CMHC’s Eco Improvement

General Angela Calla 26 Sep

Apply for a partial premium refund of 25% if you’re CMHC insured and working on energy efficient renovations to your recently purchased home.

CMHC Eco Improvement aims to reduce the environmental impact of housing by supporting energy-efficient improvements. Apply for a 25% partial premium refund if you’re insured with CMHC and you’re spending at least $20,000 in energy efficient renovations. The program is available for both home buyers and individual condo buyers.

It aligns with CMHC’s commitment to combat climate change and the Canadian government’s goal of carbon neutrality by 2050.

Read more here: CMHC’s Eco Improvement

 

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. 

Self-Employed? We have a mortgage for that!

General Angela Calla 20 Sep

Often times we get calls or emails from those who are disappointed …they spoke to the bank directly on what options are available to make a home or investment property purchase.

Let’s take a look at “why” this happens ( more of a breakdown in my book for purchase here)

Every Bank in Canada only has a few options which may, or may not include what you need as a borrower.

It’s impossible for every lender to have every product!

Simply put,  it’s most likely they just don’t have the product you require for your acquisition.

The good news is: You have options!

Canadians have access to mortgage professionals to provide you the power of choice to decide what works best for your financial plan and timelines.

Self Employed Mortgages are generally allocated by lenders in 3 ways

      1. Net Income Grossed up 15 percent

  1. Stated Income- derived in-between the gross and the net income by review of financials and add backs – there are a handful of banks ONLY accessible by mortgage brokers that specialize in this lending
  2. Private Lenders- who look more at the equity, credit and actual property for security as a whole for you to obtain your ownership goals.

Redirection can lead to to pauses where we end up finding pauses.

We have dedicated the last 20 years to educating clients directly on this, speaking for influencing partners such as accountants, book keepers, financial planners and lawyers and most recently instructing for local real estate boards in addition to the media.

If you or a loved one want personalized mortgage advise for you or a group you represent please email us directly at angela@countoncalla.ca

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. 

Tempting Rates

General Angela Calla 20 Sep

Beware of Tempting Rates! 🚫💰

Some rates seem too good to be true, and they often are. 😲 Lenders may offer specials, but you’ll lose important mortgage terms and conditions. The bona-fide sales clause locks you with the lender until your term ends (ex. the whole 5 years), limiting your options.

They may also restrict prepayment privileges, preventing you from saving on interest. 💰

Don’t be lured by a slightly lower rate—committing long-term to a limited deal isn’t worth it. ❌

All of this and more in my book (https://loom.ly/uDw_e-k) on Amazon or Audible

#themortgagecode #theangelacallamortgageteam #author #mortgagebroker #mortgageexpert #tricites #countoncalla

Contact us today! callateam@countoncalla.ca or 604-802-3983!

 

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. 

Get your rates holds in for renewal and purchases asap!

General Angela Calla 19 Sep

 

Roughly 50% of the prices in the CPI are growing more than 5%, which is still very concerning for the Bank of Canada. Market rates moved up meaningfully on the news. With the 5-year government bond yield well above 4%, fixed mortgage rates will increase this week. The odds of another 25 bps rate hike this fall have risen, but there is still another employment report and the September CPI release before the next announcement date on October 25th.

Gasoline prices in September thus far have already risen to 10% above year-ago levels, so September inflation is likely also high. The additional problem for the Bank of Canada is that core inflation measures have also risen and will likely remain sticky on the high side. This has increased the odds of another rate hike this year.

Mitigating the Bank’s inflation concerns is the slowdown in economic activity. Employment growth has slowed as the jobless rate rose to 5.5% and job vacancies fell. Excess demand has also fallen. Financial strains in the household, financial and business sectors are emerging as delinquency rates on non-mortgage debt have soared. A pause in BoC rate hikes is warranted, but if the economy starts to pick up again or core inflation continues to hold steady or rise, additional rate hikes cannot be ruled out.

Bottom Line

If you have a renewal upcoming in the next 6 months or are considering a purchase please get your rate hold in with us today

604-802-3983

angela@countoncalla.ca

 

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. 

