August 29, 2019 – The C.D. Howe Institute’s Monetary Policy Council (MPC) has recommended that the Bank of Canada keep its target for the overnight rate, its benchmark policy interest rate, at 1.75 percent at its next announcement on September 4, 2019, before lowering it to 1.25 percent by March 2020.

The MPC provides an independent assessment of the monetary stance consistent with the Bank of Canada’s 2 percent inflation target. William Robson, the Institute’s President and CEO, chairs the Council. Council members make recommendations for the Bank of Canada’s upcoming interest-rate announcement, the subsequent announcement, and the announcements six months and one year ahead. The Council’s formal recommendation for each announcement is the median vote of the members attending the meeting.

Eight of the nine members attending this meeting called for the Bank to maintain the overnight rate target at 1.75 percent next week, while one called for a cut to 1.50 percent. By the next announcement in October, five of the members supported maintaining the target at 1.75 percent, three called for a cut to 1.50 percent, and one called for a cut to 1.25 percent. Looking ahead to March 2020, the centre of gravity of the recommendations shifted decisively down: one member called for maintaining the target at 1.75 percent, three called for 1.50 percent, and five called for 1.25 percent. By September 2020, one member called for a target of 1.75 percent, three for 1.50 percent, four for 1.25 percent, and one for 1.00 percent (see table).

The profile of these recommendations – no cut in the overnight rate in the near term, but 50 basis points lower after six months – reflected the contrast between the MPC’s sanguine assessment of the Canadian economy and its worries about problems abroad. The group generally judged that economic activity in Canada is expanding at about the same pace as productive capacity is growing, and that the Bank’s current stance is appropriate for maintaining inflation at 2 percent. Looking outside Canada, however, most members thought that the downside risks were numerous and important enough to warrant at least one cut in the overnight rate target over the next 12 months.

Among the domestic indicators MPC members cited as supporting an unchanged policy stance were employment growth and rising wages, a better balance among consumption, housing, business investment and net exports, and a recovery from temporary factors slowing growth late in 2018 and in the first quarter of 2019. On the cautionary side, and reflecting in large part concerns about the outlook abroad, they noted the inversion of the yield curve and financial market expectations of below-target inflation and central bank easing. The MPC’s discussion of risks to the global economy highlighted a deteriorating growth outlook in most major economies, Brexit, and the prospect that trade tensions, particularly between the United States and China, will further damage confidence and activity.

Much of the discussion at this meeting of the MPC turned on the timing of potential cuts to the overnight rate target. Some members argued that cutting earlier would leave the Canadian economy in better shape should some of the downside risks materialize; others argued for conserving a cut until that happened. Potential actions by the US Federal Reserve and other central banks were material considerations for many members, who argued that easing abroad would put undesirable upward pressure on the Canadian dollar if the Bank of Canada did not ease also. The prospect of policy-rate cuts abroad was significant in the MPC’s call for a lower overnight rate by early 2020.

Votes of MPC members and the Council median for each announcement, percent

The views and opinions expressed by the participants are their own and do not necessarily reflect the views of the organizations with which they are affiliated, or those of the C.D. Howe Institute.

The MPC’s next vote will take place on October 24, 2019 prior to the Bank of Canada’s interest rate announcement on October 30, 2019.

Angela Calla is a 15 year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from a sales will help build a new emergency room at Eagle Ridge Hospital. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

Council Report

The First-Time Home Buyer Incentive helps qualified first-time homebuyers reduce their monthly mortgage carrying costs without adding to their financial burdens.

Read more details here: First Time Home Buyers Incentive

Angela Calla is a 15 year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from a sales will help build a new emergency room at Eagle Ridge Hospital. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

Homes sales across Canada rose for the fifth consecutive month and recorded a double-digit increase compared to a year ago in part aided by interest rates, according to the Canadian Real Estate Association.

However, sales in Vancouver and Toronto, the two largest domestic markets, remained “well below” the levels achieved before mortgage stress tests were introduced last year, the association said.

Sales rose by 3.5 per cent in July compared with June and by 12.6 per cent versus the same month in 2018, the association’s figures show.

The Bank of Canada kept interest rates at 1.75 per cent last month after raising them five times from 2017 to last Oct.

