Changes to the Strata Property Regulation will ensure that people living in stratas with 55+ age restrictions will be able to stay in their homes even if their family structure changes.

“Starting a family is a big decision and big change for many people, and that shouldn’t come with the risk of people losing their home,” said Ravi Kahlon, Minister of Housing. “After hearing from a few people experiencing similar situations, we’ve made changes so they and others can grow their families or support their children, while knowing that they’ll be able to stay in the home they know and love.”

Taking effect immediately, this amendment expands the list of exemptions to 55-and-over bylaws in strata buildings to include future children and spouses or partners of current residents. It will also create an exemption to permit adult children of current residents to move back home with their parents or former caregivers.

“I’m relieved that the government has taken action to support families like mine and especially give back a homeowner’s right to decide if they want to start a family in the future,” said Razan Talebian, a Maple Ridge strata resident. “I was shocked at how much power stratas had and, on top of that, how inhumane they could legally be. I would like to take this moment to show my gratitude to all those in the government and Ministry of Housing that are hearing our stories and doing what is needed to protect us.”

On Nov. 24, 2022, Bill 44 amended the Strata Property Act to end all rental-restriction bylaws and limit strata age-restriction bylaws to 55-and-over bylaws to promote seniors’ housing. After the bill was passed, tens of thousands of strata units opened up to renters and younger residents, providing more housing options. A few hundred strata corporations also moved to adopt 55+ age-restriction bylaws. While the act was amended to allow live-in caregivers and people who were already lawfully residing in the units to live in 55-and-over buildings, it did not account for residents’ future children or spouses. The Province is making these changes to protect families in 55+ strata buildings throughout B.C.

“This is an important change that balances the ability of seniors in age-restricted strata buildings to receive the health-care supports they need in their own homes with the desire of many seniors to live in buildings that focus on creating a senior-friendly environment,” said Isobel Mackenzie, B.C.’s seniors advocate.

Learn More:

For more information about strata age-restriction bylaws, visit: https://www2.gov.bc.ca/gov/content/housing-tenancy/strata-housing/operating-a-strata/bylaws-and-rules/age-restriction-bylaws

To read the Homes for People action plan, visit: https://news.gov.bc.ca/files/Homes_For_People.pdf

To learn about the steps the Province is taking to tackle the housing crisis and deliver affordable homes for British Columbians, visit: https://workingforyou.gov.bc.ca/

(This article is from the BC Government Website)

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. 

If you are looking to have a garden that is the envy of the neighbourhood, May is a great time to get started on your gardening to-do list.

I have put together some helpful tips and ideas for how to get started so your garden shines all summer long!

1. Plant Annuals and Perennials: This is a great time to start planting annuals and perennials in your garden. Some good choices include: cosmos, marigold, nasturtium, sunflower, sweet alyssum, and zinnia. For the best results, it is ideal to pick an overcast day for initial planting to avoid heat shock and be sure to keep all new plants well-watered until they have settled.

1. Start Summer Veggie Seeds: If you’re hoping to enjoy fresh veggies all summer, be sure to plant them now! Beans, corn, cucumbers and squash can all be sown directly in the soil (ideally when evening temperatures are around 10 degrees Celsius). Another great option is to plant tomatoes as they love the sun and are very hardy, but be sure to provide trellis support! Plant all veggies in a bed of compost (4” – 6” deep) to ensure a healthy start and remember to keep new sprouts moist to avoid heat damage.

1. Spice it Up: Now that the frost has passed, it is also a great time to plant seasonal spices. Basil, dill, rosemary, marjoram, cilantro and fennel are great options for planting this time of year. They require a bright area with 6-8 hours of sunlight per day and well-drained soil to flourish. Even better? Plant them in a container in your windowsill or on your porch so you can easily access them if you need a snip of fresh herb!

1. Lawn Mower Care: Lawn mowing season is just around the corner and now is the perfect time to tune up your lawn mower! Get your blades sharpened, change the oil, filter and update the spark plugs to keep you riding smooth all summer.