Understanding Responsibilities of being a Co Signer or Guarantor on a Mortgage

General Angela Calla 18 Sep

With changes in qualifying rates, increased housing prices, changes in relationship, it’s not uncommon for a parent, or sibling, aunt or cousin or even strangers to consider working together to achieve there home ownership dreams. The ability to buy a spouse out or even obtain a better mortgage renewal to improve your finances are most Canadians desire and that brings up a very important question.

What will the lenders approve for you to do?

Will they insist that all borrowers are co signer/borrowers? Or ,will they allow a party to the mortgage to go on as a guarantor? Is either of those what the other desires for as they plan for the future?

Being a co-signer or guarantor on a mortgage in British Columbia, Canada, can have significant financial, tax and legal implications. It’s important to understand the pros and cons of each role before making a decision. Here’s an overview of the advantages and disadvantages of being a co-signer vs. a guarantor:

 

Co-Signer:

Pros:

Helps Qualify for the Mortgage: Being a co-signer can help someone who might not otherwise qualify for a mortgage due to insufficient income or credit history. Your strong financial position can strengthen their application.

Shared Responsibility: As a co-signer, you share the responsibility for the mortgage payments and any associated debt. This can provide a sense of security for the primary borrower.

Builds Credit: If the mortgage is paid on time and in full, it can positively impact your credit score, as the account is reported on your credit history.

Cons:

Financial Responsibility: Co-signing makes you equally responsible for repaying the mortgage. If the primary borrower defaults, you’re obligated to cover the payments. This can lead to financial strain or damage your credit if payments are missed.

Risk to Assets: If the primary borrower defaults and the property is foreclosed upon, your assets may be at risk if the sale proceeds don’t cover the outstanding mortgage balance.

Limited Control: You have limited control over the property. You don’t have full ownership rights, but you’re responsible for the debt. This impacts your ability to obtain credit for borrowing for yourself in future as this loas is included in your ratios. Not living in the property also will trigger property transfer tax and future capital gains taxes potentially.

 

Guarantor:

Pros:

Assists with Qualification: As a guarantor, you provide a guarantee that the primary borrower will fulfill their mortgage obligations. This can help them secure the mortgage.

Limited Liability: Your financial liability is limited to the guarantee amount specified in the contract. You’re not automatically responsible for mortgage payments.

Maintain Ownership: Unlike co-signers, guarantors typically do not have any ownership stake in the property, so your personal assets are less likely to be at risk.

Cons:

Risk of Paying: While you’re not automatically responsible for payments, if the primary borrower defaults, you may be called upon to cover the mortgage, which can affect your financial stability. This also will be calculated in your ratios limiting future borrowing power. If not living in the property, property purchase tax and capital gains may be applicable

Credit Risk: Being a guarantor can impact your credit if the primary borrower defaults and you’re called upon to cover the mortgage payments.

Limited Control: Similar to co-signers, guarantors don’t have control or ownership rights over the property.

Difficulty Removing Guarantee: It can be challenging to remove your guarantee from the mortgage, as this typically requires the primary borrower to meet certain financial criteria and refinance the loan.

Before becoming a co-signer or guarantor, it’s crucial to carefully review the mortgage agreement and consider consulting with a legal and tax advisor. Additionally, open and honest communication with the primary borrower about their financial responsibility is essential to avoid potential conflicts and financial hardships down the road. It is the borrowers responsibility to ensure they have consulted the appropriate parties prior to funding a mortgage.

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. 

Co-ownership on the rise: How Canadians are responding to housing affordability challenges

General Angela Calla 18 Sep

While many people decide to co-own a home for cultural reasons or to help take care of elderly parents or young children, more Canadians are now turning to co-ownership as a means to combat housing in-affordability.

In 2023, 6% of Canadians said they co-own their home with someone other than a spouse or significant other, with two thirds (76%) of those saying their decision was motivated by affordability challenges, according to a Royal LePage survey.

For those between the ages of 25 and 34, a full 83% said their decision was driven by a lack of affordability.

Of those who currently co-own, 89% are co-owning with a family member, 7% co-own with friends and 8% are co-owning with someone who isn’t a friend or family member.

