How did 2022 change Canadian homebuying trends?

General Angela Calla 13 Mar

Homebuying among Canadians is a vastly different affair – and more often than not, a family one – from what it was two to three years ago, new data reveals, with half of Canadian buyers admitting that financial support from their families played a critical role in their home-purchasing process.

From 2020 to 2021, extreme demand and a low supply of homes for sale pushed the country’s housing activities and home prices to record highs. This trend started to reverse in 2022, a year defined by elevated borrowing costs and what national real estate marketplace Zolo called “a long overdue shift from a seller’s market to a more balanced market”.

For its 2023 Canada housing market report, Zolo surveyed 800 Canadians to ask them how, when, where, and why they bought a home in 2022.

The Zolo report revealed that in the current landscape of high mortgage rates, financial assistance from family members were the new normal. Forty-seven percent (47%) of homebuyers admitted they received money from family – either as a gift or through an inheritance – to help pay for their downpayment. One in four (24%) used the money of their partner’s family to bridge the same expense.

The results also showed that Canadians dedicated a lot of time and thought into home-buying. Almost half (47%) of all homebuyers spent one to two years browsing real estate listings – then proceeded to start to “house hunt in earnest”.

More than half (55%) prepared a budget, but most made the critical mistake of overlooking their mortgage rate, with only 25% of homebuyers shopping around for a mortgage.

“Not shopping around for a mortgage is the costliest mistake anybody can possibly make,” said mortgage expert and author Angela Calla in the Zolo report. Calla suggested approaching a mortgage broker for the job. “Doing it on your own hurts your credit, limits your options, and doesn’t point out the very important costs that can come down the road.”

More than one in three Canadians (37%) browsed listings online when house hunting but preferred to narrow down their choices in person. The Zolo report said that virtual viewings and long-distance purchases were rare in 2022, with most (67%) preferring to view their homes in person between two to four times before making an offer.

Websites and social media emerged as the top places to preliminary browse listings when home-buying. While in Canada, more than half of all boomers (59%), Gen X (52%), and millennials (58%) still preferred to browse real estate listing websites for the task, close to half of Gen Z Canadian homebuyers (49%) browsed Instagram to house hunt.

The emerging homebuying attitude among Canadian youth was also a more decisive one, the Zolo report found.

Most millennials and Gen Z homebuyers only viewed between one to three homes before finally settling on one, in contrast with Gen X and boomer homebuyers, who viewed between four to six homes on average.

(This article is courtesy of the CMP)


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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Bank of Canada Pauses Rate Hikes As US Fed Promises Further Tightening

General Angela Calla 8 Mar

THE BANK OF CANADA HOLDS RATES STEADY EVEN AS THE FED PROMISES TO PUSH HIGHER

As expected, the central bank held the overnight rate at 4.5%, ending, for now, the eight consecutive rate increases over the past year. The Bank is also continuing its policy of quantitative tightening. This is the first pause among major central banks.

Economic growth ground to a halt in the fourth quarter of 2022, lower than the Bank projected. “With consumption, government spending and net exports all increasing, the weaker-than-expected GDP was largely because of a sizeable slowdown in inventory investment.” The surge in interest rates has markedly slowed housing activity. “Restrictive monetary policy continues to weigh on household spending, and business investment has weakened alongside slowing domestic and foreign demand.”

In contrast, the labour market remains very tight. “Employment growth has been surprisingly strong, the unemployment rate remains near historic lows, and job vacancies are elevated.” Wages continue to grow at 4%-to-5%, while productivity has declined.

“Inflation eased to 5.9% in January, reflecting lower price increases for energy, durable goods and some services. Price increases for food and shelter remain high, causing continued hardship for Canadians.” With weak economic growth for the next few quarters, the Bank of Canada expects pressure in product and labour markets to ease. The central bank believes this should moderate wage growth and increase competitive pressures, making it more difficult for businesses to pass on higher costs to consumers.

In sum, the statement suggests the Bank of Canada sees the economy evolving as expected in its January forecasts. “Overall, the latest data remains in line with the Bank’s expectation that CPI inflation will come down to around 3% in the middle of this year,” policymakers said.