Lawn Maintenance Routine: Establish a lawn maintenance routine that includes watering your grass and garden, as well as weeding unwanted and unruly foliage and applying fertilizer. A helpful tip is to water your plants in the late afternoon or early evening to cut down on evaporation. This also allows your garden several hours to take up the water into their systems, without battling the sun.

(This article is courtesy of the DLC May 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. 

When it comes to homeownership, many of us dream of the day we will be mortgage-free.

While most mortgages operate on a 25-year amortization schedule, there are some ways you can pay off your mortgage quicker!

1. Review Your Payment Schedule: Taking a look at your payment schedule can be an easy way to start paying down your mortgage faster, such as moving to an accelerated bi-weekly payment schedule. While this will lead to slightly higher monthly payments, the overall result is approximately one extra payment on your mortgage per calendar year. This can reduce the total amortization by multiple years, which is an effective way to whittle down your amortization faster.
2. Increase Your Mortgage Payments*: This is another fairly simple change you can execute today to start having more of an impact on your mortgage. Most lenders offer some sort of pre-payment privilege that allows you to increase your payment amount without penalty. This payment increase allowance can range from 10% to 20% payment increase from the original payment amount. If you earned a raise at work, or have come into some money, consider putting those funds right into your mortgage to help reduce your mortgage balance without you feeling like you are having to change your spending habits.
3. Make Extra Payments*: For those of you who have pre-payment privileges on your mortgage, this is a great option for paying it down faster. The extra payment option allows you to do an annual lump-sum payment of 15-20% of the original loan amount to help clear out some of your loan! Some mortgages will allow you to increase your payment by this pre-payment privilege percentage amount as well. This is another great way to utilize any extra money you may have earned, such as from a bonus at work or an inheritance.
4. Negotiate a Better Rate: Depending on whether you have a variable or a fixed mortgage, you may want to consider looking into getting a better rate to reduce your overall mortgage payments and money to interest. This is ideally done when your mortgage term is up for renewal and with rates starting to come back down, it could be a great opportunity to adjust your mortgage and save! This may be done with your existing lender OR moving to a new lender who is offering a lower rate (known as a switch and transfer).
5. Refinance to a Shorter Amortization Period: Lastly, consider the term of your mortgage. If you’re mortgage is coming up for renewal, this is a great time to look at refinancing to a shorter amortization period. While this will lead to higher monthly payments, you will be paying less interest over the life of the loan. Knowing what you can afford and how quickly you want to be mortgage-free can help you determine the best new amortization schedule.

*These options are only available for some mortgage products. Check your mortgage package or reach out to me to ensure these options are available to you and avoid any potential penalties.

If you’re looking to pay your mortgage off quicker, don’t hesitate to reach out to me today! I can help review the above options and assist in choosing the most effective course of action for your situation.

(This article is courtesy of the DLC May 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. 

It has been just over a year since the Bank of Canada started hiking interest rates. While the economy has remained surprisingly resilient, the housing market has weakened sharply.

The Bank has remained on the sidelines for the past two Governing Council announcement dates, and home sales have edged upward in very tight markets.

There is a rapidly growing housing shortage. As population growth remains strong and immigration targets rise, new home construction cannot keep up with demand. Demand for rental properties is surging, and rents have risen sharply for new tenants.

Another factor that could slow the economy this year is the rise in monthly housing payments. For those with adjustable-rate mortgages, monthly payments have already risen sharply. Most of those with variable-rate loans with a fixed monthly cost has hit their trigger point, and the amount no longer covers any of the principle. Most banks have allowed negative amortization but will require borrowers to return to original 20-year amortizations upon renewal. This could be quite a shock to consumers over the next few years.

The Office for the Superintendent of Financial Institutions is very concerned about the risk associated with these loans. We will be hearing soon from OSFI regarding more restrictions on mortgage lending.

The great news is that inflation is falling quickly, down to only 4.3% in March. The central bank expects inflation to fall to about 3% by the end of this year. So, barring unforeseen inflation pressures, the Bank could pause for the rest of this year. Rate cuts, however, are unlikely until 2024.

