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Bank of Canada increases policy interest rate by 25 basis points, continues quantitative tightening

1/25/2023

The Bank of Canada today increased its target for the overnight rate to 4%, with the Bank Rate at 4% and the deposit rate at 4%. The Bank is also continuing its policy of quantitative tightening. Global inflation remains high and broad-based. Inflation is coming down in many countries, largely reflecting lower energy prices as well as improvements in global supply chains. In the United States and Europe, economies are slowing but proving more resilient than was expected at the time of the Banks October Monetary Policy Report (MPR). Chinas abrupt lifting of COVID-19 restrictions has prompted an upward revision to the growth forecast for China and poses an upside risk to commodity prices. Russias war on Ukraine remains a significant source of uncertainty. Financial conditions remain restrictive but have eased since October, and the Canadian dollar has been relatively stable against the US dollar. The Bank estimates the global economy grew by about 3% in 2022, and will slow to about 2% in 2023 and 2% in 2024. This projection is slightly higher than Octobers. In Canada, recent economic growth has been stronger than expected and the economy remains in excess demand. Labour markets are still tight: the unemployment rate is near historic lows and businesses are reporting ongoing difficulty finding workers. However, there is growing evidence that restrictive monetary policy is slowing activity, especially household spending. Consumption growth has moderated from the first half of 2022 and housing market activity has declined substantially. As the effects of interest rate increases continue to work through the economy, spending on consumer services and business investment are expected to slow. Meanwhile, weaker foreign demand will likely weigh on exports. This overall slowdown in activity will allow supply to catch up with demand. https://www.bankofcanada.ca/2023/01/fad-press-release-2023-01-25/
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Central Bank Raises Rates As Mortgage Arrears Also Rise!

1/25/2023

NEWS The Bank of Canada announced a 25 basis-point (Bps) Overnight Rate increase this morning bringing the Banks Target Rate to 4.75%. The bank also announced that will continue its policy of quantitative tightening. Tiff Macklem, Governor of the Bank of Canada, stated that Global inflation remains high and broad-based. Although inflation is dropping in many countries primarily due to lower energy prices and improvements to global supply chain, Chinas abrupt lifting of Covis restrictions poses a risk to commodity prices and the war in Ukraine continues to generate uncertainty. In Canada, economic growth has been stronger than expected and the economy remains in excess of demand. However, there is growing evidence that restrictive monetary policy is slowing activity. As the effects of interest rate increases continue to work through the economy, spending on consumer services and business investment are expected to slow. Meanwhile, weaker foreign demand will likely weigh on exports. The overall slowdown in activity will allow supply to catch up with demand. In conjunction with the Bank of Canadas Rate Announcement, the central bank also released its Quarterly Monetary Policy Report that outlines inflation being projected to fall around 3% in the middle of 2023 and reach the targeted 2% in 2024. A decrease rate that will generate a bumpy ride for consumers throughout 2023. The Bank of Canadas Media Release Monetary Policy Report January 2023 According to Ben Rabidoux of Edge Realty Analytics and author of the latest Housing and Mortgage Report done for Mortgage Professionals Canada, mortgage arrears is a lagging indicator that tells us more about how consumers were faring 9-12 months ago than it does about the near future. But, Canadas National Arrears Rate experienced an uptick from its all-time low back in October 2022. According to data from the Canadian Bankers Association, mortgage payments that are behind 3 months or more, rose to 0.15% from 0.14% where it was since June 2022. That seems to be a very small percentage but the 0.01% increase represents just over 7,400 mortgages in arrears out of a total of over 5.1 million. The numbers do tell us households are likely going into potential recession in a better position than during other turndowns, according to Ben. Sources: Bank of Canada, Canadian Mortgage Trends Mortgage Professionals Canada
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Slight increase in home sales in December

1/20/2023

Summary On a seasonally adjusted basis, home sales increased 1.3% from November to December, a second monthly gain in ten months. Despite this relative stabilization of the market in December, sales were still down 37.8% from their February 2022 level. New listings were down 6.4% from November to December, a fifth contraction in six months which shows that both buyers and sellers remain on the sidelines in the current market environment. It should also be noted there is still a high proportion of sellers who are changing their minds, as we estimate that about one in five listings are withdrawn during the month. The low level of sales is still allowing supply to rebuild, with the number of months of inventory increasing from 4.1 to 4.2 in December. While easing, market conditions are still pointing in the direction of a favourable to sellers market with supply still very low on a historical basis. Housing starts fell 14.4K in December to a 9-month low of 248.6K (seasonally adjusted and annualized). Urban starts dropped 12.9K to 227.7K on declines in both the single-family (-5.5K to a post-pandemic low of 44.9K) and the multi-family segment (-7.4K to 182.9K). The Teranet-National Bank Composite National House Price Index decreased by 0.3% in December compared to the previous month and after adjusting for seasonal effects, the sixth consecutive monthly decrease. After adjusting for seasonal effects, 6 of the 11 markets in the composite index were down during the month: Winnipeg (-1.8%), Calgary (-1.1%), Ottawa-Gatineau (-1.1%), Edmonton (-0.9%). Montreal (-0.5%) and Toronto (-0.4%). Conversely, the Quebec City (+1.3%), Victoria (+1.1%). Hamilton (+0.8%), Halifax (+0.4%) and Vancouver (+0.1%) markets were up. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf
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What’s Happening in Canadian Housing Markets as We Head into 2023?

1/11/2023

Sales in November were down 3.3% on a month-over-month basis, rejoining the trend of moderating sales that began back in February. The Aggregate Composite MLS Home Price Index (HPI) edged down 1.4% on a month-over-month basis in November, which, as with sales activity, continues the trend that began in the spring. The national MLS HPI now sits about 11.5% below its peak level but there are considerable regional differences. While prices are down more in Ontario and parts of British Columbia, they have softened to some degree almost everywhere. Calgary, Regina and Saskatoon stand out as markets where home prices are barely off their peaks. https://www.creacafe.ca/whats-happening-in-canadian-housing-markets-as-we-head-into-2023/
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Canada: Prices down from their peak across the country

1/5/2023

From National Bank of Canada For the first time since the financial crisis of 2008, all of the cities covered by the Teranet-National Bank HPI have seen prices decline from their peak reached over the past 12 months, marking the end of a prosperous period for the Canadian real estate market. Indeed, price declines were observed in all markets covered, with the last cities on the list to experience contractions being Calgary, Edmonton, Lethbridge and Trois-Rivieres. Since its peak in May 2022, the national composite index has already fallen by 9.0%, almost as much as during the last financial crisis (-9.2%). With the Bank of Canada raising its key interest rate again in December and mortgage rates remaining high, we believe that the impact on property prices should continue to be felt in the coming months. All in all, we still anticipate a total correction of about 15% in house prices nationally by the end of 2023, assuming that the policy rate does not increase further and begins to decline in the second half of 2023. Although corrections are being observed in the vast majority of markets covered by the index, the CMAs that have experienced the most significant price growth over the past two years are also those that have recorded the sharpest declines to date. Ontario, British Columbia, and the Maritimes therefore appear to be more vulnerable, while the Prairie markets are less so, helped by a buoyant economic context. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index decreased by 1.1% in November compared to the previous month and after adjusting for seasonal effects, a fifth consecutive monthly decrease. After adjusting for seasonal effects, 8 of the 11 markets in the composite index were down during the month: Montreal (-2.2%), Hamilton (-1.9%), Vancouver (-1.5%), Ottawa-Gatineau (-1.3%), Winnipeg (-1.1%), Quebec City (-1.1%), Toronto (-0.9%) and Calgary (-0.8%). Conversely, the Halifax (+1.6%), Victoria (+0.9%) and Edmonton (+0.3%) markets were up. From November 2021 to November 2022, the composite index increased by 2.0%, the lowest annual growth since November 2019. This growth was driven by Calgary (14.6%), Edmonton (7.6%), Halifax (6.2%), Quebec City (5.7%), Montreal (4.7%) and Victoria (3.0%). Growth was lower than average in Winnipeg (1.2%), Vancouver (0.7%) and Ottawa-Gatineau (0.4%), while it remained stable in Toronto and was down in Hamilton (-0.9%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf
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The housing market resumed its downward trend in November

12/28/2022

Summary On a seasonally adjusted basis, home sales decreased 3.3% from October to November, an eighth monthly decline in nine months. After recording a gain in October, the real estate market has resumed its downward trend of recent months, accumulating a decline in sales of 38.8% since their February level. New listing were down 1.3% from October to November, a fourth contraction in five months which shows that both buyers and sellers remain on the sidelines in the current market environment. It should also be noted that a very high proportion of sellers are changing their minds, while we estimate that about one in five listings are withdrawn during the month. The level of sales is still allowing supply to rebuild, with the number of months of inventory increasing from 3.9 to 4.2 in November. While easing, market conditions are still pointing in the direction of a favourable to sellers market with supply still very low on a historical basis. Housing starts were essentially steady in November at a level way above historical trends (-0.4K to 264.2K, seasonally adjusted and annualized). This was better than consensus expectations calling for a decline. That said, the prior months result was revised downwards from 267.1 to 264.6K. The Teranet-National Bank Composite National House Price lndexTM decreased by 1.1% in November compared to the previous month and after adjusting for seasonal effects, a fifth consecutive monthly decrease. After adjusting for seasonal effects, 8 of the 11 markets in the composite index were down during the month: Montreal (-2.2%), Hamilton (-1.9%), Vancouver (-1.5%), Ottawa-Gatineau (-1.3%), Winnipeg (-1.1%), Quebec City (-1.1%), Toronto (-0.9%) and Calgary (-0.8%). Conversely, the Halifax (+l.6%), Victoria (+0.9%) and Edmonton (+0.3%) markets were up. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf
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Residential Mortgage Industry Report - Fall 2022 Edition

