consignor.
• Be prepared to make the mortgage payments of the borrower doesn’t.
• Don’t be afraid to say no to co-signing if it doesn’t feel right.

Knowledge of the borrowers situation, your obligations, and potential ways to protect yourself (and of course setting emotions aside) is the best advice for anyone co-signing. And if you have any questions, please contact your local Dominion Lending Centres mortgage specialist.

Sean Binkley

The Angela Calla Mortgage Team will work with you personally to ensure you get the best mortgage options contact us directly at 604-802-3983 or callateam@dominionlending.ca it’s never too early or too late to start planning to position yourself best.