Canadian Housing Market Stuck In A Holding Pattern

General Angela Calla 17 Oct

Following the Bank of Canada’s third interest rate cut of the year, national home sales increased slightly in September compared to August. This follows a similar pattern of gains recorded in the months following the first two rate cuts.

Home sales recorded over Canadian MLS® Systems climbed 1.9% month-over-month in September 2024, reaching their highest level since July 2023. The Greater Toronto Area, Hamilton-Burlington, Montreal and Quebec City, Greater Vancouver and Victoria led the national increase.

“Sales gains are now three for three in the months following interest rate cuts, which is a trend even though the increases weren’t headline-grabbing,” said Shaun Cathcart, CREA’s Senior Economist. “That said, with the pace of rate cuts now expected to be much faster than previously thought, it’s possible some buyers may choose to hold off on a purchase for now. This could further boost the rebound expected in 2025 at the expense of the last few months of this year”.

New Listings

New listings posted a 4.9% month-over-month rise in September, as sellers listed properties in more significant than normal numbers for the first weeks of the month. Gains were broad-based, with most of the country’s biggest markets topping the list.

At the end of September 2024, 185,427 properties were listed for sale on all Canadian MLS® Systems, up 16.8% from a year earlier but still below historical averages of around 200,000 listings for that time of the year.

With sales rising by less than new listings in September, the national sales-to-new listings ratio eased to 51.3%, down from 52.8% in August. This measure could be reversed if all those listings increase sales in October. The long-term average for the national sales-to-new listings ratio is 55%, with a sales-to-new listings ratio between 45% and 65%, generally consistent with balanced housing market conditions.

“The beginning of September saw a burst of new supply for buyers to choose from before things generally quiet down for the winter,” said James Mabey, CREA Chair. “While some buyers may choose to take advantage, others may be inclined to wait as the bulk of future rate cuts from the Bank of Canada are now expected to show up in a matter of months as opposed to years.”

At the end of September 2024, there were 4.1 months of inventory nationally, down from 4.2 months at the end of August. The long-term average is 5.1 months of inventory, with a seller’s market below 3.6 months and a buyer’s market above 6.5 months.

 

Home Prices

The National Composite MLS® Home Price Index (HPI) inched up 0.1% from August to September; however, small ups and downs aside, the bigger picture is that prices at the national level have remained mostly flat since the beginning of the year.

The non-seasonally adjusted National Composite MLS® HPI stood 3.3% below September 2023, a smaller decline than the 3.9% declines recorded in July and August. Given the price weakness seen towards the end of 2023, negative year-over-year comparisons will likely continue to shrink.

 

Bottom Line

Potential homebuyers remain on the sidelines awaiting further rate cuts by the Bank of Canada. As long as home prices are flat, purchasers have no compelling reason to take immediate action. This should change gradually. With new supply on the market, sales should continue to rise this month.

With weak economic activity expected in Q3 and Q4, BoC rate reductions will continue well into 2025. Given standard seasonal housing activity patterns, we will likely see strong home sales in the spring. Governor Macklem has commented that more significant rate cuts would be forthcoming if the economy weakens too aggressively and inflation falls below the 2% target. This would be welcome news for housing. We expect the overnight policy rate to fall to 2.5% before the end of next year. It is now at 4.25%–well above the current inflation rate.

The September CPI data, released this morning, showed a marked decline in headline inflation to a mere 1.6% y/y. The decline was due to the September downdraft in gasoline prices, reflecting the weakening global economy. However, core inflation measures were unchanged from August to September, and gas prices have risen so far in October owing to stepped-up Middle East tensions. Nevertheless, excluding shelter costs–including mortgage interest payments, rent and renovation costs–inflation last month was 1.8%–below the Bank of Canada’s 1%-to-3% target band. This, combined with the slowdown in GDP growth, may trigger a 50 basis point rate cut at the October 23 Governing Council meeting.

Housing activity will continue to edge upward gradually through the remainder of 2024, accelerating as we approach the seasonally strong spring housing market.

 

Article courtesy of Dr. Sherry Cooper, Chief Economist – DLC

 

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. 

Navigating Clients Through Mortgage Changes

General Angela Calla 7 Oct

Navigating your clients through change to assist with homeownership goals

Recent changes in the housing market present exciting opportunities for homebuyers. As a realtor, your role is crucial in guiding clients through these updates, helping them build effective plans to achieve their homeownership goals by having them reach out to a mortgage broker to see what they are able to afford.

Knowing these new rules and guidelines will help with strategy and future goals of climbing the “real estate ladder.”

