Our Home Care Heroes

General Angela Calla 30 May

Here at the Angela Calla Mortgage Team, we recognize the value of caring for our senior loved ones. In recognition of Personal Support Workers Day, we wanted to share this new award from our partners at HomeEquity Bank that highlights those who see to the care of some of the most vulnerable in our community.

We want to recognize the crucial contributions that PSWs make in the lives of Canadians 55 and up, and in enabling them to age with independence, comfort and dignity.

Nominate a Home Care Hero in Your Life

HomeEquity Bank’s Home Care Heroes Award gives you, our partners, the opportunity to nominate a PSW who has made a positive impact in their life or the lives of their clients. If you have a Personal Support Worker in your life, now is the time to shine a light on the meaningful contributions they have made for you or someone you care about.

Until June 6, Canadians 55 and up, their families, or businesses that engage with PSWs can nominate a PSW as a HomeEquity Bank Home Care Hero. Three Home Care Heroes will be announced by HomeEquity Bank the week of June 13th, with each winner receiving $2,500.

Click here to nominate a Home Care Hero.

Warmly, 

The Angela Calla Mortgage Team


Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. 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. 

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Qualifying Rates of Variable and Fixed-rate Mortgages

General Angela Calla 27 May

Mortgages are required to qualify based on the stress test (the higher of 5.25% or your actual contract rate + 2%). Fixed rates are over 4%, putting the stress test at over 6%. Many people opt for variables as rates can be as low as 2.3% allowing them to qualify using 5.25% increasing the maximum allowable mortgage.

As an example, if we took a conventional insured mortgage of $100,000 with a fixed 4.29 rate and a 25-year amortization, the qualifying rate is then 6.29, requiring a $20,000 income. The same mortgage with a 5.25 max variable rate would only require $18,000 income.

Therefore the difference between a fixed-rate and variable-rate mortgage in qualifying rates is about 11%.


Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. 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

Canada’s Banking Regulator to Tighten Mortgage-HELOC Rules to Curb Rising Homeowner Debt

General Angela Calla 26 May

The trendiest type of home equity line of credit is in the crosshairs of Canada’s banking regulator, which is looking to curb risky borrowing as rising interest rates put added pressure on heavily indebted homeowners.

The product under scrutiny is the readvanceable mortgage – a traditional mortgage combined with a line of credit that increases in size as a customer pays down the mortgage principal. The regulator, the Office of the Superintendent of Financial Institutions (OSFI), calls them combined mortgage-HELOC loan programs, or “CLPs,” and has been watching warily as they have exploded in popularity while home prices have soared.

In the first two years of the COVID-19 pandemic, readvanceable mortgage borrowing increased 34 per cent and the combined-loan products had a total value of $737-billion in the first quarter of 2022, according to Bank of Canada data. That accounted for 42 per cent of all residential secured lending, higher than 37 per cent in the first quarter of 2020 and 36.5 per cent in the same period in 2019.

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That sharp increase has caught OSFI’s attention. In a January speech, Superintendent Peter Routledge said readvanceable mortgages now make up “a significant portion of uninsured Canadian household mortgage debt.” And while he acknowledged they can be useful financial tools when used responsibly, Mr. Routledge said “they can also create vulnerabilities” for the financial system and increase the “risk of loss to lenders.”

OSFI has said it will announce changes to the rules governing these products this spring, and outlined two key concerns. One is that the ability to borrow back equity from a home after each principal payment has the potential to keep customers deep in debt.

The other is that HELOCs can be used to mask cash flow issues a borrower may have, making it harder for lenders and regulators to detect looming problems, especially in times of crisis.

In a speech last November, Mr. Routledge hinted OSFI might compel banks to classify readvanceable mortgages as loans that are more risky, which would make them more expensive for lenders to carry on their books as they would have to set aside more capital against each loan. He also said the regulator may tighten up the rules about how lenders underwrite these loans.

Bankers and mortgage industry experts say the regulator could also rein in limits on how much homeowners can borrow against their homes, or force them to requalify for increases to their HELOC.

