OSFI Is At It Again

Late last week, the Office of the Superintendent for Financial Institutions (OSFI) announced it was concerned about the risks associated with the large and rising number of highly indebted borrowers, especially those with floating-rate mortgages, which stands at a record proportion of outstanding mortgage loans. 

With the economy in danger of entering a recession and the Bank of Canada warning of potentially more rate hikes to counter persistent inflation, the housing market may face continued pressure in the coming months. 

A record number of buyers used floating-rate debt for purchases during Canada’s pandemic-era real estate boom. Those borrowers may come under increasing strain if mortgage costs remain high. Job losses from an economic slowdown also would make it harder for people to keep up with loan payments and stay in their homes.  

Superintendent of Financial Institutions Peter Routledge said a review of the country’s mortgage-underwriting rules that starts later this week would look beyond its current main measure — a stress test requiring borrowers to qualify for higher interest rates than what their banks are offering.

“The question in our minds is, is it sufficient?” Routledge said of the current stress test. “So we will look at a broader range of debt-serviceability tools, including debt-to-income constraints, debt-service constraints, as well as the current interest-rate stress test tool.”

The proposed rules⁠—subject to public consultation⁠—include loan-to-income and debt-to-income restrictions, new interest rate affordability stress tests and debt-service coverage restrictions.

Highly Indebted Borrowers

OSFI is particularly concerned about the rise in mortgage originations to households with a loan-to-income ratio of 450% or more, which the Bank of Canada has long asserted is the sector most at risk of delinquency and default. This risk has repeatedly been highlighted in the Bank’s financial risk analysis–the Governing Council’s Financial System Review. The latest report says, “Those with high debt are more vulnerable to a decline in income and will face more financial strain when they renew their mortgages at higher rates.”

This vulnerability relates to households’ ability to continue servicing their debt if incomes decline or interest rates rise without significantly reducing their consumption. The Bank staff estimate that the most highly indebted households have generally seen the smallest increases in liquid assets. At the same time, alongside higher house prices, many households have taken out sizable mortgages to purchase a house, adding to the already large share of highly indebted households.

The chart below shows that the average share of high loan-to-income borrowers before the pandemic was 23.8%. The average since the pandemic onset has risen to 33.7%.

Proposals for Comment

To date, mortgage delinquency rates at federally regulated financial institutions (FRFIs) are at a record low. The large FRFIs have worked closely with borrowers who have reached their trigger points. TD, CIBC, and BMO have allowed some negative amortizations until renewal. As a result, the proportion of their mortgages having remaining amortizations has risen sharply (see second chart below). Questions remain regarding how they will deal with this at renewal time. Will the new mortgage be amortized at 25 years at renewal, raising the monthly payments dramatically and increasing the risk of delinquency or default, especially among highly indebted households?

Earlier last week, CEOs of the Big 5 banks weighed in on vulnerable mortgage clients. None were quite as forthcoming as Scotiabank’s new President and CEO, Scott Thomson, who said the bank has about 20,000 borrowers that it considers “vulnerable.” These are borrowers with a high loan-to-value (LTV) mortgage, a low credit score, lower deposits in their checking accounts and those with home valuations that are susceptible to market conditions. 

“So, as you think about the tail risk, we have about 20,000 vulnerable customers, which would be 2.5% [of the total portfolio],” he said Monday during the RBC Capital Markets Canadian Bank CEO Conference.

However, he added this represents a “manageable-type situation for us on mortgages.” Scotiabank’s floating-rate mortgages are not fixed payment. They adjust monthly payments every time the central bank changes the overnight rate. 

According to Steve Huebl at Canadian Mortgage Trends,  RBC President and CEO Dave McKay said that his bank is “keeping a watchful eye on its mortgage clients, turning to AI and various types of modelling to forecast clients’ cash flow.”

“We look at incomes, we look at the stress of inflation on expenses in a household, and we monitor cash flow to interest payments, as you would in any corporation,” McKay said during the conference. “We do that [for] every single consumer in our portfolio because over 80% of our clients have their core checking and core cash management with us.”

Looking at the bank’s variable-rate mortgage portfolio, which totals between $100 and $120 billion, McKay said the bank has been able to segment that group of clients, keeping tabs on when they reach their trigger rates and when they’ll be coming up for rate resets in the next several years.

Through modelling, the bank can then predict which clients with upcoming renewals “will or will not have a cash flow challenge” should the economy enter a moderate or severe recession, he said. “We have a pretty clear view of that.”