Expanded amortizations for first-time homebuyers

Starting December 15, first-time homebuyers will have access to 30-year amortizations. This change can benefit your clients in two significant ways:

1. Lower income requirement. By extending the amortization period, the income required to qualify for a home purchase decreases. This means more clients can meet the necessary criteria.

2. Reduced monthly payments. Clients will experience a decrease in their monthly payments, making homeownership more financially manageable. For instance, on a $600,000 purchase, the monthly payment could drop by approximately $250, providing greater flexibility in budgeting.

Increased insured mortgage cap to $1.5 million

For clients with high incomes but difficulties saving for a down payment, the increase in the insured mortgage cap to $1.5 million can accelerate their path to homeownership. Previously, purchasing a $1.4 million home required a down payment of $280,000. Now, as of December, clients can potentially purchase the same property with a down payment of about $115,000 — a savings of $165,000.00 in upfront requirements.

This change is also advantageous for “right-sizers” looking to downsize. It allows them to allocate more funds from the sale of their larger home toward retirement, as they can put less down on a new, smaller property. However, clients should keep in mind that closing costs, typically around 3.0 per cent of the purchase price, need to be accounted for in each scenario.

For a $600,000 purchase price, anticipate that clients will need an annual income of approximately $150,000 to meet today’s stress-test requirements.

Switching lenders at renewal: A business opportunity

While you may not initially think about how switching lenders can benefit your business, it’s essential to understand that mortgages encompass more than just interest rates. The Canadian Mortgage Charter now allows insured mortgage holders to switch lenders at renewal without undergoing a stress test. This change opens up opportunities for borrowers to shop around for better rates and terms, potentially saving them thousands of dollars.

Encourage your clients to consider lenders that don’t adhere to posted rates. This strategy can significantly reduce Interest Rate Differential (IRD) penalties.

Case in point

For example, let’s compare a $1 million mortgage with three years left on a five-year term at a 5.0 per cent interest rate:

Big bank Monoline lender
Original rate 5% 5%
Current rate 3.5% 3.5%
IRD penalty calculation (5% – posted 2%) x 3 years (5% – 3.5%) x 3 years
Total IRD penalty $55,000 $30,000

 

By choosing a monoline lender (provided qualifications are met), your client could save $25,000 in IRD penalties, allowing them to manage financial changes better and seize new opportunities.

Tax-efficient savings strategies

As well, two important tax-efficient savings methods have emerged that can empower your clients on their journey to homeownership:

1. RRSP withdrawal limit increase. The amount that can be withdrawn from an RRSP has increased from $35,000 to $60,000 per borrower. This change provides additional funds for clients to put toward their down payments.

2. First-time home saver account. Introduced in 2023, this account allows clients to save $8,000 per year in contribution room, which reduces their taxable income. Unlike RRSP withdrawals, funds from this account do not need to be repaid and any gains earned within it are tax-free. This account, however, has a sunset clause in 2028, making it vital for clients to act quickly to maximize its benefits.

These recent changes create valuable opportunities for your clients. By understanding the implications of expanded amortizations, increased mortgage caps, flexible lender options and tax-efficient savings strategies, you can help them make informed decisions on their path to homeownership.

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. 

 

BC mortgage market: What’s in store for the rest of 2024?

General Angela Calla 27 Sep

Falling interest rates have raised hopes of a market resurgence

Affordability struggles and eyewatering house prices may have weighed down homebuying activity in British Columbia over the past two years – but falling interest rates are set to spur a busier market for the remainder of this year and into 2025, with mortgage brokers already gearing up for that trend.

Residential sales across the Multiple Listings Service (MLS) in the province should jump by 4.4% by the end of the year, according to the British Columbia Real Estate Association (BCREA), and rise by over 10,000 units throughout 2025.

While the total inventory of available homes is now at its highest level since 2019 in the province thanks to tepid market activity during the first half of 2024, two summer rate cuts by the Bank of Canada – and the near certainty of more reductions before the end of this year – suggest better times are ahead for BC’s housing and mortgage markets.

Angela Calla (pictured, top left), a broker-owner based in Port Coquitlam, told Canadian Mortgage Professional that the Bank of Canada’s rate cuts (which marked the first time it had lowered rates for over four years) had boosted buyer sentiment noticeably. “We’ve seen renewed optimism,” she said, “and desire for education on different strategies. The increased engagement has been fantastic to increase Canadians’ financial literacy.”

How will further rate cuts impact the mortgage outlook?

Further cuts are on the horizon in the months ahead, with the Bank widely expected to lower its policy rate by a further 25 basis points when it meets next week (September 4).

That would bring its trendsetting interest rate to 4.25%, down from a 23-year high of 5% at the beginning of the summer, and it likely wouldn’t be the last cut the central bank makes in 2024.

