Given the recent increase in the Prime Rate, we want to provide clarification regarding the application of the minimum qualifying rate on Adjustable Rate Mortgages (“ARM”), insured and conventional.  All ARM loans must now be qualified using a rate of contract plus 2%, which is now greater than the 5.25% Qualifying Rate.

Existing First National Commitments for Adjustable Rate Mortgages (“ARM”) do not have to be requalified using a rate of contract plus 2%, unless there is a material change to the deal.

Existing preapprovals for Adjustable Rate Mortgages (“ARM”) must be requalified at the current qualifying rate when the deal is converted to a live deal, and a commitment is issued.

Example: Borrower has a preapproval committed which was qualified using 5.25% which was greater than the contract plus 2% when issued. The borrower has now found a property and the transaction is scheduled to close within the rate hold period. Due to the Prime Rate change, the borrower will now be qualifying off their adjusted contract rate plus 2% using the new Prime Rate of 4.70%

All adjustable rate submissions will be qualified using the new prime rate of 4.70%, effective immediately.

(This article is from the First National Financial LP. 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 August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal 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. 

Canadian Inflation Surged to 8.1% in June

Another bad inflation number was posted today. The rate of consumer inflation continued to rise, reaching 8.1% year over year (y/y) in June, following the 7.7% gain in May. The increase was the largest yearly change since January 1983. The acceleration in June was mainly due to higher prices for gasoline; however, price increases remained broad-based, with seven of eight major components rising by 3% or more.

Excluding gasoline, the CPI rose 6.5% year over year in June, following a 6.3% increase in May (see chart below).

On a monthly basis, the CPI rose 0.7% in June, following a 1.4% increase in May. On a seasonally adjusted monthly basis, the CPI was up 0.6%.

On average, prices rose faster than hourly wages, which increased 5.2% from 12 months to June, based on the Labour Force Survey data.

Gasoline prices are highly visible and have surged a whopping 54.6% y/y. That compares to a 48% increase in May. There might be some reprieve in this component of inflation, as gas prices largely follow crude oil prices, which peaked in early June and have trended downward so far in July. This would be welcome news for the Bank of Canada.

Bottom Line

All central banks worldwide (except Japan) face much more than expected inflation. The rise in the annual pace of inflation past the 8% mark will keep the Bank of Canada on its tightening path, though the numbers show some evidence of softening. For example, food prices appear to be easing, and gasoline price inflation may have peaked. Food prices were up 0.1% in June, the slowest increase in a year. Shelter costs gained 0.4%, the smallest increase since November. Statistics Canada said that reflects lower real estate commissions as the housing market slowed.

With some luck, price pressures might be peaking. The chart below shows the Bank of Canada’s most recent forecast for inflation published last week in the July Monetary Policy Report. The Bank of Canada estimated inflation would average about 8% through the third quarter of 2022 before slowing.

According to the swaps market, traders are betting that the central Bank will hike its policy interest rate another 75 basis points on September 7 when it meets again, after the full percentage point increase last week. That would take the overnight rate from 2.5% current to 3.25%–above the Bank’s estimate of the neutral range. It would also push up the prime rate from 4.7% to 5.45%, leading to a 75 bps hike in variable rate mortgages. Last week’s action already took variable mortgage rates to roughly 4.25%, which increased the qualifying rate on such loans to 6.25%–above the 5.25% rate before the move. As a result, the gap between the qualifying rate for fixed-rate mortgage loans and variable-rate loans has fallen to only about 100 bps, its lowest level in years. This undoubtedly continues to slow housing activity, reducing economic growth in Canada.

The question remains–will the Bank of Canada successfully reduce inflation without triggering a recession? Stay tuned.

(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 August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal 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. 

House Price Decline Accelerated in June

Statistics released today by the Canadian Real Estate Association (CREA) show that the slowdown that began in March in response to higher interest rates has broadened. Home sales recorded over Canadian MLS® Systems fell by 5.6% between May and June 2022, taking second-quarter sales down sharply (see chart below). The actual (not seasonally adjusted) number of transactions in June 2022 came in 23.9% below the record for that month set last year and is below its 10-year monthly moving average.

