Canadian Headline Inflation Rises to 3.3%, But Core Inflation Shows Promise

General Angela Calla 15 Aug

July Headline Inflation Rose to 3.3%, But Core Inflation Improved

The Consumer Price Index (CPI) rose 3.3% y/y in July, up from a 2.8% rise in June. The acceleration in headline inflation was widely expected due to a base-year effect on gasoline prices, as a sizeable monthly decline in July 2022 (-9.2%) no longer impacts the 12-month movement. Excluding gasoline, the CPI rose 4.1% from 4.0% in June.

The mortgage interest cost index (+30.6%) posted another record year-over-year gain and remained the most significant contributor to headline inflation. The all-items excluding mortgage interest cost index rose 2.4% in July.

The CPI rose 0.6% in July, following a 0.1% gain in June, mainly due to higher monthly prices for travel tours, with July being a peak travel month. On a seasonally adjusted monthly basis, the CPI rose 0.5%.

Food price inflation eased last month but remains sticky.​

The core inflation measures will hearten the Bank of Canada. CPI-trim eased to 3.6% y/y in July, continuing the downtrend following the November 2022 peak. CPI-median held steady at 3.7%.

The sizable slowdown in other economic indicators suggests that Q2 GDP growth slowed to roughly 1.0% in the second quarter–markedly below the 3.1% pace posted in Q1. Labour markets are also easing with a meaningful drop in job vacancies and a rising unemployment rate.

Bottom Line

It is now likely that when the Bank of Canada meets again on September 6, the Governing Council will announce a pause in rate hikes. They will promise to remain ever vigilant, but there is a good chance that the overnight policy rate has peaked at 5%–up 1900% since March 2022.

We will unlikely see the first drop in the policy rate until June of next year. The Bank will proceed slowly, taking rates down by 25 bp increments. The low in the policy rate will probably be around 3%, well above the pre-pandemic level of 1.75%.

(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.

Click here to view the latest news on our blog. 

Weaker Than Expected Jobs Report Portends No Rate Hike By BoC

General Angela Calla 9 Aug

The Long-Awaited Labour Market Slowdown

The Canadian economy shed 6,400 jobs in July, far weaker than the 25,000 gain that was expected. The jobless rate was 5.5%, the third consecutive monthly rise. This likely improves the chances the Bank of Canada will remain on the sidelines in September.

Wage inflation, however, re-accelerated, moving back to 5.0%. This, combined with the continued stickiness in core inflation, will keep interest rates high for longer.

July’s data follows a surprise gain of 59,900 in June and a 17,300 loss in May, showing that employment is a notoriously volatile series. Nevertheless, it provides the fodder for Macklem to pause again after two consecutive rate hikes.

A downturn in June’s manufacturing, wholesale, and retail data has buoyed the Bank’s hopes that the 475 basis point rate hikes have slowed the economy, especially as preliminary figures for June showed the economy contracting for the first time this year. Inflation rates for the same month moderated to 2.8%, fitting within the central bank’s target range for the first time since March 2021.

 

Policymakers scrutinize indicators to determine if the current interest rates are sufficiently high to temper economic growth. They perceive substantial wage increases as inconsistent with their goal of reducing inflation to the 2% target. Even amidst recent significant strikes from workers demanding improved remuneration, the outlook hints at a potential slowdown in wage growth. This could be driven by increased immigration, which expands the workforce while the demand for labour diminishes.

 

Bottom Line

The chances of a rate hike on September 6 have diminished significantly. However, more data is yet to come with July inflation on August 15 and the Q2 GDP figure on September 1.

(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.

Click here to view the latest news on our blog. 

August 2023 Monthly Newsletter

General Angela Calla 9 Aug

This month we are covering what you need to know about converting your basement into an income suite, plus we have some fun summer BBQ tips! Also, hear the economic forecast straight from our Chief Economist, Dr. Sherry Cooper!

Converting Your Basement to an Income Suite

With the current interest rates and economic scenarios, many Canadians may be looking for ways to bring in some extra cash. One option for this is to put your home equity to work and consider renovating your basement into a legal income suite!