Those changes might help curb some of the most precarious borrowing, but it isn’t clear they would significantly slow the demand. Experts say banks would likely pass on higher capital costs of those mortgages by charging customers higher interest rates.

“It would raise the costs for the lenders, in which case the pricing strategy for those types of products would have to be recalculated for all lenders,” said Maxime Stencer, a director with mortgage lobby group Mortgage Professionals Canada. “If there’s more costs involved in manufacturing that product and holding that product, then it becomes more costly to provide it to the customers, so customers would probably be affected by it.”

Readvanceable mortgages are now a staple product for most major lenders. Banks pitch them as a powerful borrowing tool that allows customers easy access to the equity in their homes.

A website promoting Bank of Montreal’s Homeowner ReadiLine puts the concept of the readvanceable mortgage succinctly: “Apply once. Borrow some. Pay back some. Borrow again. Pay down your mortgage. Borrow even more.”

Other banks have branded their readvancable mortgages with punchy names such as TD’s Home Equity FlexLine and CIBC’s Home Power Plan. Spokespeople for Canada’s five largest banks declined to say what proportion of their overall mortgage lending these products represent.

But regulators say the products also risk allowing customers to spend beyond their means and accumulate persistent debt that can make them more vulnerable in an economic downturn.

As national home prices skyrocketed late last year, Mr. Routledge said in November that the ability readvanceable mortgages give homeowners to boost their borrowing “may be simultaneously fuelling and helping Canadians afford rising home valuations.” That is because homeowners can borrow on lines of credit tied to their existing homes to buy vacation and investment properties.

Today, the housing market has cooled dramatically owing to higher mortgage rates. Economists predict the typical home price in Canada could decline by double-digit percentages this year.

That would lower the value of a homeowner’s property relative to the size of their mortgage and push them closer to a level of debt that OSFI views as troublesome: Borrowers who owe their lender more than 65 per cent of the value of the home, also known as a loan-to-value (LTV) ratio, which is a key metric used to assess risk in the financial system. A higher ratio represents a high level of indebtedness that could pose more problems for the financial system.

“That subset of borrowers who owe more than 65 per cent LTV poses the greatest risk,” said OSFI spokesperson Carole Saindon in an e-mail this week.

According to Bank of Canada data, borrowers above that threshold represented 28 per cent of the outstanding combined mortgage loans in the first quarter of this year. In the first quarter of 2020, the percentage was 42 per cent.

It is not clear whether that higher-risk borrowing level declined because home prices are up significantly, or because borrowers were drawing smaller amounts from their HELOCs.

Regardless, with home prices starting to cascade down, the lower prices will put upward pressure on homeowners’ LTV ratios.

“It is critical to note that these figures are calculated on the current market value of the homes and are subject to change as the market moves,” Ms. Saindon said. “If housing prices pull back from those peak levels, we would expect current LTVs to increase and the portion above 65 per cent to increase as well.”

That means borrowers could suddenly find themselves with a much higher ratio. If they breach the 65 per cent LTV threshold on the HELOC portion of their combined loan, they will have to start paying down some of the HELOC principal. For borrowers who are stretched to the max, this could wreak havoc on their finances.

Most HELOCs only require customers to pay the accrued interest, not the loan’s principal. And because the loans are secured against a borrower’s home, they typically carry lower interest rates than unsecured debt.

One reason banks like offering readvanceable mortgages is that they make consumers less likely to switch to a competitor. It is easy to assign a traditional mortgage from one bank to another, but a CLP must be fully discharged from one lender and re-registered with the new one. That process requires the borrower to pay fees and go through administrative hassles.

It is unclear whether these combined loans pose an imminent risk to the financial system. Bank of Canada data show that a large proportion of customers have relatively low levels of debt. As of the first quarter of this year, 41 per cent of combined loan borrowers had an LTV at or under 50 per cent.