However, year-over-year measures of core inflation ticked down to about 5%, and 3-month measures are around 3½%. Both will need to come down further, as will short-term inflation expectations, to return inflation to the 2% target.

Today’s press release says, “Governing Council will continue to assess economic developments and the impact of past interest rate increases and is prepared to increase the policy rate further if needed to return inflation to the 2% target. The Bank remains resolute in its commitment to restoring price stability for Canadians.”

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 Congressional testimony yesterday and today, Federal Reserve Chair Jerome Powell said that the Fed might need to hike interest rates to higher levels and leave them there longer than the market expects. Today’s news of the Bank of Canada pause triggered a further dip in the Canadian dollar (see charts below). 

Fed officials next meet on March 21-22, when they will update quarterly economic forecasts. In December, they saw rates peaking around 5.1% this year. Investors upped their bets that the Fed could raise interest rates by 50 basis points when it gathers later this month instead of continuing the quarter-point pace from the previous meeting. They also saw the Fed taking rates higher, projecting that the Fed’s policy benchmark will peak at around 5.6% this year. 

Bottom Line

The widening divergence between the Bank of Canada and the Fed will trigger further declines in the Canadian dollar. This, in and of itself, raises the Canadian prices of commodities and imports from the US. This ups the ante for the Bank of Canada.

The Bank is scheduled to make its next announcement on the policy rate on April 12, just days before OSFI announces its next move to tighten mortgage-related regulations on federally supervised financial institutions.

To be sure, the Canadian economy is more interest-rate sensitive than the US.  Nevertheless, as Powell said, “Inflation is coming down, but it’s very high. Some part of the high inflation that we are experiencing is very likely related to a very tight labour market.”

If that is true for the US, it is likely true for Canada. I do not expect any rate cuts in Canada this year, and the jury is still out on whether the peak policy rate this cycle will be 4.5%.

(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. 

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2023 Canada Housing Market Report: A Comprehensive Look at the Year’s Trends

General Angela Calla 8 Mar

For the first time since the pandemic’s start, Canadians are experiencing a shift in the real estate market they’ve come to know. There were record-setting sales across the country in 2020 and 2021, with extreme demand from buyers and a low supply of homes for sale. In turn, we saw Canada’s housing market and home prices across the country reach unprecedented highs.

Deciding to buy a home is a big deal, and there are a lot of unknowns to tackle. For instance, when they purchase a property, who do they hire? How many homes do they view before putting in an offer? What was the non-negotiable feature they needed in their home?

After all, we all want to know whether we’re doing the same things as everyone else — or if we’re missing a key step or bit of information to help us make a better decision regarding the biggest purchase of our lives. So we asked 800 Canadians how, when, where and why they bought their homes in 2022, and we’re sharing all of the juicy details. 

The trend in Canada’s housing market throughout 2022 can be boiled down to increased borrowing costs and a long overdue shift from a seller’s market to a more balanced market. And we’ll talk more about the 2022 market later in this piece. But, knowing this, how did buyers make decisions and buy homes — and what does this mean for you?

Key Findings

  • 55% of Canadians create a budget before they buy a home
  • 50% of Canadians save their down payment in their TFSA
  • 47% of Canadians receive money from family and/or an inheritance to boost their down payment
  • Only 36% of home buyers hire a home inspector
  • 49% of Gen Z browses for properties on Instagram
  • 80% of Canadians negotiate their home price

Canadians Could Use a Bit More Prep in Their Home Buying Step

Canadians homeowner budget

Typically, preparation is one of the first steps to buying a home. When you plan to buy a home, you usually require a deep understanding of your financial situation and a team of experts to help you throughout your home-buying journey. Let’s look at how most Canadians prepare to buy homes financially and otherwise.

Majority of Canadians Create a Budget Before They Buy a Home

One of the first steps you need to take to know how much home you can afford is to look at your income, spending habits and debt load. For one thing, this helps a home buyer grasp the reality of the cost of homeownership, but having this information at your fingertips will make it easier to qualify for home financing when the time comes.

Thankfully, 55% of Canadians create a budget before they buy a home. However, there is room for improvement when it comes to everything related to money and homeownership. For example, only 25% of Canadians shopped around for their mortgage rate. Getting multiple quotes on a mortgage rate is one of the key ways to ensure you get the best deal, which directly translates to how much you’ll spend each month repaying your loan. Our advice? Don’t sleep on a good comparison shop. 