Nearly half of the respondents say they and their fellow co-owners live in the home together. Another 28% don’t cohabitate while 6% say the property is not used as a primary residence.

A tale of two brothers

British-Columbia-based mortgage broker Angela Calla of the Angela Calla Mortgage Team said she recently worked on a deal involving two brothers in Surrey who decided to purchase a home together.

The brothers were both single, in their mid-twenties and living with their parents while working in the trades. They wanted to move out, but rather than renting, they decided to purchase a home together so they could start building equity, Calla says.

They were each earning about $70,000 a year and could save about $2,500 per month while living with their parents. They ended up purchasing a condo worth $600,000 and made a 10% down payment, contributing $30,000 each.

“Now they were saving money monthly and they were also building equity,” says Calla.

To arrange this, they worked with a lawyer to outline the rules of their agreement, with one important item in their contract being that they can’t have partners living at the house, which could open the door to family law. While this was a small sacrifice, Calla says it was worth it to the brothers, who view this purchase as a stepping stone to being able to purchase their own homes in the future.

“They bought for less than they could be approved for because they know that they’re young and that the next stage of their life would mean that they get in relationships,” says Calla. “You definitely need to consult a lawyer and consider that the life stage that you’re in right now is not the life stage that you’re going to be in in a few years.”

Calla emphasizes that in all cases of co-ownership, it’s essential to meet with a lawyer to discuss the terms of the agreement and how conflicts will be handled should they arise.

“Be very crystal clear about having the discussions about the hard aspects of what can happen,” says Calla. “Speaking to a lawyer who is expert in that is going to be a good guiding force for you in terms of how you’re going to handle those situations when they come together.”

Corporate co-ownership programs on the rise

There has also been a rise of companies dedicated to offering co-ownership options for those wanting to get into the housing market, but who don’t have the means to do so on their own.

One such company is Toronto-based Ourboro, which co-invests up to $250,000 towards a buyer’s down payment, which in turn earns the company a share of the future value of the home.

Lorne Andrews, principal broker at DLC Expert Financial, said he has personally referred many of his clients to Ourboro.

He said one of the advantages of this option is that the homeowners get to live in the home alone and are responsible for the mortgage payments on their own. This helps them build equity and potentially a larger down payment for a better mortgage contract in the future.

“There are many people out there who could afford to qualify for the mortgage, but they don’t have a 20% down payment,” says Andrews. “This could be a great way for people to get involved a lot sooner and not that many people know about it.”

Ourboro requires buyers to have at least a 5% down payment and then they will contribute the remaining amount to get them up to a 20% down payment. Having an uninsured or “conventional” mortgage allows the buyers to get a longer amortization period that would be possible with an insured mortgage. It also allows them to save on default-insurance fees.

“We always recommend this as a stepping stone,” says Andrews. “Get into a home today, build equity, cash out, now go buy your home with the equity that you’ve built in this home over the first four or five years.”

Co-owning is a rising trend in an unaffordable market

Whether deciding to co-own a home with another person or company, co-ownership is quickly rising as an option for many to get a foothold in a housing market that is becoming increasingly unattainable.

“Different generations of families living under one roof is not a new phenomenon, but has been growing in popularity in recent years,” said Karen Yolevski, COO at Royal LePage.

“In a market beset by reduced home supply, escalating prices, tightened mortgage qualification requirements, and the highest borrowing rates in more than two decades, many buyers are having difficulties securing the property that they want,” she added. “By dividing the cost of a home between more people, Canadians can not only get their foot on the property ladder more easily, but also expand their home search to more desirable locations or larger properties that may not have been accessible with their budget alone.”

 

(Article courtesy of Canadian Mortgage Trends featuring Angela Calla)

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. 

Canada Emergency Business Account

General Angela Calla 15 Sep

Canada Emergency Business Account: Government extends repayment and partial loan forgiveness deadlines

Backgrounder

On September 14, 2023, the Prime Minister announced extended deadlines for Canada Emergency Business Account (CEBA) loan repayments, providing an additional year for term loan repayment, and additional flexibilities for loan holders looking to benefit from partial loan forgiveness of up to 33 per cent.

