Bank of Canada Maintains Policy Rate and forward guidance, Ends Quantitative Easing

General Angela Calla 28 Oct

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.

This article was first published on the Bank of Canada website.


Angela Calla is a 17-year award-winning woman of influence which sets her apart from the rest. She is without a doubt, a true expert in her field. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click  here to view the latest news on our blog. 

Team Banner housing market

Hawkish Bank of Canada Decision

General Angela Calla 28 Oct

Bank of Canada Responds To Mounting Inflation: Ends QE and Hastens Timing of Rate Hike

The Bank of Canada surprised markets today with a more hawkish stance on inflation and the economy. The Bank released its widely anticipated October Monetary Policy Report (MPR) in which its key messages were:

  • The Canadian economy has accelerated robustly in the second half.
  • Labour markets have improved, especially in the hard-to-distance sectors. Despite continuing slack, many businesses can’t find appropriate workers quickly enough to meet demand.
  • Disruptions to global supply chains have worsened, limiting production and leading to both higher costs and higher prices.
  • The output gap is narrower than projected in July. The Bank now expects slack to be absorbed in Q2 or Q3 of next year, one quarter sooner than earlier projected.
  • Given persistent supply constraints and the increase in energy prices, the Bank expects inflation to stay above the control range for longer than previously anticipated before easing back to close to the 2 percent target by late 2022.
  • The Bank views the risks around this inflation outlook as roughly balanced.

In response to the Bank’s revised view, it announced that it is ending quantitative easing, shifting to the reinvestment phase, during which it will purchase Government of Canada bonds solely to replace maturing bonds. The Bank now owns about 45% of all outstanding GoC bonds.

The Bank today held its target for the overnight rate at the effective lower bound of 1/4 percent. While this was widely expected, the Bank adjusted its forward guidance. It moved up its guidance for the first hike in the overnight rate target by three months, from the second half of 2022 to the middle quarters–sometime between April and September.

 

 

Canadian bond traders had already bet a rate hike would occur in Q1 or Q2. Nevertheless, bond yields spiked at 10 AM today when the Bank released its policy decision (see chart below).

 

 

Bottom Line

Since the Bank last met in early September, the Government of Canada five-year bond yield has spiked from .80% by a whopping 60 basis points to a 1.40%. That is an incredible 75% rise. A year ago, the five-year bond yield was only .37%.

The Bank believes the surge in inflation is transitory, but that does not mean it will be brief. CPI inflation was 4.4% y/y in September and is expected to rise and average around 4.75% over the remainder of this year. Macklem now believes inflation will remain above the Bank’s 1%-to-3% target band until late next year.

There is also a good deal of uncertainty about the size of the slack in the economy. This is always hard to measure, especially now when unemployment remains elevated at 6.9%, while sectors such as restaurants and retail are fraught with labour shortages. Structural changes in the labour force are afoot. Many former restaurant employees have moved on or are reluctant to return to jobs where virus contagion risks and poor working conditions. There was also a surge in early retirements during the pandemic and a dearth of new immigrants.

Concerning housing, the MPR says the following: “Housing market activity is anticipated to remain elevated over 2022 and 2023 after having moderated from recent record-high levels. Increased immigration, solid income levels and favourable financing conditions will support ongoing strength. New construction will add to the supply of houses and should help soften house price growth”.

This article was written by Chief Economist, Dr. Sherry Cooper

Angela Calla is a 17-year award-winning woman of influence which sets her apart from the rest. She is without a doubt, a true expert in her field. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click  here to view the latest news on our blog. 

Hawkish Bank of Canada Decision

Mortgage Professionals Conference Update

General Angela Calla 18 Oct

On October 14, 2021, Mortgage Professionals Canada hosted its national conference featuring presentations by several industry leaders. During the Lenders’ Panel, First National’s President and Chief Operating Officer Jason Ellis provided his thoughts on the mortgage market, planned government policy changes to improve affordability, and lessons learned during the pandemic. Here are some of Jason’s comments.