Mortgage expert and author Angela Calla agrees. “Not shopping around for a mortgage is the costliest mistake anybody can possibly make,” She says that every lender has their own bias to sell a product. An independent mortgage broker uses one application to protect the applicants’ credit. Mortgage brokers aren’t directly employed by lenders, which allows them to shop your application to banks, credit unions and trust companies that consumers couldn’t access on their own. “Doing it on your own hurts your credit, limits your options, and doesn’t point out the very important costs that can come down the road,” says Calla.

You can also secure mortgage pre-approval, which only 36% of Canadians do. Pre-approval makes you look like a more serious buyer, gives you a clear sense of what you can afford, and can make buying much quicker.  

Canada housing market steps

Spilling the Tea on Down Payments

The minimum down payment requirement on a home in Canada is 5% — but a 2021 report from the Canadian Real Association (CREA) found that most people go higher than this in many provinces. For example, they looked at average down payments in British Columbia (22.5%), Ontario (20.35%), Quebec (15%), Alberta (15.15%) and Nova Scotia (14.26%), and none were below 10% down. As for where we save, the most popular place for a down payment is in a tax-free savings account (TFSA), where 50% of Canadians put their funds. 

We know where Canadians save, but where do they get the money? For most, buying a home is a family affair. Regarding down payments, 47% of Canadians receive money from family and/or an inheritance to boost their percentage. An additional 24% of people use their partner’s family’s money for the same.  

Although most Canadians get their down payment fund from their savings, a surprising number of Canadians use borrowed money to buy homes, such as through a Home Equity Line of Credit (HELOC) or inheritance. In an ideal world, regardless of where your down payment comes from, you need to be sure that the home you’re buying is affordable with or without those extra funds — and lenders will want to ensure the same.

Angela Calla - mortgage broker

While you can borrow to contribute to your down payment, you may qualify for less mortgage, according to Calla. “While today’s qualifications are income times three, for example, $100,000 per year qualifies you for a $300,000 mortgage, adding any outside debts to that usually reduces that ability,” says Calla. Instead, she says you are better off using family financial planning and getting a gift from your parents as a part of an early inheritance. 

“This is why the reverse mortgage is so popular for parents looking at how to help their kids get into the market without impacting their cash flow or causing a taxable event by taking out investments.”

(This post is courtesy of Zolo, where you can read the full article)


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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Bank of Canada Announcement – March 8, 2023

General Angela Calla 8 Mar

With this new announcement, the Bank of Canada has decided not to increase prime interest rates. We expect this pause to continue in the attempt to curb the high inflation rates and further moves will be data-dependent.

Prime rate still remains at 6.70% for most banks, with some fixed-rate mortgages having come down off of the peak and well below the prime rate, fixed rates are allowing for more qualifications and improved cash flow. This stabilization presents an opportunity to get ahead in your mortgage planning strategy.

Recently, we were invited on the Steele and Vance Show and in a segment discussed what those who are looking to get into the market or are up for renewal should keep in mind. Here is a link to the short clip 2-minute clip.

As always, our team is available to answer your questions directly at angela@countoncalla.ca

The Angela Calla Mortgage Team.


Angela Calla is an 18-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

Economic Insights from Dr. Sherry Cooper

General Angela Calla 7 Mar

The Bank of Canada was the first major central bank to hit the pause button on rate hikes in late January. Given the slowdown in inflation in the recently released January CPI, The Bank of Canada will refrain from hiking interest rates this month. 

That is welcome news for homeowners with adjustable-rate mortgages whose rate has risen 425 basis points in less than a year.

Variable-rate mortgage holders with a fixed payment have largely hit their trigger points if they bought in the past couple of years. While their monthly payments have not risen, many are not covering the higher interest costs on their mortgages. Hence their principal outstanding is rising. Little is known about how the lenders will handle that when it comes time to renew.

Housing starts also plunged 13% month over month in January.

Bank earnings are under pressure with higher taxes and capital requirements, and the federal financial institution regulator is looking to tighten mortgage terms somehow. More will be known in mid-April when the comment period is over.