“Sales activity continues to slow in the face of rising interest rates and uncertainty,” said Jill Oudil, Chair of CREA. “The cost of borrowing has overtaken supply as the dominant factor affecting housing markets at the moment, but the supply issue has not gone away.”

The Bank of Canada’s shocking 100 basis point hike in the benchmark policy rate will accelerate the slowdown in the coming months.    “One important feature of the market right now that isn’t getting enough attention is the difference in mortgage qualification criteria between fixed and variable, because while variable rates adjust in real-time, fixed rates have already priced in most of what the Bank of Canada is expected to do over the balance of 2022,” said Shaun Cathcart, CREA’s Senior Economist. “As such, it’s no surprise to see people piling into variable rate mortgages at record levels, but probably not for the reasons they may have chosen them in the past. It’s because the 200 basis points plus the contract rate element of the stress test has, just since April, become much more difficult to pass if you want a fixed-rate mortgage. A strict stress test made sense when rates were at a record-low, but policymakers may want to assess if it continues to meet its policy objectives now that fixed mortgage rates are back at more normal levels.”

The number of newly listed homes climbed 4.5% month-over-month in May. The monthly increase was influenced by a jump in new supply in Montreal, while new listings in the GTA posted a modest decline.

With sales down and new listings up in May, the sales-to-new listings ratio eased back to 57.5% — its lowest level since April 2019. It was also not far off the long-term average for the national sales-to-new listings ratio of 55.1%.

Almost three-quarters of local markets were balanced based on the sales-to-new listings ratio being between one standard deviation above or below the long-term average in May 2022 – the most significant number since the fall of 2019. A little less than one quarter was in seller’s market territory, while a small handful was in buyer’s market territory.

There were 2.7 months of inventory on a national basis at the end of May 2022, still historically low but up by a month from the tightest conditions ever recorded just six months ago. The long-term average for this measure is a little over five months.

The number of newly listed homes climbed 4.1% month-over-month in June. The monthly increase was most influenced by a jump in new supply in Montreal, while new listings in the GTA and Greater Vancouver posted slight declines.

With sales down and new listings up in June, the sales-to-new listings ratio eased back to 51.7% – its lowest level since January 2015. It was also below the long-term average for the national sales-to-new listings ratio of 55.1%. Almost three-quarters of local markets were balanced markets based on the sales-to-new listings ratio being between one standard deviation above or below the long-term average in June 2022.

There were 3.1 months of inventory on a national basis at the end of June 2022, still historically low but slowly increasing from the tightest conditions recorded just six months ago. The long-term average for this measure is more than five months.

Home Prices

The Aggregate Composite MLS® Home Price Index (HPI) edged down 1.9% on a month-over-month basis in June 2022.

Regionally, most of the monthly declines were seen in markets in Ontario. Home prices have also eased in parts of British Columbia, although the B.C. provincial totals have been propped up by mostly static prices in Greater Vancouver.

Prices continue to be more or less flat across the Prairies while only just now showing small signs of declines in Quebec.

On the East Coast, prices are mostly continuing to rise but appear to have stalled in Halifax-Dartmouth.

The non-seasonally adjusted Aggregate Composite MLS® HPI was still up by 14.9% on a year-over-year basis in June, although this was just half the near 30% record year-over-year increases logged in January and February (see chart and tables below for details by region).

Bottom Line

In many respects, today’s housing data trends are already outdated. It changed with the blockbuster rate hike a couple of days ago. Excess housing demand is essentially over, and we are heading into a more fragile period for resale volumes and prices. The national sales-to-new listings ratio fell to 51.7% in June, which is considered balanced, but it’s the lowest ratio since 2015 and is headed in a softer direction. Buyers’ markets are already evident, especially in some of the suburbs/exurbs in Ontario and parts of BC. These are the regions that posted extreme price gains last year. Others, such as cities in oil-rich Alberta and Atlantic Canada, are still holding in well.

With the Bank of Canada’s most recent tightening, qualifying rates are ratcheting up for both variable and fixed mortgage rates. Before the one percentage point rate hike, variable rate loans were qualifying at 5.25%, but now that has shifted to around 6%. Fixed-rate borrowers are qualifying at about 7%. The Canadian prime rate has surged this year, increasing variable mortgage rates by roughly 300 basis points. Robert Kavcic at BMO has calculated that “going from 1.5% to 4.5% on the same loan value would crank up the monthly variable-rate mortgage payment by almost 40%, making the current episode an even more abrupt shift than the late-1980s  after adjusting for income levels.”

