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. 

Multigenerational Home Renovation Tax Credit

General Angela Calla 19 Jul

For the 2023 and subsequent taxation years, Budget 2022 introduced the Multigenerational Home Renovation Tax Credit (MHRTC), a refundable credit to assist with the cost of renovating an eligible dwelling to establish a secondary unit that enables a qualifying individual (a senior or an adult who is eligible for the disability tax credit) to live with a qualifying relation. The credit is available for qualifying expenditures made or incurred after December 31, 2022, for services performed or goods acquired after that date.

Read more here: MHRTC Government Link

 

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. 

CPI Inflation Falls To 2.8%–Inside the BoC’s Target Range

General Angela Calla 19 Jul

Canadian Inflation Falls Within Bank of Canada’s Target Range; Food and Shelter Costs Remain High

June inflation data released today by Statistics Canada showed that the Consumer Price Index (CPI) rose 2.8% year-over-year (y/y), slightly below expectations. This was the lowest CPI reading since February 2022.

The decline in inflation was mainly due to lower energy prices, which fell by 21.6% y/y. Without this decline, headline CPI inflation would have been 4.0%. The year-over-year decrease resulted from elevated prices in June 2022 amid higher global demand for crude oil as China, the largest importer of crude oil, eased some COVID-19 public health restrictions. In June 2023, consumers paid 1.9% more at the pump compared with May.

Food and shelter costs remained the two most significant contributors to inflation, rising by 9.1% y/y and 4.8% y/y, respectively. Food prices at stores have risen nearly 20% in the past two years, the most significant rise in over 40 years. Shelter inflation rose slightly from 4.7% y/y in May.

The largest contributors within the food component were meat (+6.9%), bakery products (+12.9%), dairy products (+7.4%) and other food preparations (+10.2%). Fresh fruit prices grew at a faster pace year over year in June (+10.4%) than in May (+5.7%), driven, in part, by a 30.0% month-over-month increase in the price of grapes.

Food purchased from restaurants continued to contribute to the headline CPI increase, albeit at a slower year-over-year pace in June (+6.6%) than in May (+6.8%).

Services inflation cooled to 4.2% y/y from 4.8% y/y in May. This was due to smaller increases in travel tours and cellular services.

The Bank of Canada’s target range for inflation is 1% to 3%. While June’s inflation reading was within the target range, it is still higher than the Bank would like. The Bank raised the overnight policy rate twice in the past two months to reduce the stickier elements of inflation.

There were signs of easing price pressures for consumer goods also. Durable goods inflation continued to cool to 0.8% y/y in June. Passenger vehicle prices rose slower in June (+2.4%) than in May (+3.2%). The year-over-year slowdown resulted from a base-year effect, with a 1.5% month-over-month increase in June 2022 replaced with a more minor 0.6% month-over-month increase in June 2023. This coincided with improved supply chains and inventories compared with a year ago. Household furniture and equipment was up only 0.1% y/y in June, down from a peak of 10.5% last June.

The June inflation data provides some relief to consumers, but it is clear that food and shelter costs remain a major concern. The Bank of Canada will closely monitor inflation in the coming months to see if it is on track to return to its 2% target. There is another CPI report before the Bank meets again on September 6th.

The Bank of Canada’s underlying inflation measures cooled further in May. CPI-trim eased to 3.7%y/y in June from 3.8% y/y in May, and CPI-median registered 3.9% versus 4.0% y/y in May. The chart below shows the closely watched measure of underlying price pressures, the three-month moving average annualized of the core measures of CPI. They continue to be just under 4%.

Canadian inflation continued to make encouraging progress in June. However, the cooling in headline inflation benefits from sizeable base effects due to the favourable comparison to high energy prices last June. The Bank of Canada (BoC) is watching its preferred core measures, which continue to show glacial progress.

Bottom Line

It takes time for the full effect of interest rate hikes to feed into the CPI. Mortgage interest costs will continue to rise as higher interest rates flow gradually through to household mortgage payments with a lag as contracts are renewed.

BoC Governor Macklem emphasized last week that the Bank has become worried about the persistence of underlying inflation pressures in the economy. The June inflation data likely provides some reassurance that things are moving in the right direction, but not fast enough for the Bank of Canada to let its guard down.