Other sectors of the economy remain relatively robust. Labour markets continue to be very tight as the unemployment rate is near record lows, and job vacancies—though down a bit—remain high. This has boosted consumer spending despite inflation.

We expect a soft landing in the Canadian economy this year—a mild contraction in Canada in 2023 Q2-Q3. This is one quarter later than the Bank of Canada projected in their most recent Monetary Policy Report.

The economy is resilient, and inflation is falling, but the central bank is unlikely to cut rates this year. When rates begin to fall in 2024, they will remain well above the pre-pandemic level of a mere 1.75% for the overnight policy rate. Inflation in the decade before the pandemic averaged less than 2%. Over the next decade, inflation is likely to be higher, especially as on-shoring and the reduction in globalization will be much less disinflationary.

(This article is courtesy of the DLC March Newsletter)


Angela Calla is an 18-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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Purchasing Then vs. Now

General Angela Calla 7 Mar

Within the last year, BC’s housing market has undergone numerous changes and adjustments. The image above compares some key figures from a year ago to now. This can be crucial for one looking to buy their first home and what they can expect regarding rates, payments, and what direction the trend in the market is heading towards.

We’ve broken down the difference in these figures below:

  • Median Purchase Price: Decrease of $396,500
  • Down Payment: Decrease of $79,300
  • Property Transfer Tax: Decrease of $7930
  • 5-Year Fixed Rate: Increase of 2%
  • Mortgage Payment: Decrease of $251.96
  • Balance at the end of the 5-Year Term: Decrease of $254,248.64

What this indicates is that while rates have increased since last year, you are ultimately paying less overall for a home and paying it off faster.

The Angela Calla Mortgage Team


Angela Calla is a 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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Canadian GDP Slowed Dramatically In Q4 2022, Another Reason The BOC Won’t Raise Rates In March

General Angela Calla 28 Feb

BAD NEWS IS GOOD NEWS FOR THE BANK OF CANADA

Statistics Canada released the real gross domestic product (GDP) figure for the final quarter of 2022 this morning, showing a marked slowdown in economic activity. This will undoubtedly keep the central bank on the sidelines when they announce their decision on March 8. The Bank had estimated the Q4 growth rate to be 1.3%. Instead, the economy was flat in Q4 at a 0.0% growth rate. This was the slowest quarterly growth pace since the second quarter of 2021.

Inventory accumulation in the fourth quarter declined for manufacturing and retail goods, driving investment in inventories to decline by $29.8 billion. Further, higher interest rates by the Bank of Canada hampered investment in housing (-8.8% at an annual rate), and business investment in machinery and equipment was a weak -5.5%. On the other hand, personal expenditure in the Canadian economy expanded by 2.0% (vs -0.4% in Q3), supported by the red-hot labour market. Government spending growth also accelerated. At the same time, net foreign demand contributed positively to GDP growth as exports grew by 0.8% while imports shrank by 12.0%.

The weak Q4 result reduced the full-year gain in GDP for 2022 to 3.4%, compared to 2.1% in the US, 4.0% in the UK, and 3.6% in the Euro area. 

The January GDP flash estimate was +0.3%, pointing towards a rebound in the first quarter of this year. However, flash estimates are always volatile and subject to revision. Nevertheless, the growth in GDP this year will likely be much more moderate, less than 1%.

Bottom Line
The weakness in today’s economic data will be good news to the Bank of Canada, having promised a pause in rate hikes to assess the impact of the cumulative rise in interest rates over the past year. Today’s GDP report and the slowdown in the January CPI inflation numbers portend no interest rate hike on March 8. 

Now the Bank will be looking for a softening in the labour market.

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


Angela Calla is an 18-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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What you NEED to know if you plan to buy a home in the next 5 years

General Angela Calla 27 Feb

It’s now a little easier to buy your first home in Canada and this is how.

Starting April 1st 2023 eligible homebuyers can open a first home savings account make sure you read to the end because there is a super important planning strategy that most don’t know about.