12/15/2022

From CMHC In this Fall 2022 edition, we find the following: Recent mortgage market trends Mortgage growth slowed down as interest rates hiked in the second quarter of 2022. Mortgage consumers are increasingly turning back to fixed rates as interest rates rapidly increase and the discount on variable interest rates vanishes. Declining ratios of mortgage loan approvals to applications show it is increasingly difficult for potential borrowers to get qualified for loans subject to the stress test. The share of mortgages in arrears (i.e. delinquent for 90 days or more) have continued to trend downwards across all types of lenders. Housing Finance Research at-a-glance In the third quarter of 2022, consumers without a mortgage registered notable delinquency rate increases in auto loans and credit cards. Mortgage lending growth by alternative lenders outpaces conventional lenders. Their portfolio metrics indicate a decreasing risk profile. Mortgage borrowers in the alternative lending space are more likely to renew their loans as it becomes harder to qualify with traditional lenders. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/housing-research/research-reports/housing-finance/residential-mortgage-industry-report/2022/residential-mortgage-industry-report-fall-2022-en.pdf?rev=239fc8ea-a885-430f-97fe-dd700161d872
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Bank of Canada increases policy interest rate by 50 basis points, continues quantitative tightening

12/7/2022

The Bank of Canada today increased its target for the overnight rate to 4%, with the Bank Rate at 4% and the deposit rate at 4%. The Bank is also continuing its policy of quantitative tightening. Inflation around the world remains high and broadly based. Global economic growth is slowing, although it is proving more resilient than was expected at the time of the October Monetary Policy Report (MPR). In the United States, the economy is weakening but consumption continues to be solid and the labour market remains overheated. The gradual easing of global supply bottlenecks continues, although further progress could be disrupted by geopolitical events. In Canada, GDP growth in the third quarter was stronger than expected, and the economy continued to operate in excess demand. Canadas labour market remains tight, with unemployment near historic lows. While commodity exports have been strong, there is growing evidence that tighter monetary policy is restraining domestic demand: consumption moderated in the third quarter, and housing market activity continues to decline. Overall, the data since the October MPR support the Banks outlook that growth will essentially stall through the end of this year and the first half of next year. CPI inflation remained at 6.9% in October, with many of the goods and services Canadians regularly buy showing large price increases. Measures of core inflation remain around 5%. Three-month rates of change in core inflation have come down, an early indicator that price pressures may be losing momentum. However, inflation is still too high and short-term inflation expectations remain elevated. The longer that consumers and businesses expect inflation to be above the target, the greater the risk that elevated inflation becomes entrenched. https://www.bankofcanada.ca/2022/12/fad-press-release-2022-12-07/
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Housing affordability: Back to the 1980s!

12/2/2022

From National Bank of Canada We remain in the midst of the longest sequence of declining home affordability since the 1986-1989 episode (11 quarters). The magnitude of the deterioration, however, is much more pronounced this time (25.5 p.p. vs. 20.2 p.p. in the 1980s). As a result, the mortgage ona representative home in Canada now takes 67.3% of income to service, the most since 1981. A first since the second quarter of 2019 is the downturn in housing prices that has mitigated slightly the impact on affordability of still rising mortgage rates. Our 5-year benchmark mortgage rate used to calculate our affordability metrics rose 75 bps in the third quarter of the year. While this surge was less significant than the one observed in the previous quarter, it propelled the benchmark mortgage rate to its highest level since 2010. To give an idea of scale, all else being equal, a 75-bps increase represents an extra 300$ (or an 8.1% increase) on the monthly mortgage payment for a representative home in Canada. With our affordability indexes at extreme levels in most markets, we see further declines in housing prices. The slowdown in real estate activity in several markets is expected to result in a cumulative 15% decline in home prices in 2023 from the peak (-7.7% to date). This, combined with a stabilization of the benchmark 5-year mortgage rate, should improve affordability in the coming quarters. HIGHLIGHTS: Canadian housing affordability deteriorated for a seventh consecutive quarter in Q322. The mortgage payment on a representative home as a percentage of income (MPPI) rose 3.8 points, a deceleration from the 10.2-point increase in Q222. Seasonally adjusted home prices decreased 1.1% in Q322 from Q222; the benchmark mortgage rate (5-year term) rose 75 bps, while median household income rose 0.9%. Affordability deteriorated in all the ten markets covered in Q3. On a sliding scale of markets from worst deterioration to least: Vancouver, Victoria, Calgary, Montreal, Toronto, Quebec, Edmonton, Ottawa-Gatineau, Hamilton, Winnipeg. This was the seventh consecutive quarter with a worsening in all markets. Countrywide, affordability deteriorated 2.7 pp in the condo portion vs. a 4.8 pp deterioration in the non-condo segment. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf
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The housing market has stabilized in October

11/24/2022

Summary On a seasonally adjusted basis, home sales increased 1.3% from September to October, the first monthly gains in eight months. Despite this growth in sales, this should not be seen as the beginning of an upward trend, but more like a stabilization of the market, with sales now 35.6% below their February level. This is the first time in four months that new listings are up with an increase of 2.2% from September to October. Despite the increase in soles, the increase in new listings allowed supply to accumulate, resulting in the number of months of inventory increasing from 3.7 to 3.8 in October. We are not yet seeing a large influx of sellers at this time, so supply is still very low on a historical basis and market conditions are still pointing in the direction of a favourable to sellers market. This situation is also present in the majority of Canadian provinces, while only B.C. and Manitoba close to indicating a favourable to buyers market. Housing starts declined by 31.8K in October to 267.1K (seasonally adjusted and annualized) after having reached their highest level for 2022 in the prior month while the consensus was calling for a decline to 275K. Storts continued to be well above their long-term average, despite still increasing interest rates. The Teranet-National Bank Composite National House Price Index decreased by 0.8% in October compared to the previous month and after seasonal adjustments. Nine of the 11 markets in the composite index were down during the month: Halifax (-4.7%), Hamilton (-2.8%), Winnipeg (-2.4%), Victoria (-2.0%), Quebec City (-1.7%), Toronto (-1.1%), Ottawo-Gotineau (-1.1%), Montreal (-1.0%) and Vancouver (-0.3%). Conversely, the Calgary (+1.8%) and Edmonton (+2.0%) markets were still up. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf
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Canadian home sales edge up from September to October

11/18/2022

Statistics released by the Canadian Real Estate Association (CREA) show national home sales edged a little higher in October 2022. HIGHLIGHTS National home sales were up 1.3% on a month-over-month basis in October. Actual (not seasonally adjusted) monthly activity came in 36% below October 2021. The number of newly listed properties edged up 2.2% month-over-month. The MLS Home Price Index (HPI) declined by 1.2% month-over-month and was down 0.8% year-over-year. The actual (not seasonally adjusted) national average sale price posted a 9.9% year-over-year decline in October. https://stats.crea.ca/en-CA/
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Teranet-National Bank House Price Index - Canada: A second consecutive record decline in September

11/10/2022

From National Bank of Canada In September, the seasonally adjusted composite index fell by 2.0%, matching the previous months record decline and representing a fifth consecutive monthly contraction. Since its peak in May, the composite index (not seasonally adjusted) has already declined by 7.0%, whereas during the 2008 financial crisis, prices fell by only 6.2% over the same period and by 9.2% in total over eight months. In a context where monetary policy will continue to be tightened in the coming months, house prices should continue their contraction and exceed that experienced during the financial crisis of 2008. Indeed, we anticipate a record cumulative decline of about 15% nationally by the end of 2023, assuming a policy rate that tops out around 4.0% and a Bank of Canada that throws some weight behind lowering rates in the second half of 2023. Although corrections are observed in the vast majority of markets covered by the index, the CMAs that have experienced the most significant price growth over the past two years are also those that have experienced the most significant declines to date. As a result, the price correction is expected to be more significant in Ontario, British Columbia and the Maritimes, while it is expected to be less significant in the Prairies, which are favoured by a buoyant economic environment. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index decreased by 2.0% in September compared to the previous month and after seasonal adjustments. After adjusting for seasonal effects, 8 of the 11 markets in the composite index were down during the month: Victoria (-5.9%), Vancouver (-3.5%), Hamilton (-2.1%), Montreal (-1.9%), Toronto (-1.8%), Winnipeg (-1.7%), Ottawa-Gatineau (-1.0%), and Quebec City (-0.1%). Conversely, the Calgary (+1.2%), Halifax (+1.1%) and Edmonton (+0.2%) markets were still up. From September 2021 to September 2022, the composite index increased by 6.0%. This growth was driven by Halifax (16.4%), Calgary (14 .7%) and Montreal (10.5%). Growth was lower than average in Winnipeg (5.9%). Hamilton (5.6%), Edmonton (5.6%), Ottawa-Gatineau (5.0%), Victoria (4.7%), Toronto (4.5%) and Vancouver (3.9%). https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf
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Canada: Home sales and new listings continued to slide in September