The mortgage industry says OSFI is overreacting. They say HELOCs give borrowers easy access to the equity in their homes at a lower interest rate than other loans such as credit cards, personal lines of credit and payday loans.

HELOCs are commonly used for home renovations, investments in rental properties, to consolidate more costly debt from credit cards at lower interest rates, as well as a source of emergency funds if a borrower needs a quick cash infusion.

For example, if a borrower loses their job and no longer has employment income to pay their mortgage, drawing on a HELOC could be a low-cost, stopgap measure to make their mortgage payments while they look for another source of income.

“HELOCs prevent a lot more defaults than they cause. The reason is simple. When times get tough and you have no fallback liquidity, readvanceable mortgages let you continue paying your mortgage,” said Robert McLister, mortgage broker and strategist.

What worries regulators is when stopgap measures turn into permanent solutions – a cycle of borrowing that the Financial Consumer Agency of Canada has labelled a “home equity extraction debt spiral.”

(This article is from the Globe and Mail)


Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. 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. 

HELOC

Canadian Homes Sales Slow As Mortgage Rates Rise

General Angela Calla 26 May

Canadian Housing Market Feels The Pinch of Higher Rates

Statistics released today by the Canadian Real Estate Association (CREA) show that the slowdown that began in March in response to higher interest rates has broadened. In April, national home sales dropped by 12.6% on a month-over-month (m/m) basis. The decline placed the monthly activity at its lowest level since the summer of 2020 (see chart below).

While the national decline was led by the Greater Toronto Area (GTA) simply because of its size, sales were down in 80% of local markets, with most other large markets posting double-digit month-over-month declines in April. The exceptions were Victoria, Montreal and Halifax-Dartmouth, where sales edged up slightly.

The actual (not seasonally adjusted) number of transactions in April 2022 came in 25.7% below the record for that month set last year. As has been the case since last summer, it was still the third-highest April sales figure ever behind 2021 and 2016.

Jill Oudil, Chair of CREA, said, “Following a record-breaking couple of years, housing markets in many parts of Canada have cooled off pretty sharply over the last two months, in line with a jump in interest rates and buyer fatigue. For buyers, this slowdown could mean more time to consider options in the market. For sellers, it could necessitate a return to more traditional marketing strategies.”

“After 12 years of ‘higher interest rates are just around the corner,’ here they are,” said Shaun Cathcart, CREA’s Senior Economist. “But it’s less about what the Bank of Canada has done so far. It’s about a pretty steep pace of continued tightening that markets expect to play out over the balance of the year because that is already being factored into fixed mortgage rates. Of course, those have, for that very reason, been on the rise since the beginning of 2021, so why the big market reaction only now? It’s likely because typical discounted 5-year fixed rates have, in the space of a month, gone from the low 3% range to the low 4% range. The stress test is the higher of 5.25% or the contract rate plus 2%. For fixed borrowers, the stress test has just moved from 5.25% to the low 6% range – close to a 1% increase in a month! It won’t take much more movement by the Bank of Canada for this to start to affect the variable space as well.”

New Listings

The number of newly listed homes edged back by 2.2% on a month-over-month basis in April. The slight monthly decline resulted from a relatively even split between markets where listings rose and those where they fell. Notable declines were seen in the Lower Mainland and Calgary, while listings increased in Victoria and Edmonton.

With sales falling by more than new listings in April, the sales-to-new listings ratio eased back to 66.5% – its lowest level since June 2020. This reading is right on the border between what would constitute a seller’s and a balanced market. The long-term average for the national sales-to-new listings ratio is 55.2%.

More than half of local markets were balanced based on the sales-to-new listings ratio being between one standard deviation above or below the long-term average in April 2022. A little less than half were in seller’s market territory.

There were 2.2 months of inventory on a national basis at the end of April 2022, still historically very low but up from slightly lower readings in the previous eight months. The long-term average for this measure is a little over five months.

Home Prices

The non-seasonally adjusted Aggregate Composite MLS® HPI was still up by 23.8% on a year-over-year basis in April, although this was a marked slowdown from the near-30% record increase logged just two months earlier.