For clients who have difficulties making their payments, mortgage lenders have several options to try and assist borrowers before the situation progresses to the point of them needing to sell their homes.

“You have skip-a-payment deferrals, you have maturity extensions, whatever it happens to be, you have a lot of ways to work with that client,” McKay said.

In terms of clients with cash flow challenges in addition to a collateral problem, where the property sale wouldn’t cover their mortgage and could result in default, McKay said it’s a much smaller group but one the bank is actively monitoring.

“That bucket, I can tell you, is in the low single-digit percentages of our portfolio,” he said. “And that’s the bucket we’re managing”.

Bottom Line

To the extent these measures are implemented, further pressure on mortgage growth is likely. Mortgage brokers can access lenders not impacted by OSFI B-20 rule changes. More than ever, brokers could add value to borrowers turned away from the banks. In these uncertain times, existing and new clients need advice from a trained and caring professional.

(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. 

Good News On The Inflation Front In December

The Consumer Price Index (CPI) rose 6.3% year over year in December, down from the 6.8% pace in November. Much of the decline was owing to the drop in gasoline prices. Additional deceleration came from homeowners’ replacement costs, fuel oil and other owned accommodation expenses, and various durable goods. Slower price growth was offset by increases in mortgage interest cost, clothing and footwear and personal care supplies and equipment.

Excluding food and energy, prices rose 5.3% yearly last month, down only 0.1% from a gain of 5.4% in November.
The global slowdown and surging Covid cases in China contributed to the decline in crude oil prices, depressing the price of gasoline and fuel oil.

Easing supply chain pressures, lower shipping costs, and softer demand contributed to the slowdown in the price inflation for appliances and furniture.

For the third month in a row, yearly price growth slowed for passenger vehicles (+7.2%), which may reflect slowing demand for used cars.

On a year-over-year basis, homeowners’ replacement cost (+4.7%) and other owned accommodation expenses (+2.5%) continued to slow as the housing market continued to cool, putting downward pressure on the CPI.

The mortgage interest cost index continued to put upward pressure on the CPI amid the ongoing higher interest rate environment, rising 18.0% yearly in December following a 14.5% increase in November.

Food price inflation remained high last month at 11% compared to 11.4% in November. Food price growth has hovered around 11% over the previous five months.

The core CPI metrics slowed (see chart below), but only inappreciably. Two key yearly measures tracked closely by the central bank — the so-called trim and median core rates — edged lower, averaging 5.15% from an upwardly revised 5.25% a month earlier. Economists were expecting a reading of 5.05%.

One significant concern of the Bank of Canada is inflation expectations that cause workers to demand higher wages and businesses to pass through higher costs on to the consumer. The Bank’s latest surveys show that consumer and business expectations of inflation remain elevated.

According to the Bank’s consumer survey, “Yet consumers are still concerned about inflation, and some are uncertain about the effectiveness of tightening monetary policy. More than three-quarters of people understand that the Bank aims to reduce inflation by raising interest rates. But the share of those who believe that increasing rates will lead to lower inflation remains small at around two-fifths of respondents.”  Consumers appear to believe that inflation will be at just over 5% two years from now, well above the 2% target.

Bottom Line

The dramatic monetary tightening in the past nine months has slowed headline inflation. The decline in December, however, was primarily due to seasonality and a significant drop in gasoline prices. Core inflation eased only marginally. Underlying price pressures remain sticky. The Bank of Canada will likely hike rates by another 25 bps at next week’s meeting. Beyond that, the Bank might pause, at least for a while, depending on the incoming data.

It won’t surprise me if they resume their tightening later this year. I do not expect any rate reductions in 2023.

(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. 

December Housing Data Ended 2022 on a Weak Note

Statistics released today by the Canadian Real Estate Association (CREA) show national home sales were up month-over-month in December while new listings plummeted and national home prices fell again. 

Home sales recorded over Canadian MLS® Systems increased 1.3% between November and December 2022. Ottawa and Edmonton led gains. Nevertheless, the actual number of transactions last month was 39.1% below year-ago levels and dramatically below the 10-year monthly moving average for December (see chart below).

New Listings

Sellers remained on the sidelines. The number of newly listed homes dropped 6.4% month-over-month in December, led by British Columbia and Quebec declines. It was among the lowest December new supply levels on record.

With new listings down by quite a bit more than sales on a month-over-month basis, the sales-to-new listings ratio tightened to 54.4% compared to 50.2% posted in November. The long-term average for this measure is 55.1%.

There were 4.2 months of inventory on a national basis at the end of December 2022. This is close to where this measure was in the months leading up to the initial COVID-19 lockdowns and still nearly a full month below its long-term average.