“The extent to which recent declines in mortgage interest rates have helped lift sales activity varies by community and price segment,” CREA President Jason Stephen said in a statement. “All real estate is local.”

The number of new listings was almost flat, easing by 0.4 per cent in July as increases in Calgary, Toronto and Edmonton offset a decline in B.C. and Montreal, CREA said.

House prices were similar with gains of 0.6 per cent month on month and 0.2 per cent from a year ago.

“Sales continue to rise in housing markets where the mortgage stress test had little impact due to upbeat local economic conditions and a supply of affordably priced homes,” CREA Chief Economist Gregory Klump said in the statement.

“Meanwhile, the mortgage stress test is doing no favours for homebuyers and sellers alike in places facing challenging local economic prospects and subdued consumer sentiment.”

Financial Post

Angela Calla is a 15 year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from a sales will help build a new emergency room at Eagle Ridge Hospital. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

About twice a year, one of the big Canadian banks likes to run an advertising campaign for their cash back mortgages. These are mortgages usually with 5 year terms where you receive a certain percentage back in cash. The percentage varies from 1% to 5% in most cases. You can use these funds to build a fence, landscape, buy window coverings etc. The idea is to be able to pay for some things that you would not be able to as you put all your money into the down payment and closing costs and need some help to get started.

1- There are multiple lenders who have cash back mortgages. Don’t jump at the first one you see. They all have different terms and conditions.
2. You are really getting a loan on top of your mortgage. The interest rate is calculated so that by the end of the term you will have paid the lender back the money they gave you and a little bit extra. Sometimes this little bit extra may be twice as much as you got in cash back.
3 – The average cash back mortgage is a 5 year term. Most Canadians move every 30 months. Therefore when you break a cash back mortgage you have to pay a penalty as per usual but you also have to pay back a portion of the loan that they gave you. If you are 36 months into a 60 month mortgage, you have to pay them back 2 years’ worth or 40% of the cash back. Combined with the penalty this can be a hefty sum. In addition, there are some lenders who require you to pay back 100% of the cash back if you want to break the term.

Before signing for a cash back mortgage it’s better to discuss your needs with The Angela Calla Mortgage Team.  We can advise you on cash backs, line of credit, Purchase plus Improvements or Flex Down mortgages which may be better for your situation.

– David Cooke

Angela Calla is a 15 year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from a sales will help build a new emergency room at Eagle Ridge Hospital. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

There is always a lot of talk about the growing debt in the personal finances of everyday Canadians. And to some extent, it may be true. No doubt, many consumers have gotten used to throwing things on a credit card and then moving on to the next big purchase. The federal government was so concerned about personal debt, they enacted a bunch of rules related to qualifying for a mortgage in an effort to cool off the market. The politicians in Ottawa were concerned a sub-prime mortgage fiasco like the one that devastated the U.S. and world economy a decade ago would happen in Canada. You could argue, the intentions of these tougher qualifying rules were noble, but evidence suggests these measures weren’t really warranted. The most recent numbers by the Canadian Bankers Association (CBA) seems to dispel the concerns by the federal government.

According to the CBA, at the end of January 2019, just .25 per cent of mortgages through the major banks were in arrears of three months or more. For more perspective, out of the 4.75 million mortgages in Canada through the banks, 11,742 were in arrears. That’s basically statistically insignificant. And what it also seems to suggest, is that Canadians are actually very responsible when it comes to paying their biggest bill on time.

A closer look at the numbers also appear to blow Ottawa’s case for tough mortgage rules out of the water.

The hottest markets during the last decade were Ontario and B.C. Home prices skyrocketed in cities like Vancouver and Toronto, the average price of a single-family home climbed to more than $1 million.

There was a wide concern that homebuyers were taking on too much mortgage and would end up under water. Again, the CBA’s stats seem to suggest otherwise. Both B.C. and Ontario have the lowest rate of arrears among the provinces. In Ontario, just .10 per cent of mortgages are in arrears, while in B.C., it’s slightly higher at .15 per cent. Just 955 mortgages in B.C. were in arears at the end of January 2019 out of more than 643,000. The Atlantic province had the highest percentage of mortgages in arrears at .52 per cent.