  1. You can save up to $8000 per year.
  2. Then you take that $8000 and put it into the first home savings account that will actually get you an $8000 deduction against your income.
  3. Once the money is in the first home savings account, you can choose to invest in mutual funds, GICs, higher savings accounts, etc.
  4. You can also combine this plan with the RRSP home buyers’ plan.
  5. Now, this is the crucial part most haven’t considered you need to know if you are planning on buying a home in the next five years.

You need to open a first home savings account in April of 2023 and this is why “you only start accumulating new contribution room the year you open the plan” not the year you’re eligible for the plan. If you would like to read more on the subject, here is the link to the Government of Canada website explained in more detail.

If you or a loved one would like one of our associates to open a free account, please email us at angela@countoncalla.ca for a proper introduction.

We are always here to help you and your family plan the best strategies for home ownership, refinancing and mortgage renewals.

Many thanks and have a great day!


Angela Calla is an 18-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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Mortgages 101: What is Canada’s stress test?

General Angela Calla 23 Feb

Buying a home is the largest purchase most Canadians will make – and as of mid-2022 it became even more expensive, with rising interest rates driving up the cost of borrowing. Canada’s mortgage stress test has played a large role in that as well, by requiring buyers to prove they can manage rates well above what lenders are offering. Here’s a primer on how the stress test works, with insights from personal finance and mortgage experts.

What is Canada’s mortgage stress test?

The mortgage stress test is a financial calculation meant to ensure you can still qualify for your mortgage if interest rates rise.

The federal government introduced the stress test in 2016 for mortgage holders who were making a down payment of between 5 and 19 per cent and were required to purchase mortgage default insurance. In 2018, the Office of the Superintendent of Financial Institutions, or OSFI, the government agency that regulates federally incorporated lenders, expanded the stress test to buyers who make a down payment of at least 20 per cent and are uninsured. In essence, all insured mortgage holders and uninsured mortgage holders who get their mortgage with an OSFI-regulated lender must pass the test.

The current stress test rules, which came into effect on June 1, 2021, require borrowers to prove they can handle either the minimum qualifying mortgage rate of 5.25 per cent, or their contract rate plus two percentage points, whichever is higher.

Why was the stress test introduced?

With house prices soaring in 2016-17, the stress test was meant to give insured buyers more breathing room if the low interest rates they were borrowing at began to rise. “We know interest rates go up … and putting a buffer in place made sure Canadians could make their payments if they faced challenging circumstances,” says Angela Calla, a mortgage broker based in Port Coquitlam, B.C.

The test was also aimed at cooling Canada’s housing market. That year the average price for all housing types nationally had increased 10.7 per cent from the previous year, reaching a record high.

OSFI extended the stress test to uninsured buyers two years later out of concerns around high household indebtedness, and to guard against a wave of foreclosures if homebuyers struggled to pay their mortgages.

The stress test was also, in part, a lesson learned from the 2008 global financial crisis, Globe and Mail columnist Tim Kiladze wrote in June. Mortgages are the largest assets on the balance sheets of banks and other lenders, and a wave of defaults can ripple out to the broader financial sector.

OSFI’s move was received with “palpable and widespread” fury from the real estate industry, as the housing market was starting to cool at the time. It also sparked concerns that it could send borrowers into the unregulated lending market. It still has its detractors today. But, Mr. Kiladze argued, with inflation now at multidecade highs and the Bank of Canada hiking interest rates rapidly to wrestle it under control, the stress test is proving its value.

“If Canada still had the mortgage rules that existed when the housing market took off a decade ago, we would have every reason to be terrified now,” he wrote. “But we don’t, because, even in the face of serious backlash, regulators … prioritized controlling systemic risk.” (Data from the Canada Mortgage and Housing Corp. showed mortgage delinquency rates in Canada have remained below 1 per cent for the past 10 years, and since 2018 have never risen above 0.3 per cent.)

How does the stress test affect homebuyers?

Initially, OSFI set the stress test rate at the higher of two percentage points above a buyer’s contract rate or the posted Bank of Canada five-year rate. But after the Bank of Canada drastically cut interest rates during the pandemic, OSFI was concerned the five-year benchmark was too low to protect buyers against adverse events. In June, 2021, the most recent update, OSFI decoupled the minimum qualifying rate from the central bank’s posted rate. It has now a set floor rate of 5.25 per cent that the regulator will review annually.