Home Prices

Canadian home prices fell by the most on record in 2022 as rapidly rising interest rates forced a market adjustment that may not yet be over. The country’s benchmark home price fell 1.6% in December to C$730,600, bringing the total decrease since March to 16.4%. Last year also saw the most significant price decline for a calendar year since records began, with a 7.5% drop overall.

The Aggregate Composite MLS® HPI, which adjusts for the type of property sold, now sits about 13% below its peak level. Looking across the country, prices are down more than they are nationally in Ontario and parts of B.C. and down by less elsewhere. While prices have softened to some degree almost everywhere, Calgary, Regina, Saskatoon, and St. John’s stand out as markets where home prices are barely off their peaks at all.

The non-seasonally adjusted Aggregate Composite MLS® HPI was 7.5% below its December 2021 reading.

The table below shows the decline in MLS-HPI benchmark home prices in Canada and selected cities since prices peaked in March when the Bank of Canada began hiking interest rates. More details follow in the second table below. The most significant price dips are in the GTA and the GVA, where the price gains were spectacular during the Covid-shutdown. 

Even with these large declines, prices remain roughly 33% above pre-pandemic levels.

Bottom Line
Tomorrow, we will see the release of the Canadian CPI data for December. I expect a continued improvement in the headline and core inflation rates. Even so, the odds favour a 25 bps hike in the overnight policy rate next week when the Bank of Canada announces its decision. Labour data for December remained strong; the economy has shown continued resilience, and today’s Business Outlook Survey deteriorated further in the fourth quarter. 

Inflation expectations remain elevated as the share of firms expecting inflation to be above 3% over the next year hit a new record high of 84%. Almost 40% of respondents expect inflation to persist well above 2% into 2026 and beyond, reflecting perceived stickiness in energy prices, supply chain issues, strong demand, and labour costs, as well as the time it takes for monetary policy to slow inflation.

In a separate release, the BoC’s Survey of Consumer Expectations showed that consumers feel the pinch of reduced purchasing power and increasing wage demands. One-year-ahead inflation expectations remained elevated at over 7%, though expectations moderated at longer time horizons.

(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. 

‘Tis the season for 2023 housing market predictions in Canada. This year, most economists predict Canada will enter a recession in the first quarter of 2023. Because of this, planning to buy or sell a home can be a challenge. In addition, economic downturns often lead to higher unemployment rates, decreased property values, and less confidence in significant financial decisions — such as purchasing an asset like a home. 

These side effects of a recession can lead to a decrease in demand for housing, resulting in lower housing prices. So, what does this mean for buyers and sellers as we head into 2023? When you consider these economic predictions, it can be helpful to understand what’s happening in the housing market from the start of 2022 to today, what the overall change has been, and whether prices are increasing or decreasing.

How Do Major City Home Prices Look Today?

According to the Canadian Real Estate Association (CREA), the national average home price in November 2022 was $632,802. This number is down nearly 12% yearly, but Vancouver and Toronto were the markets that drove this decrease.

With that in mind, we spoke with several real estate professionals to gather their expert opinion on what to anticipate in the next twelve months and how you can prepare your finances as a homeowner, seller, or buyer as we enter a new real estate cycle. Here are their 2023 Canada housing market predictions.

What to Expect If You Plan to Buy a Home in 2023

The good news for buyers is that some major markets will enter a buyer’s market for the first time in a long time. So, even though you need to be more vigilant with your finances, if you can afford a home with current interest rates, there should be fewer difficulties managing homeownership costs soon. 

According to real estate investor and podcast host Daniel Foch, here are some things to know if you’re planning to buy a home in 2023. For one, with higher interest rates, more of your monthly payments go towards mortgage interest. “You’ll see a decrease in your buying power or your total purchasing budget as interest rates go up,” says Foch. He also thinks we’ll see stricter lending criteria from mortgage lenders and banks. 

The good news? Prices may finally stabilize as we head into a more seasonal real estate cycle, with a busier spring market dipping into the summer and slightly rising in the fall. 

Remember that only some markets are down or impacted by the current economic downturn. Therefore, you must stay on top of what’s happening in your local real estate market if you plan to buy in the coming year. 

Breakdown: Be patient! Now is the time to get your finances in order and pay attention to the number of homes for sale and the number of homes selling each month in your local market. You have time and negotiation on your side if you’re in a buyer’s market.

