Canadian Inflation Fell to 3.1% (y/y) In October, Ensuring the BoC Holds Rates Steady

General Angela Calla 22 Nov

Good News On the Inflation Front Suggests Policy Rates Have Peaked

Today’s inflation report showed a continued improvement, mainly due to falling year-over-year (y/y) gasoline prices. The October Consumer Price Index (CPI) rose 3.1% y/y, down from the 3.8% rise in September. There were no surprises here, so markets moved little on the news. Excluding gasoline, the CPI rose 3.6% in October, compared to 3.7% the month before.

The most significant contributors to inflation remain mortgage interest costs, food purchased at stores, and rent.
Canadians continued to feel the impact of rising rent prices, which grew faster (y/y) in October (+8.2%) than in September (+7.3%). The national increase reflected acceleration across most provinces. The most significant increases in rent prices were seen in Nova Scotia (+14.6%), Alberta (+9.9%), British Columbia (+9.1%) and Quebec (+9.1%).
Property taxes and other special charges, priced annually in October, rose 4.9% yearly, compared with a 3.6% increase in October 2022. The national increase in October 2023 was the largest since October 1992, with homeowners paying more in all but one province, as municipalities required larger budgets to cover rising costs. Property taxes in Manitoba (-0.3%) declined for the third consecutive year, mainly due to reduced provincial education tax.

While goods prices decelerated by -1.6% as prices at the pump fell, prices for services rose 4.6% last month, primarily driven by higher prices for travel tours, rent and property taxes.

While grocery prices remained elevated, they also continued their trend of slower year-over-year growth, with a 5.4% increase in October following a 5.8% gain in September. While deceleration continued to be broad-based, fresh vegetables (+5.0%) contributed the most to the slowdown.

Excluding food and energy, inflation fell to 2.7% in October, down a tick from the September reading. Two other inflation measures closely tracked by the Bank of Canada–the so-called trim and median core rates–also eased, averaging 3.6% from an upwardly revised 3.8% a month earlier.

Bottom Line

According to Bloomberg calculations, another critical measure, a three-month moving average of underlying price pressures, fell to an annualized pace of 2.96% from 3.67% a month earlier. It’s an important metric because Bank of Canada Governor Tiff Macklem has said policymakers are tracking it closely to understand inflation trends.

Today’s news shows that tighter monetary policy is working to bring down the inflation rate. In its Monetary Policy Report last month, the Bank of Canada expected the CPI to average 3.5% through mid-2024. Cutting its economic forecast, the Bank forecasted it would hit its 2% inflation target in the second half of 2025.

Given today’s data and the likely significant slowdown in Q3 GDP growth, released on November 30, and the Labour Force Survey for November the following day, policy rates have peaked. Governor Tiff Macklem will give a speech on the cost of high inflation in New Brunswick tomorrow, and the subsequent decision date for the Governing Council is December 6th. The Bank’s inflation-chopping rhetoric may be relatively hawkish, but the expectation of rate cuts could spur the spring housing market.

The economists at BMO have pointed out that “three provinces now have an inflation rate below 2%, while only three are above 3%, so much of the country is already seeing serious signs of stabilization. (Unfortunately, the two largest provinces have the fastest inflation rates—Quebec at 4.2% and Ontario at 3.3%).” There is no need for the Bank to raise rates again, and they could begin to cut interest rates in the second quarter of next year.

(Article courtesy of Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres)

Angela Calla is an 19-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 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.

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Calling all prospective First Time want to be HomeOwners, Newcomers, and Realtors!

General Angela Calla 20 Nov

I hope you’re talking about the First Home Savings Account (FHSA)!

If you and your partner each open a First Home Savings Account (FHSA) and contribute the maximum contribution amount for 2023 of $8,000, you’ll receive a $16,000 tax deduction that you can use to reduce your taxable income. Don’t delay! Not opening one this year will loose the contribution room.

When you buy your first home, you’ll be able to withdrawal your entire FHSA balance tax-free and not be required to repay any withdrawals like you would when using a Home Buyers Plan (HBP) through a Registered Retirement Savings Plan (RRSP).

If you don’t end up buying a house? No problem, you can roll your FHSA balance into your RRSP and not pay any taxes or fees.