11/4/2022

From National Bank of Canada On a seasonally adjusted basis, home sales fell 3.9% from August to September, bringing the level of sales 18.9% below its 10-year average. This was the seventh consecutive decline for this indicator, with sales down a cumulative 36.2% between February and September. Declines were observed in every province and in 60% of all local markets. We expect the current moderation in sales to continue going forward as the Bank of Canada continues to increase its overnight rate in restrictive territory. The rapid rise in interest rates by the central bank is certainly limiting the purchasing capacity of households while also having a psychological effect on some buyers who are waiting to see how high rates will stabilize before taking action. Rising interest rates and the slowdown in the market did not provoke an influx of sellers for the moment. On the contrary, new listings declined 0.8% between August and September, a third monthly drawback in a row. Overall, the number of months of inventory rose from 3.5 to 3.7 months in September, the highest level since May 2020. Based on the active-listings-to-sales ratio, market conditions loosened in the country and are still indicating a balanced market. Six provinces out of 10 are now in balanced territory: B.C., Alberto, Saskatchewan, Manitoba, Ontario and P.E.. The others continued to indicate market conditions favourable to sellers mainly due to lack of supply. On a year-over-year basis, home sales were down 32.2% compared to the second-strongest month of September in history last year. Sales were down in every province on a year-over-year basis, with the largest decline observed in B.C. (-45.2%) and the smallest in Saskatchewan (-7.3%). For the first three quarters of 2022, cumulative sales were down 21.9% compared to the same period in 2021. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf
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Bank of Canada increases policy interest rate by 50 basis points, continues quantitative tightening

10/27/2022

The Bank of Canada today increased its target for the overnight rate to 3%, with the Bank Rate at 4% and the deposit rate at 3%. The Bank is also continuing its policy of quantitative tightening. Inflation around the world remains high and broadly based. This reflects the strength of the global recovery from the pandemic, a series of global supply disruptions, and elevated commodity prices, particularly for energy, which have been pushed up by Russias attack on Ukraine. The strength of the US dollar is adding to inflationary pressures in many countries. Tighter monetary policies aimed at controlling inflation are weighing on economic activity around the world. As economies slow and supply disruptions ease, global inflation is expected to come down. In the United States, labour markets remain very tight even as restrictive financial conditions are slowing economic activity. The Bank projects no growth in the US economy through most of next year. In the euro area, the economy is forecast to contract in the quarters ahead, largely due to acute energy shortages. Chinas economy appears to have picked up after the recent round of pandemic lockdowns, although ongoing challenges related to its property market will continue to weigh on growth. Overall, the Bank projects that global growth will slow from 3% in 2022 to about 1% in 2023, and then pick back up to roughly 2% in 2024. This is a slower pace of growth than was projected in the Banks July Monetary Policy Report (MPR). In Canada, the economy continues to operate in excess demand and labour markets remain tight. The demand for goods and services is still running ahead of the economys ability to supply them, putting upward pressure on domestic inflation. Businesses continue to report widespread labour shortages and, with the full reopening of the economy, strong demand has led to a sharp rise in the price of services. https://www.bankofcanada.ca/2022/10/fad-press-release-2022-10-26/
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CMHL Housing Supply Report - Canadian Metropolitan Areas

10/20/2022

Highlights After a boom recorded last year, housing starts in the countrys six largest census metropolitan areas (CMAs) fell 5% in the first half of 2022. The decrease observed for apartments (-9%) is the main cause of this drop. On an annualized basis, however, housing starts in the first half of 2022 remained high compared to the level of construction over the past five years. Additionally, there was a lot of contrast between the six urban centres studied. Indeed, in the first half of the year, housing starts were up in Edmonton, Calgary and Toronto, while declines were observed in Vancouver, Ottawa and Montral. The effects of rising interest rates and construction costs could have an even greater impact on housing starts in the coming months. New data on physical construction time for housing reveal important differences across centres and dwelling types, which has an impact on the affordability of the end product. Cities that build a lot of large, tall apartment structures will risk having housing construction sectors that are less responsive to a rapid need for new housing units. This is consistent with what is observed in Vancouver and Toronto. Low-rise apartment structures, such as those built in abundance in Montral, take much less time to build than taller apartment structures with a similar number of units. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/market-reports/housing-supply-report/housing-supply-report-2022-11-en.pdf?rev=74c50e35-d0a7-4131-b6a5-5829967ed5d1
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The road ahead for the economy and housing — fall 2022 update

10/14/2022

Highlights Inflationary pressures have been stronger and more persistent than expected since we published our Housing Market Outlook in April 2022. This has led to significantly sharper than predicted interest rate hikes in Canada and other economies. Interest rates are expected to rise further given the need to reduce inflation. The Canadian economy will enter a modest recession by the end of 2022 and start recovering in the second half of 2023. The national house price is expected to decline by close to 15% by Q2 2023 from its historical peak in Q1 2022 as housing demand slows with rising interest rates and deteriorating economic and income conditions. Despite this house price decline, ownership affordability will not improve as the benefit from lower prices will be offset by rising interest rates. Rental affordability pressures will increase with rental demand as fewer renter households can access ownership. https://www.cmhc-schl.gc.ca/en/blog/2022/road-ahead-economy-housing-fall-2022-update
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Rates Are Moving Again AND Not Done Yet!

9/27/2022

NEWS The never-ending movement of interest rates continue to not let us down. They are on the move again and expected to be moving even more come October 26th, 2022 when the Bank of Canada makes their next announcement. The banks, along with other mortgage lenders have been pushing Fixed Mortgage Rates up a bit further the last 24 hours. Naturally, we are just so excited about this news, we can hardly hold our enthusiasm. Canadians have recently been battling interest rate hikes by taking shorter term rates, thinking it will buy time for the rates to come down in a couple years. We are not really too sure they will when those mortgages are due for renewal, but in the meantime, the Big Banks have increased their short-term rates due to their popularity. Rate hikes for primarily 1 to 3 year terms have ranged from 10 to 55 basis-points (Bps). Not to be left out, many monoline lenders have jumped on-board and are doing the same with their short-term fixed rates. As a mortgage shopper, what should you do? Well, the answer is different for everyone. Compare these short-term rates against a 5-year fixed and where the payments would sit with your budget. Maybe you feel it is still worth to mitigate these fixed rates by going with a variable or maybe a hybrid that supplied both a fixed and variable. Term selection would be the first thing to review regarding your risk management around interest rates. Generally, the more qualified and liquid you are, the more you can gamble on shorter terms or variable exposure. As we are approaching the end of September, economists believe that the Bank of Canada will most likely deliver another rate uptick of 50 Bps to 75 Bps on October 26th, 2022 therefore, moving prime once again, to around 6.20%. With this type of increase in prime, where are your thoughts on Fixed vs Variable? Sources: Bank of Canada, Canadian Mortgage Trends General Reading
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Another Rate Hike! And Stress Test Not Getting Any Easier

9/15/2022

NEWS On September 7, 2022 the Bank of Canada did not falter on the predictions as it increased the Overnight Rate another 75 basis-points (Bps) bringing the central banks rate to 3.25%.. As the bank continues to fight inflation, there have been some signs that the rate hikes are having some effect as inflation has eased in July to 7.6% from the previous months 8.1%. The Canadian economy continues to operate in excess of demand and labour markets are remaining tight. The countrys GDP did grow 3.3% in the years second quarter but was still weaker than the central bank had projected. Several Canadian Major Banks have expressed the opinion that the rates will continue to increase so the Overnight Rate will be brought to 4.00% and maybe even higher. Bank of Canada Rate Announcement Media Release Despite the rate hikes forcing Canadian Mortgage Borrowers to qualify at rates in excess of 6.00% and 7.00%, the Office of the Superintendent of Financial Institutions (OSFI) squashed the prospect of loosening the Stress Test for conventional insured or uninsured mortgages. Peter Routledge, head of OFSI, explained Rising policy interest rates will lead to higher debt servicing costs which, combined with heightened inflation, will pressure Canadian households. Sources: Bank of Canada, Canadian Mortgage Trends
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Central Bank’s September Rate Hike Predicted To Be The Last In 2022

9/1/2022

NEWS The Bank of Canada will be making their next Interest Rate Announcement the morning of September 7, 2022 and according to a recent report from CIBC Economics, they expect the countrys central bank to deliver a 75 basis-point hike that yields an Overnight Target Rate of 3.25% and then hold that rate for the remainder of the year. They also anticipate the 5-year bond yielding an average rate of 2.45% in 2022 and 2.3% in 2023 which will generate close to $19 billion of additional debt payments in 2022. CIBC Economics does not see any further rate hikes in 2023 but also does not see an easing of rates either through 2024. Other Canadian economists have agreed with the CIBC Economics vision but others have not and they predict further rates hikes could continue into next year with the Overnight Target Rate reaching 3.75%. Sources: CIBC Economics, Financial Post, Canadian Mortgage Trends
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Changes Coming To The Bank of Canada

8/29/2022

NEWS In case you missed it, on June 22, 2022 the Bank of Canada announced that the Deputy Governor, Timothy Lane, will retire on September 16, 2022. Deputy Governor Lane joined the central bank in August 2008 after spending 20 years with the International Monetary Fund (IMF). He was appointed Deputy Governor of the Bank of Canada in February 2009 and has overseen the analysis of the Canadian Economy, the Banks work on financial markets along with the Banks analysis of international economic developments. The Bank of Canada is now left with the process in finding a new Deputy Governor which we begin immediately. The Board of Directors will form a selection committee to conduct the search and selection process with the assistance of a global executive recruiting firm. The Bank of Canadas Board of Directors has since completed a full analysis of the Deputy Governors role and have decided to change this role by breaking it into two Deputy Governors. They will add an external, non-executive Deputy Governor position that is focused on contributing to the Banks monetary policy and financial stability mandates. This role will be considered part-time and is being advertised as a two-year contract position with the option to extend it for another year. Sources: Bank of Canada Media Relations
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Inflation Slowed in July BUT Rate Hikes Still Expected as Affordability Index Gets Worse

