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. 

‘Devastating news’: B.C. premier worries about rising interest rates for residents

General Angela Calla 13 Jul

B.C. Premier David Eby said the Bank of Canada interest rate rise Wednesday is “devastating news” for families that have debt.

“They borrowed money for various reasons to get through,” he said at the annual premier’s meeting in Winnipeg. “A lot of businesses in British Columbia borrowed money to get through the pandemic. They’re struggling under the weight of that debt.”

The Bank of Canada has raised its benchmark interest rate by another 25 basis points, bringing it to levels not seen since 2001 amid fears the decline in inflation “could stall.”

Economists say the latest move is a warning to Canadians not to expect rate cuts anytime soon, and that future rate hikes are not off the table. The central bank’s key interest rate now stands at 5.0 per cent following back-to-back increases.

Eby said he worries about the full impact of the high key interest rate.

“You really do have to wonder when the Bank of Canada is going to take a pause and see what the impact of this is going to be,” he added. “We haven’t seen the full impact yet. People have not renewed their mortgages yet. And the businesses that are struggling under debt have not started going under yet. But they will those jobs will be lost. And it won’t just be in British Columbia. It’ll be across the country.”

Angela Calla, author of The Mortgage Code, told Global News that this interest rate means Canadians who do have a mortgage coming up for renewal in the next year should not wait to get their rate hold.

“Rate holds can be held for 120 days,” she said. “There is no cost to get a rate hold and then allow the timing of the market to determine what the best option is for you. We certainly don’t expect decreases in the next year, so having that in mind can give you the power to shop early with any mortgage renewal or purchase.”

Calla added that more increases are expected until the Bank of Canada gets inflation in line.

View the videos here: Global News

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. 

CHIP Open: A Solution for Seamless Home Transitions for those over 55

General Angela Calla 13 Jul

Are you over 55 and looking to purchase a new home but want to take your time to sell their existing one? This situation is quite common, as many clients prefer to do renovations or settle into their new homes before making the transition.

Let me illustrate the benefits of one of our mortgage products an open reverse mortgage as a strategic bridge financing tool for situations like the one faced by the Johnsons, a lovely couple in their mid-70s residing in Chilliwack, British Columbia. The Johnsons live on a two-acre property valued at $2 million, which has become increasingly difficult to maintain. The Johnsons wanted to purchase a townhouse but didn’t want to rush to sell their current home until they were able to do some updates to the home to help increase the value of the home. However, their basic OAS and CPP income made it challenging to secure traditional financing to keep both properties for this short period.

With the solution we provided, the Johnsons accessed $650,000 from their home equity, allowing them to purchase the townhouse without worrying about monthly mortgage payments. They had the flexibility to settle into their new home and prepare their previous property for sale at their own pace. Here are some key benefits that helped the Johnsons choose to move forward:

  • Time: you can manage their move at a comfortable pace, sorting and storing belongings without rushing.
  • Flexible Dates: you can purchase their new home and sell their current home with flexible dates, increasing their chances of attracting higher offers.
  • Flexible Solution: you have the option to convert to a standard CHIP Reverse Mortgage if the market takes a downturn and they are unable to sell.
  • No Debt Servicing: Most clients don’t income qualify to purchase their next home before selling their current one. An open reverse mortgage makes this scenario possible.

Contact The Angela Calla Mortgage Team today to learn how we can help you or a loved one implement this.

 

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 Raises 25 Basis Points

General Angela Calla 12 Jul

The Bank of Canada (BoC) has made the decision to increase interest rates by 0.25% today.  You can view the announcement here: Bank of Canada Announcement

Here are a few key points to consider regarding this rate increase:

  1. Borrowing Costs:  With the rate hike, borrowing costs for individuals and businesses will likely increase. This affects mortgage rates, credit card rates, and loans. If you have any outstanding debt or are planning to take on new debt, it would be advisable to reassess your options and consider the potential impact of the higher interest rates. The financial impact it has is approx. $16 dollars per 100k in borrowed funds on a 25-year amortization. Ensure to get a rate hold if you are coming up for renewal or plan to make a purchase in the next 6 months.  Here is our app to download to see what a current payment can look like for you My Mortgage Toolbox.
  2. Fixed-Income Investments: The increase in interest rates may have an impact on fixed-income investments such as bonds and GICs. Generally, when interest rates rise, the value of these investments can decline. It would be beneficial to review your fixed-income holdings and discuss any necessary adjustments to your investment strategy with a financial planner, we can make an introduction for you by simply replying to this email address with your phone number.
  3. High Interest Savings Accounts: Interest rates are at an all-time high in today economic environment so those to looking to make a purchase in upcoming years can benefit from that silver lining along with the new First Home Savings Account.