You can do this by using a secured credit line (home equity line of credit or HELOC) to help fund the upfront cash to make changes to your home.

A few things to consider before you invest in renovating to create an income suite include:

Zoning: Before looking into doing anything with an income suite, always double-check if you are zoned accordingly for a smooth renovation. If your zoning does not allow for secondary suites, see if you can rezone.

Local Regulations: Depending on your location, there may be particular regulations that you need to follow or be aware of regarding your suite.

A few examples of how the regulations can differ between provinces or cities include:

  • In Coquitlam, you cannot have a suite that is more than 40% of the main house floor plan. You are also required to offer a parking spot for tenants.
  • In Kelowna, you can only have one secondary suite and the home must have an “S” designation.
  • In Calgary, updated zoning legislation has now made it easier to add income suites.
  • Toronto has also proposed reforms that will make it easier to add suites.
  • In Montréal, anyone carrying out a project involving the addition of at least 1 dwelling and a residential area of ??more than 450 m² (equivalent to approximately 5 dwellings) must enter into an agreement with the City of Montréal in order to contribute to the supply of social, affordable and family housing. It can be a new building, an extension, or the conversion of a building.

Visit the official municipal websites or consult local building departments to obtain accurate and up-to-date information on the rules and requirements in your area BEFORE getting started.

Insurance & Legal Considerations: Before adding your secondary suite, ensure that you have proper insurance coverage or the ability to add additional coverage to protect both the primary residence and suite. In addition, you will want to consult a lawyer and draw up a tenant or rental agreement for any potential tenants. Ontario has a mandatory standard lease agreement that all landlords must use.

Unit Layout and Design: If the zoning and regulations in your area allow you to build an income suite, the next steps are to look at the suite layout and dimensions. Confirm any size restrictions or minimum ceiling height requirements as you are laying out the design for the unit.

The unit should have, at minimum the following:

  • A separate parking space for the renter.
  • A separate entrance, kitchen, bathroom, and living/sleeping areas.
  • Ventilation and soundproofing measures to enhance livability.
  • Consideration of natural light.
  • Interlink smoke detectors for primary and secondary residences.
  • Separate, independently-controlled ventilation and heating system.
  • Proper drainage, sewage connections, and utility separations.
  • Outlets, circuits, and lighting that meet electrical code requirements.

Ensure that however your income suite is designed, you are hiring the appropriate building, plumbing, and electrical experts to ensure your suite is up to code and avoid any potential disasters.

Building & Trade Permits: Once you have confirmed that you are properly zoned and able to add an income suite and understand all the regulations for your area, you will want to draft your blueprints and submit a permit application, along with the fee, before you get started. For instance, in B.C. you are required to have a Building Permit for any suite to be considered legal.

IMPORTANT: Even if you are not required to have a building permit, it is important to get these permits for other aspects including insurance coverage should anything happen. Having a building permit will help protect your investment.

In addition to your building permits, you will need to get permits for any plumbing, electrical, and gas renovations prior to beginning your work.

Inspections & License: Once you have your permits and have begun construction, make sure you understand what inspections are required throughout the process and you schedule them accordingly with local authorities to ensure compliance with building codes, fire safety standards, and health regulations.

If the work meets all requirements, your suite will be approved. The last step is determining if you need a business licence. This is not required if your family (parents, children, etc.) will be living in the suite. In Vancouver, for example, if you intend to rent out your suite long-term, you DO need a license. Be sure to check any rules on this in your area.

