August 2023 Monthly Newsletter

General Angela Calla 9 Aug

This month we are covering what you need to know about converting your basement into an income suite, plus we have some fun summer BBQ tips! Also, hear the economic forecast straight from our Chief Economist, Dr. Sherry Cooper!

Converting Your Basement to an Income Suite

With the current interest rates and economic scenarios, many Canadians may be looking for ways to bring in some extra cash. One option for this is to put your home equity to work and consider renovating your basement into a legal income suite!

You can do this by using a secured credit line (home equity line of credit or HELOC) to help fund the upfront cash to make changes to your home.

A few things to consider before you invest in renovating to create an income suite include:

Zoning: Before looking into doing anything with an income suite, always double-check if you are zoned accordingly for a smooth renovation. If your zoning does not allow for secondary suites, see if you can rezone.

Local Regulations: Depending on your location, there may be particular regulations that you need to follow or be aware of regarding your suite.

A few examples of how the regulations can differ between provinces or cities include:

  • In Coquitlam, you cannot have a suite that is more than 40% of the main house floor plan. You are also required to offer a parking spot for tenants.
  • In Kelowna, you can only have one secondary suite and the home must have an “S” designation.
  • In Calgary, updated zoning legislation has now made it easier to add income suites.
  • Toronto has also proposed reforms that will make it easier to add suites.
  • In Montréal, anyone carrying out a project involving the addition of at least 1 dwelling and a residential area of ??more than 450 m² (equivalent to approximately 5 dwellings) must enter into an agreement with the City of Montréal in order to contribute to the supply of social, affordable and family housing. It can be a new building, an extension, or the conversion of a building.

Visit the official municipal websites or consult local building departments to obtain accurate and up-to-date information on the rules and requirements in your area BEFORE getting started.

Insurance & Legal Considerations: Before adding your secondary suite, ensure that you have proper insurance coverage or the ability to add additional coverage to protect both the primary residence and suite. In addition, you will want to consult a lawyer and draw up a tenant or rental agreement for any potential tenants. Ontario has a mandatory standard lease agreement that all landlords must use.

Unit Layout and Design: If the zoning and regulations in your area allow you to build an income suite, the next steps are to look at the suite layout and dimensions. Confirm any size restrictions or minimum ceiling height requirements as you are laying out the design for the unit.

The unit should have, at minimum the following:

  • A separate parking space for the renter.
  • A separate entrance, kitchen, bathroom, and living/sleeping areas.
  • Ventilation and soundproofing measures to enhance livability.
  • Consideration of natural light.
  • Interlink smoke detectors for primary and secondary residences.
  • Separate, independently-controlled ventilation and heating system.
  • Proper drainage, sewage connections, and utility separations.
  • Outlets, circuits, and lighting that meet electrical code requirements.

Ensure that however your income suite is designed, you are hiring the appropriate building, plumbing, and electrical experts to ensure your suite is up to code and avoid any potential disasters.

Building & Trade Permits: Once you have confirmed that you are properly zoned and able to add an income suite and understand all the regulations for your area, you will want to draft your blueprints and submit a permit application, along with the fee, before you get started. For instance, in B.C. you are required to have a Building Permit for any suite to be considered legal.

IMPORTANT: Even if you are not required to have a building permit, it is important to get these permits for other aspects including insurance coverage should anything happen. Having a building permit will help protect your investment.

In addition to your building permits, you will need to get permits for any plumbing, electrical, and gas renovations prior to beginning your work.

Inspections & License: Once you have your permits and have begun construction, make sure you understand what inspections are required throughout the process and you schedule them accordingly with local authorities to ensure compliance with building codes, fire safety standards, and health regulations.

If the work meets all requirements, your suite will be approved. The last step is determining if you need a business licence. This is not required if your family (parents, children, etc.) will be living in the suite. In Vancouver, for example, if you intend to rent out your suite long-term, you DO need a license. Be sure to check any rules on this in your area.

Beyond the ability to earn extra income per month, there are a few additional government incentive programs when it comes to suites including:

  • First Nations: If you live on a First Nations reserve, you may be eligible for federal funding that will provide up to $60,000 to help you build an inexpensive secondary suite rental linked to your principal home. If you live in a northern or remote area, this amount is increased 25%. This is a 100% forgivable loan that is not required to be paid back assuming all guidelines are followed.
  • Residential Rehabilitation Assistance Program (RRAP) – Secondary and Garden Suites: This program is open to all First Nations or individual First Nation members, particularly those who own a family home that can be converted to include a self-contained suite for a senior or adult with disability.
  • Multigenerational Home Renovation Tax Credit: A credit for a renovation that creates a secondary unit within the dwelling to be occupied by the qualifying individual or a qualifying relation. The value of the credit is 15% of the lesser of qualifying expenditures and $50,000.
  • British Columbia: Beginning in early 2024, BC homeowners will be able to access a forgivable loan of 50% of the cost of renovations, up to a maximum of $40,000 over five years, for income suites.
  • Ontario: There are multiple secondary suite programs throughout Ontario, depending on your region. These loans provide $25,000 to $50,000 in funding and are forgivable assuming continuous ownership for 15 years.