If you have any questions or concerns regarding this rate increase or its potential impact on your mortgage or HELOC, for you or a loved one please feel free to reach out to us directly. We are here to support you and help you achieve your financial goals even in the face of market fluctuations.

 

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 benchmark rate expected to reach a 22-year high of 5% this week

General Angela Calla 11 Jul

The Bank of Canada is widely expected to deliver a second consecutive quarter-point rate hike this Wednesday, which would bring its benchmark lending rate to a 22-year high of 5%.

It would also imply a similar increase to the prime rate by week’s end, bringing it to 7.20%. That would have an immediate impact on borrowers with a variable-rate mortgage or a personal or home equity line of credit.

Forecasts from all of the Big 6 banks, as well as 20 of 24 economists polled by Reuters, expect the Bank to hike rates at this week’s monetary policy meeting.

Observers say it’s unlikely that the Bank of Canada would have ended its rate pause last month for the sake of a single quarter-point increase, and that key economic data reports in recent weeks haven’t been weak enough to avert another hike.

“If the Bank thought policy wasn’t sufficiently restrictive on June 7, a single 25-bps rate increase last month probably wouldn’t be enough to bring things into balance,” economists from National Bank noted in a research note. “It’s true that recent data haven’t been as unambiguously strong as they were between the last two meetings, but data also probably weren’t weak enough to change their assessment in a material way.”

What the forecasters are saying…

On the rate decision:

  • National Bank: “The BoC has been notoriously difficult to predict this hiking cycle, half of their 12 decisions since January 2022 coming out different than markets anticipated going in. So our message is this: expect a hike… but don’t be shocked if the BoC holds. They’ve done it before, and they could very well do it again.”

On the Monetary Policy Report

  • BMO: “The 2023 GDP growth forecast will likely get an upgrade after the Q1 beat. In addition, Q2 GDP could get a modest bump higher from the 1% estimate in April. The Q3 forecast will be introduced, and expect something in the 0%-to-1% range. We’ll be watching to see if the upgraded growth history/near-term forecast impacts the timing of the closing of the output gap and, in turn, when inflation returns to the 2% target. Recall that the April MPR forecast had inflation returning to target at the end of 2024.”

On BoC guidance:

  • National Bank: “Looking ahead, we don’t think the BoC will explicitly guide to additional rate increases in the press release (just as they didn’t in June), but we also don’t expect another pause declaration. Rather, they might introduce some less aggressive language that stresses the importance of moving more cautiously at clearly restrictive policy settings. A ‘dovish hike’ would take the pressure off September and allow a full three months to assess the impact of these latest 50 bps of hikes (in addition to the earlier 425 bps). We do expect that July’s hike will be the last of the cycle as the economy more clearly weakens over coming months.”

On rate cuts:

  • Scotiabank: “It wasn’t long ago that markets were pricing BoC rate cuts to have been delivered by now. Note the plural reference. This easing of financial conditions was premature and the BoC had to lean against it in the face of the previously cited arguments. They have succeeded in doing so as markets have cried Uncle and are no longer pricing cuts this year or for much of next year for that matter.” (Source)

On inflation:

  • Scotiabank: “Given that inflation expectations are continuing to indicate little faith in the ability of the BoC to hit its 2% inflation target over the coming years, monetary policy is already in a race against the clock to convince businesses and households as they make decisions about potential wage gains, contracts, purchasing and investment. With each passing month that the economy remains resilient and inflation remains uncomfortably high, the BoC runs the risk of never getting control of inflation.” (Source)

On employment and GDP:

  • Desjardins: “With a full quarter of employment data, our tracking of Q2 2023 real GDP growth sits in the range of 1.5% to 2% (q/q annualized). That remains better than the 1% pencilled in by the Bank of Canada in its last Monetary Policy Report. The strong jobs print virtually assures another 25-bps hike at the Bank’s next meeting…and keeps the door open for more increases going forward. For the time being, the central bank should see the vitality of the labour market and resilience of the overall economy as warranting another rate hike.”

The latest Bank of Canada rate forecasts

The following are the latest interest rate and bond yield forecasts from the Big 6 banks, with any changes from their previous forecasts in parenthesis.

(Article courtesy of canadianmortgagetrends.com)

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. 