Regardless if you’re buying your first home next week, next month or next year, our office would love to share more information on how a FHSA can help you accomplish your goal of buying your first home. 🙋🏼‍♂️🏡

Let’s make sure we elevate financial literacy for our fellow Canadians

Email: angela@countoncalla.ca

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Client Appreciation Movie Night – November 9, 2023

General Angela Calla 20 Nov

We had the best time taking over the entire 3 theatres and having a cozy movie night with some of our clients that could make it out. My heart ❤️ is so full to be able to share a flick, some laughs, hugs and appreciation to be a part of our mortgage family. Going into my 20th year in business, I lead with my heart and love to share doing my favourite things together. From food, to movies and events! Other fun facts about the evening because we have the coolest clients ever: Pizza Peels are used as paddles in some circumstances 🤣 and we even got to be the first movie one of our clients ever got to go to. One thing I missed we all had a good laugh about is I did not sing the Anthem to welcome everyone into the theatre 🎭 🤣🤣

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Time for a Financial Plan Review

General Angela Calla 16 Nov

Here are the 4 top benefits we have seen our mortgage clients gain from it these past few months.

1. Finding the Money without making any investments but simply moving existing investment funds to the right place. We had a client that went from having to pay taxes, to getting a refund! They used this to pay down their mortgage being subject to higher rates upon renewal, the balance will now be reduced, helping them achieve freedom sooner and lower future payments.

2. Lower Insurance Costs I did this myself in the summer savings an extra $1,200.00 per year and got more coverage!

3. Getting Grants Set Up Properly opening of a First Home Savers Account gives you the full benefit allowance to carry forward to help buy your first home any First Timer who hopes to buy in the next 15 years using this new Federal Grant available. That is only one example, our planning partners have been able to help our clients obtain years of disability tax credits they didn’t know they had access to, in most recent months a $10,500.00 lump sum was paid to one of our mortgage family clients which helps if you or your children have a disability. We leaned most people who qualify for this let the money go unclaimed as they get no guidance.

4. When Doing A Creation/Review of a Potential Plan for a client who was up for mortgage renewal living paycheck to paycheck with nothing being able to be saved for retirement they learned they had a transferrable pension from a previous employer over 10 years ago for over $50,000.00 that they would lose the option to transfer after by their 55 birthday which was quickly approaching, thankfully that was able to be obtained to maintain its value and in the hands of the individual to now save for retirement.

To have an introduction kindly email callateam@countoncalla.ca with the best phone number to reach you at and we will have them reach out to you directly.

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I CAN’T PAY MY MORTGAGE! What can I do?!

General Angela Calla 16 Nov

Can’t pay your mortgage and need to review your options? Have a listen to Angela Calla on Mom Talk.

Finances are tighter for everyone, the cost of living is up but the wages just don’t seem to match. Despite feeling capable when you first bought your house, things are unexpectedly different now. Interest rate hikes, for example, can impact your ability to make regular mortgage payments, potentially harming your credit score and putting your home at risk of repossession. But don’t panic! There are options available to help you get back on track. Have a listen to Angela Calla on Mom Talk sharing her valuable insights on what to do if you can’t pay your mortgage, and what to ask your bank when renewing your mortgage.

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Smart Money: Saving For a Down Payment with Incentives

General Angela Calla 9 Nov

HOME BUYERS PLAN

What it is: Use up to $35,000 of your RRSPs (registered retirement savings plan) toward your down payment. Those funds have to be repaid back within 15 years.

Benefits: Any funds you contribute are tax-deductible.

How to use it: If you’re palling to save the max ($35k) over 5 years, save $134/week.

How to bump up your savings: With any tax returns you receive from your RRSP contributions, deposit them into your RRSP to boost your savings and increase your tax deductions from the next year!

Bonus: If you employer has an RRSP matching program, opt in and you’ll see your savings grow twice as fast!

FIRST HOME SAVINGS ACCOUNT

What it is: Contribute up to $8,000 annually with a lifetime contribution limit of $40,000. Any unused contribution room can carry forward to the following year up to a maximum of $8,000.

Benefits: Any withdrawals are tax free like a TFSA and like an RRSP, any funds you contribute are tax-deductible. Invest the funds and watch them grow!

How to use it: To maximize the annual contribution, save $153/week.