Kavcic continues, “the vast majority of borrowers currently on variable-rate mortgages have fixed payment features, but even there, things are now getting dicey. For example, moving a variable rate up from 1.5% to 4% with a fixed payment would effectively increase the amortization from 25 years to 45 years. Another 50 basis-point rate hike in September would take that above 60 years—that is, many will reach the point where payments are no longer taking down the principal. Each mortgage will have its unique terms when payments start to move higher, but for those that caught the low in variable rates, we’ll probably be there soon. Of course, HELOC payments used to finance many multiple-property purchases are ratcheting up in real time.”

There is also the risk that the federal financial institutions’ regulator, OSFI, will intervene to protect the big Chartered Banks from taking on too much risk rather than making it easier for borrowers to qualify or to carry variable-rate loans in this environment.

Moreover, mortgage renewals pose a problem as well. Fixed mortgage rates five years ago were roughly 3%. Resetting the mortgage at 4.5% will lead to a monthly payment increase of approximately 15%, all else equal.

With the latest move by the Bank of Canada, more potential buyers will believe that home prices are likely to fall, taking the FOMO factor out of the housing market. This removes the critical ingredient that drove prices up rapidly since the pandemic began.

(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 August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal 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. 

1. Why are more buyers attempting to back out of real estate deals right now? Is it because they cannot secure financing? Buyer’s remorse? A lower-than-expected appraisal?

Some may experience “buyer’s remorse” which it’s normal to feel in any market. Today with rates on the rise, inflation at a 40-year high, the increased cost of everything, staffing and supply shortages, and Russia attacking Ukraine; the compound effect of all of that is a natural consideration to proceed with caution.

For borrowers that had a pre-approval in place for 90 or 120 days, the rate they have is much lower than current rates so they can also be very grateful that they have secured a good option for their family. It is important that as soon as an offer is agreed upon, an appraisal is paid for and arranged to ensure that the price remains at purchase and not lower, or else there will be a shortfall to make up with gifted funds from family or a higher mortgage amount.

I have seen these market changes before and I am sure it will repeat itself again in my career as it has in the past. People still need to move, they go through a divorce, move for new job opportunities or lifestyle, and wind up estates. When we know change is constant we plan together for it the best we can by building in the security of rate holds, the protection of good contracts, and optimization of different markets and strategies.

2. In 2021 and early 2022, many people were buying without conditions of financing or inspection. How does this complicate matters for buyers?

Yes, another past market experience, despite our best advice to borrowers we had hoped would not repeat itself was back in 2021 and early 2022. Just because a market appears to be going up with limited supply does not mean you shouldn’t do your due diligence. Going in without the precautions in place left borrowers assuming the risk, period. As long as they were comfortable with that risk, it was their choice to bear it with the circumstances at hand.  We saw some buyers forced to come up with extra money, get co-signers last minute, or have to take more expensive lending options. In either case or market, if the home is suited for you then that is just a part of your journey.

3. What’s the difference between making an offer and signing a purchase agreement?

An offer is something the buyer makes to the seller. It does not become a purchase agreement until both parties agreed to the terms of the offer.

4. If a would-be buyer breaks a deal, how much are they on the hook for? Can they be sued?

They can be on the hook for damages as well as the deposit and of course all the legal fees that will arise. The deposit will be held in trust until both have come to an agreement which can be an extended period of time. This is why sellers want the largest deposit possible to avoid any legal battle or people potentially backing out.

5. Could a buyer have a harder time getting a mortgage in the future if they back out of a deal?

Not for the mortgage part as borrowers have offers they back out of all the time during their subject period and the conditions they set for themselves. They simply don’t remove their subjects, get a release and move on, all part of due diligence. Backing out if they have no conditions or after they have removed them is what makes it a legal battle between the buyer and seller only as no mortgage is registered yet.

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 August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal 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. 

A Super-Sized Rate Hike, Signalling More To Come 

The Governing Council of the Bank of Canada raised its target for the overnight policy rate by a full percentage point to 2-1/2%. The Bank is also continuing its policy of quantitative tightening (QT), reducing its holdings of Government of Canada bonds, which puts additional upward pressure on longer-term interest rates.