Appraisal Tips for Success

General Angela Calla 7 Jul

Before banks or lending institutions can consider loaning money for a property, they need to know the current market value of that property.

The job of an appraiser is to check the general condition of your home and determine a comparable market value based on other homes in your area. This is required for any buy or sell situation.

To help make the appraisal as smooth as possible and ensure you are getting top market value, check out the tips below:

  1. Clean Up: The appraiser is basing the value of your property on how good it looks. A good rule of thumb is to treat the appraisal like an open house! Stage it as you would a home for sale, clean and declutter every room, vacuum, and scrub – even consider adding a fresh coat of paint – to ensure your home is as presentable and appealing as possible. Where applicable remove personal stigma items such as alcohol or drug paraphernalia, any controversial pictures or flags, etc.
  2. Curb Appeal: First impressions can have a huge impact when it comes to an appraisal. Spending some time ensuring the outside of your property from your driveway entrance to front step is clean and welcoming can make a world of difference. Cut grass, water plants, maybe add flowers or hanging baskets to make things feel inviting and stage the yard with some lawn furniture to make it look like its own space.
  3. Visibility: The appraiser must be able to see every room of the home, no exceptions. YES, ever singly room including outbuildings, garage, closets, basement… Refusal to allow an appraiser to see any room can cause issues and potentially kill your deal. If there are any issues with any spaces of your home, be sure to take care of them in advance to allow the appraiser full access. NOTE: If there are tenants in your home, ensure you give them appropriate amount of notice for access. YES, every single room, outbuilding, closet, garage needs access. Otherwise, the appraiser will have to return at added expense to you.
  4. Upgrades and Features: Ensuring the appraiser is aware of any upgrades and features can go a long way. Make a list and include everything from plumbing and electrical to new floors, new appliances, etc. This way they have a reference as to what has been updated and how recent or professional that work was done. Knowing the age of the roof and HVAC items like water tank is important. Also, ensure the breaker box is MIN 100amps as most lenders cannot finance a home with amps under 100; older homes from the 1930 area are generally only 60amps. The same goes for knob and tube versus breaker set-ups. Upgrading is important and will add value.
  5. Be Prudent About Upgrades: While the bathroom and kitchen are popular areas, they are not necessarily the be-all-end-all for getting a higher home value. These renovations can be quite costly so it is a good idea to be prudent about how you spend your money and instead, focus on easy changes such as new paint, new light fixtures or plumbing and updated flooring to avoid breaking the bank while still having your home look fresh. Removing clutter, adding a new coat of paint and doing a deep clean will help make these spaces shine.
  6. Know Your Neighbourhood: You already know where you live better than the appraiser. Taking a look at similar homes in your neighbourhood and noting what they sold for will give you a ballpark. If your appraisal comes in low, you will be prepared to discuss with the appraiser the examples from your area and why you believe you property is worth more. In addition, keep in mind that appraisal values are based on recent sales data; if there have been zero sales in the area recently and time allows it, hold off on getting an appraisal done until some sales have been evident to ensure you’re getting the most value.
  7. Be Polite: The appraiser is there to get in and get out so let them have the run of the house while they are there. Do not follow them around and avoid asking them too many questions or making too many comments and simply be prepared should they have questions. Once they have completed the review of your home, that is a good time to bring up any comments you might have. Remember, the actual onsite inspection usually is only 15 minutes through the house but typically, the bulk of work for appraisals is at the desk, reviewing sales and other forms of research to create the appraisal report.
  8. Know The Costs: Every appraiser charges differently. If the lender allows for ordering appraisals direct, then I can shop around and fetch you the best price.

Don’t forget to contact me if you have any questions about your existing home or mortgage, or if you are looking to sell and relocate in the future!

(Courtesy of the DLC July Newsletter)

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. 

Homeowner Insurance 101

General Angela Calla 7 Jul

Not all insurance products are created equal. It is important to understand all the different insurance products to ensure you have proper coverage.

Below are the main insurance product options you will encounter with homeownership, and what they mean:

Default Insurance: This insurance is mandatory for homes where the buyer puts less than 20% down. In fact, default insurance is the reason that lenders accept lower down payments, such as 5% minimum, and actually helps these buyers access comparable interest rates typically offered with larger down payments. This insurance typically requires a premium, which is based on the loan-to-value ratio (mortgage loan amount divided by the purchase price). This premium can be paid in a single lump sum, or it can be added to your mortgage and included in your monthly payments.