8/16/2022

NEWS Has inflation hit its peak in Canada? According to Statistics Canada, it appears it has as they have reported growth of 7.6% for the month of July. Huray!!! That is the first month-over-month decline in the past twelve months as June had brought a 40 year record of 8.1%. Analysis of the CPI Index brings good news to Alberta as the June numbers had the province over the Canadian average of 8.1% to being at 7.4% for July, just below the countrys 7.5%. Further details and analysis can be found on the Stats Canada site:Click Here Not everything is rosy though, as the Bank of Canada is still expected to raise their Overnight Rate during their next announcement, September 7, 2022. The rate increase seems to be anticipated at 75 basis-points to 100 basis-points. Another 1% increase in the central banks rate would be even more significant historically and could be a final dagger to many Canadians in the house buying market, especially those First-Time Home Buyers. The consolation in this type of increase is that some economists believe that may be it for the year and the Bank of Canada will then allow the economy to adjust between then and the end of the year. Regardless of the details of the expected rate hike in September, it wont improve the central banks Housing Affordability Index (HAI) that was released last week. According to their first quarter numbers, housing affordability decayed to its worst level in over thirty years. Their report provides data that households must devote 42.8% of disposable income to housing related expenses, an increase from 39.7% in Q4 of 2021 and 34.7% a year earlier. The data used to calculate these numbers does not include property taxes which are also on the rise for most Canadians so housing carrying-costs are really higher than the numbers reported. Home Prices are expected to continue to fall into 2023 and rents continue to increase across the country except maybe in some specific pockets. Will locations in Alberta be in some of those pockets? Well, it is hard to say but provincial numbers in either category are not falling or rising as significantly as in most other places in Canada. Alberta is trending to match these rises and declines but with much lower percentages. Oil prices have been keeping the Alberta economy propped up but they are falling once again as WCS is priced at 67.63 and WTI is 86.78, so the Province of Alberta is now taking a bit hit on revenue compared to what they were generating just a few months ago. Pressure remains across the economy and it will force us to dip into our wallets a little deeper as we all try to find our way through the ups and downs. Sources: Statistics Canada, Storeys, Canadian Mortgage Trends, BNN Bloomberg
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Are Fixed Rates And Variable Rates Going In Different Directions?

8/5/2022

NEWS The Canadian Inflation Rate was showing as 8.1% recently which is the highest it has been since 1983. The Bank of Canada has been tackling this issue through several rate hikes, since March 2022. The rise of the central banks overnight rate has been the focus of battling inflation and slowing the economy. In the meantime, the Bond Market has started to slide down due to growing expectations of an economic downturn. What does all this have to do with Fixed and Variable Mortgage Rates we all ask? They have a significant impact on both types of rates and are the foundation of them going in different directions presently. The bond market influences fixed rate mortgages so as the Government of Canadas 5-Year Bond Yield falls, national mortgage lenders, especially mono-lines, are able to drop their high ratio and insurance interest rates. This has actually occurred the last week as fixed rates have begun to drop below 5%. A decline of roughly 10 basis-points and a bit more within some lender rate promos. On the other hand, variable rates are tied directly to Prime that is set by what the overnight rate from the central bank sits at. As the Bank of Canada increases the overnight rate, it increases the Prime Rate that variable rates are based on. In conjunction with the increase in the Prime Rate, now at 4.70%, lenders have also backed off their discount percentage from prime in setting their overall variable rate. Not long ago, a borrower could secure a variable mortgage rate of Prime minus one percent or maybe even a bit more. Now, many lenders are offering prime minus .90% or less that could go as low as .75% The result, a variable is now based on a higher prime rate and a lower discount from prime that yields an overall higher rate within an environment where rates are expected to increase again on September 7, 2022 when the Bank of Canada makes its next rate announcement. At present, it is clear that fixed and variable rates are going in opposite directions so a borrower should keep this in mind if seeking mortgage financing currently. Borrowers should know what their long term goals are regarding their mortgage and also assess their risk tolerance when it comes to rate influx, despite the falling of home prices. Remember, rates can change extremely quickly, so have a plan going in and discuss it further with your mortgage professional for additional updated information so you can make the best and most educational decision on whether to take a variable or a fixed rate. Sources: Canadian Mortgage Trends
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Bank of Canada Publishes its Interest Rate Announcement Schedule For 2023

7/29/2022

NEWS The Bank of Canada has published its Interest Rate Announcement Schedule for 2023 that also includes the dates when their Monetary Policy Reports will be released. All Rate Announcements will take place at 10:00AM ET by the central banks governor. Here is the released schedule: Wednesday, January 25* Wednesday, March 8 Wednesday, April 12* Wednesday, June 7 Wednesday, July 12* Wednesday, September 6 Wednesday, October 25* Wednesday, December 6 * denotes when the Monetary Policy Report will be concurrently released with the rate announcement The Bank of Canada Business Outlook Survey and Canadian Survey of Consumer Expectations Reports for 2023 publish dates will be announced at a later date. Sources: Bank of Canada
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Don’t Lose Your Mortgage Approval During Rising Inflation and Interest Rates

7/20/2022

NEWS According to a Statistics Canada release the morning of July 20, 2022, Canadas Inflation Rate has hit the mighty number of 8.1% year-over-year for the month of June. We now have the highest inflation rate our country has seen in almost 40 years. The Bank of Canada has been fighting inflation that is stampeding across Canada by increasing interest rates since this past March and made a historic announcement earlier this month by providing a 100 basis-point increase and pushed the countrys Prime Rate to 4.70%. These factors have greatly impacted the market, cost of living and even fixed and variable mortgage rates. Fixed Rates are effected more based on the Canadian Bond Market but Variable Rate Mortgages (VRM) are directly impacted by the Bank of Canadas rate increases as they are based on the Prime Rate. With rates rising regularly, it is important to understand that when your mortgage application has been approved by the Lender and by the Insurer when the financing is deemed to be a High-Ratio (When you are paying less than a 20% down payment), any changes to the mortgage will need to be re-approved by both parties. A rate increase alters the required Stress Test (Mortgage Qualifying Rate) so changes to the mortgage post approval could result in a decline and a loss of the original approval. To counter this possibility, it is now, more than ever, critical that the application is structurally sound prior to submitting the application to the Lender. To assist your Mortgage Professional with this, it is even more crucial that the supporting documentation required is collected up front to ensure the applications information is accurate and supported according to Lender and Insurer underwriting guidelines and that the numbers involved are correct prior to a Lender Submission. Working this way will better position the application so when the Conditional Approval is received, there will not be any further changes to the mortgage so a Lender and/or Insurer will not need to underwrite the file again and expose your original approval to be declined. Good advice is that once your mortgage is approved, you should not create any changes and ensure everything stays the same. A minor change could be deemed material and force the application to be reviewed again. Sources: Storey, Canadian Mortgage Trends, Statistics Canada
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Bank of Canada Drives Overnight Rate Higher Than Expected – Up 100 Basis Points

7/13/2022

NEWS The Bank of Canada announced another rate hike this morning as expected but the hike was beyond what experts were calling. Rather than the expected 75 basis-point increase, Tiff Macklem, Bank of Canada Governor, increased their target rate by 100 basis-points that reset the rate now at 2.50%. Referring to their Monetary Policy Report, that was also released this morning, the central bank explained that inflation is higher than expected based on their Monetary Policy Report from back in April, 2022 and they now expect inflation to remain around 8% over the next several months. Global inflation is also higher with the war in Ukraine delivering the biggest impact. Many central banks across the globe are tightening their monetary policy to battle inflation and control growth, so Canada is striving for the same. Todays rate increase has been the highest single day increase since 1998 and the new overnight rate, now sitting at 2.5%, is the highest it has been since 2008. This now pushes the Bank Prime Rate to 4.7% and delivering further impact on mortgage rates, especially Variable Rate Mortgages (VRM) as well as Lines of Credit and other lending products being priced directly from prime. Bank of Canada Media Release Bank of Canada Monetary Policy Report July 2022 The next Bank of Canada Rate Announcement is scheduled for September 7, 2022 and the next Monetary Policy Report will be issued on October 26, 2022. Source: Bank of Canada
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Interest Rates Expected To Increase Again – Is A Recession Coming?

7/12/2022

NEWS On July 13, 2022 the Governor, Tiff Macklem, of the Bank of Canada is expected to announce that the Overnight Rate is being bumped up another 75 basis-points. This will be the forth time in a row that the Bank of Canada has raised rates. The expected increase in the rate will naturally push the Prime Lending Rate up further from its current 3.70%. This will have a significant impact on lending products with floating rates based on prime such as Lines of Credit and Variable Mortgages. Experts are saying that if the Bank of Canada is forced to continue raising rates to fight inflation, as they are expected to, then it will slow the consumer price growth. The economy would be thrown into a reverse for two straight quarters to finish off 2022 CMHC Chief Economist Bob Dugan has explained. Their models show how the central banks inflation fighting would push home prices further down, slow home sales further and create what is known as a Technical Recession during 2023. Earlier in July, the Royal Bank of Canada was the first Canadian Major Bank to predict the nations economy will fall into a recession during 2023 amid a four-decade high inflation, historic labour shortages and continued aggressive interest rate hikes. RBC Economists have projected back to back quarter negative growth in 2023 that will yield a Technical Recession. RBC projection of this recession is illustrated by Canadas resource heavy economy. A resource heavy economy, such as Alberta, is benefiting from the recent energy prices boom but still remains vulnerable to global economic headwinds and higher borrowing costs that threaten to stall expansion in most advanced economies, such as Canada according to the RBC Economists. At present, the projected recession we will be so fortunate to experience in 2023 will be mild. Mild or not, a recession generally brings on struggles within the economy, people do lose jobs, companies sell less helping the countrys output to decline. Canadians are already scaling back on food, utilities and housing as the cost-of-living surges. According to a survey recently done by MNP, nearly half of those surveyed have cut back on non-essentials, including travelling, dining out and entertainment. No matter where Canadians turn, there is no reprieve as everything is more expensive. Not a favourable time for any of us. Source: BNN Bloomberg, CMHC, RBC Economics
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Calgary’s Real Estate Market Shifting, Sales Are Slowing