Bottom Line

The fever broke in the Canadian housing market last month. Nevertheless, despite the sizeable two-month slide in sales, activity is still almost 10% above pre-COVID levels and the raw April sales tally was still one of the highest on record.

Markets in Ontario are weakening most, significantly further outside the core of Toronto. Sales in the province slid 21% in April and are now in line with pre-pandemic activity levels. The market balance has gone from drum tight with “not enough supply” to one that resembles the 2017-19 correction period. Elsewhere, Vancouver and Montreal look better with relatively balanced markets, while others like Alberta and parts of Atlantic Canada remain pretty strong.

The Bank of Canada will likely hike interest rates by another 50 bps on June 1.

(This article is from the Sherry Cooper Assoc.)


Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. 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. 

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Interest rates, stress test, mortgage options: Questions for Mortgage broker, Angela Calla

General Angela Calla 25 May

With interest rates increasing and market conditions beginning to change, we asked mortgage broker Angela Calla three questions about what’s happening in the mortgage market today. Here’s what she told us.

What lending advice can Realtors give their clients as interest rates climb?

Advanced planning is the key to success. Over the last few months, we saw that those who got a rate hold pre-approval were able to secure fixed rates in the 2 per cent range compared to those who did not and now feel discouraged with fixed rates being over 4 per cent in a very short period.

No one can control the market, but you can protect yourself by being prepared and securing a formal rate hold when looking to buy. The same goes for the ongoing service you provide to your clients. If they have a renewal coming up, don’t wait. Renewing early can potentially save your clients thousands.

Different options can also present different opportunities. Right now, borrowers will qualify for the highest amount if they take a variable rate. Remember, variable rate mortgages can be locked in at any time with no cost or need to re-approve.

Can you see the government adjusting the stress test and what impact would it have?

I don’t foresee that happening, but it’s likely that the federal government could implement the changes they suggested during their latest campaign:

  • Raising the dollar cap of insured mortgages to $1.25 million (from $1 million); and
  • Increasing the amortization period.

Both would present more opportunities for buyers to get more value for their money and offset the increase in rates. We saw the pendulum swing in this direction back in 2006/2007, when rates were still higher than they are today.

Some banks that specialize in extended ratios and don’t follow the insured guidelines are only accessible through mortgage brokers. They already have 40-year mortgage amortizations, which isn’t new, it’s just priced differently and had been paused from time to time and started back in 2006.

What opportunities does this lending environment create for consumers in a good financial position?

Looking at the Canadian landscape, over 30 per cent of homes owned are mortgage free. This presents an opportunity for multigenerational wealth planning so families can benefit from investing in real estate as early as possible.

The key is to start early. There are non-taxable ways for parents to gift funds to their children to purchase a home or income/vacation property without impacting their cashflow through reverse mortgages. Consumers can design the life they want to live, build their family legacy, and still enjoy life while supporting our economy.

(This article is courtesy of the Real Estate Board of Greater Vancouver)


Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. 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. 

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Have fixed payments on a variable-rate mortgage? Here’s when you’ll really start to feel the pain of rising rates

General Angela Calla 16 May

If you have a static payment Variable Rate Mortgage (where your payment does not change, even if the Prime Rate rises), here is a decent article about the “Trigger Rate” (This was something I also wrote about in my book The Mortgage Code).

The Trigger Rate is reached once your payment is no longer enough to cover the interest payments. All lenders treat this a little differently, and most of us have a while to go before we even reach this Trigger Rate.

(If you have an iPhone and do not have a Globe and Mail subscription, you should be able to open the article in a “Private” tab to read)

Why Variable-Rate Penalties are Cheaper

“Ever wonder why prepayment penalties are often so much greater with fixed-rate mortgages? Standard variable-rate penalties are only three months’ interest – roughly $800 per $100,000 borrowed, at today’s rates.