Beyond the ability to earn extra income per month, there are a few additional government incentive programs when it comes to suites including:

  • First Nations: If you live on a First Nations reserve, you may be eligible for federal funding that will provide up to $60,000 to help you build an inexpensive secondary suite rental linked to your principal home. If you live in a northern or remote area, this amount is increased 25%. This is a 100% forgivable loan that is not required to be paid back assuming all guidelines are followed.
  • Residential Rehabilitation Assistance Program (RRAP) – Secondary and Garden Suites: This program is open to all First Nations or individual First Nation members, particularly those who own a family home that can be converted to include a self-contained suite for a senior or adult with disability.
  • Multigenerational Home Renovation Tax Credit: A credit for a renovation that creates a secondary unit within the dwelling to be occupied by the qualifying individual or a qualifying relation. The value of the credit is 15% of the lesser of qualifying expenditures and $50,000.
  • British Columbia: Beginning in early 2024, BC homeowners will be able to access a forgivable loan of 50% of the cost of renovations, up to a maximum of $40,000 over five years, for income suites.
  • Ontario: There are multiple secondary suite programs throughout Ontario, depending on your region. These loans provide $25,000 to $50,000 in funding and are forgivable assuming continuous ownership for 15 years.

While it is important to look online and do your research. Your best resource will be visiting local authorities at the “City of” to confirm that you completely understand the considerations before moving forward with implementing an income suite.

Best Summer BBQ Tips

It’s the season of outdoor parties and a summer BBQ is the perfect way to enjoy time with friends and family!

For some tips on how to make this year’s get-together your best one yet, check out my list below:

  1. Set the Mood: String up fairy lights, plug in a radio with some of your favourite tunes in the background, put out a lawn rug, and throw a fresh tablecloth over your outdoor dining area. A few quick items can really spruce up the yard and make it feel ready for guests!
  2. Don’t Forget to Play! If you’re hosting an adult-only BBQ, setting up a table for a card game or getting out your cornhole boards can be a great way to pass the time and get in some laughs. If you have children in attendance, consider setting up a lemonade stand or fill some water balloons for an extra splash!
  3. Choose Your Mains: It can be easy to get carried away grilling steaks, fish, chicken, hot dogs, burgers – you name it! For a more successful party, choose two options. Maybe you go with hot dogs and veggie burgers, or perhaps fish and chicken. Choose items that cook well on the BBQ together and suit the tone of your get-together.
  4. Have Drinks on Hand: Set up a table with pitchers of fun summer drink concoctions (alcohol optional!) or consider filling a kiddie pool or wheelbarrow with ice to keep those beers chilled all afternoon.
  5. Put Out Snacks: This may seem like a no-brainer, but having a table filled with fun ‘grazing’ snacks can help stave off any stress about perfectly grilling your meals! Try a veggie and dip tray, fruit shish kabobs, or a charcuterie board of cured meats and cheeses.

Economic Insights from Dr. Sherry Cooper

The Bank of Canada remains staunch in its battle against inflation, utilizing its primary weapon—the overnight policy rate—which has escalated from 25 basis points to 500 bps since March 2022.

This historically low overnight rate was a direct consequence of the COVID-19 pandemic and implementing measures to cushion the economic impact of the lockdowns. These initiatives included reducing the policy rate from 1.75% to 0.25%, postponing mortgage payments, providing financial support to businesses for workforce maintenance, and compensating individuals for home quarantine. These measures, amongst others, reignited the economy upon the widespread availability of the vaccine.

The Canadian economy bounced back robustly once commercial activities resumed. Employment rates rocketed, and unemployment plummeted to all-time lows. However, the recovery faced a setback when Russia invaded Ukraine in February 2021, which caused supply constraints, and substantially increased energy and food. Despite the soaring inflation, central banks were initially hesitant to take action.

In hindsight, we now know the necessity for initiating interest rate hikes by mid-2021. Instead, this action was postponed until March 2022.

Furthermore, the Bank of Canada and other significant central banks inundated the financial system with surplus liquidity by purchasing government bonds. This quantitative easing tactic made capital not only more affordable but also readily available, sparking an unprecedented boom in the housing market.

Many exploited the record-low rates of 2020 and 2021 by opting for variable-rate loans due to their lower costs. At its zenith, variable-rate mortgages (VRMs) accounted for 57% of all loan originations. These loans are due for renewal in 2025 and 2026. However, most of these loans have reached their trigger points and are negatively amortizing, barring substantial lump-sum payments by borrowers.