The CEBA program was available from April 9, 2020, to June 30, 2021, and provided $49 billion in interest-free, partially forgivable loans of up to $60,000 to nearly 900,000 small businesses and not-for-profit organizations to help cover their operating costs during the pandemic.

The repayment deadline for CEBA loans to qualify for partial loan forgiveness of up to 33 per cent is being extended from December 31, 2023, to January 18, 2024, recognizing that the end of December is a busy time for many Canadian businesses. This builds on the government’s previous one-year extension announced in January 2022.

For CEBA loan holders who make a refinancing application with the financial institution that provided their CEBA loan by January 18, 2024, the repayment deadline to qualify for partial loan forgiveness now includes a refinancing extension until March 28, 2024. This will allow more small businesses and not-for-profits to access relief and give them more time to hear back from their financial institutions on refinancing applications.

As of January 19, 2024, outstanding loans, including those that are captured by the refinancing extension, will convert to three-year term loans, subject to interest of five per cent per annum, with the term loan repayment date extended by an additional year from December 31, 2025, to December 31, 2026. Put simply, small businesses and not-for-profits will automatically have access to a three-year, low-interest loan of up to $60,000 if they have not repaid or refinanced their loan. This will provide those who are unable to secure refinancing or generate enough cashflow to repay their loans by the forgiveness deadline an additional year to continue repayment at a low borrowing cost.

Repayment on or before the new deadline of January 18, 2024 (or March 28, 2024 if a refinancing application is submitted prior to January 18, 2024 at the financial institution that provided their CEBA loan), will result in loan forgiveness of $10,000 for a $40,000 loan and $20,000 for a $60,000 loan.

Here are examples of how CEBA loan holders can benefit from new repayment flexibility:

  • Sarah and Nick need to pay off their $40,000 CEBA loan, but are unable to pay the full amount in time to benefit from $10,000 in partial loan forgiveness. On January 19, 2024, their loan converts to a three-year term loan with five per cent interest per year. They will make monthly interest payments of around $167 per month, and will only be required to pay their principal amount just before the term loan repayment deadline of December 31, 2026.
  • Doug applies for $40,000 in financing from the bank that provided his CEBA loan to pay off his $60,000 CEBA loan. He is unable to receive a response to his refinancing application by January 18, 2024. However, with the new refinancing extension, he has until March 28, 2024, to hear back from his bank and secure new financing to pay off his CEBA loan and benefit from $20,000 in partial loan forgiveness.

Financial institutions will contact CEBA loan holders directly regarding their loans.

The above changes also apply to CEBA-equivalent lending through the Regional Relief and Recovery Fund.

 

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. 

Province Caps Annual Rent Increase

General Angela Calla 11 Sep

Province caps annual rent increase well below inflation

For the second consecutive year, B.C.’s maximum allowable rent increase is being set below the inflation rate. The maximum increase for 2024 will be 3.5%.

“Across the country, costs have been increasing — especially for housing — at a rate that’s unsustainable for many people,” said Ravi Kahlon, Minister of Housing. “We know that’s the case for both landlords and renters, and that’s why we’ve found a balance to protect renters while helping to keep rental units on the market.”

The rent cap of 3.5% is well below the 12-month average inflation rate of 5.6% and applies to rent increases with an effective date on or after Jan. 1, 2024. If landlords choose to increase rent, they must provide a full three months’ notice to tenants using the correct Notice of Rent Increase form. B.C. landlords can increase rent only once every 12 months.

The Province has been taking steps to support renters throughout British Columbia. Before 2018, the annual allowable rent increase was based on the inflation rate plus 2%. Following a recommendation by the Rental Housing Task Force, the rent increase was reduced to just the inflation rate. A rent increase freeze was put in place in 2020 and 2021 to support renters during the COVID-19 pandemic. To protect renters from high inflation in 2023, the Province capped rent increases at 2%, well below the 5.4% inflation rate that would have otherwise applied.