Despite the unpredictable nature of the pandemic, First National experienced record mortgage volumes thanks to the support of Canada’s mortgage brokers. Our intention is to finish 2021 in a strong fashion, build on this momentum in 2022 and work tirelessly to provide broker service.

First National expanded Excalibur’s markets in the past 18 months but generally chose to focus on execution rather than new product introductions. This was intentional and allowed the company to bring its full attention to originating, underwriting and servicing mortgages.

First National recruited a record number of new team members throughout the pandemic. This expansion helps the company meet the demands of growth. Going forward, the emphasis will be on immersing our newest team members in First National’s service-oriented culture. “digital by design”

There has been a notable increase in mortgage prepayments since the pandemic began as single-family borrowers refinance to take advantage of low mortgage rates. First National’s mortgages under administration have definitely grown in any event, but perhaps not as much one would expect based on record origination volumes.

A plan by the newly elected federal government to extend mortgage default insurance eligibility to homes worth $1.25 million – from the current level of $1 million –  is critically important. Doing so will allow more Canadians to access insurance and reintroduce critical regions of the country into the default insurer’s book thereby diversifying risk for Canadian taxpayers.

Allowing longer mortgage amortizations would be a simple and effective policy tool to use in the quest to make home ownership more accessible. Since longer amortizations make it easier for borrowers to cover their monthly mortgage payments, First National is supportive of the idea. Another policy change – shared equity – has not resonated with Canadians so far and probably won’t. It remains to be seen how effective a proposed ban on blind bidding would be in quelling price increases.

It will be necessary for governments to find a way to make ownership for first-time buyers accessible without further stoking home prices. This will be a difficult balancing act.

It’s important for all governments to coordinate their approach to housing supply and affordability. Municipalities have to be sensitive to community concerns about housing intensification, but a not-in-my backyard approach presents a threat to broader public policy goals set by senior levels of government.

In today’s frothy market, buyers need to be aware that the appraisal value of the home they are bidding on may be below the price they end up paying. In these situations, borrowers will need a financing back-up plan.

Home buyers should be encouraged to undertake home inspections before buying. Often, in a race to outbid others, home buyers (especially first-time home buyers) overlook this form of due diligence and encounter unexpected problems.


Angela Calla is a 17-year award-winning woman of influence which sets her apart from the rest. She is without a doubt, a true expert in her field. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click  here to view the latest news on our blog. 

mortgage professionals conference update

4 Investing Questions Women Should Ask Themselves

General Angela Calla 18 Oct

Women often play a large role in their households’ financial decisions, and that includes making investment decisions.

Unfortunately, a recent Primerica study found that women’s financial confidence has decreased over the past year, largely due to the coronavirus pandemic’s disproportionate impact on the financial health of many women. Given this dip in confidence, it’s more important than ever for women to expand their financial and investing know-how, no matter their life stage or financial situation.

Women bring important strengths to financial decision-making. Often, women are conservative, patient investors who are willing to plan for long-term goals, as long as they have the financial knowledge to make informed investment decisions.

For every woman (or man) who wants to be more intentional about investing their hard-earned money, here are four key questions to consider.

What Are My Household’s Investment Goals and Limitations?

Consider carefully what goals you’re saving to meet. Financial goals can include buying a house, owning a car, financing college or funding retirement. Envision what you want your financial future to look like and set short-term, midterm and long-term goals.

Determine how much your household is investing each month. The number should definitely not be zero. To invest the right amount, think about how far out you are from each financial goal. The earlier you start investing, the easier saving becomes, especially for long-term goals such as retirement.

Is there anything that might get in the way of your investing? For example, do you have debt you have to pay down or an impending large purchase? These financial commitments shouldn’t prevent you from investing, but make sure to include them in your assessment of how much money you can afford to invest each month.

How Am I Allocating My Household’s Investments?

Know how much is in each of your household’s investment buckets. These can include your home’s down payment fund, your college or graduate education fund, or your retirement fund. It can be hard to know if you’re on track when you don’t know where you are on the path. Remember, what gets measured gets managed.

You can be allocated across different investment vehicles to spread out your financial risk as well as your potential for reward. Your current investment portfolio should maximize returns while appropriately minimizing your tolerance for risk. A financial professional can help you understand your risk ceiling and guide you toward smart decisions about how to allocate your assets.