How to bump up your savings: With any tax returns you receive from your FHSA contributions, deposit them into your FHSA to boost your savings and increase your tax deductions for the next year!

THE BOTTOM LINE

In total, using both these programs to their full potential could gain you $75,000 to use towards your down payment on your first home!

Over 5 years, saving $287/week will get you $75,000 for a down payment!

While that’s not realistic for everyone, contributing anything is going to have tax benefits and investment earnings over time. If home ownership is on your vision board, it’s time to start taking advantage of these programs and grow that down payment!

Need more information? Reach out to us at callateam@countoncalla.ca or 604-802-3983.

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November Newsletter

General Angela Calla 7 Nov

Welcome to the November issue of my monthly newsletter!

As we get closer to the end of the year, we have some tips for your upcoming mortgage renewal, plus how to winterize your home!! Also, hear the economic forecast straight from our Chief Economist, Dr. Sherry Cooper.

Mortgage Renewal Benefits

Is your mortgage coming up for renewal? Do you know about all the incredible options renewing your mortgage can afford you?

If not, I have all the details here on how to make your mortgage renewal work for you as we start to think about 2024.

Get a Better Rate
Are you aware that when you receive notice that your mortgage is coming up for renewal, this is the best time to shop around for a more favourable interest rate? At renewal time, it is easy to shop around or switch lenders for a preferable interest rate as it doesn’t break your mortgage. With interest rates expected to come down as we move into the New Year, taking some time to reach out to me and shopping the market could help save you money!

Consolidate Debt
Renewal time is also a great time to take a look at your existing debt and determine whether or not you want to consolidate it onto your mortgage. For some, this means consolidating your holiday credit card debt into your mortgage, for others it could be car loans, education, etc. Regardless of the type of debt, consolidating into your mortgage allows for one easy payment instead of juggling multiple loans. Plus, in most cases, the interest rate on your mortgage is less than you would be charged with credit card companies.

Start on that Reno
Do you have projects around the house you’ve been dying to get started on? Renewal time is a great opportunity for you to look at utilizing some of your home equity to help with home renovations so you can finally have that dream kitchen, updated bathroom, OR you can even utilize it to purchase a vacation property!

Change Your Mortgage Product
Are you not happy with your existing mortgage product? Perhaps you’re finding that your variable-rate or adjustable-rate mortgages are fluctuating too much and you want to lock in! Alternatively, maybe you want to switch to variable as interest rates start to level out. You can also utilize your renewal time to take advantage of a different payment or amortization schedule to help pay off your mortgage faster!

Change Your Lender
Not happy with your current lender? Perhaps a different bank has a lower rate or a mortgage product with terms that better suit your needs. A mortgage renewal is a great time to switch to a different bank or credit union to ensure that you are getting the value you want out of your mortgage if you are finding that your needs are not currently being met.

Regardless of how you feel about your current mortgage and what changes you may want to make, if your mortgage is coming up for renewal or is ready for renewal, please don’t hesitate to reach out to me! I’d be happy to discuss your situation and review any changes that would be beneficial for you to reach your goals; from shopping for new rates or utilizing that equity! I can help you find the best option for where you are at in your life now and help you to ensure future financial success.

Winterizing Your Home

We Canadians are no strangers to the chill of the winter season!

As we shift into the final few months of 2023, now is a great time to check your home before the cold front hits. Below I have included a few tips that could help you save on bills, prevent future repair costs, and be more comfortable all winter long.