How to Proceed When Selling a Home in 2023

Recently, selling a home in Canada has been a wild ride. Bidding wars, bully offers, and lineups for open houses were not uncommon, nor was accepting an offer tens of thousands of dollars over the list price. These unique circumstances weren’t normal, as President & COO of Zolo, Mustafa Abbasi, confirms.

“The last two weren’t normal years for the real estate market. Practically every market in Canada saw double-digit price increases, and bidding wars were normal right across the country.“

Our 2023 housing market predictions in Canada expert expects the new year will present a different landscape for sellers. In fact, we’re already starting to see what that will look like. “According to the Canadian Real Estate Association, activity was down 36% year over year in November 2022, with prices dropping about 10% across the nation.”

Rapidly rising interest rates fueled this slowdown as the Bank of Canada moved to curb inflation. That hasn’t happened yet, so expect more rate hikes in 2023 and a continued cooling of home prices. “We will continue to see the cooling trajectory for the next 12 months,” says Abbasi, adding that sellers shouldn’t expect a bidding war and should expect their home to sit on the market longer, especially in urban centres like Toronto and Vancouver.

Breakdown: 2023 will be a buyer’s market, and sellers should expect their homes to take longer to sell and sell for less. Expect fewer offers, and those you receive will have financing and home inspection conditions.

What Will Mortgage Rates Look Like in 2023?

One of the most significant pain points for homeowners, buyers and sellers this past year has been rising interest rates from the Bank of Canada, sending mortgage rates up alongside them. Unfortunately, higher interest rates will impact almost everyone regardless of their situation. 

To gain further insight, we spoke with mortgage broker and author of The Mortgage Code, Angela Calla. “I feel there will still be interest rate hikes in 2023,” says Calla. But, she reminds Canadians that lenders are working to look for new offerings to help. “You are not in this alone.”

If you’re up for mortgage renewal in 2023, you may feel high amounts of pressure and stress. However, Calla says the best thing you can do is start the process early. “If you have a renewal in the next six to 12 months, start consulting with an independent mortgage broker that can consider your whole finances, NOT just the mortgage.” 

How Does This Increase Affect My Mortgage?

According to Calla, anyone with a variable-rate mortgage, home equity line of credit (HELOC), or mortgage renewal will immediately see their mortgage payments increase. She says that on a $500,000 mortgage amortized over 25 years, your monthly payments would be:

• 5.5% interest = $2,908.02 per month
• 6.0% interest = $3,109.33 per month
• 6.5% interest = $3,349.12 per month

If you’re looking for a mortgage and are speaking to lenders, you must research and compare rates. “Canadians can not afford to make the costly mistake of looking only at the rate or being sold with a bias during these times,” says Calla.

Should You Choose a Fixed or Variable Rate Mortgage in 2023?

This decision is based entirely on what the market looks like when you purchase or renew. So, hiring a broker you trust and researching market trends is vital. For instance, if you want to choose a fixed-rate mortgage, you may think that inflation will stick around for a while. Or your finances are tight, and you can’t afford fluctuation or potential increases; fixed could be a great choice. 

On the flip side, a variable rate mortgage might be the right choice if you believe the Bank of Canada will stop with rate raises and that they may go down in the next one to two years. However, remember that they have yet to allude to rates dropping anytime soon. 

Breakdown: Be vigilant with your budget and use a mortgage calculator to better understand your payments on various mortgage rates if you’re up for renewal or plan to buy in 2023. 

How Will Home Insurance Costs Change in 2023?

Homeownership costs extend beyond just the mortgage payments. You’ll also need to pay utilities, property taxes, and insurance. Home insurance is an often overlooked expense for new buyers, but homeowners know this is an essential housing expense – and not a fixed one. Home insurance costs can fluctuate, even if you haven’t made a claim.

We wanted to know what to expect for home insurance costs for our 2023 Canada housing market predictions. So we asked John Shmuel, managing editor at RATESDOTCA, to weigh in.

“In general, home insurance rates are trending upward,” Shmuel says, “our latest Home Insuramap showed that average home insurance premiums rose about 5% in 2022.” While past performance doesn’t always predict future results, in this case, we expect rates will rise on average across Canada, although increases will more heavily impact some areas.

“Whether your own premium will increase or not will depend on how many claims have occurred in your area and whether the general trend of those claims are trending higher,” says Shmuel.

That means homes in areas that are prone to more claims will see their rates rise. Rising rates might occur across most of Canada since climate change has increased the number of damaging weather events, leading to more expensive claims. Hurricane Fiona, says Shmuel, was one example of an uncommon weather event leading to expensive insurance payouts.