The Canadian economy will likely slow as the year progresses. The most likely scenario is a mild recession later this year. As we move into 2024, interest rates will slowly decrease to about 2.5% for the overnight policy rate. The economy will rebound, and the Bank of Canada expects to hit its 2% target on inflation. That might be hard to achieve, given rapidly rising wages and continued inflation expectations.

(This article is courtesy of the DLC May 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. 

Improving your credit score in Canada is definitely achievable. Remember the rule of 3. 3 credit lines, for 3 years, 30 percent below balance. Share this will someone who is about to turn 19, new to the country, or has had a bump in the road with divorce, job or health challenges.

Here are some helpful tips to get started:

1. Make it a priority to pay your bills on time. This is crucial in maintaining a good credit score, and it’s one of the easiest things you can do to improve it.
2. Use your credit wisely and try to keep your balances low. This will show lenders that you’re a responsible borrower and it can help boost your credit score.
3. Keep an eye on your credit report to ensure it’s accurate and up-to-date. You’re entitled to a free credit report from Equifax and TransUnion in Canada, so take advantage of this and review your report regularly.
4. Be selective when applying for new credit. Too many applications in a short period of time can lower your credit score, so try to only apply for credit when you really need it.
5. It’s a good idea to keep your credit accounts open, especially the ones you’ve had for a while. This can show lenders that you have a history of responsible credit use and can help improve your credit score over time.
6. If you need extra help or guidance, don’t hesitate to reach out to a credit counsellor or financial advisor. They can provide you with tailored advice and support to help you achieve your financial goals. We can help with all the proper introductions email us at angela@countoncalla.ca

Remember, improving your credit score takes time and effort, but it’s definitely worth it in the long run. With a positive attitude and a little bit of hard work, you can improve your credit score and achieve your financial dreams!

Weakening Housing Markets Pose A Risk For The Canadian Economy

On April 18, Canada’s national banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), released its second Annual Risk Outlook (ARO), outlining what it believes are the most significant headwinds facing the Canadian financial system – and what the regulator plans on doing about it.

According to the report, the severe downturn in real estate prices and demand following their significant rise during the pandemic was the most pressing issue. OSFI acknowledges that the housing market changed significantly over the past year, and house prices fell substantially in 2022. The regulator is preparing for the possibility that the housing market will experience continued weakness throughout 2023.

The report also highlights how the Bank of Canada’s rate hiking cycle has impacted borrowers’ ability to pay down mortgage debt, with the central bank increasing its benchmark cost of borrowing eight times between March 2022 and January 2023, bringing its Overnight Lending Rate from a pandemic low of 0.25% to 4.5% today.

Mortgage holders may be unable to afford continued increases in monthly payments or may experience a significant payment shock at the time of their mortgage renewal, leading to higher default probabilities. Given the considerable impact of real estate-secured lending (RESL) activities in the Canadian financial system, a housing market downturn remains a critical risk.

OSFI also highlights the dangers posed by more borrowers hitting their trigger rates; according to a National Bank study, eight in ten variable fixed-payment borrowers who took their mortgages out between 2020-2022 are impacted. Lenders have addressed this by extending the amortization period for affected borrowers, but OSFI says this is just a temporary solution.

Borrowers and lenders alike will need to pay the price in due course, as OSFI points out. The growth in highly leveraged borrowers increases the risk of weaker credit performance, potentially leading to more borrower defaults, a disorderly market reaction, and broader economic uncertainty and volatility.

These recent comments strengthen expectations that stricter mortgage rules could be in the cards before the year ends. Back in January, OSFI announced it was considering making tweaks to its Guideline B-20, which outlines borrowing and risk requirements for banks underwriting residential mortgages and qualification rules for borrowers, including the mortgage stress test.

OSFI may increase borrowers’ debt servicing ratio requirements, making it more challenging for those with larger debt loads to qualify for a mortgage. It is also considering limiting how many of these higher-leveraged borrowers banks can have in their portfolios, potentially leading to fewer borrowers making the cut at A-lenders and turning to the B-side and alternative mortgage market.