“With renters facing a possible rent increase of almost 6%, the government listened to the voice of renters and acted, and I’m so glad they have,” said Spencer Chandra Herbert, Premier’s Special liaison for Renters, former chair of the Rental Housing Task Force and MLA for Vancouver-West End. “We also know people renting out homes are facing increased costs and want to make sure they continue to make places available for long-term renters.”

The 2024 maximum allowable rent increase is significantly less than what it would have been prior to changes made by the Province in 2018 that limited rent increases to inflation. As inflation returns to normal levels, the Province intends to return to an annual rent increase that is tied to B.C.’s Consumer Price Index in future years. Under the previous government, maximum rent increases could include an additional 2% on top of inflation. This change has saved families hundreds of dollars.

Since 2017, the Province has taken steps to better protect renters, including banning illegal renovictions and strengthening the financial penalties for landlords who evict tenants in bad faith. A renoviction is an eviction that is carried out to renovate or repair a rental unit. 

In addition, government provided the Residential Tenancy Branch (RTB) with $15.6 million in additional funding to improve services and reduce delays. The capacity of the RTB’s Compliance and Enforcement Unit was also increased to allow for earlier interventions and to eliminate the need for hearings in the first place.

Quick Facts:

  • If a landlord served a tenant with a Notice of Rent Increase that takes effect in 2023 using the 2024 annual allowable rent increase, it is null and void and the tenant does not have to pay it. They must follow the set rent increase for 2023.
  • The maximum allowable rent increase is defined by the 12-month average per-cent change in the all-items Consumer Price Index for B.C. ending in July the year prior to the calendar year for which a rent increase takes effect.
  • For example, if a rent increase takes effect in 2025, the maximum allowable rent increase is the 12-month average per-cent change in the all-items Consumer Price Index for B.C. ending in July 2024.
  • The 2024 maximum increase for manufactured-home park tenancies will be 3.5%, plus a proportional amount for the change in local government levies and regulated utility fees.
  • The rent increase does not apply to commercial tenancies, non-profit housing tenancies where rent is geared to income, co-operative housing and some assisted-living facilities.

 

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. 

Bank of Canada Holds The Overnight Policy Rate Steady at 5%

General Angela Calla 6 Sep

Bank of Canada Holds Rates Steady Acknowledging Economic Slowdown

With last Friday’s publication of the anemic second-quarter GDP data, it was obvious that the Bank of Canada would refrain from raising rates at today’s meeting. Economic activity declined by 0.2% in Q2; the first quarter growth estimate decreased from 3.1% to 2.6%.

Today’s press release announced, “The Canadian economy has entered a period of weaker growth, which is needed to relieve price pressures.” The Q2 slowdown in output reflected a “marked weakening in consumption growth and a decline in housing activity, as well as the impact of wildfires in many regions of the country. Household credit growth slowed as the impact of higher rates restrained spending among a wider range of borrowers. Final domestic demand grew by 1% in the second quarter, supported by government spending and a boost to business investment. The tightness in the labour market has continued to ease gradually. However, wage growth has remained around 4% to 5%.”

Lest we get too comfy with a more dovish stance in monetary policy, the central bank warned that the Governing Council remains resolute in its commitment to restoring price stability.

Inflationary pressures remain broad-based. CPI inflation rose to 3.3% in July after falling to 2.8% in June. Much of the rise in July was caused by the statistical base effect. Nevertheless, current harbingers of inflation remain troubling. The increase in gasoline prices in August will boost inflation soon before easing again. “Year-over-year and three-month measures of core inflation are now running at about 3.5%, indicating little recent downward momentum in underlying inflation. The longer high inflation persists, the greater the risk that elevated inflation becomes entrenched, making it more difficult to restore price stability.”

The Bank also continues to normalize its balance sheet by letting maturing bonds run off. This quantitative tightening keeps upward pressure on longer-term interest rates.

Tiff Macklem and company concede that excess demand is diminishing and the labour markets are easing. The unemployment rate rose to 5.5% in July, up from a cycle low of 4.9%, and job vacancies continue to decline. Net exports have slowed, and the Chinese economy has weakened sharply. Consumers are tightening their belts as the saving rate rose and household spending slowed markedly in Q1.