It also can be valuable for you to consider your household’s debt-to-income ratio. In other words, the amount of your household’s gross income that goes toward paying off debt. Consider what kind of debt you have and make a consistent effort to pay it off.

A common method to do this is called “debt stacking.”

Here’s how it works: First, aim to pay off one of your debts. The one with the highest interest payment should be your target account. Roll that payment toward your next target account and continue this process until you pay off all your debts. Once you’ve paid off your debts, you can use the money you’ve been paying toward debts to invest instead.

Do I Have a Trusted Financial Professional?

People who have guidance on money matters are more likely to feel they can achieve their financial goals. In addition, they are also more likely to have a personal financial safety net in place. You don’t need to make six figures to work with a financial professional and come up with an investment game plan.

If you are in a relationship, be sure both you and your partner make contact and build rapport with your financial professional. That way, you can make informed decisions together that take into account each of your personal financial goals, risk tolerances and investment preferences. If you and your partner part ways, each of you can continue working with your financial professional to adjust your finances, goals and investment plans.

What Can I Do Differently This Year to Meet Financial Goals?

This is an important conversation to have with your financial professional and, if you have one, your partner. Doing so will help ensure that you stay on track and are saving and investing enough to achieve the goals put forth for yourself and your household.

Each year, audit the fees you’re paying on investments and see if there are ways you can reduce costs. Reassess your risk tolerance regularly and don’t forget to rebalance your investment accounts at least annually.

Takeaway

Do you know the answers to these questions? If not, it’s time to start learning the answers. Knowledge is power when it comes to maximizing your investments and financially preparing for your future.

This article was published on US News


Angela Calla is a 17-year award-winning woman of influence which sets her apart from the rest. She is without a doubt, a true expert in her field. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show”and through her best-selling book “The Mortgage Code, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.caor at 604-802-3983.

Click  hereto view the latest news on our blog. 

investing questions women

Employee Mortgage Benefit Program

General Angela Calla 8 Oct

Employee Mortgage Benefit Program

70% of employed millennials are asking the question, “how can I reach my financial and homeownership goals?”

The onboarding process is quite simple and we have developed a way to reach more of these individuals. In the past, we’ve noticed a trend where employers often recommended us for financial and homeownership help to their employees after we helped them reach their goals. Subsequently, this trend lead us to develop the Employee Mortgage Benefit Program, a program meant for your employees.

As an employer, we want the best possible outcomes for our employees. We care about them, we want to retain them, and we want to incentivize them. The Mortgage Benefit Program does just that with it’s capability to deliver results for all of your employees.

Listen to Angela’s segment on CKNW

 

How does the Mortgage Benefit Program integrate with your business?

From companies with only 2 employees to large companies with over 1000 employees, our Mortgage Benefit Program can integrate seamlessly with your business’ needs. This means that our services can be made customizable for your employees pay structure, on your company’s Intranet, or via one-on-on consultation.

How much will it cost you?

Nothing. Our Employee Mortgage Benefit Program is no cost to you at all!

Connect with us!

To learn more about our Employee Mortgage Benefit Program, reach out to us at hello@countoncalla.ca or at 604-802-3983.


Angela Calla is a 17-year award-winning woman of influence which sets her apart from the rest. She is without a doubt, a true expert in her field. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click  here to view the latest news on our blog. 

Team Banner housing market

Downsizing Your Home

General Angela Calla 8 Oct

Downsizing Your Home.

Moving to a larger house is not the only time that things can change with your home and mortgage. Sometimes there comes a point when owning a home becomes a little too much to handle; or maybe you’re an empty-nester and no longer need three extra bedrooms. Whatever the reason, downsizing is a great option when you no longer need a full size home. Perhaps you want to swap your two-story family home for a rancher, or maybe a cute little apartment or townhouse! Just as there are many options for individuals expanding families, there are just as many options for people wanting to scale down.

For homeowners who are fortunate enough to now be mortgage-free and looking to scale down, you could be sitting on a gold mine!

