Understanding Mortgage Pre-Approval: Your Key to a Successful Home Purchase

General Angela Calla 19 Dec

Embarking on the journey to homeownership is an exhilarating experience, but it comes with its fair share of financial considerations. One crucial step that can significantly enhance your homebuying journey is obtaining a mortgage pre-approval. In this guide, we’ll demystify the mortgage pre-approval process in Canada, highlighting its importance, providing insights on how to get pre-approved, and showcasing the advantages it offers when you’re ready to shop for your dream home.

 

The Importance of Mortgage Pre-Approval, 1st download our app to be one of the best free tools for Pre- Qualification https://www.dlcapp.ca/app/angela-calla?lang=en

  1. Know Your Budget:

Mortgage pre-approval gives you a clear understanding of how much you can afford to spend on a home. This knowledge ensures that you focus your search on properties within your budget, preventing wasted time on homes that may be out of financial reach.

 

  1. Increased Negotiating Power:

Sellers are often more inclined to negotiate with buyers who have a mortgage pre-approval. It demonstrates to the seller that you are a serious and qualified buyer, increasing your chances of securing the property.

 

  1. Avoid Disappointment:

Imagine finding your dream home only to realize it’s beyond your financial means. Mortgage pre-approval prevents this heartbreak by setting realistic expectations and allowing you to explore homes within your price range.

 

How to Get Pre-Approved for a Mortgage

  1. Gather Financial Documents:

Prepare key financial documents, including proof of income, employment verification, credit history, and information about your debts and assets. Lenders will use this information to assess your financial stability.

 

 

  1. Submit an Application:

Fill out a mortgage pre-approval application with your chosen mortgage broker. Be thorough and accurate in providing the required information. The more detailed and precise your application, the smoother the pre-approval process.

 

3. Wait for Approval:

Once your application is submitted, the lender will assess your financial situation and creditworthiness. If approved, you will receive a pre-approval letter outlining the maximum loan amount you qualify for.

 

Advantages of Mortgage Pre-Approval When Shopping for Your Dream Home

  1. Focused Home Search:

Armed with a pre-approval, you can focus your home search on properties within your budget, saving time and ensuring a more efficient process.

 

  1. Confidence in Bidding:

When you find the perfect home, you can confidently make an offer, knowing that you have already secured financing. This positions you as a strong and reliable buyer in the eyes of the seller.

 

  1. Quick Closing:

Pre-approval expedites the mortgage application process when you find the right property, allowing for a quicker closing timeline. This can be advantageous in competitive real estate markets.

 

Conclusion:

In the dynamic world of Canadian real estate, mortgage pre-approval stands out as a key tool for savvy homebuyers. By understanding its importance, following the steps to obtain pre-approval, and leveraging its advantages in your home search, you set the stage for a successful and stress-free homebuying journey. Consider reaching out to professionals like the Angela Calla Mortgage Team to guide you through the pre-approval process and ensure that you are well-prepared to turn your homeownership dreams into reality. With mortgage pre-approval as your key, unlock the doors to your future home with confidence and peace of mind.

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. 

First-Time Homebuyer’s Guide: Navigating the Canadian Real Estate Landscape

General Angela Calla 19 Dec

Embarking on the journey to homeownership is an exciting and significant step. For first-time homebuyers in Canada, navigating the real estate landscape can be both thrilling and daunting. In this comprehensive guide, we’ll provide a roadmap tailored to first-time buyers, covering crucial topics such as down payments, government incentives, and homebuyer programs. This guide aims to be your go-to resource, offering valuable insights to ensure a smooth and informed entry into the Canadian real estate market.

Understanding Down Payments

  1. The Basics:

As a first-time homebuyer in Canada, understanding down payments is fundamental. In most cases, a minimum down payment is required, typically ranging from 5% to 20% of the home’s purchase price. The larger the down payment, the lower your mortgage loan amount and monthly payments.

  1. Saving Strategies:

Start saving early for your down payment. Consider creating a dedicated savings account, exploring government-sponsored savings plans, or using financial windfalls like tax refunds or bonuses to boost your down payment fund.