For those who chose adjustable-rate loans, monthly payments increased with every Bank of Canada rate hike. Delinquency rates, for the time being, remain impressively low within the prime space, though they are beginning to rise among alternative lenders.

After reaching a zenith of 8.1% in June 2022, inflation has slowed to 2.8% in June of this year. Regardless, the Bank of Canada continued its trend of interest rate hikes following a brief hiatus in its last two meetings, with speculation of another hike in September. The Bank has provided a buffer period for itself by projecting a return to the 2% target inflation rate by mid-2025—a considerably more extended period than initially anticipated.

The recent rate hikes and moderated expectations appear prudent considering the Bank’s preference for mitigating inflation over preventing a recession. It is improbable that the Bank of Canada will reduce interest rates this year.

Although the policy rate is projected to decrease in the first half of 2024, it is not expected to return to the pre-COVID level of 1.75%. Negative real interest rates (the actual market rate minus the 2% inflation rate) are unlikely to occur, barring a global economic meltdown.

 

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.

Click here to view the latest news on our blog. 

OSFI Takes Focused Action to Reduce Systemic Banking System Risk

General Angela Calla 3 Aug

OTTAWA ─ June 28, 2022 ─ Office of the Superintendent of Financial Institutions

The Office of the Superintendent of Financial Institutions (OSFI) released a new Advisory (Clarification on the Treatment of Innovative Real Estate Secured Lending Products under Guideline B-20). The Advisory complements existing expectations under Guideline B-20, which articulates OSFI’s expectations regarding underwriting practices and procedures for reverse residential mortgages, residential mortgages with shared equity features and combined loan plans.

As shared in its Annual Risk Outlook (2022-23), OSFI is taking action to ensure that federally regulated financial institutions are well prepared to address the risk of persistent, outstanding consumer debt that can make lenders more vulnerable to negative economic shocks. Accordingly, this Advisory outlines regulatory expectations with respect to Combined Loan Plans (CLPs), loans with shared equity features, and reverse mortgages.

CLPs are an innovative product that have become the predominant uninsured real estate secured lending (RESL) offering, and they can provide great value to Canadians. As their structures evolve, so too must our approach and treatment of such exposures. The most significant concern with these products is the re-advanceability of credit above the 65 percent Loan-to-Value (LTV) limit. Products structured in this way could lead to greater persistence of outstanding balances and increase risks to lenders and households.

For most borrowers using CLPs, these changes will have no effect on the way that they use their products. For those who owe more than 65 percent LTV, there will be a gradual period where a portion of their principal payments will go towards reducing their overall mortgage amount until it is below 65 percent of its original loan to value and not be re-advanceable. This will typically happen the next time borrowers renew their CLP after the end of October or December 2023 depending on the lender’s fiscal year.

Sound mortgage underwriting remains the cornerstone of a healthy residential mortgage lending industry. We are confident that our actions today are responsible, fit for purpose and contribute to its continued resilience. By acting prudently, making evidence-based decisions, engaging with regulatory partners, and being clear about our expectations of lenders, OSFI is building a foundation of stability regardless of what lies ahead.

Quote

“OSFI is continuously monitoring the economic environment for a range of vulnerabilities that could pose a risk to the health of Canada’s financial system. Today, we have asked federally regulated financial institutions to make their innovative mortgage products safer and more sustainable over the long term. We are confident that our actions today will contribute to the continued resilience of Canada’s residential mortgage lending industry, and in turn of our financial system.”

– Peter Routledge, Superintendent

Quick Facts

  • Consumers will not see an increase to their monthly payment requirements as a result of this change.
  • This action will not impact new homebuyers.
  • Uninsured real estate secured lending (RESL) offering refers to residential mortgages with a 20 percent down payment or more.
  • Combined Loan Plans (CLP) are typically a traditional, amortizing mortgage loan blended with a revolving line of credit.
  • As of March 2022, CLPs that are above 65% LTV account for $204Bn of the $1.8Tn total outstanding residential mortgages as per Bank of Canada data.
  • In the case where a borrower has exceeded the 65% LTV ratio, a portion of that principal payment will be required to go towards principal repayment, gradually reducing the overall CLP borrowing limit to the 65% LTV threshold.
  • The implementation date for federally-regulated lenders with October 31st Fiscal Year End will be October 31, 2023. For federally-regulated lenders with December 31st Fiscal Year End, the implementation date will be December 31, 2023. Consumers with CLPs will not see a change to their product structure until their next renewal after these dates.