Obviously any amount of people struggling to keep their home is unfortunate. It would be ideal if not a single homeowner defaulted on their mortgage. With an election this fall, it’s anyone’s guess where the mortgage qualifying rules are going to go. But statistically speaking, the mortgage industry is on very solid ground and Canadians are more than capable of paying their mortgage on time.

Angela Calla is a 15 year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from a sales will help build a new emergency room at Eagle Ridge Hospital. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

Oftentimes even the most organized and detail oriented first-time homebuyer can overlook some unexpected costs that come with the purchase of their new home. We are outlining four of the costs that we most commonly see overlooked by homebuyers in hopes that we can better prepare you—and save you from a few surprises!

1. Closing Costs

   Congratulations! Your offer was just accepted on your new home, you’re one step closer to adding a major asset to your portfolio! We don’t want to shock or dampen the excitement of this moment. However, it’s important that you factor in closing costs right at the beginning of your purchase. The best time to do this is before even applying for your pre-approval or making any offers on a home. Closing costs may include:

   • insurance
   • taxes (Land Transfer, Property, and others depending on what province you are in)
   • legal/notary fees
   • inspection/appraisal fees.

   A general rule of thumb is to set aside 1.5 per cent of the purchase price to account for the closing costs above. To plan ahead, consider speaking to a mortgage broker and your realtor. They can help you determine just how much you should set aside to accommodate those additional closing costs.

2. Utility Bills

If you’ve gotten used to living in a small space, such as a condo or an apartment, you may be surprised how much more water, heat, and energy you consume in a larger space such as a detached home or a townhouse. It’s important to prepare for these as you do not want to have a “surprise” when your bill arrives in the mail and it’s nearly double what you are used to spending!

Factoring in these bills is also crucial if you are going from renting to owning! Often times the landlord will cover a portion of your utility bills or your cable/internet depending on the contract you had with your landlord. Of course, once you are a homeowner, you are covering the entire cost! Ask family members, friends, even your mortgage broker or realtor what is a realistic cost for things such as cable and internet, water, heat, etc. You’d be surprised how fast they can add up!

3. Renovations and Updates

Unless you bought a newly built, brand new home, there is undoubtedly going to be future renovations and updates that you will need to do on your home. They may not need to happen right when you move in, but sometimes the unexpected does happen and having money set aside can make a world of difference! When you have your home inspection completed, make a prioritized list of what will need to be fixed/updated first and set aside money each month for it. In addition to the “must do” updates/renovations, new property owners may also want to make aesthetic improvements, whether they mean to reside there or not. Naturally, a homeowner wants to make the place feel more like their own, and investors want to add value their investment or make adjustments to make the asset more aesthetically pleasing.

4. Ongoing Maintenance

Homes require maintenance—all the time! Ask any homeowner and they will tell you that there is always home maintenance in one form or another happening.
A few common home maintenance costs may include:

• Gutter cleaning
• Roof repair/maintenance
• Drywall repair
• Furnace cleaning
• HVAC and Duct cleaning
• General plumbing and electrical fixes

Every home is different in regards to how much you should budget annually for regular maintenance. It will depend on the age of your home, square footage, climate in your region, and overall condition of your home.

In closing, property ownership shouldn’t be dampened by financial rules caused by lack of preparation. All of these costs, as well as additional other costs, are easy to plan ahead for and to ensure that you have budget set aside each and every single month to make sure that you stay on track. As a rule of thumb, the CMHC states that your housing costs including mortgage payment should not exceed 39 per cent of your monthly income. Treat this number as a point of reference when you’re doing your budget and consider leaving room for the unexpected. It’ll give you peace of mind on the long run and allow you to actually enjoy your new home!

Angela Calla is a 15 year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from a sales will help build a new emergency room at Eagle Ridge Hospital. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

The Women’s Collaborative Hub (WCH) is looking for unsung women heroes to honour and celebrate.

Nominations are open for the third annual WCH Women Influencer Awards, put on by the group that encompasses Coquitlam, Port Coquitlam, Port Moody, Pitt Meadows and Maple Ridge. This year’s event will be held Nov. 17 at the Hard Rock Casino Vancouver in Coquitlam.