Monetary policy actions have a lagged effect on the economy. As mortgage renewals rise, peaking in 2026, the economic impact of higher interest rates will grow. Homeowners renewing mortgages this year are seeing roughly a doubling in interest rates.

The Governing Council will focus on the movement in excess demand, inflation expectations, wage growth and corporate price decisions.

Bottom Line

The Bank of Canada, though independent, is coming under increasing political pressure. In an unusual move, the premiers of both BC and Ontario have publicly called for a cessation of rate hikes. Even so, the BoC is keeping its hawkish bias to avoid a bond rally that could trigger another boost in the housing market, similar to what we saw last April. The government bond yield is hovering just under 5%, having breached that level recently with the release of robust US economic data.

There are two more meetings before the end of this year, and many are expecting another rate hike in one of those meetings. The odds of this are less than even, given the downward momentum in the economy.

The central bank’s next decision is due October 25, after two releases of jobs, inflation and retail data, gross domestic product numbers for July and an August estimate.

(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. 

September Newsletter

General Angela Calla 5 Sep

Welcome to the September issue of my monthly newsletter!

This month, I am covering what you need to know about condition-free offers, plus since the kids are headed back to school, now is a great time to teach them about money. Also, hear the economic forecast straight from our Chief Economist, Dr. Sherry Cooper!

Market Beware: Condition-Free Offers

When it comes to purchasing a home, most offers include “conditions” (or “subjects” if you are in the provinces of British Columbia or Manitoba), which are requirements or criteria to be met before the sale can be finalized and the property is transferred.

Some of the most common conditions include:

  • Financing approval
  • Home inspection
  • Fire/home insurance protection
  • Strata document review if applicable

The purpose of these conditions is to protect the buyer from making a poor investment and ensure that there are no hidden surprises when it comes to financing, insurance, or the state of the property.

These conditions are written up in the purchase offer with a date of removal. This is agreed to by the seller before the sale is finalized. Assuming the conditions are lifted by the date of removal, the sale can go through. If the conditions are not lifted (perhaps financing falls through or something is revealed during the home inspection), the buyer can waive the offer and the purchase becomes void.

In some cases, homebuyers choose to approach an offer without conditions.  Below we have outlined the impact of what this means for buyers and sellers to help you better understand the risks and outcomes:

The purpose of these conditions is to protect the buyer from making a poor investment and ensure that there are no hidden surprises when it comes to financing, insurance, or the state of the property.

These conditions are written up in the purchase offer with a date of removal. This is agreed to by the seller before the sale is finalized. Assuming the conditions are lifted by the date of removal, the sale can go through. If the conditions are not lifted (perhaps financing falls through or something is revealed during the home inspection), the buyer can waive the offer and the purchase becomes void.

In some cases, homebuyers choose to approach an offer without conditions.  Below we have outlined the impact of what this means for buyers and sellers to help you better understand the risks and outcomes:

Pros of Condition-free Offers

  • Buyers: The main benefit of a condition-free offer for a buyer is the ability to “beat the competition” in a heated market. However, it is not without risks.
  • Sellers: Typically, a condition-free offer will include a competitive price, willingness to work with the dates the seller prefers, and evidence that the buyer has already done as much research as possible. If time is sensitive for the seller because they are trying to purchase another home or want to move as soon as possible, they may also choose your offer over conditions offers to expedite the process.

Cons of Condition-free Offers

  • Buyers: As a buyer submitting a condition-free offer, you are assuming a great deal of risk in several areas including financing, inspection, and insurance:
    • Financing: While buyers may feel that they have a pre-approval and so they don’t require a condition to financing, it is important to recognize that a pre-approval is not a guarantee of financing. If you are submitting a condition-free purchase based on a pre-approval, buyer beware. The financing is subject to the lender approving the property and the sale; from the price and location to type of property or other variables the lender deems important. By submitting a condition-free offer without a financing guarantee (or an inspection, title check, etc.), there is a risk that the deal can fall through. Even when you do not include conditions on the offer, you still are required to finance your purchase. In addition, as deals are submitted typically with a deposit, there is a risk that if the condition-free offer falls through the buyer will lose their deposit. This amount can range vary in the thousands and is typically a percentage of the purchase price or down payment.
    • Inspection & Insurance: If a buyer is also opting to skip the home inspection and home insurance protection conditions to have the offer accepted, then they assume huge risk as they do not know what they are getting and whether or not the property is up to code for insurance.
    • Due Diligence: With condition-free offers, there is no opportunity for due diligence after the offer has been made. This requires the buyer to do all their research before their initial bid. Because it is firm and binding, a buyer who decides to back out will likely be met with serious legal ramifications. Submitting an offer without conditions is not due diligence and it is at the buyer’s behest.
  • For Sellers: When it comes to the individual selling the property, there is less risk with condition-free offers but not zero. While the benefit is essentially there is no wait to accept the offer on the seller’s side, they do not know for sure if financing will come through.