Calla said a likely resurgence in market activity as rates fall means those buyers who can afford to get into the market now shouldn’t hold off. “If you’re considering a purchase, don’t wait until the rates go down further,” she said.

“More competition is coming in the marketplace. Buy and wait – don’t wait to buy, as prices will increase with a larger pool of buyers.”

For Vancouver-based broker Kyle Green (pictured, top right), the city is unlikely to see a big upswing in housing market activity before the end of the year. Still, that’s not to say buyers won’t face a potentially more challenging landscape, one that could see momentum swing back toward sellers.

That would buck a trend that’s emerged thanks to greater buyer choice and milder competition of late. “I believe Vancouver will be a relatively flat market,” Green told CMP, “potentially [seeing] some small declines in prices as the inventory has increased substantially.

“However, dropping rates may counterbalance this switch from a seller’s market to a buyer’s market which has only really been a recent phenomenon.”

Could variable rates become more appealing for buyers and homeowners?

The central bank’s recent pivot towards rate cuts doesn’t appear to have shifted sentiment in the mortgage market away from shorter-term variable options as the most popular choice among borrowers.

While rock-bottom variable rates during the COVID-19 pandemic saw many borrowers flock to those mortgage types, the Bank’s aggressive series of rate hikes throughout 2022 and 2023 meant they increasingly opted for two-to-three-year fixed options to keep their own rates steady.

Calla said that hasn’t changed markedly – not yet, at least. “Most are still gravitating towards fixed rates for a shorter term,” she said. “Variables are most attractive for very qualified borrowers with smaller-than-average mortgage amounts or those planning to sell in the next year.”

Green said his clients are also mostly inclined to go fixed, “but the tide is starting to turn right now.” The percentage of new business coming through the door and considering variable options, he said, is inching towards 50%.

Brokers should also be attuned, he said, to refinance potential for clients in the current market. “There seems to be a potential opportunity to refinance clients who took a three-year fixed in the second half of 2023,” he highlighted.

“Running the numbers, there seem to be surplus savings right now – [so] dig into your databases, brokers.”

 

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. 

September 2024 Newsletter

General Angela Calla 27 Sep

Welcome to the September issue of my monthly newsletter!
It is already September and I am excited to share my latest newsletter with you! This month, I have some details about the upcoming Fall market, along with expert tips for staging your home! Scroll down for all the details and have a great month.

2024 Fall Market Outlook

The initial Bank of Canada rate cuts this past summer did not spur housing activity as anticipated, but potentially more on the way will continue to affect the housing market outlook. New listing levels are expected to rise as sellers who may have held back enter the market with the hope that lower mortgage rates will attract additional buyers.

While the current Bank of Canada rate of 4.5% may still not be enough to make a dent in home affordability, it does provide a glimmer of hope for potential buyers as interest rates continue to fall.
Canadians across the country are anxiously awaiting additional rate cuts, promoting future home affordability. While consumer confidence is beginning to rise, mortgage affordability will need to be balanced with rising unemployment to reduce the number of households with strained budgets.
In addition, while home prices have cooled a bit, home prices in Canada remain among the highest in the world’s most advanced economies (Japan, France, Germany, Italy, and the UK). These still -high prices have resulted in many potential first-time home buyers to withdraw for now. Higher property taxes, higher qualifying stress-test rates, and the current wave of mortgage renewals will also factor into how successful the Fall market will be.
In 2023 alone, the country saw an influx of 46% of new Canadians, which also contributes to housing demands and pricing. As rates continue to drop, the hope is that prices will stabilize owing to increased supply as demand rises.
If you are looking to get into the housing market as a buyer or seller, or simply have questions so you can best prepare yourself for a future move, don’t hesitate to reach out to me!

Expert Tips for Staging Your Home

Even in a sellers’ market, there are some ways you can improve your chances of increasing the number of offers and selling your home for the best value.

Check out these expert tips for staging your home to help make the best first impression possible:

  1. Clean and Declutter: Clean, clean, and clean some more! While you might not be able to stage each room in your home, it is vital to ensure that each space is cleaned and decluttered. Especially ensure that counters, carpets, flooring, and appliances are spotless! This not only signals pride of ownership, but it helps display the potential of the spaces to buyers.
  2. Depersonalize: While you’re working through and cleaning your spaces, make sure to depersonalize along the way. Ideally, any family photos, kids’ drawings, etc, should be removed or replaced with more general photography to better appeal to potential buyers.
  3. Focus on Key Spaces: The primary areas in your home are your living room, kitchen, dining room, and master bedroom. If you are not able to get to each room, these are the ones you should focus on to ensure your home is represented as best as possible.
  4. Consider a Fresh Coat: Did you know? According to a RE/MAX Canada Renovation Investment Report, 36% of buyers prefer a fresh coat of paint! This can go a long way to making your home look new and revitalized.
  5. Boost Curb Appeal: While you’re staging your home, don’t forget about curb appeal! The exterior of your home is just as important as the interior – if not MORE important for first impressions. A good place to start would be renting a power washer to scrub down your driveway and exterior walls.