Inspect Your Fireplace: There is no better time than now to have your fireplace inspected to ensure optimal efficiency and heat output. Whether you have a wood-burning, gas, or electrical fireplace, proper maintenance can go a long way for your heating bill!
Maintain Your Furnace: While you’re having your fireplace inspected, don’t forget to maintain your furnace! If your furnace is getting up there in age, you may want to also consider replacing it as typically newer furnaces are more efficient than the previous generation, which could help save on energy costs. Either way, ensuring your furnace is in working order will guarantee top output and a cozy winter!
Clean The Gutters: The last thing you want is your gutters to be clogged when the snow hits! Cleaning your gutters from Fall leaves and other debris will help ensure proper drainage for melting snow. For those who want to go the extra step, consider gutter guards which can help keep out unwanted objects from your gutters.
Examine Your Roof: While you’re prepping your gutters for the winter, it is a good idea to also examine your roof. A few things to look for include broken or missing shingles, damaged flashing, staining from water leakage, and ventilation.
Consider a Programmable Thermostat: According to experts, a degree drop in your home temperature can measure up to 1% on your heating bill. For those of us who don’t like to have cold feet all season, smart thermostats are a great way to keep warm and optimize your energy savings! Ideally, you want to set your thermostat to turn on in the morning, off when you go to work, and back on in the evening to ensure a toasty welcome.
Insulate Windows: Always be sure to check your windows for any gaps or water leakage and get them resealed as soon as possible. If you live in a particularly cold location, consider swapping out your windows to double-paned glass for an added layer of insulation. Another tip to keep the cold from seeping in through your windows is swapping out your curtains for a heavier, thermal-lined set which can do wonders!
Check Your Pipes: Checking pipe joints for leaks that could cause rot and damage will save you trouble in the future. Repair any cracks you find, especially those around electrical outlets and alarm system lines. You can also consider foam pipe insulation, which is fairly easy to install and could help prevent energy loss and potential water damage from frozen pipes.
Stock Up on Supplies: There are a few things you might want to consider stocking up on ahead of time for the winter season, such as flashlights and batteries, ice melt, extra pet food and canned goods, and an emergency storm kit that includes an extra flashlight, candles, portable radio, water, and snacks.

With a little preparation, you can keep your home in good shape without needing to feel the cold bite of winter!

Economic Insights from Dr. Sherry Cooper

The Canadian economy is showing continued signs of slowing as inflation decelerates. This opens the door for a continued pause in rate hikes. Indeed, with any luck, the Bank might have finished its tightening cycle.

One more rate hike is possible, especially if continued Middle East tensions lead to a sustained oil price increase, but the odds are against it.

This does not suggest, however, that interest rates will decline anytime soon. Headline inflation in September was posted at a 3.8% year-over-year pace, well above the Bank’s 2% target. Wage inflation remains at roughly 5%, and inflation expectations remain high.

However, the economy is slowing, and excess demand in labour markets is waning. Third-quarter economic growth is likely to be less than 0.5%, and leading economic indicators are pointing to a further slowdown in the final quarter of this year and the first quarter of 2024.

Canadian consumers, weighed down by record debt loads and high prices, are tightening their purse strings. Savings rates have fallen, and retail sales per capita have slowed markedly. Sales were down in six subsectors: car dealers, furniture, electronics, and appliance retailers.

Canadians are quickly rolling back their purchases of goods as more households face mortgage payment renewals. The Bank of Canada consumer survey suggested that families expect more adverse effects ahead as an increasing volume of mortgages come due for renewal or refinancing.

Businesses are also tightening their belts as the recent Bank of Canada Business Outlook survey showed considerable weakness. The Bank is counting on softening demand to translate into a slower inflation rate in the coming months.

I expect the central bank to cut interest rates in mid-2024, gradually taking the overnight policy rate down. In the meantime, housing markets will continue seeing a surge in new listings and more favourable buying opportunities.

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Soft Jobs Report Weakens Impetus for Further Bank of Canada Rate Hikes

General Angela Calla 3 Nov

Weak October Jobs Report Likely Takes Further BoC Rate Hikes Off The Table

Today’s StatsCanada Labour Force Survey for October was weak across the board. Total job gains were meagre, full-time jobs fell, hours worked were flat, wage inflation eased (a bit), and the unemployment rate rose.

Employment changed little in October, up only 17,500 (0.1%), after rising 64,000 in September and 40,000 in August. The employment rate—the proportion of the working-age population with a job—fell 0.1 percentage points to 61.9% in October, as the population aged 15 and older increased by 85,000 (+0.3%).

Most notably, the unemployment rate rose 0.2 percentage points to 5.7%–its fourth monthly increase in six months and its highest level in 21 months, adding evidence to a weakening economy. The latest monthly GDP figures released earlier this week point to a flat to negative growth rate for the third quarter this year. Final data will be released later this month, but today’s numbers suggest that the overnight policy rate at 5.0% has peaked. The pace of employment gains is running below labour force growth from record population increases. It indicates that labour demand is cooling while supply is catching up quickly. The Bank of Canada expects the economy to move into modest excess supply in the fourth quarter, helping to reduce consumer price inflation.