Should You Change Your Home Insurance Policy in 2023?

If natural disasters are becoming more common, should you update your home insurance policy in 2023? Shmuel says it’s always a good idea to review your coverage, particularly your flood coverage. A recent study from RATESDOTCA found that 32% of Canadians were unaware that a standard home insurance policy lacks flood protection.

“Standard policies do not cover many forms of water damage which, if they were to occur, can be very costly,” says Shmuel. So, consider adding this coverage if your standard policy doesn’t have overland flooding, sewer backup, or seepage coverage. Yes, it will add cost, but protecting your biggest asset is important.

Breakdown: Expect home insurance rates to rise if you live in a disaster-prone area, and review your coverage to ensure you are covered for natural disasters.

Should You Renovate Your Home in 2023?

If you’re considering renovating your home or tackling some outstanding home maintenance projects in 2023, this might be your year to learn to do it yourself. Rebekah Higgs, designer and star of the Canadian TV show DIY MOM, shares her advice for homeowners considering a major renovation in 2023.

“I recommend to my clients that they put off renovating until 2024 if they can,” Higgs says, citing labour shortages in residential service industries and trades. “Start planning for any big renovation plans now, get your drawings and elevations in order, design your space, measure for future projects and thoroughly plan.” Higgs says thorough planning now ensures the renovation cost doesn’t increase due to change orders.

Should You DIY Your Renovation?

If you want to renovate in 2023, consider doing the project yourself or hiring a handyman instead of a contractor. “Trying to do small maintenance and repairs on your own or with a for-hire handyman might be your best option,” says Higgs. She urges anyone considering this route to ask for references and photos of past work. You can even get a criminal record check and verify their ID for extra security.

Breakdown: Consider delaying major projects until 2024, plan well, and DIY small projects in 2023.

How to Prepare For Utility Bills Next Year

This winter came early and with force for Canadians. Because of this temperature drop, analysts predicted that utility bills would increase by up to 100% — which is incredibly overwhelming when you combine these costs with the current economic climate and inflation levels.  

With many world events, like the war in Ukraine and the transition to renewable energy globally, the demand for natural gas is rapidly increasing. Typically, each winter has Canadians anticipating rising costs for their utilities, but this year is exceptionally high. 

To help homeowners prepare for 2023 utility bills, we spoke with Bruna Drummond, an energy content expert from Rank-it.ca. “Tight supply plus high demand tends to result in shocking bills,” says Drummond. 

In Ontario, for example, Drummond says that according to the Ontario Energy Board, average natural gas bills could rise from $64.80 to $163.83 for a typical residential user this winter, depending on the provider. 

“Natural gas is the primary heating source in Ontario for 67.20% of energy consumers, according to the Canada Energy Regulator (CER),” says Drummond. 

To help prepare, Drummond suggests the following:

• Compare energy providers and rates
• Find out if it’s cheaper to heat the home with electricity or gas
• Check for drafts and seal any cracks around windows and doors
• Clean or replace your AC filter
• Research available rebates in your province or territory

Breakdown: Your utility bills may increase in price. Now is the time to caulk your windows and doors, look for affordable rates, and research rebate opportunities! 

TL;DR: 5 Things to Do Now to Prepare for Our 2023 Housing Market Predictions in Canada

Keep your buying, selling, and homeownership costs lost in 2023 by implementing these key tips:

1. Homebuyers and sellers should be patient and understand the real estate market in 2023 will be very different than in 2022.
2. Be vigilant with your budget, and use a mortgage calculator to understand your payments on various mortgage rates better if you’re up for renewal or plan to buy in 2023.
3. Expect home insurance rates to rise if you live in a disaster-prone area, and review your coverage to ensure you are covered for natural disasters.
4. Consider delaying major home renovation projects until 2024, plan well, and DIY small projects in 2023.
5. Now is the time to caulk your windows and doors, look for affordable rates, and research electricity-saving rebate opportunities!

(This article is courtesy of Zolo)

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. 

The holidays are a season of giving and often times, households can often find themselves carrying some extra debt as we enter the New Year.

If you happen to be someone currently struggling with some post-holiday debt, that’s okay! Whether you’ve accumulated multiple points of debt from credit cards or are dealing with other loans (such as car loans, personal loans, etc.), you are likely looking for a way to simplify your payments – and reduce them.