 

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.

Click here to view the latest news on our blog. 

The Angela Calla Mortgage Team – Letter of Engagement

General Angela Calla 27 Jul

Dear Client,

Thank you for choosing DLC – Angela Calla to prepare your application for mortgage financing. We are proud to offer a high level of service and it will be our pleasure to lead you through the process. DLC -Angela Calla maintains the highest level of integrity and we are always working in the best interest of our clients.

Process
In order to properly assist you, financial documents will be requested and need to be obtained. These documents are required by the lenders before considering your application. These are necessary to review prior to being able to advise and be successful in arranging financing and delivery of a mortgage commitment. The Mortgage Commitment will provide terms and conditions specific to the Mortgage Funding. Be prepared, Lenders will always ask for additional information after providing a Mortgage Commitment. Our goal is to fulfill all the funding conditions in the Mortgage Commitment as quickly as possible, but the precise timing cannot be guaranteed and is often dependent on how quickly documents or information can be obtained from you or from another source. In return, it is expected that you will set aside 30 minutes to review the Mortgage Commitment in detail, in person, at our Port Coquitlam office. A conference call will be available only in extenuating circumstances.

Terms of Engagement
You may terminate this engagement at any time by providing us with written notice of your decision to do so. Likewise, we may terminate this engagement at any time by providing you with written notice of our decision to do so. We may terminate the engagement for reasons including, but not limited to, the following:

• shopping other lenders or brokers while we are working on your application as this reflects poorly on your credit and flags the application for fraud preventing us from moving forward with your application; or
• you provide us with false, incomplete or misleading information or do not promptly provide us with information that is required from you; or
• you ask us to do something unethical or illegal or verbally abuse our team members; or
• as matters for your circumstances are confidential if things don’t go as either party intends no slander written or verbal is permitted; or
• we cannot find suitable financing for you despite using our best efforts to do so.

Communication
Acquiring a mortgage can be a stressful endeavor. The goal is to facilitate much of the hard work for you and guide you through the process of obtaining a mortgage. During the financing process, we will assist you in dealing with appraisers and insurance agents. We will keep you informed throughout the application process, provide progress updates from beginning to end and involve you in all important decisions. Our role through this process is to guide you, the client, through the mortgage financing process and explain the details of the mortgage you aim to register on your home.
At no point are we able to guarantee financing, as we are not the lender. You confirm that you understand that we cannot guarantee that we will be able to obtain financing for you and that even if you are approved or a lender commits to financing, we cannot guarantee that the lender will fulfill its Mortgage Commitment to you, particularly if circumstances change after you are approved for financing.

Confidentiality
Over the course of your mortgage application we will request and be privy to much of your personal information. Be assured you can provide your personal information knowing that we will collect what is necessary to achieve your financing goals and ensure that your private information is secured.

Disclosure
Our office arrangement involves sharing file data with parties related to the approval of the mortgage and our arrangement may include sharing services such as photocopying, telephone, fax, email, mail and file submission software programs. We will share the information you provided to us with potential lenders and insurers when applicable. We may also discuss aspects of your file with mortgage brokers from within our industry and, from time-to-time, may co-broker information to gain access to other lenders, if we feel it would be in your best interests.

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act
We are required to advise you that the Canadian federal government has enacted the Proceeds of Crime
(Money Laundering) and Terrorist Financing Act (the “Act”). The Act imposes obligations on our mortgage advisors and staff to report and record certain client transactions. The Act requires us to report “suspicious transactions” to an agency of the federal government;
Our obligations under the Act are not optional. Please refer to Canada’s Anti-Money Laundering and Anti-Terrorist Financing.