If you do still owe on your current mortgage, it is important to remember that downsizing during your current mortgage cycle, will be breaking the mortgage. This means, you will have to go through the entire qualification process again – including passing the stress test. The stress test is now required for all mortgages. Its purpose is to determine whether a homebuyer can afford their principal and interest payments, should interest rates increase. It is based on the 5-year benchmark rate from Bank of Canada or the customer’s mortgage interest rate plus 2% – whichever is higher.

Regardless of your current situation, there are some costs that go with selling your existing home and moving to something smaller or more affordable.

Some of the costs associated to downsizing are:

  • Realtor commission fees, which range from 2.5 to 5 percent of the home selling price
  • Closing costs and legal fees, which are 1 to 4% of the purchase price on the new home
  • Miscellaneous costs such as moving expenses, upgrading appliances and/or buying new furniture
  • If you are moving into a condominium or townhouse, there are strata fees to consider

WHY NOT CONSIDER A REVERSE MORTGAGE?

Most individuals looking to scale down are looking to do so for retirement or because they are now empty-nesters. However, if you are looking to downsize simply due to being unable to manage your mortgage or maintenance costs, there is an option called a “Reverse Mortgage”.

A reverse mortgage is a loan secured against the value of your home. It is exclusively for homeowners aged 55 years and older and enables the homeowners to convert up to 55% of the home’s value into tax-free cash!

With a reverse mortgage, you maintain ownership of your home and can use the loan to cover costs or pay out debts. The loan would need to be repaid in the event that you choose to move and sell the current home.

If you are looking to downsize your home, a Dominion Lending Centres mortgage professional can help! Contact one of our many experts today to help make your next move a successful one.

This article was published  by Dominion Lending Centres.


Angela Calla is a 17-year award-winning woman of influence which sets her apart from the rest. She is without a doubt, a true expert in her field. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on The Mortgage Showand through her best-selling book “The Mortgage Code, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click  here to view the latest news on our blog. 

downsizing your home

Royal LePage Study Says Owning Has More Benefits Than Renting

General Angela Calla 8 Oct

buying is better than renting

 

A new study from Royal LePage has found that homeowners who can afford 20% down payments are much better off in the long run than renters.

In fact, buying a home in Canada with an uninsured mortgage puts homeowners ahead of renters in 91% of cases analyzed.

“Canadians strongly value homeownership for many reasons. Not only is it a great source of pride, it is likely the largest and most significant financial investment most people will ever make,” Karen Yolevski, chief operating officer of Royal LePage Real Estate Services Ltd., said. “Historically, homeownership has been very profitable for Canadians, many of whom have factored their real estate investments into their retirement planning. Owning a home is widely viewed as a means to save money and build equity.”

The Royal LePage-sponsored study was conducted by Will Dunning, an economist and housing market analyst who analyzed 278 scenarios based on city and housing type and took into consideration historical data and future projections. Dunning ultimately determined that owning is a better future prospect than renting.

Despite monthly ownership costs being greater than rental expenses, a mortgage’s principal payment component is a form of saving because it is not a true cost. Moreover, interest payments on the mortgage are greatest in the first month but gradually decrease over the life of the mortgage.

In 253 out of the study’s 278 cases analyzed, the net cost of owning a home, which was calculated by taking the total cost of ownership and subtracting the savings through principal repayment, was lower than rent—the report referred to it as the “ownership advantage,” which was $769 less a month in Q2-2021 than renting. In the 9% of cases in which renting came out on top, albeit only by $245, the ownership homes were in the luxury segment.

“For many people, buying a home—especially the first—is a landmark event and one of the most challenging decisions we’ll make in our lives,” Dunning, president of Will Dunning Inc., said. “It is a decision that is usually based on a lot of hard work. This research tests a belief that is held by a lot of Canadians, that owning is better financially than renting. And, it finds that this belief is very often correct.”

This article was written by Neil Sharma and published on Canadian Real Estate Magazine.


Angela Calla is a 17-year award-winning woman of influence which sets her apart from the rest. She is without a doubt, a true expert in her field. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Showand through her best-selling book “The Mortgage Code, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click  here to view the latest news on our blog. 

