The stress test rate is about to fall for the second time in three months following cuts by Canada’s Big Six banks to their 5-year fixed posted rates.

Mortgage experts say the Bank of Canada will reduce the benchmark qualifying rate—a.k.a., “stress test rate”—from 4.94% to 4.79% this week.

National Bank of Canada cut its posted 5-year fixed rate by 15 bps on Monday, following similar cuts by BMO and CIBC over the weekend, while RBC and TD lowered their rates last week.

In May, similar big-bank posted rate reductions caused the qualifying rate to fall from its then-current level of 5.04%, since the rate is based on a mode average of the big banks’ 5-year fixed posted rate. That marked their first time since January 2018, when OSFI’s stress test was introduced, that the benchmark qualifying rate fell below 5%.

It will make qualifying easier, or permit some people to borrow fractionally more.

Just how much more? Well, not a whole lot in the scheme of today’s average home prices.

Rob McLister, founder of RateSpy.com, calculated that a buyer earning $70,000 a year and purchasing with the minimum 5% down would be able to afford roughly $4,000 more home, or about 1.2%.

“That’s not much to get excited about, but on a market-wide basis, small buying power improvements are inflationary for home prices, other things equal,” he wrote.

At 4.79%, the benchmark qualifying rate will be just 15 bps above the all-time low of 4.64%, last seen in July 2017, McLister notes.

Stress Test Still Well Above Market Rates

Despite the reduction, the stress test rate is still roughly 290 basis points above the lowest nationally available insured rate today.

And that’s despite the current interest rates expectations, including Bank of Canada Governor Tiff Macklem’s suggestion there will be no interest rate hikes for the next two or even three years.

“Interest rates are very low and they are going to be there for a long time,” Macklem said.

A Better Formula Still on Hold

While these recent small reductions to the mortgage qualifying rate are assisting affordability to a small degree, industry leaders have called on the federal government to proceed with a plan to change how the stress test rate is calculated.

In April, the Department of Finance said homebuyers purchasing with an insured mortgage would be stress-tested at a rate equal to the weekly median 5-year-fixed insured mortgage rate plus 2%.

At the time, when the stress test rate was 5.19%, the change would have reduced it to 4.89%. But in March, at the height of the COVID-19 pandemic, the government announced it would suspend the proposed changes.

A similar change for the uninsured mortgage stress test, which was being considered by the Office of the Superintendent of Financial Institutions (OSFI), was also put on hold.

The pause on new regulatory changes was sensible given the marketplace uncertainty in March. However, as we begin to open businesses again, now is the time for OSFI and Finance to consider the implementation of the new test.

Sourced here

Angela Calla is a 16-year award-winning woman of influence and mortgage expert. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. She educates and empowers individuals on the “The Mortgage Show”, which she’s hosted for over a decade and is the best selling author of The Mortgage Code available on Amazon. All proceeds from her book sales are donated to Access Youth Outreach services, a local charity in our community supporting our youth.

Angela leads by example with passion and conviction. She is known as an industry expert on TV and radio and the go-to source for publishers across the Country. On top of all her achievements, Angela finds the time to be a loving wife and mother of two beautiful children.

For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at callateam@countoncalla.ca or 604-939-8777.

The Canadian economy bounced back sharply in May and June as Canadian provinces eased lockdown measures.

GDP expanded 4.5% in May, and activity in June was even more robust at an estimated 5% rise. Cumulatively, GDP rose 10% in May and June, after plummeting more than 18% in March and April. These figures are calculated on a month-over-month basis.

These figures point to about a 40% annual rate decline in second-quarter GDP in Canada, which is roughly in line with economists’ projections. South of the border, the US posted a 33% contraction in GDP for the second quarter, the most massive plunge on record (see details below). It’s not surprising that Canada’s economy tanked by more than the US in Q2, as Canada enacted more aggressive restrictions earlier than the US and eased them more slowly. These public health restrictions were well worth it, as Canada has had far greater success at flattening the curve of new cases and deaths. Moreover, Canada’s economy will likely outpace the US in Q3, showing the benefit of allowing the public health considerations to dominate.