As unemployment has increased and job vacancies have decreased in recent months, the labour force participation rate—the proportion of the population aged 15 and older that was either employed or looking for work—has remained relatively high. The participation rate in October (65.6%) was unchanged from the previous month and up 0.2 percentage points on a year-over-year basis.

The most significant job gains were in construction, rising by 23,000, more than offsetting a decline of 18,000 in September. The most economically sensitive sectors posted job losses. These included manufacturing, wholesale and retail trade, finance, insurance, real estate, and rental and leasing, as well as accommodation and food services.

Wage inflation continues to be troubling for the central bank. On a year-over-year basis, average hourly wages rose 4.8% in October, following an increase of 5.0% in September.

Bottom Line

The Bank of Canada meets once again on December 6th. Before then, we will see another CPI inflation report on November 21, Q3 GDP on November 30 and the November Labour Force Survey on December 1. Given the Bank’s general reluctance to hike rates just before the holiday season, the Bank of Canada will remain on the sidelines.

Judging by today’s weaker-than-expected employment report in the US as well, the Fed will also hold their pause for the remainder of this year.

Rate relief, however, is still many months away. The central banks will want to see inflation at 2% with the belief that it will remain there before they begin to cut interest rates. That will happen, but probably not before next summer. According to Bloomberg News, “Traders in overnight swaps brought forward their expectations for when the Bank of Canada will start loosening policy, and are now betting policymakers will cut interest rates by 25 basis points in July, from September a day ago.”

Article courtesy of Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres

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Dreaming of Home Ownership…

General Angela Calla 30 Oct

Dreaming of home ownership but need help saving for a down payment? Between current home prices and inflation, it can feel challenging. But the good news is that first-time homebuyers can use both an FHSA and the HBP to optimize their saving.

An FHSA allows you to contribute up to $8,000 a year, to a lifetime maximum of $40,000. All of this plus any growth from your investments can be used for a down payment. If you’re eligible, the HBP allows you to withdraw up to $35,000 tax-free from your RRSP to buy your first home. You just have to make sure you repay the funds to your RRSP within 15 years.

Depending on how you set your investment goals, combining the money from your FHSA and HBP means you can potentially save $75,000 or more for a down payment. Remember, this is per person. If you and your partner are both eligible, together you can potentially save over $150,000 for your first home.

The key is starting early. The more time you give yourself to save and grow your investments, the easier it will be for you to reach your savings goal. We will make an introduction to an advisor that can help you get on the path to making your homeownership dreams a reality.

604-802-3993
angela@countoncalla.ca
www.angelacalla.ca

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Reverse Mortgage Information

General Angela Calla 27 Oct

A reverse mortgage in Canada is a financial product designed for homeowners aged 55 and older that allows them to access a portion of their home’s equity without having to sell or move out of the property. This type of loan enables homeowners to convert part of their home equity into tax-free cash, typically in the form of a lump sum, periodic payments, or a combination of both.

Key points about reverse mortgages in Canada include:

Eligibility: Homeowners must be at least 55 years old and own their primary residence outright or have a significant amount of equity in their home.

Loan Repayment: The loan does not require monthly mortgage payments. Instead, the loan, including interest and fees, is typically repaid when the homeowner moves out, sells the home, or passes away. The loan amount increases over time as interest accrues.

Loan Limits: The maximum amount that can be borrowed is determined based on factors such as the homeowner’s age, property value, and location.

Interest Rates and Fees: Interest rates for reverse mortgages in Canada are often higher than traditional mortgage rates. Additional fees, such as closing costs and servicing fees, may apply.

Counseling and Legal Requirements: Potential borrowers are required to seek independent legal advice and counseling before obtaining a reverse mortgage to ensure they understand the terms, implications, and alternatives.

Regulation: Reverse mortgages in Canada are regulated to protect homeowners and ensure transparency in the lending process. The regulations provide certain safeguards and guidelines to protect the interests of borrowers.

It’s crucial for individuals considering a reverse mortgage in Canada to thoroughly understand the terms, associated costs, and the potential impact on their home equity and inheritance.

Below are some images related to a reverse mortgage product. For further information for your specific needs, please reach out to callateam@countoncalla.ca or 604-802-3983.

Financial Illustration