Team Banner housing market

More Canadians Are Moving to BC Than Anywhere Else in the Country

General Angela Calla 4 Oct

BC experienced the largest net gain in interprovincial migration in the 12-month period ending June 30, 2021, which just so happens to be the largest wave of migrations in the last 28 years. This was fueled by a remote work culture that has become the norm in all relevant industries.

Interprovincial migration (the difference between residents moving into and out of a region) +34,277 in 2020/21.

For comparison migration rates elsewhere:

      • Alberta – 11,831
      • Manitoba – 9,685
      • Saskatchewan – 9,410

While BC may be an attractive option in the lifestyle front, calling the mountain-filled province home doesn’t come cheap — especially when it comes to real estate. After all, it’s no coincidence that Metro Vancouver is the eviction capital of Canada. – Storeys

Supply must meet demand and with the recent elections we hope that the Government can help create more supply for the growing demand in BC.

View the full article on Storeys.


Angela Calla is a 17-year award-winning woman of influence which sets her apart from the rest. She is without a doubt, a true expert in her field. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click  here to view the latest news on our blog. 

Team Banner housing market

 

Home Buyer Relief | Will the Election Deliver?

General Angela Calla 4 Oct

The 2021 federal election is now in the books and while it did little to shake-up political power, it did bring the issue of housing affordability to the forefront and plenty of promises were made. We will have to wait on whether or not any of them come to fruition, but here is a rundown of the more noteworthy promises and how they might affect anyone looking to buy a home.
  • Restrictions on foreign ownership. Whether an outright ban on ownership or increased taxes on vacant properties, the consensus is that these policies would have very little effect on dampening prices. The pandemic either closed or severely restricted the border for much of the last 18 months and we all know what happened to house prices during that period.
  • A doubling of the home-buyer tax credit. This would save you an additional $750 bucks one-time on your income taxes when you buy a home. Not exactly chump change, but wouldn’t go too far in paying down the mortgage.
  • Reducing the cost of CMHC mortgage insurance for first-time buyers. This would definitely help as insurance tacks an extra 3-4% to your mortgage for anyone with less than 20% down.
  • Less stress-testing and longer mortgages. Tweaking the mortgage stress test to allow people to borrow more money sounds like a recipe for disaster and not a solution! Spreading the payments over 30 years (25 is the limit now) was also suggested, but this only lowers the monthly payment, costs you more in interest, and does nothing to control rising home prices. In fact, both of these measures may actually lead to more competition and higher prices.
  • More tax-sheltered savings/investment accounts like the proposed “First Home Savings Account”. Currently, you can borrow from your RRSP to buy a home and many people also use their TFSA for their down payment savings. Additional tax-sheltered savings/investment accounts may help somewhat, but not much if you are struggling to max out what we have already (18% of gross income RRSP + $6000 TFSA). Higher limits and/or better tax sheltering (tax-free in and out for example) on savings won’t really move the needle for most of us if home prices are sky high while incomes are stagnant.
  • Increasing the supply of homes. Supply up, price down is economics 101 and it sounds like a reasonable idea. The big question here is implementation – what levers can the federal government pull to make this happen and can they provide enough subsidies, incentives or whatever else they are thinking to actually make a dent in the current shortage and keep a lid on prices?
This list is not exhaustive and many ideas were floated during the campaign, but it is safe to say that first-time home buyers looking to the election for a significant change were likely left disappointed. While some of the proposed solutions would lower monthly payments, none of them seem effective at actually controlling home prices. The lack of a majority government will make it even more difficult to deliver on any of them.
This article was written and published by, Enriched Academy.

Angela Calla is a 17-year award-winning woman of influence which sets her apart from the rest. She is without a doubt, a true expert in her field. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Learn more by viewing the latest news on our blog. 

Team Banner housing market

Buying vs Renting

General Angela Calla 4 Oct

News Provided By
Royal LePage Real Estate Services 
Sep, 28, 2021

Home ownership remains a top priority for many Canadians. While buying a home is seen as a milestone and can improve your quality of life, most are hoping that their purchase will also be a sound financial decision. A recent study1 has found that, for those who are able to secure a sufficient down payment, it is more financially beneficial to buy a home in Canada than to rent over the long term, in 91 per cent of cases analyzed. The scenarios assume the owner is able to provide a 20 per cent down payment.