Economic Insights from Dr. Sherry Cooper

As the Bank of Canada cuts interest rates, housing activity has remained relatively weak. Existing home sales were well below historical averages in July, while new listings edged upward. Prices have plateaued, and residential mortgage originations are tepid.

Mortgage balances grew by 3% annually in Q2, the second slowest quarterly pace since 2000.

This portends a further dip in household debt-to-income ratios—welcome news, as elevated leverage drives household financial vulnerability. The central bank is widely expected to continue to cut the overnight policy rate at the remaining meetings this year and well into 2025. Monetary policy remains highly restrictive, with the policy rate at 4.5%, well above the 2.5% inflation rate.

We believe interest rates will continue to fall as the overnight rate heads for 2.75%. By later this year, housing activity is likely to pick up gradually.

In the meantime, Canadian homebuilding remains sturdy despite softness in the resale market and ongoing capacity pressures. Housing starts surged again in July. The data series is volatile, but the trend is strong at just under its recent all-time highs posted in 2021. The strength of residential starts has been dominated by multi-unit construction, while single-family starts have historically been very weak.

The home construction sector has suffered ongoing capacity pressures, including a shortage of construction workers, zoning restrictions and supply bottlenecks. These capacity pressures have delayed housing completions, bringing the number of dwellings under construction to fresh record highs.

Homebuilding has remained remarkably resilient, albeit at a much slower pace than the torrid population growth. The government plans to cool the growth in temporary immigration, but the Bank of Canada recently suggested that the slowdown is likely to be delayed and smaller than originally projected.

Meanwhile, Canadian labour markets are easing. Job vacancy rates have plunged, and unemployment has risen, especially for young workers and new immigrants.

Economic growth has slowed to about 1% this year and will pick up only moderately next year. Inflation is falling without a recession. To be sure, some sectors have slowed meaningfully, especially manufacturing. Canadian businesses are bracing for billions of dollars in losses if the country’s two national railways shut down this week.

More than 9,000 workers at Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. could either be on strike or locked out if no labour agreement is reached by Thursday, disrupting the supply chain industries.

Housing markets will begin to recover as lower interest rates do their job this fall.

 

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. 

 

 

Banking Regulator to Relax Stress-Test

General Angela Calla 25 Sep

Banking regulator to relax stress-test rules for homeowners switching lenders at mortgage renewal.

Canada’s banking regulator is set to relax mortgage rules for homeowners who switch banks when they renew their loans.

The Office of the Superintendent of Financial Institutions (OSFI) will no longer require banks to apply the mortgage stress test on borrowers who switch lenders if they are simply renewing their loan, the regulator told The Globe and Mail on Wednesday.

The change, which is due to take effect Nov. 21, will make it easier for borrowers with uninsured mortgages to move to a different bank at renewal. It is also expected to motivate banks to offer cheaper mortgage rates in order to retain their current borrowers and attract new customers.

The change marks a significant win for the mortgage industry, which had been pushing for this relief in the face of rising interest rates.

When borrowers take out their initial mortgage, they must pass the federal mortgage stress test or prove they have enough income to cover their mortgage payments at an interest rate that is two percentage points higher than their actual loan contract.

When the mortgage term ends and they have to renew their loan, borrowers must again pass the mortgage stress test if they want to switch to a different lender because the borrower is new to that lender. That rule stands even if the renewal is a “straight switch,” which means the borrower will remain on the same amortization schedule and is not lengthening the time they will take to pay off their mortgage or increasing the amount of their loan.

But because mortgage rates more than doubled over the past two years to above 6 per cent at their height, borrowers had to prove they could make their loan payments with an interest rate of at least 8 per cent. That made it much more difficult for uninsured borrowers to pass the stress test if they renewed with a different lender.

“There isn’t reckless underwriting in straight switches,” OSFI Superintendent Peter Routledge said in an interview.

Currently, homeowners with insured mortgages are exempt from the mortgage stress test on straight switches because the insurer is protecting the bank if the homeowner misses mortgage payments. (A borrower must pay for mortgage insurance if they have made a down payment that is less than 20 per cent of the property’s purchase price.) But until now, borrowers with uninsured mortgages have still had to requalify if they switched lenders.