By requiring buyers to qualify at a higher rate than they’re actually being offered, the stress test makes it more difficult for Canadians to get a mortgage. It can reduce the mortgage amount you qualify for or require you to save more money for a larger down payment.

When the stress test came in for uninsured borrowers in 2018, it cut purchasing power by about 22 per cent, according to the National Bank of Canada. The most recent update cut buying power by 4 per cent on average. This is because lenders have limits on borrowers’ debt service ratios – the amount of their income that goes to making their payments – and pushing the mortgage rate up means they’ll hit the ceiling faster and thus qualify for smaller mortgages.

While a 4-per-cent decrease in purchasing power might sound modest, it can be significant. Last year real estate brokerage Zoocasa calculated that Canadians looking to buy the average-priced home in their city with a 20-per-cent down payment would see the mortgage they qualify for decrease by between $14,000 and $47,000. Alternately, they’d need to boost their income by between $2,000 and $9,000 annually. Those living in Toronto and Vancouver took the biggest hits to mortgage qualification amounts.

Is everyone subject to the stress test?

Anyone who takes out a mortgage with a federally regulated lender overseen by OSFI – which includes banks and federal credit unions, and trust and loan companies – must face the stress test. Provincially regulated lenders like most credit unions, as well as alternative lenders, are not subject to the stress test rules. Some of these lenders will stress test you anyway to gauge the risk of lending to you, but they have the discretion to decide to approve you for a mortgage regardless.

However, if you’re an insured borrower you’ll be subject to the stress test regardless of the mortgage you choose.

If you’re renewing or refinancing your mortgage and decide to switch lenders, you’ll also likely need to pass the stress test. However, according to Robert McLister, a mortgage strategist with MortgageLogic.news and a Globe contributing columnist, there is an exception. If you were approved for a CMHC-insured mortgage prior to the introduction of the stress test in 2016, some lenders can “grandfather” you and qualify you at their actual five-year fixed rate.

Who is most affected by the stress test?

The stress test tends to disproportionately affect those who are just on the margins of qualifying, who are typically “buying the most house they can afford,” said Mr. McLister. And that’s a lot of people. According to the CMHC’s 2021 mortgage consumer survey, 65 per cent of buyers paid the maximum price they could afford to buy their home.

Does the stress test apply to both variable and fixed-rate mortgages?

You’ll have to undergo the stress test regardless of whether you opt for a fixed- or variable-rate mortgage. With variable rates consistently lower than fixed rates, Mr. McLister said choosing to be stress tested at a variable rate will likely help you qualify for a bigger mortgage than you would be able to achieve on a fixed.

As an example, an uninsured buyer who went with the lowest available five-year fixed rate as of August, 2022 would be stress tested at 6.79 per cent; if they went with the lowest available five-year variable rate, they’d be tested at 6.15 per cent. Mr. McLister said that in this case, a hypothetical uninsured buyer who’s making $100,000 a year, doesn’t have other debts and takes a 30-year amortization period, could qualify for a home that’s 5.4 per cent more expensive with a variable rate.

How have rising interest rates affected the stress test?

Recent rate increases show the huge impact that the hikes can have. The Bank of Canada, in an effort to tame rising inflation, made a series of interest rate hikes in 2022, including a supersized 100-basis-point hike in July that brought its policy rate to 2.5 per cent. (A basis point is one-hundredth of a percentage point.)

After two years of rapidly rising housing prices, rate hikes have started to cool the market – but they’ve also sent borrowing costs soaring and made the stress test much harder to pass. The minimum qualifying rate of 5.25 per cent is “no longer a factor,” Mr. McLister said, because it’s less than the lowest contract rates available on the market plus two percentage points. As of August, 2022, the easiest stress test rates for insured and uninsured buyers, based on the lowest nationally available interest rates, are 5.45 per cent and 6.15 per cent, respectively. (Insured buyers are typically offered lower rates because their lender is guaranteed repayment even if they default.)

According to loan comparison website Ratehub.ca, the yearly income needed to purchase the average Canadian home at a fixed mortgage rate with 20 per cent down has climbed by an average of $18,000, owing to these higher stress test requirements as of July. Vancouver buyers need to make a minimum of $232,000 a year to afford a home in the city – a nearly $32,000 increase since March – and Toronto buyers need to make roughly $226,000, an additional $16,000 in the same time frame.