While it is important to look online and do your research. Your best resource will be visiting local authorities at the “City of” to confirm that you completely understand the considerations before moving forward with implementing an income suite.

Best Summer BBQ Tips

It’s the season of outdoor parties and a summer BBQ is the perfect way to enjoy time with friends and family!

For some tips on how to make this year’s get-together your best one yet, check out my list below:

  1. Set the Mood: String up fairy lights, plug in a radio with some of your favourite tunes in the background, put out a lawn rug, and throw a fresh tablecloth over your outdoor dining area. A few quick items can really spruce up the yard and make it feel ready for guests!
  2. Don’t Forget to Play! If you’re hosting an adult-only BBQ, setting up a table for a card game or getting out your cornhole boards can be a great way to pass the time and get in some laughs. If you have children in attendance, consider setting up a lemonade stand or fill some water balloons for an extra splash!
  3. Choose Your Mains: It can be easy to get carried away grilling steaks, fish, chicken, hot dogs, burgers – you name it! For a more successful party, choose two options. Maybe you go with hot dogs and veggie burgers, or perhaps fish and chicken. Choose items that cook well on the BBQ together and suit the tone of your get-together.
  4. Have Drinks on Hand: Set up a table with pitchers of fun summer drink concoctions (alcohol optional!) or consider filling a kiddie pool or wheelbarrow with ice to keep those beers chilled all afternoon.
  5. Put Out Snacks: This may seem like a no-brainer, but having a table filled with fun ‘grazing’ snacks can help stave off any stress about perfectly grilling your meals! Try a veggie and dip tray, fruit shish kabobs, or a charcuterie board of cured meats and cheeses.

Economic Insights from Dr. Sherry Cooper

The Bank of Canada remains staunch in its battle against inflation, utilizing its primary weapon—the overnight policy rate—which has escalated from 25 basis points to 500 bps since March 2022.

This historically low overnight rate was a direct consequence of the COVID-19 pandemic and implementing measures to cushion the economic impact of the lockdowns. These initiatives included reducing the policy rate from 1.75% to 0.25%, postponing mortgage payments, providing financial support to businesses for workforce maintenance, and compensating individuals for home quarantine. These measures, amongst others, reignited the economy upon the widespread availability of the vaccine.

The Canadian economy bounced back robustly once commercial activities resumed. Employment rates rocketed, and unemployment plummeted to all-time lows. However, the recovery faced a setback when Russia invaded Ukraine in February 2021, which caused supply constraints, and substantially increased energy and food. Despite the soaring inflation, central banks were initially hesitant to take action.

In hindsight, we now know the necessity for initiating interest rate hikes by mid-2021. Instead, this action was postponed until March 2022.

Furthermore, the Bank of Canada and other significant central banks inundated the financial system with surplus liquidity by purchasing government bonds. This quantitative easing tactic made capital not only more affordable but also readily available, sparking an unprecedented boom in the housing market.

Many exploited the record-low rates of 2020 and 2021 by opting for variable-rate loans due to their lower costs. At its zenith, variable-rate mortgages (VRMs) accounted for 57% of all loan originations. These loans are due for renewal in 2025 and 2026. However, most of these loans have reached their trigger points and are negatively amortizing, barring substantial lump-sum payments by borrowers.

For those who chose adjustable-rate loans, monthly payments increased with every Bank of Canada rate hike. Delinquency rates, for the time being, remain impressively low within the prime space, though they are beginning to rise among alternative lenders.

After reaching a zenith of 8.1% in June 2022, inflation has slowed to 2.8% in June of this year. Regardless, the Bank of Canada continued its trend of interest rate hikes following a brief hiatus in its last two meetings, with speculation of another hike in September. The Bank has provided a buffer period for itself by projecting a return to the 2% target inflation rate by mid-2025—a considerably more extended period than initially anticipated.

The recent rate hikes and moderated expectations appear prudent considering the Bank’s preference for mitigating inflation over preventing a recession. It is improbable that the Bank of Canada will reduce interest rates this year.