READ MORE HERE

Angela Calla is a 16-year award-winning woman of influence and mortgage expert. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. She educates and empowers individuals on the “The Mortgage Show”, which she’s hosted for over a decade and is the best selling author of The Mortgage Code available on Amazon. All proceeds from her book sales are donated to Access Youth Outreach services, a local charity in our community supporting our youth.

Angela leads by example with passion and conviction. She is known as an industry expert on TV and radio and the go-to source for publishers across the Country. On top of all her achievements, Angela finds the time to be a loving wife and mother of two beautiful children.

For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at callateam@countoncalla.ca or 604-939-8777.

Not even a pandemic can slow buyers. More of us are working from home, staying in, homeschooling and all need a space to co-habitat together.

Canadians want more space. A place to recharge, work, and educate their children. BC in particular is being showcased for all the beautiful locations with waterfront views. Only minutes away we have more affordable real estate outside of the lower mainland with a slower lifestyle pace – a place where you can truly relax.

If you’re looking to enhance your lifestyle there could be some key steps getting in the way of your dream to move up the property ladder or acquire a second home to staycation this summer. We recently did a segment with Global to elaborate on what might prevent you from living this dream!

Angela Calla is a 16-year award-winning woman of influence and mortgage expert. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. She educates and empowers individuals on the “The Mortgage Show”, which she’s hosted for over a decade and is the best selling author of The Mortgage Code available on Amazon. All proceeds from her book sales are donated to Access Youth Outreach services, a local charity in our community supporting our youth.

Angela leads by example with passion and conviction. She is known as an industry expert on TV and radio and the go-to source for publishers across the Country. On top of all her achievements, Angela finds the time to be a loving wife and mother of two beautiful children.

For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at callateam@countoncalla.ca or 604-939-8777.

Not even a pandemic can slow buyers. More of us are working from home, staying in, homeschooling and all need a space to co-habitat together.

Canadians want more space. A place to recharge, work, and educate their children. BC in particular is being showcased for all the beautiful locations with waterfront views. Only minutes away we have more affordable real estate outside of the lower mainland with a slower lifestyle pace – a place where you can truly relax.

If you’re looking to enhance your lifestyle there could be some key steps getting in the way of your dream to move up the property ladder or acquire a second home to staycation this summer. Here are some tips to watch out for:

1. Your outside debt. Many people are unaware that every payment outside of your mortgage takes away your ability to qualify for a mortgage. Most Canadians have car loans, student loans, credit card loans, or lines of credit. Did you know for every $480/month payment outside of your mortgage that’s $100,000.00 taken away in mortgage qualifications?! Imagine that, $900/per month will take away just over $200,000 in mortgage qualifications! There is a big difference in being approved for 500k or 700k. Understanding that outside debt is a huge factor and needs to be addressed with either a refinance to consolidate this debt into your existing mortgage or pay down strategy will help you improve your credit score, cash flow, and future qualifications.
2. Existing time in your job, or work interruptions. Some of us have had unfortunate interruptions to our work or reductions in income. Depending on your type of employment, different lenders use different averages of incomes or want to see a specific amount of return to work with consistency prior to issuing an approval.
3. Not being pre-approved. This is huge for many reasons. With all the factors and calculations that go into purchasing a home – the down payment, your income, credit, closing costs, and personal profile – shopping without a FULL pre-approval to understand those specific factors will lead to disappointment and can unnecessarily lead to bidding up the price of homes.
4. Zoning and/or property condition. The last stage, once a contract is accepted, is the property review by the lender. Anything named, “handyman special”, “as is where is”, “leased land”, “manufactured home”, “cable cord construction”, “co-op”, “commercial-zoned”, “maintenance not being done properly on properties”, or “water and sewer connections/access to the property and year-round access” all contribute to who will lend on it and at what cost. Some people will have to use the equity in their existing home or savings to purchase certain properties or be willing to pay higher rates. Discussing your intentions of purchase during the pre-approval process and subject period will assist you in gaining clarity.