In its press release this morning, the Bank said that “inflation in Canada is higher and more persistent than the Bank expected in its April Monetary Policy Report (MPR), and will likely remain around 8% in the next few months… While global factors such as the war in Ukraine and ongoing supply disruptions have been the biggest drivers, domestic price pressures from excess demand are becoming more prominent. More than half of the components that make up the CPI are now rising by more than 5%.”

The Bank is particularly concerned that inflation pressures will become entrenched. Consumer and business surveys have recently suggested that inflation expectations are rising and are expected to be higher for longer. Wage inflation has accelerated to 5.2% in the June Labour Force Survey. The unemployment rate has fallen to a record-low 4.9%, with job vacancy rates hitting a record high in Ontario and Alberta.

Central banks worldwide are aggressively hiking interest rates, and growth is slowing. “In the United States, high inflation and rising interest rates contribute to a slowdown in domestic demand. China’s economy is being held back by waves of restrictive measures to contain COVID-19 outbreaks. Oil prices remain high and volatile. The Bank expects global economic growth to slow to about 3½% this year and 2% in 2023 before strengthening to 3% in 2024.”

Further excess demand is evident in the Canadian economy. “With strong demand, businesses are passing on higher input and labour costs by raising prices. Consumption is robust, led by a rebound in spending on hard-to-distance services. Business investment is solid, and exports are being boosted by elevated commodity prices. The Bank estimates that GDP grew by about 4% in the second quarter. Growth is expected to slow to about 2% in the third quarter as consumption growth moderates and housing market activity pulls back following unsustainable strength during the pandemic.”

In the July Monetary Policy Report, released today, the Bank published its forecasts for Canada’s economy to grow by 3.5% in 2022–in line with consensus expectations–1.75% in 2023 and 2.5% in 2024. Some economists are already forecasting weaker growth next year, in line with a moderate recession. The Bank has not gone that far yet.

According to the Bank of Canada, “economic activity will slow as global growth moderates, and tighter monetary policy works its way through the economy. This, combined with the resolution of supply disruptions, will bring demand and supply back into balance and alleviate inflationary pressures. Global energy prices are also projected to decline. The July outlook has inflation starting to come back down later this year, easing to about 3% by the end of next year and returning to the 2% target by the end of 2024.”

Bank of Canada Overnight Rate

Bottom Line

Today’s Bank of Canada reports confirmed that the Governing Council continues to judge that interest rates will need to rise further, and “the pace of increases will be guided by the Bank’s ongoing assessment of the economy and inflation.” Once again, the Bank asserted it is “resolute in its commitment to price stability and will continue to take action as required to achieve the 2% inflation target.”

At 2.5%, the policy rate is at the midpoint of its ‘neutral’ range. This is the level at which monetary policy is deemed to be neither expansionary nor restrictive. Governor Macklem said he expects the Bank to hike the target to 3% or slightly higher. Before today’s actions, markets had expected the yearend overnight rate at 3.5%.

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 August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal 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 increases its benchmark interest rate to 2.50%

Today, the Bank of Canada increased its overnight benchmark interest rate 100 basis points to 2.50% from 1.50% in June – the largest single increase in almost 25 years. This is also the fourth time this year that the Bank has acted to tighten money supply to combat the possibility of an entrenched inflationary cycle, although previous moves were much smaller (0.25% in March and 0.50% in each of April and June).

The Bank characterized this progressively larger increase as a way to “front-load the path to higher interest rates,” a clear signal that it is concerned that elevated inflation will become entrenched without affirmative action and that more rate hikes are almost certainly on their way.

With this latest increase, the Bank Rate rises to 2.75% and the deposit rate increases to 2.50%.

These are the highlights of today’s announcement.