Rolling them into your mortgage could be the perfect solution. In fact, consolidating other forms of debt into your mortgage has multiple benefits, including:

• Helping you pay off your loans over a longer period of time
• Allowing for reduced interest rates when compared to a credit card
• Being easier to track with one single payment per month
• Reduce your total monthly outlay of debt repayments

If you’re still not sure if this is the right solution for you, here is an example… if you have $30,000 of credit card debt, you are probably paying approximately $600 per month and $500 per month of that is likely going directly to interest. If you let me help you to roll that debt into your home equity and monthly mortgage, your payment for this $30,000 portion would drop down around $175 per month, with interest charges closer to $140 per month. That is huge savings!

While debt consolidation through refinancing will increase your mortgage, the benefits can be well worth it when it comes to interest savings, time and stress. Keep in mind, you’ll need a minimum of 20 percent equity in your home to qualify for this adjustment.

If you are looking for a way to simplify (or get out of) debt, reach out to me today! I would be happy to take a look at your current mortgage and walk you through the debt consolidation process, or help you come up with an alternative option that may help suit your needs.

This article is courtesy of the DLC January 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. 

When traditional lenders (such as banks or credit unions) deny mortgage financing, it can be easy to feel discouraged. However, it is important to remember that there is always an alternative!

If you’re seeking a mortgage, but your application doesn’t fit into the box of the big traditional institutions, you’ll find yourself in what’s commonly referred to in the industry as the “Alternative-A” or “B” lending space.

These lenders come in three classifications:

• Alt A lenders consist of banks, trust companies and monoline lenders. These are large institutional lenders that are regulated both provincially and federally, but have products that may speak to consumers who require broader qualifying criteria to obtain a mortgage.
• MICs (Mortgage Investment Companies) are much like Alt A lender but are organized in accordance with the Income Tax Act with an incorporated lending company consisting of a group of individual shareholder investors that pool money together to lend out on mortgages. These lenders follow individual qualifying lending criteria but tend to operate with an even broader qualifying regime.
• Private Lenders are typically individual investors who lend their own personal funds but can sometimes also be a company formed specifically to lend money for mortgages that carry a higher risk of default relative to a borrower’s situation.  These types of lenders are generally unregulated and tend to cater to those with a higher risk profile.

All classifications noted above price to risk when it comes to a mortgage. The more broad the guidelines are for a particular mortgage contract, the more risk the lender assumes. This in turn will yield a higher cost to the borrower typically in the form of a higher interest rate.

Before considering an alternative mortgage, here are some questions you should ask yourself:

1. What issue is keeping me from qualifying for a traditional “A” mortgage today?
2. How long will it take me to correct this issue and qualify for a traditional lender mortgage?
3. How much do I have to improve my credit situation or score?
4. How much do I currently have available as a down payment?
5. Am I willing to wait until I can qualify for a regular mortgage, or do I want/need to get into a certain home today?
6. Is this mortgage sustainable? Can I afford the larger interest rate?
7. Can I exit this lender down the road in the event the lender does not renew or I cannot afford this alternative option much longer?

If you are someone who is ready to go ahead with an alternative mortgage due to a weaker credit score, or you don’t want to wait until you’re able to qualify with a traditional lender, these are some additional questions to ask when reviewing an alternative mortgage product:

1. How high is the interest rate? What are the fees involved and are these fees paid from the proceeds, added to the balance or paid out of pocket
2. What is the penalty for missed mortgage payments? How are they calculated? What is the cost to get out of the mortgage altogether?
3. Is there a prepayment privilege? For example, are you able to avoid penalties if you give the lender a higher mortgage payment once a month?
4. What is the cost of each monthly mortgage payment?
5. What happens at the end of the term? Is a renewal an option and what are the costs to renew if applicable
6. What is the fine print?

When it comes to the alternative lending space, things can get complex. Contact me today if you’re considering an alternative lender and I can help you source out various mortgage products, as well as review the rates and terms to ensure it is the best fit.

This article is courtesy of the DLC January 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. 

What a year this has been. In the face of red-hot inflation, the Bank of Canada raised its policy rate by a whopping 400 basis points to 4.25%. First to cool was the housing market, where buyers moved to the sidelines and mortgage rates surged.

Home prices fell, especially in Toronto and Vancouver. The economy appears to have slowed, and inflation has fallen to 6.8%–down from 8.1% earlier this year. But core inflation is sticky, and wages are rising rapidly. The Bank of Canada is adamant it will beat inflation to the 2% target level, even if it causes a recession.

As we move into 2023, I expect at least one more rate hike—probably a mini one—and then a pause. But the Bank will not cut the policy rate next year. A mild recession will ensue, home prices will fall somewhat further, and by 2024 the economy will begin to recover, and buyers and sellers in the housing market will re-engage. Inflation won’t go back below 2%, and interest rates will not return to pre-COVID levels.