Although the policy rate is projected to decrease in the first half of 2024, it is not expected to return to the pre-COVID level of 1.75%. Negative real interest rates (the actual market rate minus the 2% inflation rate) are unlikely to occur, barring a global economic meltdown.

 

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

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

Click here to view the latest news on our blog. 

OSFI Takes Focused Action to Reduce Systemic Banking System Risk

General Angela Calla 3 Aug

OTTAWA ─ June 28, 2022 ─ Office of the Superintendent of Financial Institutions

The Office of the Superintendent of Financial Institutions (OSFI) released a new Advisory (Clarification on the Treatment of Innovative Real Estate Secured Lending Products under Guideline B-20). The Advisory complements existing expectations under Guideline B-20, which articulates OSFI’s expectations regarding underwriting practices and procedures for reverse residential mortgages, residential mortgages with shared equity features and combined loan plans.

As shared in its Annual Risk Outlook (2022-23), OSFI is taking action to ensure that federally regulated financial institutions are well prepared to address the risk of persistent, outstanding consumer debt that can make lenders more vulnerable to negative economic shocks. Accordingly, this Advisory outlines regulatory expectations with respect to Combined Loan Plans (CLPs), loans with shared equity features, and reverse mortgages.

CLPs are an innovative product that have become the predominant uninsured real estate secured lending (RESL) offering, and they can provide great value to Canadians. As their structures evolve, so too must our approach and treatment of such exposures. The most significant concern with these products is the re-advanceability of credit above the 65 percent Loan-to-Value (LTV) limit. Products structured in this way could lead to greater persistence of outstanding balances and increase risks to lenders and households.

For most borrowers using CLPs, these changes will have no effect on the way that they use their products. For those who owe more than 65 percent LTV, there will be a gradual period where a portion of their principal payments will go towards reducing their overall mortgage amount until it is below 65 percent of its original loan to value and not be re-advanceable. This will typically happen the next time borrowers renew their CLP after the end of October or December 2023 depending on the lender’s fiscal year.

Sound mortgage underwriting remains the cornerstone of a healthy residential mortgage lending industry. We are confident that our actions today are responsible, fit for purpose and contribute to its continued resilience. By acting prudently, making evidence-based decisions, engaging with regulatory partners, and being clear about our expectations of lenders, OSFI is building a foundation of stability regardless of what lies ahead.

Quote

“OSFI is continuously monitoring the economic environment for a range of vulnerabilities that could pose a risk to the health of Canada’s financial system. Today, we have asked federally regulated financial institutions to make their innovative mortgage products safer and more sustainable over the long term. We are confident that our actions today will contribute to the continued resilience of Canada’s residential mortgage lending industry, and in turn of our financial system.”

– Peter Routledge, Superintendent

Quick Facts

  • Consumers will not see an increase to their monthly payment requirements as a result of this change.
  • This action will not impact new homebuyers.
  • Uninsured real estate secured lending (RESL) offering refers to residential mortgages with a 20 percent down payment or more.
  • Combined Loan Plans (CLP) are typically a traditional, amortizing mortgage loan blended with a revolving line of credit.
  • As of March 2022, CLPs that are above 65% LTV account for $204Bn of the $1.8Tn total outstanding residential mortgages as per Bank of Canada data.
  • In the case where a borrower has exceeded the 65% LTV ratio, a portion of that principal payment will be required to go towards principal repayment, gradually reducing the overall CLP borrowing limit to the 65% LTV threshold.
  • The implementation date for federally-regulated lenders with October 31st Fiscal Year End will be October 31, 2023. For federally-regulated lenders with December 31st Fiscal Year End, the implementation date will be December 31, 2023. Consumers with CLPs will not see a change to their product structure until their next renewal after these dates.

 

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

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

Click here to view the latest news on our blog. 

The Canadian Mortgage Market is at the Precipice of an Evolutionary Shift

General Angela Calla 27 Jul

The Canadian mortgage market is at the precipice of an evolutionary shift as it ventures into a post-pandemic environment.

 

With the 2023 Residential Mortgage Industry Report from the Canada Mortgage and Housing Corporation (CMHC) now available, CMHC 2023 Residential Report

a roadmap has been provided for the mortgage industry moving forward, outlining crucial insights into future prospects for real estate professionals of all stripes.

 

An important trend emerging from the report is the prominent ascent of non-bank lenders, a significant factor contributing to a transformative shift in the mortgage landscape. These lenders have been increasing their hold on the market share thanks to their competitive rates and flexible terms, which cater to a broad spectrum of borrowers. As these non-bank entities continuously innovate and remodel themselves to cater to dynamic consumer needs, we foresee them becoming progressively influential players in the mortgage arena.