This is one hot market! Being prepared and learning what applies to you will help you move forward with you living your best life.

Angela Calla is a 16-year award-winning woman of influence and mortgage expert. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. She educates and empowers individuals on the “The Mortgage Show”, which she’s hosted for over a decade and is the best selling author of The Mortgage Code available on Amazon. All proceeds from her book sales are donated to Access Youth Outreach services, a local charity in our community supporting our youth.

Angela leads by example with passion and conviction. She is known as an industry expert on TV and radio and the go-to source for publishers across the Country. On top of all her achievements, Angela finds the time to be a loving wife and mother of two beautiful children.

For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at callateam@countoncalla.ca or 604-939-8777.

During your pre-approval inquiry process, we may ask that you provide the following documents. It is best to have these on hand and easily accessible to ensure the process goes smoothly.

1. A Credit Check Authorization signed – One (1) must be filled out by each applicant and a picture of 2 pieces of ID.
2. A Letter of Engagement, signed and returned
3. Letter of employment for all applicants
4. Copy of 2020 and 2021 T4’s for all applicants
5. Copy of 2021 Notice of Assessment for personal income taxes
6. Copy of 2020 and 2021 T1 Generals, (If you are self-employed) (full versions – not condensed)
7. Copy of Mortgage Statements for all mortgages
8. Most recent Two Years Business Financials (If you are self-employed)

Not ALL of these documents will be required. They will depend on your unique profile and whether you are employed or self-employed.

Angela Calla is a 16-year award-winning woman of influence and mortgage expert. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. She educates and empowers individuals on the “The Mortgage Show”, which she’s hosted for over a decade and is the best selling author of The Mortgage Code available on Amazon. All proceeds from her book sales are donated to Access Youth Outreach services, a local charity in our community supporting our youth.

Angela leads by example with passion and conviction. She is known as an industry expert on TV and radio and the go-to source for publishers across the Country. On top of all her achievements, Angela finds the time to be a loving wife and mother of two beautiful children.

For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at callateam@countoncalla.ca or 604-939-8777 ext 309.

💸 All About RESPs

A Registered Education Savings Plan (RESP) is an investment account designed to help parents save for their child’s education. Like other tax-shelter accounts, an RESP allows investments inside the account to grow tax-free. That means you don’t pay taxes on capital gains, no income taxes on interest, and no tax on dividend payments.

The significant benefit of RESPs is the Canadian Education Savings Grant (CESG). The CESG is essentially free money. For every dollar you put into your child’s RESP, the government will put in up to 20 cents.

If you put $2,500 in your child’s RESP, you will receive $500 for a total of $3,000.

🗹 3 Reasons You Should Open An RESP

1. Post Secondary education is getting more expensive. The burden on students can last years. If you alleviate some financial pressure for your child, you are giving them a massive head start.
2. Tax-free growth. Not only are you getting up to a 20% return, but you can also invest that money for further growth without paying tax. With 20% from CESG and another 8% in the stock market, your child’s RESP will give you a total return of up to 28%!
3. If your child does not go to school, you can transfer that money back into your RRSP. The CESG grant will be deducted, but you can still keep the return you earned.

Need I say more?

📚 Additional Resources

1. 7 Things To Know About RESPs before you start

2. RESP Questions Answered. From how to open one to how to invest using the RESP, this article has the most common RESP questions covered.
3. RESPs are not without fees! Have all your bases covered by educating yourself on fees to look out for.