The awards recognize women who make a positive difference to those around them and whose influence benefits the community.

In 2018, WCH received 110 nominations that were considered by 32 community judges in a two-stage independent process.

“We found, supported by independent, global research, that women have a tendency to avoid promoting themselves and their accomplishments,” said Hub co-founder Sandra Horton in a press release. “We saw an opportunity, through the Women Influencers Awards, for the community to acknowledge their accomplishments for them in order to inspire confidence and self-esteem. These women do so much for our communities, and they deserve to be recognized.”

The categories for nomination are for beyond the call of duty, sustainability champion, inspirational Wonder Woman, exceptional educator, emerging influencer, extraordinary leader, community steward, Indigenous leader, and new immigrant influencer. Nominations can be made online at womenscollaborativehub.com/awards. The deadline is noon on Oct. 4.

The event’s MC will be mortgage specialist Angela Calla with Lotte Davis, founder of One Girl Can, as the keynote speaker.

-newsroom@tricitynews.com

Angela Calla is a 15 year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from a sales will help build a new emergency room at Eagle Ridge Hospital. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

With the return of a buyer’s market, finally a reduction in the qualifying rates assists both people buying a home or people looking to access to their equity to take advantage of the situation.

1. If you are currently shopping for a home, review your pre-approval with your mortgage broker. On a $500,000 mortgage, the new rate increases your buying power on average by $10,000. This could be the difference in you winning the bid, getting that extra parking spot or slightly higher square footage.
2. Rates have been going down; that coupled with the recent qualifying rate reduction could improve your rate and cash flow as well.
3. If you have an existing mortgage with a rate more than 3.2 per cent, it’s worth a review to see if it’s beneficial to break it and get a new term. Everyone’s scenario will be different based on their existing equity, income, credit and their lender. A mortgage professional can guide you through it. Once those numbers are worked out, it will be easy to make a decision based on the numbers after penalty and costs.

In this ever changing mortgage market, it’s been incredibly exciting to see homebuyers entering the market after a few rough years and getting some relief! Looking forward to more changes to come with the Bank of Canada and how the federal government’s homebuying plan will roll out in upcoming months.

Stay tuned and here to help with any clarity.

Angela Calla is a 15 year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from a sales will help build a new emergency room at Eagle Ridge Hospital. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

The interest rate used by the federally regulated banks in mortgage stress tests has declined for the first time since 2016, making it a bit easier to get a mortgage. This is particularly important for first-time homeowners who have been struggling to pass the B-20 stress test. The benchmark posted 5-year fixed rate has fallen from 5.34% to 5.19%. It’s the first change since May 9, 2018. And it’s the first decrease since Sept. 7, 2016, despite a 106-basis-point nosedive in Canada’s 5-year bond rate since November 8 (see chart below).

Five-Year Canadian Bond Yield

The benchmark qualifying mortgage rate is announced each week by the banks and “posted” by the Bank of Canada every Thursday as the “conventional 5-year mortgage rate.” The Bank of Canada surveys the six major banks’ posted 5-year fixed rates every Wednesday and uses a mode average of those rates to set the official benchmark. Over the past 18-months, since the revised B-20 stress test was implemented, posted rates have been almost 200 basis points above the rates banks are willing to offer, and the banks expect the borrower to negotiate the interest rate down. Less savvy homebuyers can find themselves paying mortgages rates well above the rates more experienced homebuyers do. Mortgage brokers do not use posted rates, instead offering the best rates from the start.
The benchmark rate (also known as, stress test rate or “mortgage qualifying rate”) is what federally regulated lenders use to calculate borrowers’ theoretical mortgage payments. A mortgage applicant must then prove they can afford such a payment. In other words, prove that amount doesn’t cause them to exceed the lender’s standard debt-ratio limits.

The rate is purposely inflated to ensure people can afford higher rates in the future.

The impact of the B-20 stress test has been very significant and continues to be felt in all corners of the housing market. As expected, the new mortgage rules distorted sales activity both before and after implementation. According to TD Bank economists in a recent report, “The B-20 has lowered Canadian home sales by about 40k between 2017Q4 and 2018Q4, with disproportionate impacts on the overvalued Toronto and Vancouver markets and first-time homebuyers…All else equal, if the B-20 regulation was removed immediately, home sales and prices could be 8% and 6% higher, respectively, by the end of 2020, compared to current projections.”