The Canadian economy has never been so interest sensitive. Debt-servicing costs are at record levels. Many will feel the pinch when their mortgages renew in the coming years. The unsustainable housing froth of the pandemic years will not return. Still, the underlying value will be solid as the Canadian population snowballs owing to the rapid influx of immigrants.

This article is courtesy of the DLC January 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. 

Employment Report Ended 2022 With a Boom

Today’s Labour Force Survey for December was much stronger than expected, raising the odds of a 25 bps increase in the policy rate by the Bank of Canada on January 25th. While the Bank has hiked rates by 400 bps to 4.25%, core inflation remains sticky, wages have risen by more than 5% for the seventh consecutive month in December, and Q4 GDP is running well above the Bank’s forecast of 0.5%. 

Employment rose by 104,000 last month, and the unemployment rate fell to 5.0%–just above the 50-year low of 4.9% posted in June and July. Indeed, the jobless rate would have fallen even further had the labour force participation rate not ticked upward as discouraged workers re-enter the jobs market when vacancies are plentiful. Employment rose the most for youth and people aged 55 and older. 

Throughout 2022 the employment rate of core-aged women hovered around record highs. On average, 81.0% of core-aged women were employed, the highest annual rate since 1976 and 1.3 percentage points higher than in 2019. 

Much of this increase has been among women with young children. On average, during 2022, 75.2% of core-aged women with at least one child under six years of age were working at a job or business, up 3.3 percentage points compared with 2019.

The increase in employment in December was driven by full-time work, which rose for a third consecutive month.  Full-time work also led employment growth for the year ending in December 2022.

Employment rose in multiple industries, notably construction, transportation, and warehousing.

Job gains were reported in Ontario, Alberta, BC, Manitoba, Newfoundland and Labrador, and Saskatchewan.  There was little change in the other provinces.

Bottom Line

The Canadian economy has also been boosted by strength in the US, where nonfarm payroll employment rose by 223,000 in December, and the unemployment rate fell to 3.5%, matching a five-decade low.

Governor Tiff Macklem and his officials have slowed down the rate hikes (from 75 bps to 50 bps) and signalled that future decisions would depend on economic data. Indeed, the most recent GDP and today’s jobs report point to continued economic strength. The October and November gains in GDP suggest Canada’s growth is holding up better than expected. The economy is on track to expand at an annualized rate of 1.2% in the fourth quarter, exceeding the central bank’s expectations. 

The December CPI report will be released on Jan 17, ahead of the Jan 25 Bank of Canada decision. That will be closely watched as well.

In other news, housing market activity continued to slow in December. Home sales plummeted in the country’s largest metro areas by 30%-to-50% as buyers and sellers moved to the sidelines. Housing is the most interest-sensitive sector and has been slowing since the Bank began hiking interest rates last March. 

Greater Vancouver led the way, with sales falling 52% year-over-year, while the Greater Toronto Area saw a 48% decline. Montreal followed with a 39% annual decline, whereas sales were down 30% in both Calgary and Ottawa.

Average prices continued to fall in most of the metro areas. The MLS Home Price Index benchmark is now down 9% year-over-year in the Greater Toronto Area. In Calgary, however, average prices remain nearly 8% above year-ago levels.

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. 

With the holidays just around the corner, many of us are already starting to fill up our social calendars and think about the coming month.

To help make your holidays even more special, and ensure you have the best party on the block, I have some tips:

1. Make a List: While you might not be hosting for 50 people this year, that doesn’t mean that preparations go out the window! The mark of a good holiday celebration is planning, planning, planning! Ideally, you will want to make a list of everything you need before you get started. From food to drinks to decor, having an idea of what you need in advance will make it much easier to get everything in one go.
    
2. Manage the Mood: To help create a cozy, holiday mood you might consider turning off your overheads and using candles to give off a warm glow and cozy scent. Music is another important factor; try mixing traditional holiday tunes with modern favourites to create the perfect feel.
    
3. Sweet and Simple Decor: When it comes to the holidays, there are endless options for decor. From traditional red and green to silver and gold or silver and blue, the best choice is one that fits your tastes. Even if you cannot host your entire neighbourhood, that doesn’t mean you can’t enjoy that holiday feeling! A few key pieces here and there, such as a large wreath and centrepiece for the table can go a long way.
    