The difference in rules between insured and uninsured borrowers is one of the reasons that OSFI decided to make the change. “If I were that Canadian walking in with an uninsured mortgage, I kind of feel like that was an imbalance that wasn’t fair,” Mr. Routledge said. “Part of our job is to enable banks and lenders to take reasonable risks. And part of that reasonable risk-taking may involve treating an uninsured mortgager at renewal for a straight switch the same as an insured,” he said.

OSFI’s decision to eliminate the stress test on straight switches is occurring as the federal government relaxes other mortgage policies. Buyers will soon be allowed to put down smaller down payments on homes worth more than $1-million and first-time homebuyers will be allowed to stretch out their mortgage payments over 30 years instead of 25 on an insured mortgage.

Mr. Routledge said he does not think OSFI’s latest change will have any effect on the mortgage market credit risk or the housing market. He said the regulator has data showing that homeowners overwhelmingly stay with their lender when they renew their mortgages, which was also the case before mortgage stress test went into effect in 2018 for uninsured mortgages.

“I don’t view this as having discernible effect one way or the other,” he said.

The stress test has two thresholds: a minimum qualifying rate, or MQR, that is set by the regulator and an interest rate that is two percentage points higher than the borrower’s mortgage contract. The lender must use the higher interest rate to stress test the borrower. Since the MQR is currently set at 5.25 per cent, it is effectively obsolete because mortgage rates are currently around that level.

(Article courtesy of Rachelle Younglai, Real Estate Reporter)

 

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. 

Attainable Housing Initiative Heather Lands

General Angela Calla 25 Sep

The Attainable Housing Initiative (AHI or Initiative) provides approximately 2,600 strata leasehold homes at an initial 40 percent below market value at the Heather Lands in Vancouver.

The Initiative is intended to provide homes that middle-income, first-time homebuyers can own themselves and live in. It is not intended as an investment vehicle, to generate homes for rent, or to benefit households living outside of B.C.

Read more HERE.

 

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. 

ENHANCE Your Expertise: IRD Penalties

General Angela Calla 25 Sep

In today’s ever-changing mortgage environment, we understand the challenges, especially when it comes to understanding as a clients the intricacies of Interest Rate Differential (IRD) penalties. We’re here to support you every step of the way. Our products that we offer you before we go to one of the big banks are designed to not only meet your immediate needs but also to protect your long-term financial interests. One way we do this look at monoline lenders with a fair IRD penalty calculation.

Take this example:  one of the big banks has offered you a rate 10 bps lower than what you have been discussing with a mortgage broker. But that lender uses discounted rates. Before you start thinking THIS IS ALL ABOUT THE RATE  learn how the math impacts your future if you are like 7/10 Canadians that will look to break there mortgage for a variety of reasons either with the market or your personal lifestyle on what that lower rate could mean later if they need to break their mortgage in two years:

Let’s compare:

 Client has a slightly lower payment with the other lender and saves about $780 in interest over the two years.
But when they need to break their mortgage, client penalty costs are $23K+ higher.
Client wanted to break the mortgage to take advantage of lower rates. However, due to the high penalty, it doesn’t make sense for the clients to break their term. They are forced to stay with the other lender.
At the end of the term with the other lender, clients will end up with higher interest costs + higher payments for the last 3 years of the term.

How can you avoid costly mistakes and gain Penalty Protection?

  • Understand The Journey – Assess both immediate needs and future financial goals, ensuring you always covered.
  • Understand with Confidence – Life is unpredictable, and most clients will need to break their mortgage. A slightly higher monthly payment can act as insurance against hefty penalties helps protect financial well-being.
  • Leverage Our Expertise – We provide you with extensive product knowledge and transparent penalty information, so you can confidently be guided through any scenario.
  • Review  a Visual – Utilize impactful tools like penalty comparisons that not only make the math clear, but helps you understand the conversation beyond just rates.
  • Keep the Conversation Going – Your Mortgage Broker is here to support you as an expert resource, empowering you with timely and accurate information, ensuring they feel secure in every decision. We advise and you the client always instructs.

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. 

Mortgage Changes | Global News

General Angela Calla 18 Sep

In my recent Global News segment, I discussed exciting updates that could make a big difference for homebuyers and those with upcoming mortgage renewals.
Here are some key takeaways to share with you and your loved ones:

Insured Change Cap: This isn’t just for First Time Buyers—it benefits right-sizers who could be moving up the property ladder.
Those with insured mortgages coming up for renewal, as they are no longer subject to a stress test.
Lower Down payment Requirement: If you’re on a savings plan, this could help you reach your homeownership goals faster. Combine it with the First Time Home Savers Account (available until 2028) for extra support.
RRSP Withdrawal Limit Increase: Take advantage of the higher limit moved up to $60,000.00 from the previous $35,000.00 to plan for your down payment .