Financing Around Condition-free Offers

When submitting a condition-free offer, it is essentially up to the buyer to do as much due diligence as possible before submitting. They will need to identify what the lender is looking for to make sure they walk away with a mortgage. Though approval is never certain, prospective buyers placing a condition-free offer should do their very best to secure financing beforehand.

Contractual Obligations

Be mindful when it comes to purchasing offers versus purchase agreements. While your purchase offer is a written proposal to purchase, the purchase agreement is a full contract between the buyer and seller. The purchase offer acts as a letter of intent, setting the terms you propose to buy the home. If financing falls through, for example, then the contract is breached and this is where the buyer may lose the deposit.

It is also important to be aware of a breach of contract in the event that a seller chooses to take action. For example, if you submit a condition-free offer of $500,000 and cannot secure financing for that offer and the seller turns around and is only able to get a $400,000 deal with another buyer, they could potentially sue the initial buyer for the difference due to breach of contract.

Preparing a Condition-Free Offer

If you have decided to go ahead with a condition-free offer, regardless of the risks, there are some things you can do to mitigate potential issues, including:

  • Get Pre-Approved: Again, this is not a guarantee of financing when you do make an offer, but it can help you determine whether you would be approved or not.
  • Financing Review: Identify what the lender is looking for to make sure they walk away with a mortgage. Though approval is never certain, prospective buyers placing a condition-free offer should do their very best to secure financing beforehand.
  • Do Your Due Diligence: Look into the property and determine if there have been major renovations or a history of damage. This could come in the form of a Property Disclosure Statement. While this statement cannot substitute a proper inspection, it can help identify potential issues or areas of concern. If possible, conduct an inspection before submitting your bid/offer.
  • Get Legal Advice: This can help you determine your potential risk and ramifications of the offer should it be accepted, or otherwise.
  • Title Review: Be sure to review the title of the property.
  • Insurance: Confirm that you are able to purchase insurance for the home. Keep in mind, an inspection may be required for this but in some cases, you can substitute for a depreciation report if it is recent.
  • Strata Documents (if applicable): Thoroughly review strata meeting minutes and any related documents to determine areas of concern.

While there are things that can be done to help with condition-free offers, it is still risky. Ultimately submitting an offer with conditions gives you the time and ability to gather information on the above, as well as access to the property or home for inspections.

If you are intent on submitting a condition-free offer, be sure to discuss it with your real estate agent as they can determine if a condition-free offer is necessary, or if perhaps a short closing window would suffice to seal the deal. A good realtor will keep you informed of potential interest and other bids during the process as well. Their goal should be to maximize your opportunity and minimize your risk. In addition, before making any offers, be sure to contact me to discuss your mortgage and financing so you can make the best decision.

Back to School: Teaching Kids About Money

Financial independence is a critical skill for future success that your children will not learn anywhere else.

Not only does financial literacy help your children have more success in life, but it allows them to move out sooner and it avoids delaying your retirement with additional expenses to support them.

So, how do you teach your children about money?