Angela Calla is a 16-year award-winning woman of influence and mortgage expert. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. She educates and empowers individuals on the “The Mortgage Show”, which she’s hosted for over a decade and is the best selling author of The Mortgage Code available on Amazon. All proceeds from her book sales are donated to Access Youth Outreach services, a local charity in our community supporting our youth.

Angela leads by example with passion and conviction. She is known as an industry expert on TV and radio and the go-to source for publishers across the Country. On top of all her achievements, Angela finds the time to be a loving wife and mother of two beautiful children.

For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at callateam@dominionlending.ca or 604-939-8777.

In response to the Housing Minister’s July 16th announcement addressing their plan for rent increases, unpaid rent during the State of Emergency, and unpaid rent up to September 1, for our members we have prepared a detailed explanation to assist you in managing this process. As it has been said countless times, this pandemic is unprecedented and nothing is for certain. Keeping that in mind please note that the government’s plan may be altered to adapt to an ever-changing environment. 

Unpaid Rent and/or Utilities from March 18 to August 31, 2020

Please Note: Do not act immediately, this is for informational purposes only; there will be a RTB Repayment Plan form coming soon.

Landlords with tenants that have not paid all or partial rent during the State of Emergency must offer their tenant a repayment plan and give the tenant until July 2021 to pay all arrears in full. Landlords that have not served a repayment plan to their tenant(s) will not be able to end the tenancy for unpaid rent. Tenants who default on their repayment plan may be subject to a Notice to End Tenancy. Landlords that have already entered into a rent deferral agreement can replace that previous agreement with a new repayment plan that calls for rent and utilities owing.

Unpaid Rent and/or Utilities from September 1, 2020 and Onward

Tenants are required to pay rent and utilities in full as of September 1. Tenants that do not pay their rent and/or utilities in full on the day it is due may be subject to a 10 Day Notice to End Tenancy. As always, we encourage landlords to communicate with their tenant to avoid the need to end a tenancy. Landlord should review the process on how to utilize the 10 Day Notice to End Tenancy. LandlordBC members have access to detailed guides addressing this and other topics related to this new RTB process.

Rent Increases

Any rent increase with an effective date of April 1, 2020 onward, has had its effective date delayed by Ministerial Orders M089 and M195 and again by the updated Residential Regulations. The most recent change has delayed the effectiveness of rent increases until December 1, 2020. This means that any rent increase previously served between December 2019 and August 2020 will now have an effective date of December 1, 2020.

Landlords who have already served a Notice of Rent Increase do not need to serve a new notice. It is also important to note any rent increase contemplated for 2021 must consider this delayed effective date. As rent increases can not be effective less than 12 months from the last time the rent was increased meaning that tenants who will see a rent increase in December 2020 will not be subject to another increase until December 2021. Landlords should review the process for issuing rent increases.

Angela Calla is a 16-year award-winning woman of influence and mortgage expert. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. She educates and empowers individuals on the “The Mortgage Show”, which she’s hosted for over a decade and is the best selling author of The Mortgage Code available on Amazon. All proceeds from her book sales are donated to Access Youth Outreach services, a local charity in our community supporting our youth.

Angela leads by example with passion and conviction. She is known as an industry expert on TV and radio and the go-to source for publishers across the Country. On top of all her achievements, Angela finds the time to be a loving wife and mother of two beautiful children.

For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at callateam@dominionlending.ca or 604-939-8777.

A wonderful 38-second clip from our Governor of the Bank of Canada about interest rates, consumer indebtedness, and the availability of credit. A stark contrast to CMHC’s sound bytes.

"Interest rates are very low, and they’re going to be there for a long time": BoC Governor Tiff Macklem pic.twitter.com/1BFh2owsQs

— BNN Bloomberg (@BNNBloomberg) July 15, 2020

Angela Calla is a 16-year award-winning woman of influence and mortgage expert. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. She educates and empowers individuals on the “The Mortgage Show”, which she’s hosted for over a decade and is the best selling author of The Mortgage Code available on Amazon. All proceeds from her book sales are donated to Access Youth Outreach services, a local charity in our community supporting our youth.