7/7/2022

NEWS According to the Calgary Real Estate Board (CREB), sales eased up in June relative to the past several months. With a total of 2,842 sales, the market fell by two percent year-over-year, though last year at this time the market served up a record high. CREBs analysis unveiled that the decline of detached and semi-detached homes has been the driving force behind the drop. Naturally, higher interest rates are starting to have a greater impact as well. The pullback in Calgarys market has not been met with the easing in home prices as the average home price reached $517,059 in June, that is up approximately five percent from June 2021. The Calgary Housing Market is becoming more of a Balanced Market according to Ann-Marie Lune, CREBs Chief Economist. Regional Markets such as Airdrie, Cochrane and Okotoks have not been following Calgary the same way. Airdrie has eased slightly but not enough to offset gains earlier in the year, Cochrane is actually slightly up from last year as inventory is growing as well. Okotoks remained quite stable, including the number of new listings. Source: Calgary Real Estate Board (CREB), BNN Bloomberg
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Bank of Canada’s Canadian Survey of Consumer Expectations

7/6/2022

NEWS The Bank of Canada released the results for their Canadian Survey of Consumer Expectations on July 4, 2022. They advised readers that the survey was conducted between April 28 and May 13, 2022 with some follow-up interviews during June, 2022. Result Highlights Consumers expectations for inflation have risen in addition to concerns about prices for food, gas and rent. Consumers short-term expectations are at record high levels and long-term expectations certainly increased, bringing those thoughts back to pre-pandemic levels. Canadians think supply chain issues, the pandemic and higher government spending are driving high inflation. There is more uncertainty among consumers about how inflation will evolve and they are more likely to have opposing views. The majority of polled consumers believe the Bank of Canada can achieve its inflation target but many think their process will be difficult. Canadians plan to cut spending because they are lacking the confidence due to high inflation and rising interest rates. Prior to purchasing, they are taking more time to seek more affordable options. There is a clear relation to inflation concerns by those consumers in lower income brackets versus those in higher ones. The higher the income bracket, the less concerned the respondents are regarding inflation and the rising costs. Consumers are anticipating that wage increase will be modest though employees in the private sector have higher expectations for wage growth. Flexible work arrangements with employers could attract more Canadians into the labour force as it is felt that working from home could offset expenses of higher inflation. During interviews with respondents, many workers close to retirement indicated that high inflation may force them to keep working so they can afford the increase in the cost of living. The Canadian Survey of Consumer Expectations is conducted by the Bank of Canada each quarter and gathers views on inflation, the labour market and household finances. The survey expresses the views of those who respond to this online survey and are not necessarily the views of the Bank of Canada. Canadian Survey of Consumer Expectations Report Details Source: Bank of Canada
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OSFI Changing Mortgage Rules!

7/6/2022

NEWS The Office of the Superintendent of Financial Institutions (OSFI) announced changes to mortgage financing as they take action to reduce systemic banking system risk. On June 28, 2022, OSFI explained that they need to ensure that federally regulated financial institutions are well prepared to address persistent risk of outstanding consumer debt. The action they are taking is outlined in their Annual Risk Outlook 2022-2023. The announced changes are focused on Combined Loan Plans (CLP), Shared Equity Mortgages and Reverse Mortgages. Combined Loan Plans, also known as CLP are mortgage products that have a re-advanceable component to the mortgage. An example of this type of mortgage is an amortized mortgage (fixed or variable) that also has a Line of Credit component to it as well, such as a HELOC). These types of mortgages in the market allow credit to be re-advanced via the line of credit portion as the principal declines, even when the balance is over 65%. OSFI has announced that the change will force the principal amount of the payments to be applied to the reduction of the mortgage balance over 65% which will reduce the borrowing limit on the re-advanceable amount of the mortgage. Shared Equity Mortgages are programs that pair home buyers with third parties to help them come up with cash for a down payment, in exchange for an equity stake in the property being purchased. The Canadian Government came out with such a program back in 2019 known as the First-Time Home Buyer Incentive Program and shortly after, several non-profit and community groups have rolled out their versions of the program. OSFIs announcement was simply clarifying that these programs must be legitimate equity stakes and not simply another loan. They must be on equal footing with the buyers equity stake. Reverse Mortgages are programs that enable qualifying home owners to access existing equity in their homes without having to sell and not necessarily having to pay regular mortgage payments though interest is charged so the overall equity can disappear over time. OSFIs announcement pins a new cap on the amount the home owner can take out to 65% of the property value at the date or origin of the mortgage. Quote OSFI is continuously monitoring the economic environment for a range of vulnerabilities that could pose a risk to the health of Canadas 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 Canadas residential mortgage lending industry, and in turn of our financial system. - Peter Routledge, Superintendent These changes are scheduled to take effect in late 2023 as the lenders fiscal year comes to an end. Source: OSFI Media Release, Canadian Mortgage Trends, BNN Bloomberg CBC News
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There Will Be More Renters Than Homebuyers in 2022

6/28/2022

NEWS The majority of renters in Canada doubt they will have the ability to purchase a home in 2022 because of the continued increase in interest rates and high inflation. Although the Canadian housing market is cooling for the most part, across the country, the Bank of Canadas multiple rate hikes are becoming the deal breaker when thinking of buying. The increase in rates are creating higher mortgage payments and post pandemic property taxes are not going down either. Canadians will continue to see homeownership as increasingly challenging, said Paul Orlander, Executive Vice President of Individual Customers at Canada Life. According to a recent survey by Canada Life, about 73% of those respondents who are renters said its a bad time to buy a house while 17% said they would never buy one. The main reasons given for staying away from buying were a lack of money, fear and uncertainty. With inflation reaching 7.7% (May 2022) and an expected rate hike of 75 basis-points by the Bank of Canada on July 13, 2022, their rationale is not surprising. Mr. Orlander has stated that homeownership and the cost of maintaining a house could create an issue for Canadian trying to save for retirement and believes renting is a practical option right now if you wish to maintain flexibility or need to protect cash flow for savings and retirement. Source: The Motley Fool
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Purchase Plus Improvements

6/24/2022

PROGRAM The Purchase Plus Improvements Program provides mortgage borrowers the opportunity to do improvements in conjunction with the purchase of the home. The purchase and the improvements are combined into one mortgage and a single advance. Transaction Eligibility Purchase, Business For Self (Fully Qualified Alta A), Family Plan, Second Homes New to Canada, Rental Property Program (2 4 units), Owner-Occupied Rentals Flexible Down Payment Program Transaction Information Purchase a home with as little as 5% down payment, 10% for Business For Self Alt A Program Existing requirements related to income, down payment and credit worthiness apply Gifted Down Payment from immediate family can be used Government Grant may be considered if pre-approved by insurer Credit Scores below 680 have lower affordability ratio requirements Lending Value is based on the lesser of the improved property value of the sum of the purchase price plus direct improvement costs Improvements cannot exceed 20% of the initial property value or $40,000.00 Required Down Payment is the percentage of the total purchase price plus cost of the improvements Detailed Quotes for the improvements are required up front, prior to the mortgage application being submitted to a lender Improvements must be completed within 120 days of the purchase closing date, though some lenders may cap this at 90 days An Inspection Report is required to confirm the improvements have been 100% completed prior to funds for the improvements being released by the lender An Inspection Report may be waived in particular circumstances. An example would be improvements under $15,000 and then receipts would be required. Lenders differ on this aspect so ensure these requirements are understood upon receipt of the mortgage commitment. The proposed improvements must add value to the home to qualify Improvement Funds are Single Advance Only Further requirements and/or qualifications may be applicable. Contact Chris Stewart to further discuss this mortgage program regarding your specific circumstances.
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The Mortgage Qualifying Rate Is Significantly Impacting Borrowing Power!

6/24/2022

NEWS The Mortgage Qualifying Rate, also known as the Benchmark Rate or Stress Test Rate, is currently causing havoc with the power of mortgage borrowing. The major issue is that the current Qualifying Rate sits at 5.25% where it has been for quite a period of time. The issue is that most 5 Year Fixed Rates are now over 5% so borrowers are now forced to qualify at the contract rate plus 2%. That means if your mortgage lender is charging you a 5-Tear Fixed Rate of 5.26%, you must qualify for the mortgage with a rate of 7.26%. This significantly cuts into what a borrower will be able to afford. To counter-act this calculation, the variable rate is the way to go as currently those rates are coming under the Benchmark Rate of 5.25%. So, if you secure a variable at Prime Minus .75%, your contract rate today would be 2.95%, so the Benchmark of 5.25% could be used for qualifying. That, is a major change than the 7.26% we discussed above. The con to the variable rate is that it is based on Prime so it is subject to change as the Bank of Canada continues to increase their Overnight Rate to battle inflation, so your mortgage rate will rise with the bumps in prime. This is the example of the craziness in Canadian Mortgage Financing at present. Will this change? There is a good bet it will, and relatively soon. On July 13, 2022 the Bank of Canada will make their next Overnight Rate announcement where all seem confident, another rate bump will be supplied. The hope is that this fullish Benchmark Rate rationale will be adjusted to make more sense and put a stop to the lower borrowing power for borrowers have with a fixed rate mortgage. As of today, borrowers will qualify for a larger mortgage if a variable rate is taken or a shorter fixed term. They may also qualify for a larger mortgage through other types of lenders than just their bank. Todays mortgage world in Canada is more complex than ever and the best piece of advise one could be given is to connect with a good Mortgage Professional who is well educated in the field and can work with you to achieve the best mortgage channel to maximize the complexities of mortgage financing that exists. Its not about the lowest rate any longer, its about achieving the best available mortgage, with the lowest possible rate based on your circumstances. Source: Canadian Mortgage Trends
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Mortgage Application Document Checklist