But fixed-rate mortgage penalties are usually based on the higher of three months’ interest or the interest rate differential. They can go up to $2,500 to $5,000 per $100,000 borrowed if rates are flat to trending down – depending on your lender and interest rates at the time.

“Fixed-rate mortgages are backed by investors looking for non-fluctuating returns,” says Andrew Gilmour, managing director at CMLS Financial. In other words, the investors and banks who fund fixed mortgages don’t like surprises.

When a borrower breaks their fixed-rate mortgage early, penalties help those investors recoup the return they originally planned on, “which is why the penalty increases as rates on new mortgages go lower,” he says.

“On the other hand, floating-rate mortgages are usually quoted as a spread to a floating benchmark, the prime rate for example,” he adds. That spread usually doesn’t change dramatically over the course of the mortgage term.

As a result, if you break a variable-rate mortgage early, the investor can usually reinvest at close to the return that was originally planned, “since the same benchmark would be used for a new mortgage,” Mr. Gilmour says.

What’s more, funds for floating-rate mortgages are more often supplied from a bank’s internal sources (deposits, for example), notes Albert Collu, chief executive of Marathon Mortgage Corp. “Those internal costs of funds are not nearly the same as the liability of providing a guaranteed return when securitizing and hedging a fixed-rate mortgage,” he says.

That’s why fixed-rate mortgage penalties can be drastically larger, particularly when rates are falling. And falling rates are indeed likely after our central bank gets inflation under control. At that point, hundreds of thousands of Canadians will be rushing to refinance. And many will be learning about penalties the hard way.”

(You can read the full article here at the Globe and Mail)


Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. 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. 

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Should You Break Your Mortgage Early?

General Angela Calla 11 May

A big hello from our team and we hope you have been keeping well. With the rising inflation impacting us all, we thought we would share how we may be able to help if you have a mortgage, and compound that benefit if you have debt outside of your mortgage.

Wade, our client from Nanaimo in this six-minute video attached, had first approached his original mortgage lender to talk about refinancing early but was told to come back when it was 90 days before his mortgage was up. What the lender did not do was take into account his lines of credit and debt payments.

 

As a regular listener of our show on CKNW, Wade wanted to take advantage of the knowledge that interest rates are on the rise, so he reached out to our team. Ultimately, we were able to help him consolidate all of his debt into a new mortgage and save a total of $2600.00 on monthly payments, securing a better rate for the next 5 years than he had initially!

While saving $2600/month has changed his financial future, it has also improved his relationship with his children. We couldn’t be any more thrilled to now have him as a part of our mortgage family for life.

In the end, the advice Wade wanted to give everyone is to not hesitate to reach out and find out what your options are. That you are not just restricted to what your mortgage lender tells you. So if you or a loved are not sure if it would be worth redoing your mortgage right now, it never hurts to give us a call or introduce us in an email to callateam@countoncalla.ca so that you can make the best-informed decision!

Have a wonderful rest of the week.

The Angela Calla Mortgage Team


Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. 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

Why Bond Yields Affect Your Mortgage Rates

General Angela Calla 11 May

In a recent article, we looked at how the Bank of Canada’s policy rate affects other banks’ prime rates and what it means for borrowers. The bank’s interest rate impacts a lot of what happens in the Canadian financial system, but it isn’t the only important variable that investors should know about.

Another common figure that plays a role in the market is what is known as bond yields. The role that these play in mortgages and other borrowing is similar to the overnight rate. When bond yields change, the banks take the change into account which then gets passed on to the borrower. Bond yields are crucial in understanding how fixed-rate mortgage rates are set.

What are government bonds?

A bond is a kind of investment product that is most popular for its low risk and reliable returns. When you buy a bond yield, you are, in essence, acting as a lender to the Bank of Canada. The bank will take your money and put it towards government spending and debts and will issue you interest over time. Once your bond reaches maturity, you are paid back the principal amount in full.

Government bonds are thought to be extremely low risk, some even say zero-risk. This is because the bonds are guaranteed by the government themselves, making them some of the most secure investments around. In theory, the government could fall apart and fail to honour your bond, but if that happens, you probably have a lot more to worry about.