 

Another central agent of change in the mortgage industry is the emergence of new technology, including AI. The CMHC report underscores the growing role of digital platforms in the mortgage approval process. This trend, catalyzed and expedited by the pandemic, has streamlined the mortgage process, making it quicker, more efficient, and, importantly, more accessible for borrowers. In the future, we envisage technology taking further leaps, with artificial intelligence and machine learning assuming a crucial role in risk evaluation and decision-making.

 

Government policies will invariably persist in molding the future shape of the mortgage market. The government’s pandemic response significantly impacted mortgage lending practices, especially its provisions to buttress homeowners and stimulate the housing market. As we navigate the road ahead, we expect government policies to keep pace with fluctuating market conditions, emphasizing stability and mitigating potential risks.

 

Though the Bank of Canada chose to pause rate hikes earlier in 2023, there has been growing speculation that increases in lending rates could be on the way. As the conditions the BoC laid out for pausing the rate hikes are no longer being met due to stronger-than-expected GDP numbers and an increasing inflation rate, we could expect another rate hike by the end of the year. That said, the overall outlook for the remainder of the year will likely be contingent on regional conditions, with smaller, presently affordable markets likely to maintain their stability.

 

Nevertheless, these shifts are not devoid of challenges. The growing presence of non-bank lenders and the mounting reliance on technology in the mortgage process could inadvertently lead to an increased risk quotient in the housing market. Regulatory bodies must keep a close watch on these developments and stand ready to intervene as needed to uphold market stability.

 

In conclusion, the future of the Canadian mortgage market will likely be sculpted by intensifying competition, rapid technological advancements, and flexible government policies. As we traverse this ever-changing landscape, it will be vitally important for borrowers to stay informed and collaborate with trusted professionals to make prudent decisions for their financial future. With an increasingly complex and dynamic mortgage industry landscape, we are on the cusp of an era that could define the future of housing finance in Canada for years to come.

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

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

Click here to view the latest news on our blog. 

CPI Inflation Falls To 2.8%–Inside the BoC’s Target Range

General Angela Calla 19 Jul

Canadian Inflation Falls Within Bank of Canada’s Target Range; Food and Shelter Costs Remain High

June inflation data released today by Statistics Canada showed that the Consumer Price Index (CPI) rose 2.8% year-over-year (y/y), slightly below expectations. This was the lowest CPI reading since February 2022.

The decline in inflation was mainly due to lower energy prices, which fell by 21.6% y/y. Without this decline, headline CPI inflation would have been 4.0%. The year-over-year decrease resulted from elevated prices in June 2022 amid higher global demand for crude oil as China, the largest importer of crude oil, eased some COVID-19 public health restrictions. In June 2023, consumers paid 1.9% more at the pump compared with May.

Food and shelter costs remained the two most significant contributors to inflation, rising by 9.1% y/y and 4.8% y/y, respectively. Food prices at stores have risen nearly 20% in the past two years, the most significant rise in over 40 years. Shelter inflation rose slightly from 4.7% y/y in May.

The largest contributors within the food component were meat (+6.9%), bakery products (+12.9%), dairy products (+7.4%) and other food preparations (+10.2%). Fresh fruit prices grew at a faster pace year over year in June (+10.4%) than in May (+5.7%), driven, in part, by a 30.0% month-over-month increase in the price of grapes.

Food purchased from restaurants continued to contribute to the headline CPI increase, albeit at a slower year-over-year pace in June (+6.6%) than in May (+6.8%).

Services inflation cooled to 4.2% y/y from 4.8% y/y in May. This was due to smaller increases in travel tours and cellular services.

The Bank of Canada’s target range for inflation is 1% to 3%. While June’s inflation reading was within the target range, it is still higher than the Bank would like. The Bank raised the overnight policy rate twice in the past two months to reduce the stickier elements of inflation.

There were signs of easing price pressures for consumer goods also. Durable goods inflation continued to cool to 0.8% y/y in June. Passenger vehicle prices rose slower in June (+2.4%) than in May (+3.2%). The year-over-year slowdown resulted from a base-year effect, with a 1.5% month-over-month increase in June 2022 replaced with a more minor 0.6% month-over-month increase in June 2023. This coincided with improved supply chains and inventories compared with a year ago. Household furniture and equipment was up only 0.1% y/y in June, down from a peak of 10.5% last June.