6/24/2022

RESOURCE The following checklist outlines the potential documentation required to properly support each applicants Mortgage Application. Please ensure you provide all applicable documentation outlined below based on each applicants current situation, with the completed application. Standard Application Documentation * CML Client Consent Agreement [Included with the CML Application Package] *Government Photo ID [Drivers License is the most common] * Status Card / Residency Permit [Required for applicants who are not a Canadian Citizen] Income Documentation Each applicant will need to provide all applicable income documentation relevant to their employment and/or income circumstances. This is a critical condition for any mortgage so please provide all applicable income documentation upfront prior to us submitting the application to a lender. Salaried, Commissioned Hourly Income * Employment Letter Must be on company letterhead with an authorized signature and include your name, position, tenure, employment status (FT or PT)and income. If you are paid hourly, please have your employeroutline the guaranteed hours you work per week. * Pay Stub Please provide your last two most recent pay stubs showing the payperiod information as well as the year to date income information. * T4 or T4A Statements Please provide your last two years statements if you are salaried and receive any type of additional income such as bonuses, youare paid hourly or receive commissions of any kind. Self-Employed Income * T1 Generals ALL Schedules Notice of Assessments Please provide the last two years of your filed T1 Generals ALL Schedules as well as their corresponding Notice of Assessments (NOA) * Company Financials If your company is incorporated, please provide the last two years of accountant prepared company financials, It must include a Table of Contents and the Notice to Reader. * Articles of Incorporation If the company is incorporated, please provide the companys Articles of Incorporation outlining the ownership of the company. Other Income Sources * Pension or Investment Income If you are receiving any pension or investment income such as CPP, OAS, RIF, Disability or any other type of income not previously mentioned, please provide the applicable statements confirming such income. Applicable statements would include T3, T5, Pension Stubs, etc. If any of this income is received through a direct deposit, please provide your most recent bank statement confirming the deposit. Ensure the bank statement provides the institutions name along with the account owners name and address * Canada Child Benefit If you receive Canada Child Benefits (CCB) from the Government of Canada and wish to use these benefits as qualifying income within your mortgage application, please provide your most recent CCB Statement and the Birth Certificates of all children falling under this benefit. CCB is not considered by all lenders and those that do accept CCB generally have certain parameters in accepting this as income. * Rental Income If you currently own one or more rental properties, please provide the following for each rental property: Lease Agreements; Mortgage Statement; Property Tax Bill; Condo Fee Confirmation [ifapplicable];Last Two Years T1 General Tax Returns, including ALL Schedules that consists of the Statement of Real Estate Rentals NOTE: If you have an income source that is not noted above, such as Alimony/Child Support, EI Benefit for Maternity Leave, please contact your CML Mortgage Professional to further discuss and clarify documentation required. Down Payment Documentation The down payment documentation is another critical condition for lenders due to Canadian Anti-Money Laundering Legislation. Please provide all applicable documentation to support the source(s) of your down payment. * Personal Cash Savings Please provide the last 90 Days of Savings History. The Bank Statements demonstrating savings accumulation must be with a Canadian Financial Institution. The Bank Statements and/or Transaction History provided must also include the Account Owners Name, Account Number and Institution Name. * Personal Investments Please provide the last 90 Day Investment History. The Investment Statements demonstrating investment accumulation must be with a Canadian Financial Institution. Examples of Personal Investments are RRSP, Mutual Funds, Stocks, TFSA. The Bank Statements and/or Transaction History provided must include the Account Owners Name, Account Number and Institution Name. * Gifted Down Payment If any aspect of your down payment is being gifted, please advise who is gifting the down payment and how much. Further documentation requirements will be provided to you once the mortgage has been Conditionally Approved. Gifted down payments are only acceptable from immediate family. Immediate Family is considered as being Parents, Siblings or Grand Parents. * Home Buyers Plan (HBP) If you are a First-Time Home Buyer (FTHB), you are allowed to withdraw up to $35,000 in a calendar year from your Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home. For further information regarding the HBP Program, Click Here * FTHB Incentive Plan If you are a First-Time Home Buyer (FTHB), you may be interested in exploring the First-Time Home Buyer Incentive Program (FTHBIC). If you wish to use this program please advise us up front. For further information regarding this Government Program, Click Here. Subject Property Documentation If you already have an Accepted Purchase Agreement for the property you are buying whether an existing home or a new build, please provide the applicable documentation as outlined below. If you do not have an Accepted Purchase Agreement, the documents below will be required once you do. * MLS Listing Please provide the MLS Listing (Realtors Version) for the property you are purchasing. The MLS Listing also includes a picture of the home as well as all details of the home and property. If the property you are purchasing is being so via a Private Sale or a Rent-to-Own, please advise as there is a manual Feature Sheet that will be required and there will be an appraisal required. Further details will be provided. * Purchase Agreement Please provide the Accepted and fully Executed Purchase Agreement, including ALL applicable schedules and amendments. This is the contract that legally demonstrates that your offer to purchase the property has been accepted by the seller and details the amount of the purchase, the condition date, the closing date as well as other relevant information. A Rent-to-Own purchase would require a copy of the original legal agreement that was completed when the Rent-to-Own first began. * Builder Documents If you are purchasing a new home through a Home Builder, please provide the following: Floor Plans Builder Representative Contact Information. Purchase Agreement ALL Schedules Specs Drawings If you are doing a Self-Build and/or need a Construction Mortgage, please advise us immediately so the proper Construction Mortgage Schedules can be provided to you so they may be completed and returned as quickly as possible. Every Home Purchase is independently different, so the documents mentioned above are the most common and other documentation may be required upfront or requested during the process. Your CML Mortgage Professional will advise you further if this is the case and outline what additional documentation is needed. Thank you for the opportunity to work together in order to secure your mortgage financing requirements.
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Mortgage Condition Resource Information