Exploring Government Incentives

  1. First-Time Home Buyer Incentive (FTHBI):

The FTHBI is a federal program designed to assist first-time homebuyers by reducing their monthly mortgage payments. Eligible buyers can receive a shared-equity loan from the government, lowering the overall cost of homeownership.

  1. Home Buyers’ Plan (HBP):

The HBP allows first-time buyers to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) to use towards a home purchase. This program provides a tax-friendly way to fund your down payment.

  1. First Time Home Savers (FHSA):

The First Time Home Savers account 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.

This means that the interest earned on the savings in the account is not taxed, nor are withdrawals from the account. Plus, since your contributions to this account are not taxed, your money will have the opportunity to grow faster in an FHSA than a traditional savings account. More on this new for 2023 here https://angelacalla.ca/general/first-home-savings-account-fhsa/

Navigating Homebuyer Programs

  1. Land Transfer Tax Rebates:

Be aware of provincial land transfer tax rebates available for first-time homebuyers. These rebates can significantly reduce the upfront costs associated with purchasing a home.

  1. Mortgage Insurance Options:

Explore mortgage insurance options, especially if your down payment is less than 20%. Mortgage insurance protects lenders in case of default but also provides an opportunity for first-time buyers to enter the market with a lower down payment.

  1. Download our app to be pre qualified in seconds learning payment comfort and calculation closing costs https://www.dlcapp.ca/app/angela-calla?lang=en

The Importance of Professional Guidance

  1. Mortgage Brokers:

Consider enlisting the help of a mortgage broker, such as the Angela Calla Mortgage Team. Mortgage brokers have access to a wide range of lenders and can help you find the most suitable mortgage product for your unique financial situation.

  1. Real Estate Agents:

Work with a qualified real estate agent who specializes in first-time homebuyers. They can guide you through the process, help you find suitable properties, and negotiate on your behalf.

Conclusion:

Navigating the Canadian real estate landscape as a first-time homebuyer requires a thoughtful approach and a comprehensive understanding of key factors. By mastering the essentials of down payments, taking advantage of government incentives and homebuyer programs, and seeking professional guidance, you can embark on your homeownership journey with confidence. Remember, the Angela Calla Mortgage Team is here to support you throughout the process, ensuring that your first home purchase is a successful and rewarding experience. As you take your first steps into the world of real estate, use this guide as your compass, and embrace the exciting adventure of homeownership in Canada.

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 Holds The Overnight Policy Rate Steady at 5% For the Third Consecutive Meeting

General Angela Calla 15 Dec

The Bank of Canada Held Rates Steady and Took A More Neutral Tone

It was widely expected that the Bank of Canada would maintain its key policy rate at 5% for the third consecutive time. It will continue to sell government securities (quantitative tightening) to normalize its balance sheet. Market participants weighed and measured each word of the BoC press release and assessed that the Bank took a less hawkish stance.

This time, the release said, “Higher interest rates are clearly restraining spending: consumption growth in the last two quarters was close to zero, and business investment has been volatile but essentially flat over the past year. Exports and inventory adjustment subtracted from GDP growth in the third quarter, while government spending and new home construction provided a boost. The labour market continues to ease: job creation has been slower than labour force growth, job vacancies have declined further, and the unemployment rate has risen modestly. Even so, wages are still rising by 4-5%. Overall, these data and indicators for the fourth quarter suggest the economy is no longer in excess demand.”

 

 

 

 

At the prior meeting in late October, the Bank said that the labour market remained “on the tight side” but acknowledged today that it was loosening. Indeed, the October Monetary Policy Report suggested that the inflation rate would not hit its 2% target level until late 2025.

Today, the tone was much more optimistic, suggesting that policymakers are increasingly confident interest rates are restrictive enough to bring inflation back to the 2% target. Still, Bank officials want to see more progress on core inflation before it begins to ease. It said, “The Bank’s preferred measures of core inflation have been around 3½-4%, with the October data coming in towards the lower end of this range.”

The central bank focuses on “the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour” and remains resolute in restoring price stability.