The June inflation data provides some relief to consumers, but it is clear that food and shelter costs remain a major concern. The Bank of Canada will closely monitor inflation in the coming months to see if it is on track to return to its 2% target. There is another CPI report before the Bank meets again on September 6th.

The Bank of Canada’s underlying inflation measures cooled further in May. CPI-trim eased to 3.7%y/y in June from 3.8% y/y in May, and CPI-median registered 3.9% versus 4.0% y/y in May. The chart below shows the closely watched measure of underlying price pressures, the three-month moving average annualized of the core measures of CPI. They continue to be just under 4%.

Canadian inflation continued to make encouraging progress in June. However, the cooling in headline inflation benefits from sizeable base effects due to the favourable comparison to high energy prices last June. The Bank of Canada (BoC) is watching its preferred core measures, which continue to show glacial progress.

Bottom Line

It takes time for the full effect of interest rate hikes to feed into the CPI. Mortgage interest costs will continue to rise as higher interest rates flow gradually through to household mortgage payments with a lag as contracts are renewed.

BoC Governor Macklem emphasized last week that the Bank has become worried about the persistence of underlying inflation pressures in the economy. The June inflation data likely provides some reassurance that things are moving in the right direction, but not fast enough for the Bank of Canada to let its guard down.

The BoC is facing a difficult balancing act. It needs to raise interest rates enough to bring inflation under control, but it also needs to be careful not to raise rates so high that it causes a recession. The next few months will be critical for the BoC as it assesses the risks of inflation and recession.

(Courtesy of Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres)

 

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

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

Click here to view the latest news on our blog. 

Bank of Canada Hikes Policy Rate By 25 BPs to 5.0%–Highest in 22 Years

General Angela Calla 13 Jul

Interest Rates Will Stay Higher For Longer

The Bank of Canada increased the overnight policy rate by 25 basis points this morning to 5.0%, its highest level since March 2001. Never before has a policy action been so widely expected. Still, the Bank’s detailed outlook in the July Monetary Policy Report (MPR) suggests stronger growth and a longer trajectory to reach the 2% inflation target. The Bank of Canada believes the economy is still in excess demand and that growth will continue stronger than expected, supported by tight labour markets, the high level of accumulated household savings, and rapid population growth. “Newcomers to Canada are entering the labour force, easing the labour shortage. But at the same time, they add to consumer spending and demand for housing.”

The Bank forecasts GDP growth to average 1.0% through the middle of next year–a soft landing in the economy. “This means the economy moves into modest excess supply in early 2024, and this should relieve price pressures. CPI inflation is forecast to remain about 3% for the next year, before declining gradually to the 2% target in the middle of 2025.” This is about six months later than the Bank expected in April. This means that high-interest rates remain higher for longer.

While Canadian inflation has fallen quickly, much of the downward momentum has come from lower energy prices and base-year effects as large price increases last year fall out of the year-over-year inflation calculation. We are still seeing large price increases in a wide range of goods and services. Our measures of core inflation—which we use to gauge underlying inflationary pressures—have come down, but not as much as we expected.

There continue to be large price increases in a wide range of goods and services. Measures of core inflation have come down, but by less than expected (see chart below). One measure of core inflation–which removes food, energy and shelter prices, remains elevated and will likely continue to be sticky.

To remove base effects, the Bank looks at three-month rates of core inflation, which have remained at 3.5% to 4.0% since September 2022, almost a percentage point above the Bank’s expectations at the beginning of this year.

In addition, labour markets remain tight. Although the jobless rate has risen to 5.4%, that is still low by historical standards. The unemployment rate was at 5.7% when the pandemic began, which was considered close to full employment at the time. Job gains have been robust, with about 290,000 net new jobs created in the first six months of 2023. Many new entrants to the labour market have been hired quickly, and wage growth has been about 4% to 5%.

The faster-than-expected pickup in housing resales, combined with a lack of supply, has pushed house prices higher than anticipated by the Bank of Canada in January (see chart below). According to the MPR, “the previously unforeseen strength in house prices is likely to persist and boost inflation by as much as 0.3 percentage points by the end of 2023, compared with the January outlook.”

Bottom Line

As always, the next steps by the Bank of Canada will be data-dependent. Interest rates will remain higher for longer if the Bank is correct that inflation will not reach its 2% target until 2025. We also cannot rule out more rate hikes in the future. This morning, the US inflation data for June were released, showing a marked decline from 4% in May to 3% in June. Markets rallied worldwide, taking Canadian bond yields down despite the BoC tightening. The hardship caused by the continued rise in mortgage rates is already evident. OSFI recently announced the possibility of higher capital requirements for federally insured financial institutions on mortgages with loan-to-value ratios above 65% that have unusually high amortizations. This proposal is now out for consultation. It seems OSFI and the federal consumer watchdog are working at cross purposes.