Home (Property & Fire) Insurance: Next, we have another mandatory insurance option, property and fire coverage (or, home insurance, as most people know it by). This MUST be in place before you close the mortgage! It is especially important to note that not all homes or properties are insurable, so you will want to review this sooner rather than later. Keep in mind, with this coverage you may not have protection in the event of a flood or earthquake. You may need to purchase additional coverage to be protected from a natural disaster, depending on your location.

Title Insurance: When it comes to lenders, this insurance is mandatory with every single lender in Canada requiring you to purchase title insurance on their behalf. In addition, you have the option of purchasing this for yourself as a homeowner. The benefit of title insurance is that it can protect you from existing liens on the property’s title, but the most common benefit is protection against title fraud. Title fraud typically involves someone using stolen personal information, or forged documents to transfer your home’s title to him or herself – without your knowledge. Similar to default insurance, title insurance is charged as a one-time fee or a premium with the cost based on the value of your property.

Strata Insurance: When it comes to a stratum, their insurance covers the building itself – meaning in the event of an incident (fire, flood, etc.) the building can be re-established. This however only covers common areas; it does not cover the contents of YOUR particular unit, which requires a homeowner’s insurance policy. Personal insurance can also help with the strata deductible. For example, in the event of a flood that originates from a unit, it will require fixes to the unit itself (under your personal policy) plus the building (covered by the strata policy). Depending on the type of claim or damage, owners are often relocated to a hotel while the unit is being repaired and the personal insurance would also cover being displaced.

To ensure that you remain up-to-date with your strata insurance policies, it is vital that homeowners living within a stratum to check with management for a copy of the most recent insurance policy. Always take your strata and individual policy to an insurance agent to ensure you are aware of your coverage and that your individual homeowner’s policy is working in your favor. Investment property owners especially need to check their existing deductible against the updated deductible and insurance policies to avoid any future issues.

Mortgage Protection Plan: This coverage is optional, but any mortgage professional will tell you is extremely important. The purpose of the mortgage protection plan is to protect you, and your family, should something happen. It acts as a disability and a life insurance policy in regards to your mortgage. Typically, when you get approval for a mortgage, it is based on family income. If one of the partners in the mortgage is no longer able to contribute due to disability or death, a mortgage protection plan gives you protection for your mortgage payments.

If you have any questions about mortgage insurance or what are the best options for you, please do not hesitate to reach out to me! I would be happy to take a look at your existing plan and discuss your needs to help you find the perfect coverage to suit you and your family.

(Courtesy of DLC July Newsletter)

 

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. 

Removal of Property Transfer Tax suggested for first time Vancouver homebuyers

General Angela Calla 6 Jul

Owning a home in Vancouver can often feel unattainable for first time buyers.

The Real Estate Board of Greater Vancouver (REBGV) is calling on the provincial government to make policy changes to help with affordability.

The board met with a provincial legislative committee this week to present a list of changes to help ease the burden of house hunters.

One suggestion states the Property Transfer Tax (PTT) should be removed on any home costing under $755,000 for both new construction and resale.

Dylan Passmor has been looking to buy his first home for more than a year and could qualify if the PTT removal was implemented.

“It’s a really challenging time, affordability just seems to be getting worse,” he said.

While he’s happy advocates are pushing for policy changes, he says the recommendations don’t reflect the price tags he’s seeing on the market.

“We’re looking at two bedrooms and it’s hard to find under $800,000 and that’s a pretty average, if not a below average living environment.”

According to B.C.’s latest budget, the province made $2.2 billion dollars this fiscal year in property transfer tax revenue.

“You could look at this and say, ‘Should there even be a threshold? If we’re talking about getting first time buyers into the market, why does it really matter?’ We’re trying to be reasonable and give the government something they can work with,” said Andrew Lis, the director of economics of the REBGV.

“The government is out there saying, ‘Hey, we want to do everything we can do move the needle on affordability.’ And here’s something they already have in place, it’s a program that already exists,” Lis continued.

Without any meaningful change, people like Passmor will continue watching.

“Prices have softened a little, but I think with the interest rates having gone up with the way they did, I think that affordability is actually worse than what it was,” said Passmor.

The board’s recommendations also suggest exemptions for the flipping tax, so it does not penalize those who are most likely to move. It also recommends new homes be exempted from the tax and that the framework does not discourage investment in secondary suites.

As for rental supply, the board suggests creating a provincial rebate program for the GST required on new rental construction. It also requests an “ultra-low-cost” loan program be created for rental property developers.

(This article is courtesy of bc.ctvnews.ca)

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