Bottom Line

Bond yields peaked in early October and have fallen by nearly 100 basis points. This has led to reductions in fixed mortgage rates; however, those cuts have been far less than historical experience would have suggested, given the rally in 5-year government bonds.

Cuts in variable mortgage rates await a reduction in the overnight policy rate, which triggers a commensurate decline in the prime rate, which is currently stuck at 7.2%. I expect the BoC to begin cutting the policy rate by the middle of next year, taking it down a full percentage point to 4% by yearend

(Article courtesy of Dr. Sherry Cooper, Cheif 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. 

December Newsletter

General Angela Calla 7 Dec

Welcome to the December issue of my monthly newsletter!

As we get closer to the end of the year, we have some special New Year resolutions for your home! Plus, check out some of my favourite holiday desserts. In addition, don’t miss the latest economic insights direct from Dr. Sherry Cooper!

New Year Resolutions for Your Home

The New Year is approaching! While we are in the spirit of goal planning and setting our intentions for the coming months, don’t forget about your home!

There are several things you can do to make your home and finances work for you in 2024:

Review Your Home Budget (or make one!): Money can be a stressful subject, but creating a home budget and keeping it updated whether annually, bi-annually, or monthly can truly help you get a handle on your cash flow and what you are spending on. An annual review of your budget at minimum to account for changes in wages, loan payments, expenses and more is a great way to get 2024 off to a balanced start! This is also a good opportunity to think about future renovations, vacations or expenses so you can start a savings fund to meet your goals!

 Embrace Minimalism: Heading into January is a great time to take stock of your home and life. For many people, embracing minimalism has allowed them to declutter their minds and increase clarity to focus on what matters in life. Clearing out old furniture, clothes, or anything that doesn’t bring you peace, is a great way to live in the moment and align your home.

 Cut Your Carbon Footprint: Your home is a great place to cut energy! Everything from switching off the lights when you leave a room to dialing down your air conditioner and heating, to installing LED bulbs and energy-saving showerheads or toilets, can help you save in the long run and ensure your home is more energy-efficient for the New Year!

Get Growing: Got a green thumb or simply looking for a new hobby? Consider starting a garden at home! Whether you place large planters in your backyard, some pots on the patio, or grow some herbs in your kitchen, this can be a great way to nurture your mind and body! Plus, it adds a little extra life to your home!

Improve Your Work/Life Balance: If you are still working at home and haven’t yet nailed down a dedicated space for your office, 2024 is your year! Having a separate space for your work versus your life can help you with decluttering your brain and maximizing your time and focus both on the clock and off.

Make the Most of Your Mortgage Renewal: As discussed in our last issue, your mortgage renewal is a great opportunity to make your home put in the work for you! With lots of renewals coming up in 2024, now is the time to start thinking ahead! Choose to consolidate debt, utilize home equity, get a better rate, and more at renewal time.

 Contribute to Your RRSP: Don’t forget — February 29, 2024, is the last day to make RRSP contributions for the 2023 tax year! Before your RRSP deadline, there are a few things to consider to help you get a jump start in planning for the future and increasing your peace of mind: should you invest in an RRSP or focus on paying down your mortgage? Is a debt consolidation mortgage right for you? Should you consider the Home Buyers’ Plan to help fund your down payment on your first home?

Favourite Holiday Desserts

The holidays are a wonderful time of year for the merriment, music, lights… and treats!

You’ll need to throw out the scale for this list of scrumptious holiday dessert ideas.

Gingerbread Cookies: Did you know? The oldest recorded gingerbread recipe, dating to the 16th century, is kept in the Germanic National Museum in Nuremberg! A tried-and-true classic for a reason, gingerbread is a particularly festive go-to! Whether you create gingerbread men or a gingerbread house – or a whole town (we won’t judge!) – you need the right recipe!

CLICK HERE TO DOWNLOAD THE RECIPE CARD!

Nanaimo Bars: Over the years, this delicious treat has gone by many names… The first recipe originated in the 1952 edition of the Women’s Auxiliary Nanaimo Hospital Cookbook where it was simply named “chocolate square”. A similar recipe was later published in a 1953 edition of the Edith Adams’ Cookbook with the name “Nanaimo Bar”. The recipe clipping still hangs in the Nanaimo Museum! A no-bake dessert bar, this mouth-watering treat consists of three main layers: graham wafer crumb and shredded coconut for the bottom, a custard-flavored butter icing in the middle, and a chocolate ganache on top.