Finally, OSFI may change the threshold criteria for the mortgage stress test. Currently, borrowers must prove they can carry their mortgage at a rate of 5.25%, or 2% above the one they’ll receive from their lender, whichever is higher. However, following last year’s rapid rate increases, the 5.25% threshold has become obsolete, with all current market rates above 3.25%.

OSFI wrapped up consultations on these potential changes late last week and will release a report on its recommendations. Borrowers should keep an eye out for changes in the months to come.

(This article is courtesy of the Sherry Cooper Assoc.)

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. 

Great News On The Inflation Front

The Consumer Price Index (CPI) fell sharply in March to 4.3% year-over-year, continuing a pattern of repeated declines. Before we break out the champagne, however, much of the drop in inflation resulted from the steep monthly increase in prices in March one year ago (1.4% m/m), the so-called base-year effects. 

Gasoline prices have fallen sharply since March 2022–down year-over-year by a whopping -13.8%. This was the second consecutive month in which gas prices caused inflation to fall. The fall in gasoline prices was mainly driven by steep price increases in March 2022, when gasoline rose 11.8% month-over-month due to supply uncertainty following Russia’s invasion of Ukraine. This increased crude oil prices, which pushed prices at the pump higher for Canadians. Gasoline price inflation was transitory.

There is no question that lower inflation portends a continued rate pause by the Bank of Canada. 

Inflation at 4.3% was the smallest rise since August 2021. On a year-over-year basis, Canadians paid more in mortgage interest costs, offset by a decline in energy prices.

Excluding food and energy, prices were up 4.5% year over year in March, following a 4.8% gain in February, while the all-items CPI excluding mortgage interest cost rose 3.6% after increasing 4.7% in February.

Two key yearly measures tracked closely by the central bank — the so-called trim and median core rates — also dropped, averaging 4.5%, in line with forecasts.

On a monthly basis, the CPI was up 0.5% in March, following a 0.4% gain in February. Travel tours (+36.7%) contributed the most to the headline month-over-month movement, largely driven by increased seasonal demand during the March break. On a seasonally adjusted monthly basis, the CPI rose 0.1%.

While headline inflation has slowed in recent months, having increased 1.7% in March compared with six months ago, prices remain elevated. Compared with 18 months ago, for example, inflation has increased by 8.7%.

On a year-over-year basis, price growth for durable goods slowed in March (+1.6%) compared with February (+3.4%). Furniture prices led the deceleration in prices for durable goods, falling 0.3% year over year in March, following a 7.2% increase in February. The decline was primarily due to a base-year effect, as furniture prices rose 8.2% month over month in March 2022 amid supply chain issues.

Prices for passenger vehicles also contributed to the deceleration in prices for durable goods, increasing at a slower pace year over year in March 2023 (+4.7%) compared with February (+5.3%). Higher prices for passenger vehicles in March 2022, due to the global shortage of semiconductor chips, put downward pressure on the index in March 2023.

Month over month, new passenger vehicle prices were up 1.3% in March, attributable to the higher availability of new 2023-model-year vehicles. For comparison, prices for used cars rose 0.6% month over month in March, after a 1.9% decline in February.

Homeowners’ replacement costs continued to slow in March, rising 1.7% year over year compared with a 3.3% increase in February, reflecting a general cooling of the housing market.

In contrast, mortgage interest costs rose faster in March (+26.4%) compared with February (+23.9%). This was the most significant yearly increase on record as Canadians continued to renew and initiate mortgages at higher interest rates.

There has finally been some relief in grocery price inflation. Year over year, prices for food purchased from stores rose to a lesser extent in March (+9.7%) than in February (+10.6%), with the slowdown stemming from lower prices for fresh fruit and vegetables.

Service inflation slowed to 5.1% in March. But in a sign wage pressures could be picking up, more than 155,000 federal workers are set to go on strike starting Wednesday if no deal is reached on their talks with Prime Minister Justin Trudeau’s government by Tuesday night.