There are a variety of bonds offered, each with different times to maturity. Generally, the longer the maturity period, the higher the yield, but the longer you will need to wait to see your principal repaid. Bank of Canada bonds can be as short as one year and as high as 30 years.

The downside is that in investing, the higher the risk, the higher the potential returns. Bonds, with their remarkably low risk, don’t pay as much interest compared to many other investment avenues. This makes them a good option for those looking for somewhere to hold money they can’t risk losing, but not great for those hoping to see it grow quickly.

Bonds are primarily issued to banks who then sell them as investment products to clients. Bonds can be held to collect on their interest or bought and sold at any time to other investors. When a bond is sold on the market, it may be sold for more or less than its initial face value.

What are bond yields?

The yield of a bond is a way of measuring the annual return on a bond investment. A bond’s yield is expressed as a percentage.This is not strictly a measurement of interest paid out. At the time of issuing, each bond comes with a face value and what is called a coupon rate, a fixed interest amount that is paid. Then when bonds are bought and sold on the open market, they may sell for above or below the face value. There are a few ways to calculate bond yields that take into account the different coupon rates and changing value over time.

However, these calculations can get complicated. For the sake of understanding mortgage rates, it’s important to know that bond prices fluctuate in the market. When bond prices go up, the returns from owning a bond go down. When prices are low, the returns are higher. Mortgage rates follow the bond yields and, therefore, have an inverse relationship to bond prices.

The price of individual bonds depends a lot on the face value, the time they were issued, and the time they are sold. Generally, bond yields are reported as market averages for similar bond types, rather than exact values for any specific bond.

Why do banks use bonds?

For banks, bonds represent a nearly guaranteed minimum amount of return they can collect on their money. This means that any investments they make must ideally be more beneficial than simply holding bonds, otherwise, they take on unnecessary risk for lower or equal returns. This is fundamental in explaining how bond yields affect mortgage rates.

How do they affect mortgage rates?

Bonds and mortgages are similar in that they have relatively fixed time periods, the difference being that a mortgage is much riskier to a lender than buying bonds. For a bank, mortgages allow them to make more money, but they aren’t guaranteed. For a given time period, the bank knows they could get a guaranteed return of a certain percentage based on the bond’s yield, so they charge you a premium above this interest rate for mortgage rates in order to account for risk. As bond yields rise, it would be comparatively less appealing for a bank to invest in mortgages so they raise their rates to correct for the new minimal return they expect.

In general, fixed interest rates react pretty quickly to current yield values. Banks tend to base their interest rates for each mortgage on the corresponding bond yield. For example, for five-year fixed mortgages, one of the most popular mortgage types, the interest rate is tied to the five-year bond yield. It is important to understand how the bond market affects your interest rate if you plan to get a fixed-rate mortgage. Though all banks access the same bond market, this doesn’t mean they will all offer the same mortgage rates. Some may choose to charge more or less of a premium above the bond yield. Knowing the yields can help you tell if you are getting a bad deal or not, as well as how rates may change if you choose to wait for your mortgage.

Current bond yields and forecasts

Here are some of the current yields for a select few Bank of Canada bonds, as of the time of writing:

  • 1-year bond yield- 2.481%
  • 3-year bond yield – 2.736%
  • 5-year bond yield – 2.859%
  • 30-year bond yield – 2.99%

As you can see, the longer your bond takes to mature, the higher your interest may be.

Looking at the historical data, we are currently seeing a rise in bond yields. Bond yields generally fell through 2018–2019 as interest rates went down and hit an all-time low in 2020. This also shows how bond yields are closely related to interest rate levels. As interest rates go down, so do bond yields.

The upwards trend in bond yields will likely continue for the time being. As the Bank of Canada raises interest rates, bond yields should follow. Other economic uncertainty around rising rates and inflation may also push more investors toward buying bonds for their inherent lower risk.