The BoC is facing a difficult balancing act. It needs to raise interest rates enough to bring inflation under control, but it also needs to be careful not to raise rates so high that it causes a recession. The next few months will be critical for the BoC as it assesses the risks of inflation and recession.

(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. 

Bank of Canada Hikes Policy Rate By 25 BPs to 5.0%–Highest in 22 Years

General Angela Calla 13 Jul

Interest Rates Will Stay Higher For Longer

The Bank of Canada increased the overnight policy rate by 25 basis points this morning to 5.0%, its highest level since March 2001. Never before has a policy action been so widely expected. Still, the Bank’s detailed outlook in the July Monetary Policy Report (MPR) suggests stronger growth and a longer trajectory to reach the 2% inflation target. The Bank of Canada believes the economy is still in excess demand and that growth will continue stronger than expected, supported by tight labour markets, the high level of accumulated household savings, and rapid population growth. “Newcomers to Canada are entering the labour force, easing the labour shortage. But at the same time, they add to consumer spending and demand for housing.”

The Bank forecasts GDP growth to average 1.0% through the middle of next year–a soft landing in the economy. “This means the economy moves into modest excess supply in early 2024, and this should relieve price pressures. CPI inflation is forecast to remain about 3% for the next year, before declining gradually to the 2% target in the middle of 2025.” This is about six months later than the Bank expected in April. This means that high-interest rates remain higher for longer.

While Canadian inflation has fallen quickly, much of the downward momentum has come from lower energy prices and base-year effects as large price increases last year fall out of the year-over-year inflation calculation. We are still seeing large price increases in a wide range of goods and services. Our measures of core inflation—which we use to gauge underlying inflationary pressures—have come down, but not as much as we expected.

There continue to be large price increases in a wide range of goods and services. Measures of core inflation have come down, but by less than expected (see chart below). One measure of core inflation–which removes food, energy and shelter prices, remains elevated and will likely continue to be sticky.

To remove base effects, the Bank looks at three-month rates of core inflation, which have remained at 3.5% to 4.0% since September 2022, almost a percentage point above the Bank’s expectations at the beginning of this year.

In addition, labour markets remain tight. Although the jobless rate has risen to 5.4%, that is still low by historical standards. The unemployment rate was at 5.7% when the pandemic began, which was considered close to full employment at the time. Job gains have been robust, with about 290,000 net new jobs created in the first six months of 2023. Many new entrants to the labour market have been hired quickly, and wage growth has been about 4% to 5%.

The faster-than-expected pickup in housing resales, combined with a lack of supply, has pushed house prices higher than anticipated by the Bank of Canada in January (see chart below). According to the MPR, “the previously unforeseen strength in house prices is likely to persist and boost inflation by as much as 0.3 percentage points by the end of 2023, compared with the January outlook.”

Bottom Line

As always, the next steps by the Bank of Canada will be data-dependent. Interest rates will remain higher for longer if the Bank is correct that inflation will not reach its 2% target until 2025. We also cannot rule out more rate hikes in the future. This morning, the US inflation data for June were released, showing a marked decline from 4% in May to 3% in June. Markets rallied worldwide, taking Canadian bond yields down despite the BoC tightening. The hardship caused by the continued rise in mortgage rates is already evident. OSFI recently announced the possibility of higher capital requirements for federally insured financial institutions on mortgages with loan-to-value ratios above 65% that have unusually high amortizations. This proposal is now out for consultation. It seems OSFI and the federal consumer watchdog are working at cross purposes.

(Courtesy of Chief Economist, DLC – Dr. Sherry Cooper)

 

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. 

Angela Calla on CBC National News Discussing Mortgage Strategies

General Angela Calla 13 Jul

Its been a stressful week for many with the increase in interest rates. Here is a segment we did with the CBC National that discusses some the strategies that can help you navigate these current times.

If you are up for mortgage renewal, or trying to plan for your future in these times. Click here for the segment  ( approx. 5 minute)

Please reach out to us to review your mortgage or if you would like an introduction to our financial planning partners

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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