Angela leads by example with passion and conviction. She is known as an industry expert on TV and radio and the go-to source for publishers across the Country. On top of all her achievements, Angela finds the time to be a loving wife and mother of two beautiful children.

For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at callateam@dominionlending.ca or 604-939-8777.

Finance Minister Bill Morneau presented his fiscal snapshot this afternoon. Most economists were expecting a budget deficit of roughly $260 billion. Instead, the government announced a deficit for the fiscal year 2020-21 of $343.2 billion–close to 16% of GDP. That compares to the $34.4 billion deficit projected before the pandemic.

A big chunk of that additional deficit can be attributed to the $212 billion in direct support measures the federal government is providing to individuals and businesses. The deficit was initially estimated at C$256.2 billion by the Parliamentary Budget Officer, the country’s budget watchdog. The discrepancy reflects lower tax revenue, an eight-week extension of CERB and the wage subsidy increase.

Aside from the pandemic program spending, the economic slowdown is estimated to have added another $81.3 billion to the deficit in 2020-21, driving spending levels to their highest since 1945. The recession has also taken a toll on revenue, which will drop as a share of the economy to the lowest since 1929.

The prime minister argued the economy would be in much worse shape were it not for the government’s response, in part to thwart the need for households to take on more debt. “We made a very specific and deliberate choice throughout this pandemic to help Canadians, to recognize that overnight people had lost their jobs,” Trudeau told reporters in Ottawa. “We decided to take on that debt to prevent Canadians from having to do it.”

To be sure, the government can finance the debt at a much lower cost than households. Long-term interest rates for the government of Canada are at record lows–below the rate of inflation. The ten-year GOC yield is 0.56% and the 30-year bond yield is just a tad over 1.0%. In consequence, the interest cost to the government of the rising debt burden is very modest.

In addition, the vast majority of the temporary surge in Ottawa’s new debt is being absorbed by the Bank of Canada in its bond purchases. While the BoC’s holdings of federal government debt as a share of its total securities holdings has risen abruptly from less than 14% at the start of the year to around 27% now, that’s still below the share of domestic government debt held by central banks in Japan, Germany and Sweden, for example. Canada’s overall public sector net debt remains moderate among major economies, and especially when compared to the U.S., Britain, or the Euro Area.

Read more here.

Angela Calla is a 16-year award-winning woman of influence and mortgage expert. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. She educates and empowers individuals on the “The Mortgage Show”, which she’s hosted for over a decade and is the best selling author of The Mortgage Code available on Amazon. All proceeds from her book sales are donated to Access Youth Outreach services, a local charity in our community supporting our youth.

Angela leads by example with passion and conviction. She is known as an industry expert on TV and radio and the go-to source for publishers across the Country. On top of all her achievements, Angela finds the time to be a loving wife and mother of two beautiful children.

For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at callateam@dominionlending.ca or 604-939-8777.

Angla Calla teamed up with the Real Estate Board of Greater Vancouver to help you navigate the market during changing times.

Learn how we can help you access your equity and how a reverse mortgage might be the perfect solution for you so you don’t have to sacrifice your lifestyle. She also discusses the recent CMHC updates and what they mean for you.

Angela Calla is a 16-year award-winning woman of influence and mortgage expert. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. She educates and empowers individuals on the “The Mortgage Show”, which she’s hosted for over a decade and is the best selling author of The Mortgage Code available on Amazon. All proceeds from her book sales are donated to Access Youth Outreach services, a local charity in our community supporting our youth.

Angela leads by example with passion and conviction. She is known as an industry expert on TV and radio and the go-to source for publishers across the Country. On top of all her achievements, Angela finds the time to be a loving wife and mother of two beautiful children.

For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at callateam@dominionlending.ca or 604-939-8777.