Compensation
Generally, the lender pays us a fee for arranging your mortgage. The fee we are paid by a lender varies, depending on the lender and the nature of the financing. This does not affect our decision on which lender to do business with. If financing from a private or alternative lender is required, you must pay a fee to the lender to arrange the financing. We will disclose that fee to you, in advance, and obtain your approval before you enter a mortgage commitment for financing. While our fees are generally paid by the lender, in most circumstances you have to pay other expenses in connection with the financing arranged which include:

• legal fees including, title search, title insurance, mortgage processing, law society fees, disbursements, property transfer tax, Provincial and Federal taxes;
• appraisal fees;
• strata document retrieval fees; or
• fees charged by the lender.

Yours truly,
The Angela Calla Mortgage Team

 

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.

Click here to view the latest news on our blog. 

The Canadian Mortgage Market is at the Precipice of an Evolutionary Shift

General Angela Calla 27 Jul

The Canadian mortgage market is at the precipice of an evolutionary shift as it ventures into a post-pandemic environment.

 

With the 2023 Residential Mortgage Industry Report from the Canada Mortgage and Housing Corporation (CMHC) now available, CMHC 2023 Residential Report

a roadmap has been provided for the mortgage industry moving forward, outlining crucial insights into future prospects for real estate professionals of all stripes.

 

An important trend emerging from the report is the prominent ascent of non-bank lenders, a significant factor contributing to a transformative shift in the mortgage landscape. These lenders have been increasing their hold on the market share thanks to their competitive rates and flexible terms, which cater to a broad spectrum of borrowers. As these non-bank entities continuously innovate and remodel themselves to cater to dynamic consumer needs, we foresee them becoming progressively influential players in the mortgage arena.

 

Another central agent of change in the mortgage industry is the emergence of new technology, including AI. The CMHC report underscores the growing role of digital platforms in the mortgage approval process. This trend, catalyzed and expedited by the pandemic, has streamlined the mortgage process, making it quicker, more efficient, and, importantly, more accessible for borrowers. In the future, we envisage technology taking further leaps, with artificial intelligence and machine learning assuming a crucial role in risk evaluation and decision-making.

 

Government policies will invariably persist in molding the future shape of the mortgage market. The government’s pandemic response significantly impacted mortgage lending practices, especially its provisions to buttress homeowners and stimulate the housing market. As we navigate the road ahead, we expect government policies to keep pace with fluctuating market conditions, emphasizing stability and mitigating potential risks.

 

Though the Bank of Canada chose to pause rate hikes earlier in 2023, there has been growing speculation that increases in lending rates could be on the way. As the conditions the BoC laid out for pausing the rate hikes are no longer being met due to stronger-than-expected GDP numbers and an increasing inflation rate, we could expect another rate hike by the end of the year. That said, the overall outlook for the remainder of the year will likely be contingent on regional conditions, with smaller, presently affordable markets likely to maintain their stability.

 

Nevertheless, these shifts are not devoid of challenges. The growing presence of non-bank lenders and the mounting reliance on technology in the mortgage process could inadvertently lead to an increased risk quotient in the housing market. Regulatory bodies must keep a close watch on these developments and stand ready to intervene as needed to uphold market stability.

 

In conclusion, the future of the Canadian mortgage market will likely be sculpted by intensifying competition, rapid technological advancements, and flexible government policies. As we traverse this ever-changing landscape, it will be vitally important for borrowers to stay informed and collaborate with trusted professionals to make prudent decisions for their financial future. With an increasingly complex and dynamic mortgage industry landscape, we are on the cusp of an era that could define the future of housing finance in Canada for years to come.

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.

Click here to view the latest news on our blog. 

Using a Reverse Mortgage To Purchase a Revenue Property

General Angela Calla 25 Jul

We are seeing an increasing number of clients turn to revenue properties to supplement their monthly income in retirement. But how does that work given that reverse mortgages primarily lends on the primary residence?