CLICK HERE TO DOWNLOAD THE RECIPE CARD!

Peppermint Fudge: Originating in the 19th century, fudge is not necessarily new… but with so many additions to flavourings, it never gets old! This season, try one of our favourites – peppermint fudge! Easy to make and waiting to be enjoyed.

 CLICK HERE TO DOWNLOAD THE RECIPE CARD!

Peanut Brittle: Brittle is thought to be one of the first candies ever made… and there is a lot of confusion around how it came to be. Some claim it happened by accident as a New England woman was making taffy and accidentally added baking soda in 1890! Another theory dates brittle as far back as the Celts where it was enjoyed as a traditional Celtic dessert, making its way from Europe to America! Still today, peanut brittle continues to stand the test of time as a favored treat.

 CLICK HERE TO DOWNLOAD THE RECIPE CARD!

Economic Insights from Dr. Sherry Cooper

As we move into yearend, we have every reason to believe that the economy has slowed and inflation, while still above target, has dropped significantly. But slower inflation does not mean falling prices in most markets. Yes, gasoline prices are down, and food inflation has slowed, but the purchasing power of households has not improved.

Consumer confidence is down as many households fear their mortgage renewals, where rising monthly payments will dig even deeper into their discretionary income.

Mortgage arrears are still at historical lows, but credit card and auto loan delinquencies are rising. Housing markets have slowed considerably, even as lenders cut their fixed mortgage loan rates. Declines in variable-rate loans generally await an easing in monetary policy by the Bank of Canada, which is still likely at least six months away.

The good news is that interest rates have likely peaked. So far, the economy is on a glide path for a ‘softish’ landing. I doubt we will see two consecutive quarters of negative growth. And, if we do, the central bank will respond sooner with rate cuts.

The fiscal authorities’ hands are tied. Many accuse Ottawa of increasing budgetary red ink too quickly over the past eight years, especially during the pandemic. Now that market-determined interest rates have risen sharply, the debt financing costs are spiking. The Liberals’ popularity is waning, and while business is calling for investment tax credits and everyone wants more affordable housing, the feds can only marginally affect these issues, given budgetary and political constraints.

The latest gimmick is to reduce short-term rentals by restricting Airbnb properties in some ways, but that will again have a meagre impact. Encouraging construction with GST elimination and cheaper credit is helpful. Still, even if they do lead to 30,000 new rental properties, that’s a drop in the bucket when planned permanent immigration is slated for 500,000 people per year.

The real rebound in economic activity is coming when the BoC signals it will cut the overnight policy rate. In the meantime, it is now a buyers’ market in many localities as home prices decline. The spring housing market could show a meaningful pickup in anticipation of lower rates and more housing supply. Motivated sellers will be out there, and buyers can pre-approve and take their time finding the right fit. The multiple-bidding wars are over. The housing market will lead the economy upward next year.

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. 

Difference between Adjustable Rate Mortgage and Variable Rate Mortgage

General Angela Calla 4 Dec

Do you know the difference between an ARM and VRM mortgage?

An ARM (Adjustable Rate Mortgage) changes your payments when the prime rate moves, offering potential cash flow benefits when rates go down. On the other hand, VRM (Variable Rate Mortgage) maintains fixed payments despite changes in the prime rate, keeping your payments stable throughout the term. In our fluctuating interest rate environment, it’s crucial to choose the right one for your financial plan.

In 2023, many Canadians reached a trigger rate when there VRM did not cover the interest of the mortgage and were forced to pay a lump sum down, switch to a fixed rate or take out another loan. Knowing this difference will help in planning moving forward.

With our everchanging interest rate environment you want to ensure you have the right one for your financial mortgage plan! One allows you to take advantage of rates going down with improved cashflow , while the other keeps the same payment. Reach out to us directly to ensure you always have the best mortgage for you angela@countoncalla.ca 604-802-3983

Click the video to hear more!