(Courtesy of Chief Economist, DLC – Dr. Sherry Cooper)

 

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

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

Click here to view the latest news on our blog. 

‘Devastating news’: B.C. premier worries about rising interest rates for residents

General Angela Calla 13 Jul

B.C. Premier David Eby said the Bank of Canada interest rate rise Wednesday is “devastating news” for families that have debt.

“They borrowed money for various reasons to get through,” he said at the annual premier’s meeting in Winnipeg. “A lot of businesses in British Columbia borrowed money to get through the pandemic. They’re struggling under the weight of that debt.”

The Bank of Canada has raised its benchmark interest rate by another 25 basis points, bringing it to levels not seen since 2001 amid fears the decline in inflation “could stall.”

Economists say the latest move is a warning to Canadians not to expect rate cuts anytime soon, and that future rate hikes are not off the table. The central bank’s key interest rate now stands at 5.0 per cent following back-to-back increases.

Eby said he worries about the full impact of the high key interest rate.

“You really do have to wonder when the Bank of Canada is going to take a pause and see what the impact of this is going to be,” he added. “We haven’t seen the full impact yet. People have not renewed their mortgages yet. And the businesses that are struggling under debt have not started going under yet. But they will those jobs will be lost. And it won’t just be in British Columbia. It’ll be across the country.”

Angela Calla, author of The Mortgage Code, told Global News that this interest rate means Canadians who do have a mortgage coming up for renewal in the next year should not wait to get their rate hold.

“Rate holds can be held for 120 days,” she said. “There is no cost to get a rate hold and then allow the timing of the market to determine what the best option is for you. We certainly don’t expect decreases in the next year, so having that in mind can give you the power to shop early with any mortgage renewal or purchase.”

Calla added that more increases are expected until the Bank of Canada gets inflation in line.

View the videos here: Global News

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

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

Click here to view the latest news on our blog. 

Bank of Canada Raises 25 Basis Points

General Angela Calla 12 Jul

The Bank of Canada (BoC) has made the decision to increase interest rates by 0.25% today.  You can view the announcement here: Bank of Canada Announcement

Here are a few key points to consider regarding this rate increase:

  1. Borrowing Costs:  With the rate hike, borrowing costs for individuals and businesses will likely increase. This affects mortgage rates, credit card rates, and loans. If you have any outstanding debt or are planning to take on new debt, it would be advisable to reassess your options and consider the potential impact of the higher interest rates. The financial impact it has is approx. $16 dollars per 100k in borrowed funds on a 25-year amortization. Ensure to get a rate hold if you are coming up for renewal or plan to make a purchase in the next 6 months.  Here is our app to download to see what a current payment can look like for you My Mortgage Toolbox.
  2. Fixed-Income Investments: The increase in interest rates may have an impact on fixed-income investments such as bonds and GICs. Generally, when interest rates rise, the value of these investments can decline. It would be beneficial to review your fixed-income holdings and discuss any necessary adjustments to your investment strategy with a financial planner, we can make an introduction for you by simply replying to this email address with your phone number.
  3. High Interest Savings Accounts: Interest rates are at an all-time high in today economic environment so those to looking to make a purchase in upcoming years can benefit from that silver lining along with the new First Home Savings Account.

If you have any questions or concerns regarding this rate increase or its potential impact on your mortgage or HELOC, for you or a loved one please feel free to reach out to us directly. We are here to support you and help you achieve your financial goals even in the face of market fluctuations.

 

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

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

Click here to view the latest news on our blog. 

Bank of Canada benchmark rate expected to reach a 22-year high of 5% this week

General Angela Calla 11 Jul

The Bank of Canada is widely expected to deliver a second consecutive quarter-point rate hike this Wednesday, which would bring its benchmark lending rate to a 22-year high of 5%.

It would also imply a similar increase to the prime rate by week’s end, bringing it to 7.20%. That would have an immediate impact on borrowers with a variable-rate mortgage or a personal or home equity line of credit.

Forecasts from all of the Big 6 banks, as well as 20 of 24 economists polled by Reuters, expect the Bank to hike rates at this week’s monetary policy meeting.

Observers say it’s unlikely that the Bank of Canada would have ended its rate pause last month for the sake of a single quarter-point increase, and that key economic data reports in recent weeks haven’t been weak enough to avert another hike.