 

Client Details:

  • 70 year old male & 70 year old female
  • $2.4M primary residence in North Vancouver
  • Purchasing 1 bedroom condo in Lower Lonsdale for $725,000, currently rented for $2,500/month
  • Monthly condo expenses: $350 strata fees, $150 property taxes, $100 insurance

 

Option 1: Mortgage on Primary Residence Only

 

Assuming the primary residence is free & clear these clients can do a $725,000 reverse mortgage and purchase the condo for cash, and still have some reverse mortgage funds to draw on in case of emergency.

There are no payments required on the reverse mortgage so the only things the rental income needs to service are the strata fees, property taxes and insurance. Our clients will have monthly net rental income of $1,900.

 

These clients could have chosen to do the Reverse  Income Advantage product and received $1,900/month that way, but they value real estate and like the idea of having two properties growing in value over time. And because they used the $725,000 reverse mortgage to purchase an investment property, the mortgage interest is tax deductible (please consult an accountant for tax advice).

 

Option 2: Inter-alia Mortgage on Primary Residence & Rental Property

 

But what if their primary residence has an existing $200,000 mortgage? No problem! They will do an inter-alia mortgage over the existing property and the new rental property to get them the extra funds they need to pay off the existing mortgage and purchase the revenue property.

Based on a $725,000 purchase price, these clients qualify for an inter-alia mortgage of $924,000. The clients will have just enough to payout their existing mortgage and purchase the new revenue property.

 

Not only are they receiving $1,900 in net rents each month, they no longer have a mortgage payment on the previously existing $200,000 mortgage. Their cash flow situation is improved significantly.

 

Please let me know if you have any questions about how to support you or a loved one in the purchase of a revenue property.

 

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.

Click here to view the latest news on our blog. 

Free Family Fun – Summer 2023

General Angela Calla 24 Jul

This summer, Port Coquitlam is transforming two parks into a giant outdoor movie theatre! It’s a fun time for the kiddos and it’s all for FREE!

 

🎬 Jumanji: The Next Level

📅 Sat, July 29 at 9:15pm at Evergreen Park

 

🎬 Super Mario Bros. Movie

📅 Sun, Aug. 20: 8:45pm at Gates Park

 

🎬 Guardians of the Galaxy Vol. 3

📅 Sat, Aug. 26: 8:45pm at Evergreen Park

 

For all of our summer event details, visit portcoquitlam.ca/summer

 

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.

Click here to view the latest news on our blog. 

8 Ways Canadians Benefit from Early Mortgage Redo: A Nurse and Engineer’s Success Story

General Angela Calla 24 Jul

In the ever-changing Canadian market, financial decisions can be both daunting and exhilarating. Every day, The Angela Calla Mortgage Team have the privilege of helping Canadians navigate these waters. Recently, a nurse and an engineer from Port Coquitlam experienced firsthand the benefits of taking control of their financial future by redoing their mortgage early. Through this decision, they managed to save a significant amount of money, and their experience highlights the eight things they love about it.

1. Save Money Monthly: One of the most immediate and rewarding benefits of refinancing their mortgage early was the opportunity to save money on a monthly basis. By securing a lower interest rate and potentially extending the mortgage term, they reduced their monthly mortgage payments significantly, freeing up funds for other important financial goals.

2. No Outside Debts: With the newfound savings from their lower mortgage payments, the nurse and engineer were able to eliminate outside debts. Paying off high-interest debts, such as credit cards or lines of credit, provides them with financial freedom and the ability to focus on their long-term financial well-being.

3. Building an Emergency Fund: Having an emergency fund is essential for handling unexpected financial challenges without resorting to high-interest loans. By restructuring their mortgage, the couple now has an opportunity to build a robust emergency fund, giving them peace of mind and added financial security.

4. Accelerating Property Ladder Progress: A key advantage of refinancing early is the ability to move up the property ladder sooner. With reduced monthly payments and better financial planning, the nurse and engineer are now on track to achieve their dream of upgrading to a larger, more suitable home in the future.