Inflation at home and abroad

• Inflation in Canada is higher and more persistent than the Bank expected in its April Monetary Policy Report, and will likely remain around 8% in the next few months
• Global factors including the war in Ukraine and supply disruptions are the biggest drivers, but “domestic price pressures from excess demand are becoming more prominent”
• Surveys indicate more Canadian consumers and businesses are expecting inflation to be “higher for longer,” raising the risk that elevated inflation becomes entrenched in price- and wage-setting; “if that occurs, the economic cost of restoring price stability will be higher”
• The July outlook for Canada has inflation “starting to come back down later this year, easing to about 3% by the end of next year and returning to the 2% target by the end of 2024”
• Global inflation is higher and accordingly, many central banks are also tightening their monetary policies

Canadian and global economies

• As a result of tighter financial conditions, economic growth is “moderating” and will continue to do so as tighter monetary policy works its way through the economy; when combined with the resolution of supply disruptions, the Bank believes this change “will bring demand and supply back into balance and alleviate inflationary pressures”
• As a result, the Bank now expects Canada’s economy to grow by 3.5% in 2022, 1.75% in 2023, and 2.5% in 2024 and for global economic growth to slow to about 3.5% this year and 2% in 2023 before “strengthening to 3% in 2024”
• Canadian labour markets are tight with a record low unemployment rate, widespread labour shortages, and increasing wage pressures
• With strong demand, Canadian businesses are passing on higher input and labour costs by raising prices
• Domestic consumption is robust, led by a rebound in spending on hard-to-distance services, while business investment is solid and exports are being boosted by elevated commodity prices
• The Bank estimates that Canada’s Gross Domestic Product grew by about 4% in the second quarter
• In the United States, high inflation and rising interest rates are contributing to a slowdown in domestic demand
• China’s economy is being held back by “waves of restrictive measures” to contain COVID-19

Canadian housing market

• As growth in Canada is expected to slow to about 2% in the third quarter as consumption moderates, the BoC is now projecting that housing market activity will “pull back following unsustainable strength during the pandemic”

Looking ahead

Along with noting that its Governing Council decided to “front-load the path to higher interest rates” with today’s 100 basis point increase, the BoC also said it “continues to judge that interest rates will need to rise further, and the pace of increases will be guided by the Bank’s ongoing assessment of the economy and inflation.”

The Governing Council stated that it is “resolute” in its commitment to price stability and will continue to take action as required to achieve its 2% inflation target. The message to the market is clear: inflation must be corralled and higher interest rates are to be expected.

This is an evolving story with the next scheduled chapter landing on September 7^th, 2022 – the date of the BoC’s next policy announcement.

(This article is courtesy of First National)

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 August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

The Bank of Canada increases the overnight lending rate by 1% today. The largest increase in over 20 years. It is expected that banks, credit unions and monolines will increase their prime rate over the following weeks. This will increase the cost of variable rate (VRM) and adjustable rate (VRM) mortgages as well as home equity line of credits HELOC).

What does this cost you?

Homeowners with adjustable rate mortgages will see their payments increase by roughly $56/m/100k.

With nearly 25% of home buyers borrowing over $600,000 to buy a home in the last quarter of 2021 these increases represent a significant increase in the monthly cost of the average mortgage in Canada.

Borrowers who have variable rate mortgages will not see their payments increase but will have the debt they pay down with each mortgage payment reduced. (Such as TD/CIBC)

Those who took variable rate mortgages when the prime was 2.7% need to be aware as trigger points in their mortgages loom closer.

How does this impact qualifying for a mortgage?

These changes do not have a direct impact on fixed rates but bond yields (the primary driver of fixed rates) have been falling since they spiked in mid-June.

Anyone seeking a five-year fixed rate mortgage with any federally regulated lender (monolines and banks) has lost nearly 20% of their borrowing power due to the stress test since February 2022.

Due to the Bank of Canada increase, today borrowers will lose nearly 10% of their borrowing power on floating rate mortgages (ARM and VRM) as well as HELOCs.

What should you do?

We suggest that borrowers take a few steps to assess their next move that we can help with.

1) Complete a personal budget to determine how to maximize/protect your options

2) Work out at what interest rate you reach the limit of your maximum housing budget

3) Use this maximize allowable rate to determine if a fixed or floating rate option is best for you

4) Take action on any renewal in the next 12 months instead of waiting, September is expected to bring more increases.

What today’s rate increase means for the market?

At this point, there is no questioning the fact that rising interest rates have begun to impact the borrowing power of home buyers. The “stress test” is starting to force borrowers to consider between qualifying for larger mortgages with the uncertainty of variable rates or qualifying for less with the predictability of fixed-rate mortgages.