4. Prep Food in Advance: When it comes to food, simple is best and whatever you can prep in advance is better. With a smaller invitee list, you can easily get away with simple finger foods. From shrimp or tuna rolls to spinach dip and bread to veggie trays or cheese and crackers, the options are endless and there are many options that don’t require hours and hours of prep time.
5. Send Out Invitations: If you are hosting a virtual gathering, make sure to send out invitations as soon as possible. This can be a simple e-mail to friends or family with a link to join in or a fun e-card!

This article is from the DLC December 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. 

Another Month, Another Dip In Housing

Statistics released today by the Canadian Real Estate Association (CREA) show home sales edged down in November. National home sales fell 3.3% between October and November, continuing the moderating sales trend that began last February on the precipice of unprecedented monetary policy tightening. Sales are down a whopping 39% from a year ago. The Bank of Canada has hiked their overnight policy rate by 400 bps, from 25 bps to 4.25%, triggering a whopping rise in mortgage rates. 

About 60% of all local markets saw lower sales in November, led by Greater Vancouver and the Fraser Valley, Edmonton, the Greater Toronto Area (GTA) and Montreal.

The actual (not seasonally adjusted) number of transactions in November 2022 came in 38.9% below a near-record for that month last year. It stood about 13% below the pre-COVID-19 10-year average for November sales (see chart below).

New Listings

Sellers remain on the sidelines as the number of newly listed homes edged down last month by 1.3%, declining 6.1% from a year ago. Most sellers are waiting for interest rates to fall, either because they expect a rebound in sellers or are unwilling to buy new properties themselves with mortgage rates so high.

While sales have swung wildly, new listing flows have remained relatively steady through the recent turbulence and are very much in line with pre-COVID norms. There’s still not a lot of forced selling, which can exacerbate a price correction.

New listings fell in slightly more than half of the local markets. Among the larger markets in Canada, month-over-month movements in new supply were generally small, the only exception being some more significant declines in the B.C. Lower Mainland and Okanagan regions.

In terms of monthly new supply, the bigger picture is listings are not flooding the market. With the one exception of 2019, November 2022 saw the fewest new listings for that month in 17 years.

With sales down month-over-month by a little more than new listings in November, the sales-to-new listings ratio fell to 49.9% compared to 50.9% in October. The ratio has remained close to around 50% since May. The long-term average for this measure is 55.1%.

Based on a comparison of the current sales-to-new listings ratio with long-term averages, about 70% of local markets are currently in balanced market territory.

There were 4.2 months of inventory on a national basis at the end of November 2022. This is close to where this measure was in the months leading up to the initial COVID-19 lockdowns and still nearly a full month below its long-term average.

Home Prices

The Aggregate Composite MLS® Home Price Index (HPI) edged down 1.4% month-over-month in November 2022, continuing the trend that began in the spring.

The Aggregate Composite MLS® HPI now sits about 11.5% below its peak level. Breaking that down regionally, the general trend is prices are down somewhat more than they are nationally in Ontario and parts of B.C. and down by less elsewhere. While prices have softened to some degree almost everywhere, Calgary, Regina and Saskatoon stand out as markets where home prices are barely off their peaks at all.

The table below shows the decline in MLS-HPI benchmark home prices in Canada and selected cities since prices peaked in March when the Bank of Canada began hiking interest rates. More details follow in the second table below. The most significant price dips are in the GTA and the GVA, where the price gains were spectacular during the COVID-shutdown.

Bottom Line
OSFI announced this morning that the minimum qualifying rate for uninsured mortgages at federally regulated financial institutions would remain unchanged. They will review Guideline B-20 next month, but don’t hold your breath for an easing of the stress test.

In other news, housing starts were little changed last month at 264,600 annualized units. This is a strong level of new construction; the year-to-date average is roughly 265,000 units. Combined with the record 275,000 new units started last year, we are in line for the most significant two-year wave of housing starts on record. On a per-capita basis, we’re starting 2023 with an unprecedented construction boom despite higher costs, labour shortages and much higher interest rates. 

Outlook   

The Bank of Canada is likely to raise the policy rate a couple of times by 25 bps in the first half of next year, pausing between rate hikes. They will not cut rates in 2023 even though the economy will post at least a mild contraction. 

2024 will be a recovery year but don’t expect the overnight rate to return to the pre-Covid level of 1.75%. Indeed, the new cycle low will likely be more like 2.5% assuming inflation continues to trend downward. Price growth will be much more subdued than during the rocking ten-year period before the pandemic. Still, the underlying fundamentals of rapid population growth, mainly from immigration, bode well for sustained growth going forward.

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.