Bottom Line

The Bank of Canada is no doubt delighted that inflation continues to cool. The Bank expects price gains to reach 3% by midyear and return to near their 2% target by the end of 2024. But they said getting the prices back to 2% could prove more difficult because inflation expectations are coming down slowly, and service prices and wage growth remain elevated.

Governor Tiff Macklem, speaking at the IMF and World Bank meetings in Washington recently, said the Bank of Canada is prepared to end quantitative tightening earlier than planned if the economy needs stimulation. Quantitative tightening is the selling of government bonds on the Bank’s balance sheet, which takes money out of the economy.

Macklem said his officials discussed hiking rates further during deliberations for the April 12th decision to continue to pause and reiterated that “it is far too early to be thinking about cutting interest rates.”

His comments provide a glimpse into the Bank of Canada’s strategy for shrinking its balance sheet, which ballooned to more than $570 billion during the pandemic as it bought large quantities of government bonds — to restore market functioning during the initial Covid shock and then to provide a stimulus for the economy.

The remarks show an acknowledgment among policymakers that their plans could shift if there’s a negative economic shock that requires a loosening of monetary policy.

According to Bloomberg News, swaps traders are now betting the Bank of Canada’s next move will be a cut later this year. The governor pushed back on those expectations in a press conference this week. He and his officials discussed the possibility that rates need “to remain restrictive for longer to get inflation all the way back to target.”

In a speech last month, Deputy Governor Toni Gravelle said quantitative tightening will likely end in late 2024 or early 2025. That marked the first time the Bank of Canada put a date on abandoning the program.

(This article is courtesy of the Sherry Cooper Assoc.)

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. 

Good News On The Canadian Housing Front

The Canadian Real Estate Association says home sales in March edged up 1.4% in March. Homeowners and buyers were comforted by the fall in fixed mortgage rates as the Bank of Canada paused rate hikes. Bond market yields, though very volatile, have trended downward in March, although they have bounced since the release of this data this morning. The five-year government of Canada bond yield, tied closely to fixed mortgage rates, increased to 3.22% this morning compared to a low of roughly 2.8% in the week of March 20th. Rates had been as high as 3.9% over 52 weeks. 

As we move into the all-important spring-selling season, green shoots of growth are evident. A standout in March was a significant sales increase in BC’s Fraser Valley.

The actual (not seasonally adjusted) number of transactions in March 2023 was 34.4% below a historically strong March 2022. The March 2023 sales figure was comparable to what was seen for that month in 2018 and 2019. It was also the smallest year-over-year decline since last September.

As we enter the spring season, some buyers are coming off the sidelines, but these are very tight markets. The inventory of unsold homes is exceptionally low in most regions of the country as sellers have been waiting for prices to rise. Home prices are now stabilizing across the country.

New Listings

The number of newly listed homes dropped a further 5.8% on a month-over-month basis in March. New supply is currently at a 20-year low. The monthly decline from February to March was led by a majority of major Canadian Census Metropolitan Areas (CMAs).

With new listings falling considerably and sales increasing again in March, the sales-to-new listings ratio jumped to 63.5%, the tightest market in a year. The long-term average for this measure is 55.1%. There were 3.9 months of inventory on a national basis at the end of March 2023, down from 4.1 months at the end of February and the lowest level since last October. It’s also now more than a full month below its long-term average.

Home Prices

The Aggregate Composite MLS® Home Price Index (HPI) was up 0.2% on a month-over-month basis in March 2023 – the first increase, albeit a small one–since February 2022. The trend of stabilizing prices from February 2023 to March 2023 was broad-based.

With few exceptions, prices are no longer falling across most of the country, although they’re not rising meaningfully anywhere. The Aggregate Composite MLS® HPI now sits 15.5% below year-ago levels, a smaller decline than in February.

Bottom Line
A gradual turnaround in the Canadian housing market is in train. While inventory remains extremely low, homes are not only selling but also selling fast. Short-term fixed-rate mortgages are popular with buyers. A significant change from before the Bank of Canada started raising rates. 