“I’ve seen over the last few months it’s really impacting buyers’ ability to buy what they want in real time, one month to [the next] after the Bank of Canada has increased its rates,” said Davelle Morrison, a Toronto broker with Bosley Real Estate Ltd.

If rates keep climbing – as many in mid-2022 were expecting them to – then the stress will become progressively tougher for borrowers.

OSFI is leaving the door open to tweaking the mortgage stress test rules before the end of 2022 to address these new circumstances, Globe real estate reporter Rachelle Younglai reported in May.

Can you get around the stress test? What are the benefits and risks of doing so?

If you’re an uninsured borrower and choose to work with a private lender, mortgage investment company or provincially regulated credit union, you’ll likely be able to skirt the stress test – or, if your lender applies it, they may not reject you if you can’t pass the higher rate. “A debt service ratio shouldn’t make or break a mortgage decision in isolation of other factors,” Allison Van Rooijen, vice-president of consumer credit at Meridian Credit Union, told The Globe in August.

There are tradeoffs to this, Mr. McLister said: These lenders tend to offer interest rates “materially higher” than OSFI compliant mortgages. But this isn’t necessarily a bad thing, he said. As an example, if you went with a credit union that offered an interest rate that was 0.5 percentage points higher than a major bank’s, the credit union would still be able to qualify you for more financing because you don’t have to clear the hurdle of qualifying for two points higher than your contract rate.

(This article is courtesy of the Globe and Mail)


Angela Calla is an 18-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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Canadian Inflation Slows in January Assuring a Rate Pause at March 8 BOC Meeting

General Angela Calla 23 Feb

FURTHER DECLINE IN INFLATION IN JANUARY AFFIRMS BANK OF CANADA PAUSE IN MARCH

Canadian inflation decelerated meaningfully in January despite the continued strength in the economy. Labour markets remain very tight, and retail sales continue strong. Nevertheless, the Bank of Canada’s jumbo rate hikes over the past eleven months have tempered inflation from a June ’22 peak of 8.1% y/y to 5.9% in January. 

The 3-month average growth in the Bank of Canada’s preferred median and trim inflation measures – designed to look through volatility in individual product prices to better gauge underlying price pressures – are running at around 3.5% on a three-month annualized basis. That’s still above the BoC’s 2% inflation target but is well below peak levels last year. 

Prices for cellular services and passenger vehicles contributed to the deceleration in the all-items CPI. However, mortgage interest costs and food prices continue to rise.

Last month, inflation excluding food and energy, rose 4.9% y/y. Prices excluding mortgage interest costs rose 5.4%. In both cases, year-over-year price growth was slower than in December. Some of the decline in inflation was due to base-year effects. In January 2022, mounting tensions amid the threat of a Russian invasion of Ukraine, coupled with supply chain disruptions and higher housing prices, put upward pressure on prices.

Monthly, the CPI rose 0.5% in January 2023, following a 0.6% decline in December. Higher gasoline prices contributed the most to the month-over-month increase, followed by a rise in mortgage interest costs and meat prices.

Another critical factor in today’s data is that inflation in services eased to 5.3% from 5.6%.

Food prices, however, remain elevated in January (+10.4%) compared to 10.1% in December. Grocery price acceleration in January was partly driven by year-over-year growth in meat prices (+7.3%), resulting from the most significant month-over-month increase since June 2004. Food purchased from restaurants also rose faster, rising 8.2% in January following a 7.7% increase in December.

Bottom Line

The Bank of Canada must feel pretty good about today’s inflation numbers. They confirm the wisdom of their announced pause in rate hikes at the January meeting. Despite continued strength in the labour market and January retail sales, headline and core inflation measures have declined again, with a five handle now on the headline rate. That is still a long way to the 3.0% inflation forecast by the end of this year, but it is moving in the right direction.

There will be no BoC action when they meet again on March 8. Their press release will be scrutinized for a hawkish versus dovish tone. Regardless of upcoming data, there is virtually no chance of any rate cuts this year.

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


Angela Calla is an 18-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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