6/24/2022

RESOURCE Here is a list of potential Mortgage Conditions you may have to fulfill quickly along with outlining many particulars and details regarding each condition that can assist you with your document collection. Important Please provide ALL required mortgage documents (Conditions) as soon as possible. The Lender can take up to 5 business days and sometimes even more to accept, review and approve supporting documentation depending on their current volumes. The Lender may also add additional conditions if the documentation provided for review doesnt meet their expectations. If Purchasing a new property, it is critical that documentation is supplied to the Lender quickly so they may review and approve prior to your Condition of Finance [COF] Day as outlined on your Purchase Agreement. We MUST work together to ensure ALL the Financing Conditions are submitted to the Lender quickly. If Refinancing or Switching/Transferring, it is important to have ALL the Conditions approved by the Lender so that the mortgage can be Instructed to the Lawyer / Legal Servicing Company as soon as possible to ensure the file can be completed to meet the scheduled Closing Date. Please provide the Outstanding Mortgage Conditions directly to Your CML Mortgage Professional. Income Documentation Income Documentation is a critical condition for mortgage financing as it can make or break a mortgage. To minimize this from happening, your CML Mortgage Professional collects ALL Income Documentation upfront that they feel is required by the Lender prior to your application submission to the Lender. This generally minimizes these critical documents from having to be collected after a Conditional Approval is in place. Having these documents upfront, better ensures that the best and accepted income can be used for qualifying purposes and that the income is fully supported via accepted documentation. This documentation is still subject to the Lenders review and approval so additional documentation may be required. Down Payment Documentation This is another critical Condition as Lenders must confirm all aspects of the funds being used for the down payment under the Anti-Money Laundering Act [AML]. If the down payment is from saved funds such as savings or investments, the last 90 days of the account transactions must be disclosed to demonstrate the accumulation of funds. If there are any large deposits during that time, they must be explained and proven. You must demonstrate account ownership. If pulling them from web banking, please send a copy of the main profile. If a Gift is being issued for the down payment, the applicable Lender Gift Letter must be completed and signed by all applicable parties and a bank statement or transaction document from the bank must be issued to confirm the deposit into your bank account. If ALL or PART of the down payment is being sourced from selling a property, you must provide the MLS Listing (Realtor Version), Completed Signed Purchase Agreement as well as the Completed Signed Conditions Waiver. This document confirms that ALL Purchase Agreement Conditions have been waived by the buyers and that the sale is considered FIRM. Please be advised that additional documentation may be required by the Lender depending on the source of the down payment and documents provided. Gift Letter If you have indicated that all or part of your down payment is being gifted by an immediate family member (Parents, Grandparents or Siblings), the Lenders Gift Letter has been included in your Conditional Mortgage Approval Package. Please Read, Complete, Date and have it signed by ALL applicable parties. Supporting Bank Account Documentation must also be supplied that confirms the gift has been deposited to the mortgage applicants bank account. The documentation being provided to confirm the Gifts deposit must also confirm that account is owned by the applicable applicant on the mortgage. Occasionally, the Lender may request account history from the individual(s) making the gift. Appraisal Report If an Appraisal Report is required by the Lender, as outlined within the Mortgage Commitment, CML Canadian Mortgage Lender or the Lender will coordinate and order the appraisal to ensure all Lender Appraisal Requirements are fulfilled correctly. As the mortgage clients, you are responsible to pay all the associated costs for the appraisal. The mortgage may need to be revised based on the appraised value of the property and all appraisals must be reviewed and approved by the lender. Further details and costs of the appraisal will be communicated to you as the mortgage condition process is coordinated. Note - Appraisal Reports are the property of the Appraiser and the Lender so a copy of the report may not be available for your viewing. Market / Economic Rent Report If you own a Rental Property or are converting your current Primary Residence to a Rental Property and there is not a Lender Acceptable Lease Agreement available for the rental property, a Market / Economic Rent Report may be required. This report is to be done by a Lender Accepted Appraiser. The report will outline and support a market rent amount for the subject property that will be used in the final affordability ratios for final mortgage qualifying. The Lender or your CML Mortgage Professional will order and coordinate the Market Rent Report and you will be responsible for all associated costs. Further details and costs will be communicated to you once the report has been ordered. Note - Market Rent Reports are the property of the Appraiser and the Lender and a copy of the report may not be available for your viewing. Final Inspection Report If your mortgage is a Purchase Plus Improvements Product, a Final Inspection will generally be required. Once you have closed on your new property and the previously quoted Improvements are completed, a Final Inspection Report will be required. This report confirms the work described in the original quotes has been done and fully completed. This report is done by a Lender Approved Appraiser and upon confirmation by the appraiser to the Lender that the improvements are 100% complete, the Lender will advise your Lawyer that they are clear to release the holdback of funds to you. The Lender or CML Mortgage Professional will order and coordinate the report once you have confirmed the improvements have been completed. All associated costs for this report are your responsibility and further details and costs will be communicated to you once the order has been made. Note - Final Inspection Reports are the property of the Appraiser and the Lender and that a copy of the report may not be available for your viewing. Lawyer If you are purchasing a home, you will require Legal Representation to complete your transaction. Your lawyer will represent you, your best interests along with preparing all the legal mortgage documentation, searches, title insurance and registration as per the Lenders Mortgage Instructions. Your lawyer will then meet with you to review all the documentation and have you sign them and answer any further legal questions you may have at the time. The lawyer and/or their paralegal will advise you on what to bring to their office for your appointment. The common items required are: Remaining Down Payment Legal Fees Home Insurance Policy Government Photo ID VOID Cheque for your mortgage payments. If you do not have a lawyer that does real estate and/or do not know one, your CML Mortgage Professional will be happy to provide a few lawyers you can contact. Legal Costs do vary from lawyer to lawyer so your CML Mortgage Professional is unable to provide any pricing for their services. Note - If you are building a home, most Builders will pay your legal fees if you use their appointed Lawyer. This may sound like a good deal as it wont cost you anything but you should still consider hiring your own Lawyer as they will look out for your best interests not someone elses. Legal Services Company All mortgage financing transactions require legal services but not necessarily a lawyer. If your mortgage is a Refinance or a Switch / Transfer, a Title Insurance Company such as First Canadian Title (FCT), may be available to use. A company like FCT will handle all the legal service requirements a lawyer can provide other than advice. The advantage of using such a company for a Refinance is that they generally offer better pricing than Lawyers as well as home signing via a Remote Signor. If you are having a Switch/Transfer completed, a company like FCT is used by the Lender for efficiency and cost. Note - Legal Servicing Companies may not be available to use if the refinanced mortgage is being funded by a Non-Prime or Private Lender. These Lenders generally require a Lawyer. Title Insurance [Lender] Your Mortgage Lender will request your Lawyer or Legal Service Company to secure Title Insurance for your property. The Title Insurance requirement is generally noted within the mortgage commitment under Solicitor Conditions. This type of Title Insurance helps reduce risk to the lender by protecting them against losses associated with the priority, validity and unenforceability of a residential mortgage. It also helps guard against claims that challenge their interest in the title. This Title Insurance Policy lasts as long as this mortgage remains registered against title. There is a one-time premium charged and you will be charged for the premium in conjunction with your final legal bill. Your Lawyer or Legal Service Provider is who coordinates and secures the Title Insurance Coverage. Please refer to your Lawyer or Legal Services Company for further information and/or pricing. For additional information, please refer to the link below: https://fct.ca/lending-professionals/residential-title-insurance/ Title Insurance [Homeowners] Your Mortgage Lender has requested Title Insurance on your subject property so they are protected but this coverage does not protect you as the homeowner. You should consider getting Property Owner Title Insurance so we recommend you discuss this further with your Lawyer or Legal Services Company and determine the premium cost for the coverage. Property Owner Title Insurance has a one-time premium and protects the homeowner(s) against losses associated with Title Fraud as well as Survey and Title Issues/Defects. For further information, please refer to the following link: https://fct.ca/property-owners/ Property Taxes Property Taxes are municipality taxes that you must pay on your property annually. Property Taxes are calculated by the municipal government through a formula that factors in the propertys Assessed Value, a Council Approved Tax Rate (Mill Rate) and in Alberta, it also generally includes a School Tax Rate. Other Taxation Fees may also be included so check with the municipality that your property is located for a more detailed list of taxes included. When purchasing a new home, your Lawyer will make the Property Tax Adjustments based on how they stand between the municipality and the seller. Your Lawyer will detail the taxes and explain these adjustments. Your CML Mortgage Professional must advise the Lender regarding the method in which the Property Taxes will be paid by you moving forward after closing. Mortgage Lenders quite often have their own policies surrounding Property Tax Payment Methods so be sure you advise your CML Mortgage Professional how you wish to pay them so the method can be approved by the Lender. Most Mortgage Lenders DO NOT allow borrowers to pay property taxes once annually when they are actually due. You generally must either have your Property Taxes added to your mortgage payment so the Lender will manage your Tax Roll with the municipality or you may pay them monthly directly to the municipality. This program is known as the Tax Installment Payment Plan [TIPP]. In order to apply for TIPP, you must contact the municipality and complete their application and provide a VOID Cheque for the account you wish to have them debit. Note - Not ALL Municipalities offer TIPP so check with the municipality to see if they do. Municipalities that offer TIPP generally supply an online sign-up from their website. Homeowner Association [HOA] Fees It is becoming more common that properties are within a community that have Titled Homeowner Association Fees. Known as HOA Fees, these are an amount of money that is generally due annually by the community homeowners and payable to the Community Association. You may need to pay them directly to the Community Association or they may be collected via a Property Management Company hired by the Community Association. These fees vary across communities and are generally based on the services the Community Association provides to their homeowners. When purchasing a home on the MLS Listing, the HOA Fees are disclosed. You may also want to inquire with your Realtor as well. It is recommended you look into where, when and how these fees are collected. Note HOA Fees differ from Condo / Strata Fees as you may have both to pay by owning the subject property. Home Insurance You will be required to secure Home Insurance (Personal Liability Fire) for the property if you are purchasing a new home and if you are refinancing or switching an existing mortgage, you must advise your current Home Insurance Company of the new mortgage details. Your Home Insurance provider will require the mortgage company name, address and other contact information so they can properly list them as the Loss Payee under your policy. If you do not have Home Insurance or are looking to potentially change companies and not sure who to contact, please let your CML Mortgage Professional know as they can provide some Insurance Agents to contact for quotes. Note - Your Home Insurance Policy is required to be provided to your Lawyer or Legal Servicing Company when signing the final legal documents. Conditions Removal / Waiver When Purchasing a property and the Lender has confirmed they have all the required documents (conditions) and they have all been approved, you can contact your Realtor and discuss removing the Financing Condition in your Purchase Agreement. Important - Upon you removing the Financing Conditions, you will be legally committed to purchasing the home. Remember, if you seek and/or secure additional credit between then and your closing date, you may put your mortgage financing in peril. DO NOT or ATTEMPT TO borrow funds until your mortgage has fully been funded and the transaction finalized. Once ALL Mortgage Conditions have been supplied to, reviewed by and approved by the Lender, they will move forward with Instructing your mortgage to the Lawyer or Legal Servicing Company you have chosen.
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Conditional Mortgage Approval Signing Instructions