Click here to watch the approx 4-minute segment

Here’s a link with the full breakdown and the government announcement.

Lastly, here is an interview Angela did regarding the attainable housing initiative at Heather Lands.

If you or someone you know could benefit from setting up a tax-efficient savings plan, getting pre-approved for a purchase, or reviewing a mortgage renewal, reach out to us for expert guidance! Via email angela@countoncalla.ca or 604-802-3983

 

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. 

 

 

Great News On the Canadian Inflation Front in August

General Angela Calla 17 Sep

More Good News On The Canadian Inflation Front

The Consumer Price Index (CPI) rose 2.0% year over year in August, the slowest pace since February 2021, and down from a 2.5% gain in July 2024.  core inflation measures averaged 2.35% y/y and excluding mortgage interest, headline inflation was a mere 1.2%– well below the Bank’s target inflation level of 2.0%.  this opens the door for a possible acceleration in Bank of Canada easing.  Governor Macklem has suggested that a 50 bp rate cut is possible if inflation falls too fast as unemployment rises.

The deceleration in headline inflation in August was due, in par, to lower gasoline prices, a combination of lower prices and base-year effect.  The decline in August 2024 was mainly due to lower crude oil prices amid economic concerns in the United States and slowing demand in China.  Excluding gasoline, the CPI rose 2.2% in August, down from 2.5% in July.

Mortgage interest costs and rent remained the most significant contributors to the increase in the CPI in August.  The mortgage interest cost index continued to rise at a slower pace year over year in August (+18.8%) for the 12th consecutive month after peaking in August 2023 (+30.9%).

The CPI fell 0.2% m/m in August after increasing 0.4% in July.  Lower prices for air transportation, gasoline, clothing and footwear, and travel tours led to a monthly decline.  The CPI rose 0.1% in August on a seasonally adjusted monthly basis.

The central bank’s two core inflation measures decreased, averaging a 2.35% yearly pace from 2.55% a month earlier, matching expectations.  According to Bloomberg calculations, a three-month moving average of those measures fell to an annualized pace of 2.4% from 2.8% in July.

August marked the eighth month of headline rates within the central bank’s target range.

Bottom Line

The inflation print is the first of two CPI reports before the Bank of Canada’s next rate decision on Oct. 23.  After the data was released, overnight swaps traders upped their bets on a larger-than-normal reduction at that decision, putting the odds of a 50-basis point cut at just over a coin-flip.  Prices declined in five or eight subsectors every month, which could trigger worries about deflation among central bank officials i it becomes a trend.  Macklem has recently said that bank cares as much about undershooting the 2% inflation target as it is overshooting it.

Markets now suggest a 47% chance of a 50 bps BoC cut on October 23 and a 57% probability of a 25 bps cut.  Next week’s GDP data and the October 15 CPI report loom large in the 25 versus 50 bps debate.

Further rate cuts will no doubt spur a housing recovery, though we suspect a shallow one initially due to affordability issues in Ontario and B.C.  However, three new mortgage rule changes (effective December 15) could speed things along.  the changes will allow all buyers to get a longer 30-yuear mortgage for a new build, first-time buyers to get a similar term for all properties (both new and old), and buyers to get an insured loan on a home priced up to $1.5 Million (versus $1.0 million currently).  The latter change will allow smaller down payments and lower borrowing costs than an uninsured loan.  The 5-year extended term will lower monthly mortgage payments by about 9%.

Article 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. 

July 2024 Newsletter

General Angela Calla 2 Jul

Welcome to the July issue of my monthly newsletter!

Things are starting to heat up as we head into July! For those first-time buyers looking to purchase a home, I have all the details for you below! For those other homeowners hoping to stay cool and enjoy their spaces this season, scroll down for tips on how to turn your backyard into a staycation paradise! Have a great summer!

Entering the Housing Market

With the first Bank of Canada rate drop having occurred in June, many individuals are looking at the housing market with renewed vigor and an expectation that rates will continue to come down to a more sustainable level.

If you are someone who is considering entering the housing market this summer, there are a few things you should keep in mind:

Determine Your Budget: Download my app from Google Play or the Apple iStore to help you calculate mortgage payments, affordability, the income required to qualify, and even estimate your closing costs! It also allows you to connect directly with me through the app so that I can answer any questions you have right in the palm of your hand.
Save For a Down Payment: Your typical down payment should be at least 5% of the purchase price, though 20% down is preferable as anything below that requires default insurance. Your down payment can be done through your own savings account or RRSP’s.