While the Bank will likely hold rates steady for the remainder of this year, I do not expect Macklem to cut rates before then. All of this depends on inflation. We will get another read on that next week. It should be a good number (less than February’s 5.2% y/y posting) because of base effects. Stay tuned.

(This article is courtesy of the Sherry Cooper Assoc.)

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. 

Do you or a loved one currently have a variable-rate mortgage? If so, you could have the opportunity to save hundreds of dollars in monthly payments. We know there are many variable-rate mortgage holders always looking for ways to save more of their hard-earned income and increase overall cash flow, so we wanted to provide one possibility to help you do so!

(Please note that this is just an example. Each instance will be subject to approval and different for each person’s specific situation)

We wanted to share this snapshot of a client we helped this week, for whom we saved over $500 in monthly payments! If you would like to see what makes sense for your family’s mortgage and overall financial plan, please reach out to us today 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. 

The Bank of Canada Holds Rates Steady Again But Maintains Its Commitment To 2% Inflation

The Bank of Canada left the overnight policy rate at 4.5%, as expected, stating their view that inflation will hit 3% by mid-year and reach the 2% target by next year. They admit, however, that demand continues to exceed supply, wage gains are too high, and labour markets are still very tight. The Bank is also continuing its policy of quantitative tightening. 

“Economic growth in the first quarter looks to be stronger than was projected in January, with a bounce in exports and solid consumption growth. While the Bank’s Business Outlook Survey suggests acute labour shortages are starting to ease, wage growth is still elevated relative to productivity growth. Strong population gains are adding to labour supply and supporting employment growth while also boosting aggregate consumption. Housing market activity remains subdued.”

The Bank expects consumption spending to moderate this year “as more households renew their mortgages at higher rates and restrictive monetary policy works its way through the economy more broadly.”

“Overall, GDP growth is projected to be weak through the remainder of this year before strengthening gradually next year. This implies the economy will move into excess supply in the second half of this year. The Bank now projects Canada’s economy to grow by 1.4% this year and 1.3% in 2024 before picking up to 2.5% in 2025”.

Most economists believe the Bank of Canada will hold the overnight rate at 4.5% for the remainder of this year and begin cutting interest rates in 2024. A few even think that rate cuts will begin late this year. 

In contrast, the Fed hiked the overnight fed funds rate by 25 bps on March 22 despite the banking crisis and the expectation that credit conditions would tighten. This morning, the US released its March CPI report showing inflation has fallen to 5% year-over-year. Next Tuesday, April 18, Canada will do the same. The base year effect has depressed y/y inflation. Canada’s CPI will likely have a four-handle.

Fed officials next meet in early May, and it is widely expected that the Fed will continue to raise the policy rate while the Bank will continue the pause.

Due to the differences in our mortgage markets and the higher debt-to-income level in Canada, our economy is much more interest-sensitive. Despite these disparate expectations, the Canadian dollar has held up relatively well. 

Bottom Line

The Bank of Canada upgraded its growth projections for this year in a new forecast, suggesting the odds of a soft landing have increased. This may preclude interest rate cuts this year. 

“Governing Council continues to assess whether monetary policy is sufficiently restrictive to relieve price pressures and remains prepared to raise the policy rate further if needed to return inflation to the 2% target,” the bank said.

The April Monetary Policy Report suggests strong Q1 growth resulted from substantial immigration. With the population proliferating, labour shortages should continue to decline, and inflation will fall to 3% later this year. The global growth backdrop is better than expected, though the Bank continues to look for a slowdown in the coming months, citing the lagged effects of rate hikes and the recent banking sector strains.

Governor Macklem said in the press conference that the economy needs cooler growth to corral inflation, although the Bank’s forecast does not include an outright recession.

The Bank will refrain from cutting rates this year. The Governor explicitly said at the press conference that market pricing of rate cuts later this year is not the most likely scenario.

(This article is courtesy of the Sherry Cooper Assoc.)

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.