According to Rate Spy, for a borrower buying a home with 5% down, today’s drop in the stress-test rate means:

• Someone making $50,000 a year can afford $2,800 (1.3%) more home
• Someone making $100,000 a year can afford $5,900 (1.3%) more home
  (Assumes no other debts and a 25-year amortization. Figures are rounded and approximate.)

For a borrower buying a home with 20% down, today’s drop in the stress-test rate means:

• Someone making $50,000 a year can afford $4,000 (1.4%) more home
• Someone making $100,000 a year can afford $8,300 (1.4%) more home
  (Assumes no other debts and a 30-year amortization. Figures are rounded and approximate.)

Bottom Line: Almost no one saw this coming due to the stress test rate’s obscure and arcane calculation method (see Note below). This 15 basis point drop in in the qualifying rate will not turn the housing market around in the hardest-hit regions, but it will be an incremental positive psychological boost for buyers. It should also counter, in some small part, what’s been the slowest lending growth in five years.

Note: Here’s the scoop on why the qualifying rate fell. According to the Bank of Canada:
“There are currently two modes at equal distance from the simple 6-bank average. Therefore, the Bank would use its assets booked in CAD to determine the mode. We use the latest M4 return data released on OSFI’s website to do so. To obtain the value of assets booked in CAD, simply do the subtraction of total assets in foreign currency from total assets in total currency.”

The BoC explains further:

“Prior to July 15th, we were using April’s asset data to determine the typical rate as that was what was published on OSFI’s website. On July 15th, OSFI published the asset data for May, and that is what we used yesterday to determine the 5-year mortgage rate. As a result, the rate changed from 5.34% to 5.19%.”

-Dr. Sherry Cooper

Angela Calla is a 15 year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from a sales will help build a new emergency room at Eagle Ridge Hospital. Angela can be reached at callateam@dominionlending.ca or 604-802-3983.

Reverse mortgages are continuing to grow as a retirement solution for Canadians 55+. Homeowners 55+ are unlocking their home equity for tax-free funds that improve their cashflow and pay-off higher interest loans. Consider your own financial needs. Do any of these 5 common scenarios sound familiar?

1) You have missed a payment/made a late payment.
Credit card payments can become a vicious cycle; you make monthly interest payments and elongate the process of chipping away at that debt. Alleviate the stress of credit card debt by consolidating smaller loans with a reverse mortgage at a much lower interest rate. By consolidating your debt with a reverse mortgage, you can eliminate the stress of having to make monthly payments towards your loan and in turn, free up your monthly income.

2) You have asked to skip a payment or are accessing your investments earlier than you’d like.
If your debt has led to missing payments or touching your RRIF or retirement accounts, consider using a reverse mortgage to unlock up to 55% of your home equity. This way you can pay off debts while your investments keep working for you.

3) You want to start crossing things off your bucket list, yet can’t afford to.
Maybe your dream is to purchase a second home like a cottage, take a vacation, or even just dine out or attend the theatre regularly. A reverse mortgage can improve your retirement lifestyle by supplementing your monthly income without affecting your OAS and pension.

4) You want to financially assist your aging parents/kids/grandkids.
As the sandwich generation, you’re caring both for kids and aging parents. That can place huge financial stress on a household. A reverse mortgage can give both you and your aging parents financial independence and the ability to help your kids/grandkids pay for their education or even assist with a down payment for their home.

5) You are facing unexpected expenses.
Maybe it’s a leaky roof or a flood in your basement. Or you might have to renovate your home, allowing you to stay in your home long term. A reverse mortgage gives you quick access funds to pay for unplanned expenses without worrying about making any payments until you move or decide to sell your home.

If any of the above examples resonate with you, the CHIP Reverse Mortgage from HomeEquity Bank could be a great solution. Choose to receive funds as a lump sum or a monthly advance, depending on your needs. The Angela Calla Mortgage Team can tell you more!

-Eric Bisaillon