  • Thanks to the Federal Government’s Home Buyer’s Plan, first-time homebuyers can leverage up to $60,000 from their RRSPs (maximum of $120,000 for a couple).
  • PRO TIP: The First Home Savings Account (FHSA) is specifically designed to help first-time homebuyers save for their down payment without having to pay taxes on the interest earned on their savings.

Take Advantage of First-Time Buyer Programs: Did you know? First-time home buyers are eligible for an exemption, reducing the amount of property transfer tax paid, depending on the property’s value.

  • PRO TIP: In addition, Ontario, British Columbia, Prince Edward Island, and the City of Toronto offer land transfer tax rebates for first-time homebuyers.

Get Pre-Approved: This means that a lender has stated (in writing) that you qualify for a mortgage and what amount, based on submitted documentation of your current income and credit history. A pre-approval usually specifies a term, interest rate, and mortgage amount and is typically valid for a brief period, assuming various conditions are met.

There are a few benefits to pre-approval such as:

  • It confirms the maximum amount you can afford to spend.
  • It can secure you an interest rate for 90-120 while you shop for your new home
  • It lets the seller know that securing financing should not be an issue. This is extremely important for competitive markets where lots of offers may be coming in.

Understand the Closing Costs: Closing costs are a one-time fee associated with the sale of a home and are separate from the mortgage insurance and down payment. Typically, these costs range from 1.5-4% of the purchase price, depending on your location. Factoring these costs into your maximum budget can help you narrow down an entirely affordable home and ensure future financial stability and security.

Here are a few closing costs to keep an eye out for:

  • Land Transfer Tax: This is calculated as a percentage of the purchase price of your home, with the amount varying in each province. Some cities, such as Toronto, also have a municipal LTT.
  • Legal Fees and Disbursements: You can expect to incur a minimum of $500 (plus GST/HST) on legal fees for the preparation and recording of official documents.
  • Title Insurance: Most lenders require title insurance to protect against losses in the event of a property ownership dispute. This is purchased through your lawyer/notary and is typically $300 or more.
  • PST on CMHC Insurance: Though CMHC insurance itself is financed through the mortgage, PST on the insurance is typically paid at the lawyers and sometimes deducted from your advance.
  • Home Inspection Fee: A home inspection is highly recommended as a condition of your Offer to Purchase to prevent any future surprises. This can cost around $500.
  • Appraisal Fee: An appraisal is performed to certify the lender of the resale value of the home in the case you default on the mortgage. The cost is usually $400 – $600 but is typically covered by the lender.
  • Property Insurance: Property insurance covers the cost of replacing your home and its contents, and must be in place on closing day. This is paid in monthly or annual premiums.
  • Prepaid Utility Bills: You may need to reimburse the previous owner of your property for prepaid costs such as property taxes, utilities, and so forth.
  • Property Taxes: Property taxes are due on an annual basis and are calculated as a percentage of the home value and vary by municipality. You also may need to reimburse the previous property owner if he/she has already paid property taxes for the full year.

Getting Proper Coverage: Purchasing a home is likely the largest investment you will make, and you want to ensure it is protected.

Various insurance items can be obtained for your home, including:

  • Title Insurance: Required by most lenders to protect against losses should a property ownership dispute arise. This insurance is done through your lawyer/notary and typically runs $100-$300.
  • Mortgage Protection Insurance: An optional debt replacement that protects your family should anything happen in the future. Many homeowners believe they are covered through their life insurance policy, but the Manulife Mortgage Protection Plan is different. Before closing, it’s important to look at the costs and coverage for you!
  • Property & Fire Insurance: Mandatory and needs to be arranged before your closing appointment. Not sure how much to budget for? Get quotes from various insurance companies! Your lawyer/notary or myself can provide recommendations
  • Default Insurance: Only required if you purchase a house with less than a 20% down payment.

Whether you’re looking at a condo, townhouse, rancher, or a two-story property, there is nothing quite like your first home! However, the mortgage process can be intimidating – and that’s where I come in! If you’re looking to get started on your home-buying journey, don’t hesitate to reach out to me today.

5 Ways to Turn Your Home into a Staycation Paradise

We all invest a lot into our homes, so we want to make sure we are enjoying them to the fullest all year long.

As we head into the prime of summer, there is no better time to update your space to turn it into the perfect staycation paradise so that you can fully enjoy the season!