BC and Ontario are likely to be hit the hardest by these changes with these changes costing the average borrower over $25,000 over the next five years.

Lower price point markets may see an increase in demand as buyers consider more cost-effective options. The average mortgage size in Alberta is over 30% smaller than BC/Ont making for significant savings in mortgage costs.

If rates continue to rise and mortgage applicants continually qualify for less it seems logical that the housing market could fall in sync. With immigration expected and a housing building shortage that is still to be determined.

It will be interesting to see if policymakers begin to consider increasing maximum amortizations beyond 25/30 years to alleviate the rising cost of mortgages and offset the decline in borrowing power as discussed in the last election, while federal policymakers may have this in sight, please remember there are banks that do have 40-year mortgages and no stress test to help borrowers who need it.

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 August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal 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. 

There’s something magical about summer and no matter where you live in Canada, summer is the perfect opportunity to spend a little time with family and friends. Nothing says party vibes more than food on the grill and summer drinks flowing.

Whether you live in a country house, a suburban townhome or a city condo, gather your crew and remember these essentials:

• Good Eats: To have the most success with your backyard party, you must pre-plan! This includes organizing an easy menu with bite size snacks, easy salads and flavour packed options to keep your guests satisfied. And don’t forget to make sure the barbecue has plenty of propane!
• Cold Drinks: A cooler full of pop and water is a great start for a summer day! If you’re hosting adults, add a little alcohol to the mix! Boozy lemonades or spiked ice teas are easy to make and very fun to drink. Craft beer, ciders or chilled white wine are other fun options for a hot day!
• Did Someone Say Dessert? If you’re planning an all-day affair, you might want to keep some quick and easy desserts or snacks on hand for the evening. Homemade ice cream bars, fruit kabobs or a veggie platter, or even chips can make great options for any peckish guests. And as the sun sets, you can break out the marshmallows and get your s’mores on in front of the fire!
• Decor & Ambiance: For suburban hosts, your backyard party would include a sitting area, maybe umbrellas to offer some shady spots and some water fun! However, if you find yourself in smaller city digs, that doesn’t mean your party still can’t be one for the ages. Consider throw pillows, paper patio lanterns and plastic glassware which are all affordable and easy to find to help create that perfect party space!
• Choosing Your Tunes: While music can set the ambiance, you need to know your guests. It’s not easy to pick a playlist that will appease all ears, but streaming services like Spotify and Apple iTunes have plenty of mixed playlists that should do the trick. Or search for Dominion Lending Centres on Spotify!
• Entertainment: Backyard games such as a bocce ball set, Frisbee and even a football can keep the fun and competition going for hours! If you’re looking for a more chill hang, consider setting up a card table or some board games for those who want to partake.
• For the Kids: If your party involves kids, you’ll want to keep the food simple and easy to eat with hands, so burgers, hot dogs, chips and watermelon are the way to go. You’ll also want to keep them occupied with simple games or more active options such as a soccer ball, mini trampoline or a sprinkler to run through and keep them cool. When daylight starts to fade, you can set up a backyard movie or camp-out with some tents to settle the night down.

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 August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal 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. 

Building a new home is an exciting adventure but requires very different considerations. To help you have the best experience, here are 5 of the most important things to consider:

1.  It’s All In The Numbers: Whether you are shopping for a pre-built home, or are looking to create your own from the ground up, it is vital to know what you can afford and stay within it. This is the key to building a home that you will be able to enjoy for the next 20 or 30 years, while still maintaining your financial stability. Overall, the average cost to build a house can range $300,000 to $350,000 for 1,000 square feet to double or triple that amount. For example, an average 2,500 square foot home could cost between $500,000 and $875,000 to build depending on materials, design, etc. Keep in mind, these costs don’t include the land or taxes on the construction and material.
2. Choose a Reputable Builder: This one seems pretty straight forward, but when you start looking it can quickly become overwhelming when you realize how many options there are. When it comes to determining the head contractor for your project, careful research is needed. Another option is to consult friends and family members who have gone through the process, or ask me, your mortgage expert and/or your realtor! They often have many qualified contacts in the industry or can help point you in the right direction.
3. Build a Home For Tomorrow: As tempting as it can be to personalize your home to the nth degree and include every cool little feature you can think of, it is important to always keep resale value and practicality in the back of your mind. Life can often throw a few curve balls that, for one reason or another, may result in your having to sell your home in the future. If that time should ever come, you will want to be able to appeal to all buyers easily and not have to hold the house longer than necessary. Ask yourself if the features you are putting into your home will appeal to others, and also if the design suits the neighborhood you are building in as well.
4. Go Green! Now more than ever before energy efficient upgrades are easy to add to your home. To make your home as efficient as possible, it is important to incorporate these options into your design BEFORE you start building. Options such as energy efficient appliances, windows, HVAC systems, and more can save you money in the long run and may also make you eligible for certain grants and discounts. For instance, the Canadian Mortgage and Housing Corporation (CMHC) green building program rewards those who select energy efficient and environment friendly options.
5. Understand The Loan: Lastly, beyond the costs and design of building a new home, what does a mortgage look like for an unbuilt home? I suggest you provide me with a budget that includes both hard and soft costs, as well as the reserve of money you plan to have set aside in case you run into unexpected events.

Requirements for capital

A common mistake that many people don’t realize is you need capital upfront. The capital is needed for the initial down payment on the land/lot, as well as city red tape and permits to start the construction and throughout the build. It’s personal capital that is needed to finance the build to each stage of the construction. The draw mortgage will then advance money (the draw) to pay back the funds used to hit that stage of construction. For example, your capital finances the foundation of the home then the mortgage draw will advance funds to pay back that foundation capital. Then capital is used to get the house to the next draw stage which is generally framing, roofing, doors and windows (knows as “lock-up”) then the mortgage draw pays back the funds used to achieve the stage and so forth.

It is also important to note that the lender will consider the appraised value of the finished product. This value is determined before the project begins. In this example, the completed appraised value of the home would have to be at least $600,000 to qualify. In addition, the client will have to come up with the initial $150,000 to be able to finance the total cost of $600,000.

Additional Notes: When it comes to building your own home and construction loans, here are a few extra things to keep in mind:

• Make your building plans in advance and stick with them to avoid costly changes during construction.
• Depending on the lender, you may have a time frame within which you need to complete construction (typically between 6 and 12 months).
• Construction loans are usually fully opened and can be repaid at any time.
• Interest is charged only on amounts drawn; there are no “unused funds”
• Once construction is complete and project completion has been verified by the lender, the construction mortgage is “moved over” to a normal mortgage

If you’re looking to build a home, don’t hesitate to reach out to me for friendly mortgage advice!

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 August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal 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 recent Bank of Canada interest rate hikes, and more on the way, here is what you need to know about how these policy changes affect your mortgage.

First and foremost, the interest rate hikes directly affect individuals that currently have an adjustable-rate mortgage.

Depending on your mortgage amount, you’re looking at a potential mortgage payment increase of $40 per month for every $100,000 of balance owing. For example, if your mortgage balance is $400,000 then your monthly payment will increase approximately $160 per month.

As Canada’s lending prime has increased, variable rates increase as these rates are tied to prime. Payments need to increase to ensure the scheduled amortization remains the same. Hence you will still pay off your mortgage as the original amortization shows. For those individuals on a fixed-mortgage, you will not be affected by these interim changes outside of renewing your mortgage. If your mortgage is up for renewal, you will likely be renewing at a higher rate depending on your lender. If you’re still six months away from renewing, it may be a good idea to look into the options for early renewal to avoid getting caught up in another interest rate hike later this year.

All rates, fixed or variable are expected to rise more over the summer months. Please reach out to me today to discuss obtaining a rate hold. I can lock-in an interest rate for 90-120 days while you plan your next step whether it is renewing, purchasing or planning for changes.

If you’re not currently a homeowner, but were looking at getting into the marketplace, it is a good idea to revaluate your budget and potential calculations for homeownership to ensure that your estimates are in line with the new interest rates. Download my mobile app My Mortgage Toolbox to play around with calculators and review your budget.

While interest rate hikes affect everyone, understanding the dollar value change for your situation and adjusting your budget accordingly, can help ease the pressure from increased mortgage costs. If you have any questions or are not sure what your next move should be, don’t hesitate to reach out to me today! I’d be happy to help review your situation and walk you through your options.

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 August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal 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.