  1. Review Your Attitude Towards Money: The first and most important thing is to examine your own attitude towards money. Are you a penny pincher? Frivolous spender? Do you buy on impulse, or take a long time to make a purchase? How much debt do you have? Your financial habits will shape your children. To ensure that you are setting them up for their best financial future, parents need to consider what messages they are sending with their own money habits.
  2. Give Your Children an Allowance: Providing an allowance to your children (especially one in exchange for chores) is an age-old way of teaching your kids about money. A good guideline is $1.00 per year of your child’s age. For a 10-year-old, this would be $10 per week.
  3. Teach Your Child to Save: If you are giving your child $10 per week in allowance for chores, encourage them to put even just $1 per week into a piggy bank. In six months, show them how much money they have saved and talk to them about why it is important, and what they can do with that larger amount now.
  4. Encourage Kids to Think Before They Buy: While it’s hard to get a 10-year-old excited about an RRSP, there are other ways to help them plan ahead. One is to encourage them to think about their purchases before they commit. They saw a toy on TV and they have to have it – teach them about how advertisements are designed to make you want something. Ask them to wait a week. Do they still want it?
  5. Involve Your Children in the Family Finances: It is more valuable than you might think to let your kids see and hear you discuss financial planning; let them be part of opening and paying bills or planning vacations. Explain why and how much you pay for certain things and discuss affordable choices. This helps them be part of the conversation and will work to instill a sense of financial responsibility as they grow up.

Remember, you are the best example to your children about money. Don’t be afraid to share the ups and downs with them. Be patient with your kids, but don’t give up! The best thing you can do as a parent is to promote financial security and independence

Economic Insights from Dr. Sherry Cooper

The Bank of Canada has a single mandate—to ensure that inflation returns to the 2% target. This means that the Bank will raise interest rates if inflation is too high and lower interest rates if inflation is too low.

The U.S. Federal Reserve, in contrast, has a dual mandate—to maximize employment given a 2% target for inflation.

July inflation data showed that the headline CPI inflation rose to 3.3%, up from 2.8% in June. One challenge in understanding year-over-year inflation data is base effects. Base effects occur when the current year’s inflation is compared to the previous year’s inflation, called the base year. If the base year has unusually high inflation, then the current year’s inflation will appear lower than it is.

For example, inflation in Canada was very high in June 2022. This means that inflation in June 2023 appeared to be lower than it is, even if there is no change in the underlying level of inflation.

Gasoline prices peaked in June 2022 and trended downward for most of the year. That makes y/y comparisons look worse starting last month. If you are only focusing on the annual change in inflation, you will be misled.

Looking at monthly changes in the headline inflation data can also be misleading because so many components of headline inflation are highly volatile. For example, monthly consumer prices in July rose 0.6% compared to only 0.1% in June. The y/y increase was smaller for core inflation measures. And if you exclude food, energy and mortgage rates, y/y inflation was quite moderate.

The main point here is that it’s complicated. I am more sanguine about last month’s inflation data than most Bay Street economists. The overall Canadian economy has slowed. Following the strong first quarter growth of 3.1%, Q2 GDP growth will likely come in at around a much more muted 1.2%. Job vacancies have fallen for a year, and the unemployment rate has risen to 5.5%–still low by historical standards but up from the record low this cycle of 4.9%.

The single major economic release ahead of the September 6 Bank of Canada policy decision is Q2 GDP, released on September 1. The BoC is expecting growth of 1.5%.

The impact on the economy of higher interest rates has a long lag. The full effects of the tightening will not be evident for a few more years. Given that most Canadian mortgage borrowers renew their mortgages every five years, the largest impact is yet to come. Nevertheless, higher interest rates have slowed the most interest-sensitive sectors.

Canadian new home prices edged down 0.1% in July, deepening the year-over-year decrease to 0.9%. In the same month, the yearly decline in the benchmark price of an existing home (as measured by the MLS HPI) eased to 1.5%. While prices for existing homes are still rising modestly, the momentum looks to have slowed as the market returns roughly to balance following the Bank’s latest two rate hikes.

Barring a massive upside surprise in Q2 GDP, the central bank will leave the policy rate unchanged at 5.0%. Longer-term market rates, however, have been rising, boosting fixed-rate mortgage yields. This results from economic and political concerns in the U.S. There is a good chance that overnight rates in Canada have peaked. If the economy remains too strong, the Bank will keep the door open for further tightening as inflation exceeds the 2% target.

 

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. 

« First…1011121314…203040…Last »