5. Investing in Their Children’s Future: With their finances in better shape, the couple has decided to start contributing to their children’s Registered Education Savings Plan (RESP). By prioritizing their children’s education, they are building a solid foundation for their youngsters’ futures.

6. Contributing to Their RRSPs and Tax Refunds: Through mortgage refinancing, the couple was able to free up more funds to contribute to their own Registered Retirement Savings Plans (RRSPs). This not only helps secure their retirement but also leads to additional benefits, such as a tax refund, which they plan to use for a bit of well-deserved fun.

7. Avoiding Unnecessary Interest Payments: By taking control of their mortgage and refinancing early, the nurse and engineer were able to avoid paying unnecessary interest for no apparent benefit. Reducing the overall interest paid over the life of the mortgage allows them to retain more of their hard-earned money.

8. Securing a Lower Rate for the Long Term: One of the most significant advantages of refinancing early is the ability to secure a lower interest rate for a more extended period. This locks in their mortgage at a favorable rate, shielding them from potential future interest rate fluctuations.

The success story of the Port Coquitlam nurse and engineer demonstrates the power of making informed financial decisions. By taking control of their mortgage and refinancing early, they unlocked a wealth of benefits, including reduced monthly payments, elimination of outside debts, and increased contributions to their RRSPs and their children’s RESP. Moreover, their decision to build an emergency fund and secure a lower interest rate provides them with financial security and a stronger foundation for their future. If their experience teaches us anything, it’s that by carefully navigating the changing market and seeking expert advice, Canadians can achieve financial success and enjoy a brighter financial future.

 

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.

Click here to view the latest news on our blog. 

How Homeowners Are Coping With Raising Interest Rates When Renewing Mortgages

General Angela Calla 24 Jul

 

 

 

 

PUBLISHED JULY 21, 2023 UPDATED JULY 22, 2023

With the Bank of Canada’s latest interest rate hike in July, life keeps getting more expensive for those with a mortgage.

Angela Calla, mortgage broker at Dominion Lending Centres in Vancouver, notes that regardless of income level, having to qualify at interest rates that are 4 or 5 percentage points higher than when a homeowner first got their mortgage is certainly a pressure cooker. She recently shared her thoughts with Globe Advisor on strategies for how her clients are coping.

What things do you advise clients to consider at mortgage renewal time?

With another hike looming in the fall, anybody who has a renewal upcoming in the next year shouldn’t wait to secure a rate to protect themselves and minimize their payment shock.

They also need to consider if they want to move up the property ladder in the future or have outside debts. The mortgage renewal is the optimal time to review your options because there’s no penalty.

If they live in a strata property, they want to make sure that they have no assessments coming up. It’s essential for them to take out the money to have in an emergency fund for that. We’re seeing a lot of people getting hit with assessments on their condos for certain items such as roofs. That can be detrimental to people on a fixed income in these high inflationary times and even at the best of times. If they need to break their mortgage down the road, then they’re looking at a penalty. In the middle of an assessment, lenders don’t look at these properties favourably.

What are your clients doing to manage the rate increases?

Some people who are experiencing the largest increases are using a reverse mortgage. They’re getting these because they don’t want to take their money out of investments and pay taxes on them. They already feel like they may not be prepared for retirement with the increase in inflation. It’s been common for them to take a three- or five-year term to help things as they settle.

Some are putting their emergency funds in a high-interest saving account paying more than 5 per cent. So, instead of paying property taxes with their mortgage or pre-paying their mortgage, they’re putting those funds aside in their emergency funds.

Some are extending their amortization to give them some time until rates come back down. Some want to sell and rent but the problem is there’s no product to rent.

What’s your overall outlook that you share with clients who are finding it tough to cope?

I tell my clients that anything they do right now is specific to this time in the market and specific financial circumstances. It can always be modified and changed when other things change down the road.

This interview has been edited and condensed. This is Globe Advisor’s weekly newsletter for professional financial advisors, published every Friday.

– Deanne Gage, Globe Advisor reporter

 

 

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.

Click here to view the latest news on our blog. 

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