(This article is accredited to the Canadian Real Estate Magazine)


Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. 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. 

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Home Security Tips

General Angela Calla 6 May

Looking for some tips to improve your home security?

While there are many things you can do, the security you choose will depend on your comfort level and preferences.

Check out these ideas below to help get you started!

  • Reinforce the windows on your first floor with window stops
  • Use deadbolts instead of spring-latch locks.
  • Frost the windows on your garage to avoid wandering eyes.
  • Install motion-detector lighting outdoors to shine a light on potential intruders.
  • Keep your shrubbery short to avoid giving intruders hiding places.
  • Install security sensors in any detached buildings, like a garage or pool house.
  • Install door reinforcement hardware on any outward facing doors.

This article is from the May monthly newsletter.


Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. 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

Half (48%) of Canadians are Less than $200 Away Monthly From Being Financially Insolvent

General Angela Calla 5 May

Nearly one half (48%) of Canadians are $200 or less per month away from not being able to meet all of their bills or debt obligations each month, including 26% who say they already don’t make enough money to cover their bills and debt payments, according to a new Ipsos poll conducted on behalf of MNP.

Residents of Ontario (29%) and Quebec (29%) are most likely to say they already don’t make enough to cover their bills and debt payments, followed by those living in Atlantic Canada (24%), Alberta (21%), British Columbia (19%) and Saskatchewan and Manitoba (17%).

Moreover, it will take some time for Canadians to dig out of the non-mortgage debt that they have accumulated, with the average Canadian with debt saying it will take approximately 7 years before they are debt free, completely ignoring the 15% who believes that they will never be debt-free.

  • Most likely to say that they will never be debt-free are residents of Atlantic Canada (28%), followed distantly by those in Saskatchewan and Manitoba (17%), Alberta (16%), BC (15%), Ontario (15%) and Quebec (10%).
  • Among those who think they’ll be able to climb out of debt, it will take Ontarians the longest (8 years on average), followed by those in Quebec (7 years), Atlantic Canada (6 years), BC (6 years), Alberta (6 years) and Saskatchewan and Manitoba (5 years).
  • Most likely to be debt-free already are residents of BC (50%), and Quebec (45%), followed by those living in Alberta (39%), Ontario (38%), Saskatchewan and Manitoba (37%) and Atlantic Canada (31%).

Given the amount of debt that Canadians hold, and the length of time that it will take many of them to pay off their outstanding debts, it’s interesting to note that four in ten (43%) `agree’ (17% strongly/27% somewhat) that they regret the amount of debt they’ve taken on during their life. A similar proportion (43%) agrees (15% strongly/28% somewhat) that they are concerned about their current level of debt.

A positive note is that a relatively small proportion of the population appears more relaxed in their attitudes towards debt: just one in three (32%) agrees (6% strongly/26% somewhat) that debt is not a big deal to them – it’s just a fact of life, while the vast majority (68%) of Canadians `disagree’ (36% strongly/32% somewhat).

Understanding Insolvency and Bankruptcy…

When it comes to the terms insolvency and bankruptcy, Canadians appear to be not as strong in their knowledge as they could be: six in ten (60%) `agree’ (21%) strongly/39% somewhat) that they are aware of the differences between insolvency and bankruptcy, while four in ten (40%) `disagree’ (15% strongly/25% somewhat), admitting that they’re not aware of the difference.

Moreover, many are unaware of the resources available to them, as only a slim majority (55%) `agree’ (16% strongly/40% somewhat) that they would know where to turn if they were to become financially insolvent, while nearly half (45%) `disagree’ (20% strongly/25% somewhat).

Despite some gaps in their knowledge, four in ten (43%) Canadians `agree’ (17% strongly/26% somewhat) that they personally know someone who has become insolvent, with Quebecers (51%) and Atlantic Canadians (47%) being more likely than those in Ontario (42%), Saskatchewan and Manitoba (40%), Alberta (40%) and BC (37%) to say so.

(This article is from Ipsos)


Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. 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. 

debt

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