“Canadians strongly value home ownership for many reasons. Not only is it a great source of pride, it is likely the largest and most significant financial investment most people will ever make,” said Karen Yolevski, chief operating officer, Royal LePage Real Estate Services Ltd. “Historically, home ownership has been very profitable for Canadians, many of whom have factored their real estate investments into their retirement planning. Owning a home is widely viewed as a means to save money and build equity.”

The study, by economist and housing market analyst Will Dunning, and sponsored by Royal LePage, uses price data for 278 scenarios (broken out by city and housing type) across the country and approaches the commonly-asked question ‘Is it better to buy or rent?’ from various angles – using historical data, future projections, and viewing home ownership as an investment.

“For many people, buying a home – especially the first – is a landmark event and one of the most challenging decisions we’ll make in our lives,” said Will Dunning, president, Will Dunning Inc. “It is a decision that  is usually based on a lot of hard work. This research tests a belief that is held by a lot of Canadians, that owning is better financially than renting. And, it finds that this belief is very often correct.”

While the total monthly costs of owning a home may be higher than renting, there is an important factor to consider. Mortgage payments comprise principal and interest, and the principal component can be seen as a form of saving, albeit forced saving. While the homeowner has to pay the full amount each month, the principal is not a true cost. What’s more, the interest component is largest in the first month and gradually decreases over the life of the loan, effectively increasing the amount of forced saving each month.

In 253 out of 278 cases studied (91%), the net cost of ownership (the total ownership cost minus the saving that occurs through principal repayment) is lower than the cost of renting. In the report, this factor is referred to as the ‘ownership advantage’. As of the second quarter of this year, on average the net home ownership cost was $769 per month less than the cost of renting an equivalent dwelling. In the nine per cent of scenarios where renting was more beneficial than buying, cases were concentrated in luxury homes in expensive neighborhood pockets. Moreover, the monthly savings were minimal for this demographic at $245.2

“While Canadians do want their homes to appreciate, potential homebuyers will find it reassuring that significant price appreciation is not necessary for ownership to be financially worthwhile,” said Yolevski. “There are other benefits to owning a home, in addition to the financial advantages. Owning a property allows more freedom and stability than renting. As a homeowner, you do not have to worry about the landlord hiking up the rent or forcing you to move. And, homeowners have the ability to make a place their own, with renovations or décor. I believe most Canadians would agree that owning a home is as much about laying down roots in a community and making memories with family, as it is about financial security.”

The study tested various scenarios. This includes a mortgage renewal in five years, at an increased interest rate (3.62%, which is based on the highest interest rate seen during the study period from the fourth quarter of 2014 to the present). Even in that scenario, home ownership is expected to remain more affordable than renting in most situations.

“Although supply has reached historic lows and home price appreciation continues to trend upward, the findings of the report show that owning a home remains financially advantageous for most people. However, all Canadians would benefit from swift and material government action to solve the country’s housing supply crisis,” added Yolevski.

To varying degrees, Canadians think of their homes as an investment, and not just a place to live. The study calculated how home ownership might perform as an investment, making varying assumptions about how much values might change during the coming 10 years. The calculations found that even with a 10 per cent decline in home prices, approximately half of the homeowners studied would still see a positive rate of return on investment, while the other half would break even or see a modest loss as an investment.3 If there is no growth in values, ownership would result in a positive rate of return on investment in a majority of cases. Other scenarios in which values rise show increasingly attractive rates of return.

The analysis includes assumptions about the costs of buying and selling homes (closing costs, lawyers’ and real estate agents’ fees, and land transfer taxes), and the major ongoing costs incurred by homeowners (utilities, repairs, homeowners’ insurance and condominium fees, where applicable)

This article was written and published on Newswire.


Angela Calla is a 17-year award-winning woman of influence which sets her apart from the rest. She is without a doubt, a true expert in her field. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

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