Here are my top 5 tips for creating that backyard oasis:

  1. Expand Your Outdoor Entertaining Area: Take your outdoor space to the next level by adding amenities for entertaining. Consider installing an outdoor kitchen or bar area complete with a grill, refrigerator, and seating area. Adding a pergola or canopy can provide shade and shelter, while outdoor speakers and a fire pit create ambiance for evening gatherings under the stars.
  2. Incorporate Relaxation Zones: Create multiple relaxation zones throughout your home to cater to different activities and moods. Designate a cozy corner with plush seating and soft lighting for reading or meditation. Set up a hammock or hanging chair in the backyard for afternoon naps or stargazing. Incorporate a spa-like bathroom retreat with a luxurious bathtub, candles, and soothing music for a pampering escape.
  3. Embrace Indoor-Outdoor Living: Maximize the connection between your indoor and outdoor spaces to blur the boundaries and create a seamless flow. Install sliding glass doors or folding patio doors to open up your living areas to the backyard, allowing for easy access and natural ventilation. Arrange indoor furniture to face outdoor views and encourage indoor-outdoor socializing.
  4. Infuse Tropical Vibes: Bring the vacation vibes home by incorporating tropical elements into your decor. Add pops of vibrant colors, tropical patterns, and lush greenery throughout your home. Hang palm leaf or bamboo curtains, display tropical fruits in bowls, and accessorize with seashells and driftwood for a breezy, island-inspired ambiance.
  5. Curate Outdoor Activities: Make the most of your outdoor space by curating a variety of activities to enjoy during your staycation. Set up a mini-golf course, bean bag toss, or giant Jenga for backyard games. Create a movie night under the stars with a projector and outdoor screen. Arrange a DIY spa day with facials, massages, and foot baths for a rejuvenating retreat at home.

By incorporating these ideas into your home and yard, you can transform your space into a paradise that grants you relaxation, entertainment, and rejuvenation all summer!

Economic Insights from Dr. Sherry Cooper

The Bank of Canada finally began an easing cycle on June 5, taking their overnight policy rate down 25 bps to 4.75%–the first major central bank to do so. The housing market has languished over the past year with extremely weak affordability.

The Multiple-Listing Service Home Price Index fell again in May and is now down 2.4% year-over-year and is off 14.4% from the early 2022 peak when the overnight rate was a mere 25 basis points. Average transaction prices are down 4% y/y and off nearly 15% from the high.

Except for Calgary, housing markets across the country are in a buyers’ market as inventories of active listings have risen and sales have slowed. Calgary prices were up just under 10% y/y in May, pushing new record highs by the month. In the meantime, Vancouver, Toronto, and Montreal prices are all flat or down from a year ago, and they are still tucked below the levels seen at the early 2022 high.

The significant drivers in Calgary’s outperformance have been more substantial population growth (juiced by interprovincial inflows), better affordability, and valuations that might make some sense for investors.

Even with their lackluster performance since the Bank of Canada began hiking interest rates in March 2022, home prices are still high, having tripled in the past two decades, posting an average 5.7% annual rise, while inflation averaged only 2.2% per year over the same period.

Moreover, the total return on the Toronto Stock Exchange over the same period has been much higher still, averaging 7.9% annually over the past two decades. Despite the recent mini selloff in stocks, the TSX has boasted a more robust return than housing over time. And the US stock market has significantly outperformed the TSX.

Of course, there are significant differences between these two asset classes. Stocks are passive investments that do not provide a place to live or require repairs and maintenance. Housing is more than just a financial investment; it is a lifestyle choice that provides the necessary shelter.

The Bank of Canada will continue to lower interest rates as inflation reaches its 2% target. We expect the overnight rate to fall to about 3% by the end of the easing cycle. But even with only one quarter-point rate cut, bond yields have already fallen significantly in anticipation.

Many mortgage lenders, including three of Canada’s Big Six banks, are slashing fixed mortgage rates, a welcome development for those facing renewal in the coming months. Lenders have already started trimming rates in the wake of a nearly 40-basis-point drop in bond yields, which typically leads fixed mortgage rate pricing.

Over 70% of outstanding mortgages will be renewed within two years. Falling mortgage rates could help soften the payment shock expected for the estimated 2.2 million mortgages that will be renewing at higher rates in the next two years.

But just because rates are falling doesn’t mean all lenders will offer equally low rates in their renewal letters. Typically, they don’t just hand out their especially low rates. That’s where a mortgage broker provides real value, educating borrowers about alternative options, which can be used to haggle a better rate even if they decide not to switch lenders.

For insurable mortgages, the borrower does not need to re-qualify when switching lenders. However, for uninsured mortgage switches, OSFI head Peter Routledge recently rejected renewed calls to remove the mortgage stress test for federally regulated lenders. Knowing your options to improve your bargaining power with your existing lender still pays.

There is a record number of resale condos on the market, and new construction is at a record high. While there remains a longer-term shortage of affordable housing for rent and purchase, it will probably be another year before markets equilibrate and sellers have the advantage.

Housing activity has likely bottomed and will increase as interest rates fall.

 

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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