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. 

Q3 GDP Weaker Than Expected Paving The Way For Future Rate Cuts

General Angela Calla 30 Nov

The Table Is Set For Rate Cuts In 2024

The Canadian economy weakened far more than expected in the third quarter, down 1.1% annually. However, the Q2 figures were revised up significantly from a 0.2% decline to a rise of 1.4%. Such are the vagaries of economic data. The Canadian economy is contracting despite the positive impetus of rapid population growth. Household consumer spending flatlined, and the savings rate rose, confirming that the central bank’s aggressive interest-rate hikes are doing their job to slow economic activity.

Statistics Canada also released preliminary data suggesting that GDP grew 0.2% in October, boosted by residential construction and increased oil and gas extraction and retail trade, after the better-than-expected 0.1% expansion in September.

The economic contraction was broadly based. Household spending hasn’t been this weak since 2009, except during the pandemic lockdowns. In addition, business investment was particularly feeble, down 14.4% for business equipment and -7.7% for nonresidential construction. Exports also declined 5.1% over the same period.  Investment in residential construction rose 8.3% annualized, the first increase since the beginning of 2022.

Job vacancy data, also released today, posted another decline, confirming that the economy has weakened and excess demand has been eliminated. On a per capita basis, Canada’s economy has contracted for the second consecutive quarter.

Tomorrow, Statistics Canada will release the labour market report for November.

 

Bottom Line

Today’s release is welcome news for the Bank of Canada. Tiff Macklem said last week that the Bank’s interest rate hikes were doing their job to return inflation to its 2% target. The Governing Council meets once again on December 6th. We expect a more dovish press release suggesting that the policy rate has likely peaked. Market-driven interest rates have fallen sharply since early October, taking fixed mortgage rates down significantly (see chart below).

Traders in overnight swaps are betting the Bank of Canada will loosen monetary policy as early as April 2024, little changed from before the release. I expect that the Bank of Canada will gradually cut interest rates beginning in the second quarter of next year, taking the overnight rate down 200 basis points to 3.0% by year’s end.

 

 

(Article courtesy of Der. 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. 

BC Housing Secondary Suite Incentive Program

General Angela Calla 27 Nov

What is the Secondary Suite Incentive Program?

The Secondary Suite Incentive Program will help homeowners create affordable housing in their communities. The program will provide money to help homeowners create a new secondary suite on their property to be rented out for below market value.

Homeowners who qualify will receive up to 50% of the cost of renovations, up to a maximum of $40,000. The program will provide a rebate in the form of a forgivable loan—a loan that does not need to be repaid if the homeowner follows the terms of the program.

For the loan to be forgiven, the new unit must be located on the same property where the homeowner lives and must be rented out at below market rates, set by BC Housing, for at least five years.

Check out more details here: BC Housing

Here is a simplified fact sheet : Fact Sheet

 

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 Renewal Review

General Angela Calla 22 Nov

Friends don’t let friends renew their mortgage without talking to our team first!

One of our clients was out for a hike with a friend, and of course they were talking mortgages, inflation, and family.  In this discussion, they discussed how long it took for them to get an approval from their bank and how high the rate appeared to be.

They made an introduction to us, and we quickly were able to see this client qualified for a better rate.

In summary, from that simple review they saved $169 in monthly cashflow totaling $10,140.00 over the next 5 years of money in your pocket.  This change increased the amount paid to the principal by $3,868 and reduced the interest paid by $14,048.00.  This is a swing of saving of $17,916 over the term!

When we get the opportunity to review any mortgage, you can count on, unbiased advice, options, privacy, credit protection and if rates go down prior to funding, we automatically review every file before closing to ensure the lowest cost of borrowing for your profile. If its best for you to stay with your existing lender or plan, that is exactly what we reinforce for you.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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. 

 

Canadian Inflation Fell to 3.1% (y/y) In October, Ensuring the BoC Holds Rates Steady

General Angela Calla 22 Nov

Good News On the Inflation Front Suggests Policy Rates Have Peaked

Today’s inflation report showed a continued improvement, mainly due to falling year-over-year (y/y) gasoline prices. The October Consumer Price Index (CPI) rose 3.1% y/y, down from the 3.8% rise in September. There were no surprises here, so markets moved little on the news. Excluding gasoline, the CPI rose 3.6% in October, compared to 3.7% the month before.