“If the Bank thought policy wasn’t sufficiently restrictive on June 7, a single 25-bps rate increase last month probably wouldn’t be enough to bring things into balance,” economists from National Bank noted in a research note. “It’s true that recent data haven’t been as unambiguously strong as they were between the last two meetings, but data also probably weren’t weak enough to change their assessment in a material way.”

What the forecasters are saying…

On the rate decision:

  • National Bank: “The BoC has been notoriously difficult to predict this hiking cycle, half of their 12 decisions since January 2022 coming out different than markets anticipated going in. So our message is this: expect a hike… but don’t be shocked if the BoC holds. They’ve done it before, and they could very well do it again.”

On the Monetary Policy Report

  • BMO: “The 2023 GDP growth forecast will likely get an upgrade after the Q1 beat. In addition, Q2 GDP could get a modest bump higher from the 1% estimate in April. The Q3 forecast will be introduced, and expect something in the 0%-to-1% range. We’ll be watching to see if the upgraded growth history/near-term forecast impacts the timing of the closing of the output gap and, in turn, when inflation returns to the 2% target. Recall that the April MPR forecast had inflation returning to target at the end of 2024.”

On BoC guidance:

  • National Bank: “Looking ahead, we don’t think the BoC will explicitly guide to additional rate increases in the press release (just as they didn’t in June), but we also don’t expect another pause declaration. Rather, they might introduce some less aggressive language that stresses the importance of moving more cautiously at clearly restrictive policy settings. A ‘dovish hike’ would take the pressure off September and allow a full three months to assess the impact of these latest 50 bps of hikes (in addition to the earlier 425 bps). We do expect that July’s hike will be the last of the cycle as the economy more clearly weakens over coming months.”

On rate cuts:

  • Scotiabank: “It wasn’t long ago that markets were pricing BoC rate cuts to have been delivered by now. Note the plural reference. This easing of financial conditions was premature and the BoC had to lean against it in the face of the previously cited arguments. They have succeeded in doing so as markets have cried Uncle and are no longer pricing cuts this year or for much of next year for that matter.” (Source)

On inflation:

  • Scotiabank: “Given that inflation expectations are continuing to indicate little faith in the ability of the BoC to hit its 2% inflation target over the coming years, monetary policy is already in a race against the clock to convince businesses and households as they make decisions about potential wage gains, contracts, purchasing and investment. With each passing month that the economy remains resilient and inflation remains uncomfortably high, the BoC runs the risk of never getting control of inflation.” (Source)

On employment and GDP:

  • Desjardins: “With a full quarter of employment data, our tracking of Q2 2023 real GDP growth sits in the range of 1.5% to 2% (q/q annualized). That remains better than the 1% pencilled in by the Bank of Canada in its last Monetary Policy Report. The strong jobs print virtually assures another 25-bps hike at the Bank’s next meeting…and keeps the door open for more increases going forward. For the time being, the central bank should see the vitality of the labour market and resilience of the overall economy as warranting another rate hike.”

The latest Bank of Canada rate forecasts

The following are the latest interest rate and bond yield forecasts from the Big 6 banks, with any changes from their previous forecasts in parenthesis.

(Article courtesy of canadianmortgagetrends.com)

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

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

Click here to view the latest news on our blog. 

Appraisal Tips for Success

General Angela Calla 7 Jul

Before banks or lending institutions can consider loaning money for a property, they need to know the current market value of that property.

The job of an appraiser is to check the general condition of your home and determine a comparable market value based on other homes in your area. This is required for any buy or sell situation.

To help make the appraisal as smooth as possible and ensure you are getting top market value, check out the tips below:

  1. Clean Up: The appraiser is basing the value of your property on how good it looks. A good rule of thumb is to treat the appraisal like an open house! Stage it as you would a home for sale, clean and declutter every room, vacuum, and scrub – even consider adding a fresh coat of paint – to ensure your home is as presentable and appealing as possible. Where applicable remove personal stigma items such as alcohol or drug paraphernalia, any controversial pictures or flags, etc.
  2. Curb Appeal: First impressions can have a huge impact when it comes to an appraisal. Spending some time ensuring the outside of your property from your driveway entrance to front step is clean and welcoming can make a world of difference. Cut grass, water plants, maybe add flowers or hanging baskets to make things feel inviting and stage the yard with some lawn furniture to make it look like its own space.
  3. Visibility: The appraiser must be able to see every room of the home, no exceptions. YES, ever singly room including outbuildings, garage, closets, basement… Refusal to allow an appraiser to see any room can cause issues and potentially kill your deal. If there are any issues with any spaces of your home, be sure to take care of them in advance to allow the appraiser full access. NOTE: If there are tenants in your home, ensure you give them appropriate amount of notice for access. YES, every single room, outbuilding, closet, garage needs access. Otherwise, the appraiser will have to return at added expense to you.
  4. Upgrades and Features: Ensuring the appraiser is aware of any upgrades and features can go a long way. Make a list and include everything from plumbing and electrical to new floors, new appliances, etc. This way they have a reference as to what has been updated and how recent or professional that work was done. Knowing the age of the roof and HVAC items like water tank is important. Also, ensure the breaker box is MIN 100amps as most lenders cannot finance a home with amps under 100; older homes from the 1930 area are generally only 60amps. The same goes for knob and tube versus breaker set-ups. Upgrading is important and will add value.
  5. Be Prudent About Upgrades: While the bathroom and kitchen are popular areas, they are not necessarily the be-all-end-all for getting a higher home value. These renovations can be quite costly so it is a good idea to be prudent about how you spend your money and instead, focus on easy changes such as new paint, new light fixtures or plumbing and updated flooring to avoid breaking the bank while still having your home look fresh. Removing clutter, adding a new coat of paint and doing a deep clean will help make these spaces shine.
  6. Know Your Neighbourhood: You already know where you live better than the appraiser. Taking a look at similar homes in your neighbourhood and noting what they sold for will give you a ballpark. If your appraisal comes in low, you will be prepared to discuss with the appraiser the examples from your area and why you believe you property is worth more. In addition, keep in mind that appraisal values are based on recent sales data; if there have been zero sales in the area recently and time allows it, hold off on getting an appraisal done until some sales have been evident to ensure you’re getting the most value.
  7. Be Polite: The appraiser is there to get in and get out so let them have the run of the house while they are there. Do not follow them around and avoid asking them too many questions or making too many comments and simply be prepared should they have questions. Once they have completed the review of your home, that is a good time to bring up any comments you might have. Remember, the actual onsite inspection usually is only 15 minutes through the house but typically, the bulk of work for appraisals is at the desk, reviewing sales and other forms of research to create the appraisal report.
  8. Know The Costs: Every appraiser charges differently. If the lender allows for ordering appraisals direct, then I can shop around and fetch you the best price.

Don’t forget to contact me if you have any questions about your existing home or mortgage, or if you are looking to sell and relocate in the future!

(Courtesy of the DLC July Newsletter)

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

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

Click here to view the latest news on our blog. 

Removal of Property Transfer Tax suggested for first time Vancouver homebuyers

General Angela Calla 6 Jul

Owning a home in Vancouver can often feel unattainable for first time buyers.

The Real Estate Board of Greater Vancouver (REBGV) is calling on the provincial government to make policy changes to help with affordability.

The board met with a provincial legislative committee this week to present a list of changes to help ease the burden of house hunters.

One suggestion states the Property Transfer Tax (PTT) should be removed on any home costing under $755,000 for both new construction and resale.

Dylan Passmor has been looking to buy his first home for more than a year and could qualify if the PTT removal was implemented.

“It’s a really challenging time, affordability just seems to be getting worse,” he said.

While he’s happy advocates are pushing for policy changes, he says the recommendations don’t reflect the price tags he’s seeing on the market.

“We’re looking at two bedrooms and it’s hard to find under $800,000 and that’s a pretty average, if not a below average living environment.”

According to B.C.’s latest budget, the province made $2.2 billion dollars this fiscal year in property transfer tax revenue.

“You could look at this and say, ‘Should there even be a threshold? If we’re talking about getting first time buyers into the market, why does it really matter?’ We’re trying to be reasonable and give the government something they can work with,” said Andrew Lis, the director of economics of the REBGV.

“The government is out there saying, ‘Hey, we want to do everything we can do move the needle on affordability.’ And here’s something they already have in place, it’s a program that already exists,” Lis continued.

Without any meaningful change, people like Passmor will continue watching.

“Prices have softened a little, but I think with the interest rates having gone up with the way they did, I think that affordability is actually worse than what it was,” said Passmor.

The board’s recommendations also suggest exemptions for the flipping tax, so it does not penalize those who are most likely to move. It also recommends new homes be exempted from the tax and that the framework does not discourage investment in secondary suites.

As for rental supply, the board suggests creating a provincial rebate program for the GST required on new rental construction. It also requests an “ultra-low-cost” loan program be created for rental property developers.

(This article is courtesy of bc.ctvnews.ca)

Angela Calla is an 19-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

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

Click here to view the latest news on our blog. 

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