The most significant contributors to inflation remain mortgage interest costs, food purchased at stores, and rent.
Canadians continued to feel the impact of rising rent prices, which grew faster (y/y) in October (+8.2%) than in September (+7.3%). The national increase reflected acceleration across most provinces. The most significant increases in rent prices were seen in Nova Scotia (+14.6%), Alberta (+9.9%), British Columbia (+9.1%) and Quebec (+9.1%).
Property taxes and other special charges, priced annually in October, rose 4.9% yearly, compared with a 3.6% increase in October 2022. The national increase in October 2023 was the largest since October 1992, with homeowners paying more in all but one province, as municipalities required larger budgets to cover rising costs. Property taxes in Manitoba (-0.3%) declined for the third consecutive year, mainly due to reduced provincial education tax.

While goods prices decelerated by -1.6% as prices at the pump fell, prices for services rose 4.6% last month, primarily driven by higher prices for travel tours, rent and property taxes.

While grocery prices remained elevated, they also continued their trend of slower year-over-year growth, with a 5.4% increase in October following a 5.8% gain in September. While deceleration continued to be broad-based, fresh vegetables (+5.0%) contributed the most to the slowdown.

Excluding food and energy, inflation fell to 2.7% in October, down a tick from the September reading. Two other inflation measures closely tracked by the Bank of Canada–the so-called trim and median core rates–also eased, averaging 3.6% from an upwardly revised 3.8% a month earlier.

Bottom Line

According to Bloomberg calculations, another critical measure, a three-month moving average of underlying price pressures, fell to an annualized pace of 2.96% from 3.67% a month earlier. It’s an important metric because Bank of Canada Governor Tiff Macklem has said policymakers are tracking it closely to understand inflation trends.

Today’s news shows that tighter monetary policy is working to bring down the inflation rate. In its Monetary Policy Report last month, the Bank of Canada expected the CPI to average 3.5% through mid-2024. Cutting its economic forecast, the Bank forecasted it would hit its 2% inflation target in the second half of 2025.

Given today’s data and the likely significant slowdown in Q3 GDP growth, released on November 30, and the Labour Force Survey for November the following day, policy rates have peaked. Governor Tiff Macklem will give a speech on the cost of high inflation in New Brunswick tomorrow, and the subsequent decision date for the Governing Council is December 6th. The Bank’s inflation-chopping rhetoric may be relatively hawkish, but the expectation of rate cuts could spur the spring housing market.

The economists at BMO have pointed out that “three provinces now have an inflation rate below 2%, while only three are above 3%, so much of the country is already seeing serious signs of stabilization. (Unfortunately, the two largest provinces have the fastest inflation rates—Quebec at 4.2% and Ontario at 3.3%).” There is no need for the Bank to raise rates again, and they could begin to cut interest rates in the second quarter of next year.

(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. 

Calling all prospective First Time want to be HomeOwners, Newcomers, and Realtors!

General Angela Calla 20 Nov

I hope you’re talking about the First Home Savings Account (FHSA)!

If you and your partner each open a First Home Savings Account (FHSA) and contribute the maximum contribution amount for 2023 of $8,000, you’ll receive a $16,000 tax deduction that you can use to reduce your taxable income. Don’t delay!  Not opening one this year will loose the contribution room.

When you buy your first home, you’ll be able to withdrawal your entire FHSA balance tax-free and not be required to repay any withdrawals like you would when using a Home Buyers Plan (HBP) through a Registered Retirement Savings Plan (RRSP).

If you don’t end up buying a house? No problem, you can roll your FHSA balance into your RRSP and not pay any taxes or fees.

Regardless if you’re buying your first home next week, next month or next year, our office would love to share more information on how a FHSA can help you accomplish your goal of buying your first home. 🙋🏼‍♂️🏡

Let’s make sure we elevate financial literacy for our fellow Canadians

Email: angela@countoncalla.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.

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