6/24/2022

RESOURCE Have you received your Conditional Mortgage Approval Package from your CML Mortgage Professional? If so, Congratulations! Here are some details and instructions regarding the execution of the package to ensure it is accepted by you. Important Please provide ALL required mortgage documents (Conditions) as soon as possible. The Lender can take up to 5 business days and sometimes even more to accept, review and approve supporting documentation depending on their current volumes. The Lender may also add additional conditions if the documentation provided for review doesnt meet their expectations. If Purchasing a new property, it is critical that documentation is supplied to the Lender quickly so they may review and approve prior to your Condition of Finance [COF] Day as outlined on your Purchase Agreement. We MUST work together to ensure ALL the Financing Conditions are submitted to the Lender quickly. If Refinancing or Switching/Transferring, it is important to have ALL the Conditions approved by the Lender so that the mortgage can be Instructed to the Lawyer / Legal Servicing Company as soon as possible to ensure the file can be completed to meet the scheduled Closing Date. Please provide the Outstanding Mortgage Conditions directly to Your CML Mortgage Professional. Mortgage Commitment Package The Mortgage Commitment Package issued by the Lender provides the mortgage financing details, administration costs, pre-payment privileges as well as explanations regarding the required conditions that must be provided and approved by the Lender prior to them removing the Conditional aspect to your approval. The commitment must be fully completed, all pages initialed and signed where applicable by ALL applicants prior to it being returned. FTA Statement of Disclosure This provincial Fair Trade Act [FTA] Disclosure is a required document when there are Lender and/or Brokerage Fees being charged. This generally occurs when the Conditionally Approved Mortgage is being done by a Non-Prime and/or Private Mortgage Lender. This Disclosure outlines the particulars of the mortgage (i.e.: Principal, Contract Rate, Annual Percentage Rate [ARP], Payment, Cost of Borrowing as well as the additional fees involved and whether the fees are being deducted from the mortgage proceeds or paid outside the mortgage. Please Read the FTA Statement of Disclosure, initial each page and Sign where applicable. Letter of Direction The Letter of Direction is a document produced when CML Canadian Mortgage Lender is charging a Broker Fee for the mortgage financing. A Broker Fee is charged when the mortgage is being financed within the Non-Prime, Private or Non Broker Mortgage Channels. These channels require additional work to be done and/or they do not necessarily pay the Brokerage for the mortgage. This is how the Brokerage and your Mortgage Professional are paid for their services. This document will be sent to the your Lawyer or Legal Services Company so the listed Broker Fees will be deducted from the mortgage proceeds and directed to CML Canadian Mortgage Lender. Please Read and Sign where applicable. MPP Creditor Insurance CML Canadian Mortgage Lender Mortgage Professionals offer all their clients the opportunity to access Life, Disability and Critical Illness Insurance through their partnership with Mortgage Protection Plan (MPP). MPP Creditor Insurance is underwritten by Manulife Financial, is optional for all clients unless deemed to be ineligible by age. The MPP Insurance Application and Product Information will be provided to you via your Conditional Mortgage Approval Package or Electronically under separate cover. MPP Insurance is mobile so it does not matter who the Lender is or will be. This coverage should not be confused with any coverages offered by the Lender as their coverages are not mobile and will cease if your mortgage is ever switched to a different Lender. You may choose any combination of coverage available across ALL applicants. Please complete the MPP Application via the method it is provided. A detailed MPP Product Information Brochure is provided with every application. If you wish to waive coverage, please initial the manual application at the top as Waived and then sign at the bottom. If you are waiving coverage electronically, please follow the instructions through the link you are provided. Pre-Authorized Debit [PAD] Form The Lenders Pre-Authorized Debit [PAD] Authorization may have been included in your Conditional Mortgage Approval Package if the Lender has requested this information. Some Lenders include the request within their Mortgage Commitment or they do not request it at all. If you have not received this document, please refer to the Mortgage Commitment. If there is not a location to list your Bank Account you wish the Lender to debit for your mortgage payments, then they will have your Lawyer or Legal Services Company collect it. If your CML Mortgage Professional is responsible to collect this information, you will see a listed Condition for a VOID Cheque. If the PAD Authorization is required, please Complete this authorization, Date and Sign it. Clients Broker Authorization Form In many cases, you may be supplied with this form by your CML Mortgage Professional. This Document Authorization has been prepared for ALL mortgage applicants to sign and date. This document grants permission for the Lender to supply your mortgage information to the listed CML Mortgage Professional after the mortgage has been closed. This can be very helpful in the future when you are looking for mortgage information and/or various details as it enables you to contact your CML Mortgage Professional to inquire on what information you are seeking and they will contact the Lender to obtain this information for you. In some cases, your CML Mortgage Professional has back channels with the Lender so information can be obtained quickly. This document is optional but is quite beneficial if signed and returned. The authorization does not grant your CML Mortgage Professional the ability to change anything such as payment frequency, bank account debit set up, etc. Your authorization directly with the Lender would be required for any changes. Property Tax Payment Instructions It is important to discuss and clarify your intended method of paying the Property Taxes for the subject property. The Lender doing your mortgage may dictate the method in which you must pay your property taxes or your preferred method may not be available with the Lender, such as making an annual payment only. Lender Policies can vary and if your requested method is not accepted by the Lender, your CML Mortgage Professional will advise so alternative choices can be made. Note The best and most efficient method to pay property taxes is to sign up for the municipalitys Tax Installment Payment Plan [TIPP]. Visit your municipalitys website for further details and how to sign up.
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Home Prices Down 13% From February While Rent Up Another 10%

6/24/2022

NEWS The average home prices across Canada fell again in May and home sales were down in the majority of all Canadian markets. The average Canadian home price dropped to $711,316 in May according to data released by the Canadian Real Estate Association [CREA]. These results have produced a decrease of 4.6% month-over-month and 13% from this past February, though prices still remain about 3.4% above the average of this time last year. The biggest hits to pricing are in the Greater Toronto Area (-6.8%), Greater Vancouver (-8.3%) and BC has an overall decrease of 13.5% month-over-month. Alberta continues to buck the trend with a province wide increase of 2.4% and its two major cities showing vastly different analytics with Calgary up 4.0% and Edmonton 10.3% Despite the decline in the average national price, TD Banks Rishi Sondhi says its important to remember that theres a regional story playing out underneath the national headline. For example, Sondhi notes sales and prices are down disproportionately in Ontario and B.C. markets, which felt the brunt of affordability challenges during the pandemic. Meanwhile, rent prices continue to climb as they show another average 3.7% increase. The average rents are now almost 13% above those recorded last April during the pandemic. According to data from Rentals.ca, the average rent is $1,888 per month which is up 10.5% tear-over-year. Rental demand is up as more and more would-be buyers stray from buying a home now due to climbing interest rates and expensive properties. Source: Canadian Mortgage Trends, CREA Rentals.ca
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Mortgage Glossary of Terms

6/24/2022

RESOURCE Mortgage Financing and its process can be complex at times and generally are time consuming and full of acronyms and terms that are not always understood. Here is a list of some with an explanation to assist in better understanding mortgage terminology. Adjustable Rate Mortgage (ARM) This type of mortgage has a floating interest rate that may increase or decrease during the mortgage term. This floating rate is generally linked directly to the Canadian Prime Rate. The rate used may be set up as Prime Minus a Percentage or Prime Plus a Percentage. The mortgage payment may periodically be adjusted due to the moving prime rate. Appraisal This is the process where a properly licensed professional appraiser conducts a thorough inspection of a property to assess its true market value. The appraiser will compile all of their findings into a professionally structured report. The Appraisal Report will list the propertys As is value and at times, will also list its Improved value. Amortization The timeframe used to calculate the applicable regular payments for a mortgage. Each time a payment is made, a portion of the payment is applied to interest and the remaining portion to the principal. The most common amortization used in Canada when purchasing a home is 25 years, though there are situations where 30 years could be used. Bridge Financing This type of financing is also known as Bridge Loan or Interim Financing and is a type of second mortgage that is immediately paid out following the closing of the clients home being sold. Bridge Financing is generally used when a buyer id closing on their new home prior to the home they have sold is scheduled to close and funds from the sale are needed for the home being purchased. Mortgage Lenders have maximum timeframes for Bridge Financing along with capped amounts along with applicable interest rates and administrative costs. Closed Mortgage A type of mortgage that, for a specified period of time, locks the borrower into paying the required mortgage payments and not have the ability to alter the terms of the mortgage unless a penalty is paid as outlined in the signed mortgage documents. Penalties can be significant, though most closed mortgages do grant specific pre-payment privileges. Closing Costs These are the various costs associated with completing the mortgage transaction. Some examples of closing costs are: Legal Services, Title Insurance, Home Insurance, Property Tax Adjustments and Tax (GST, PST or HST). Some closing costs, such as charged taxes, are provincially managed so some provinces charge tax on mortgage default insurance premiums. The Mortgage Lender generally requires the borrower to confirm they have sufficient available monies to pay the closing costs. In Alberta, the normal default closing cost amount used by the Lender is 1.5% of the purchase price. Collateral Mortgage A type of mortgage offered by a Mortgage Lender that has a re-advanceable portion to the mortgage. It means that the Mortgage Lender can advance additional funds against the property when its value has increased without having to refinance the mortgage. This can be a benefit for a borrower but it can hinder the movement of the mortgage in the future to another lender with a better rate and it can decrease the available equity for a second mortgage at a later date. Conventional Mortgage A type of mortgage that has at least 20% equity of the propertys purchase price or appraised value, whichever is greater. In Canada, a conventional mortgage does not require mortgage default insurance. Equity Take-Out Mortgage (ETO) A mortgage that pulls equity from a property to generate monies that could be used for various reasons. Fixed Mortgage A mortgage type where the mortgages interest rate is fixed for the full term of the mortgage. The rate will not change, despite what rates are doing in the market place. Gross Debt Servicing (GDS) This is an affordability ratio used by Mortgage Lenders that is required to cover mortgage principal interest payments (PI), property tax payments (T), condo fee payments (CF), and property heating payments (H) against the total accepted borrowers gross income (GI). There are capped ratios based on the borrowers credit worthiness (FICO Score). The actual equation used for this calculation is: GDS = (PI + T + CF + H) / GI High - Ratio Mortgage A type of mortgage that has less than 20% equity of the propertys purchase price or appraised value, whichever is greater. In Canada, a high - ratio mortgage MUST have mortgage default insurance. Loan-To-Value (LTV) A ratio used by Mortgage Lenders to assess risk and determine if a mortgage is a Conventional or High Ratio Mortgage. A LTV is the ratio of monies being borrowed vs. the value of the property. If the LTV is above 80%, the mortgage is deemed a High Ratio and therefore, must have default mortgage insurance. LTV (%) = Mortgage Amount ($) / Accepted Property Value ($) x 100 Mortgage Default Insurance Insurance that is required for all High-Ratio Mortgages in Canada. It protects the Mortgage Lender in the event that the borrower defaults on the mortgage. The Insurance Premium charged is a percentage based on the total amount being borrowed against the property value being used. The insurance premium charged can be paid upfront as a closing cost by the borrower or it can be added to the mortgage financing and would become part of the mortgage principal being charged interest. There are currently three companies that underwrite Mortgage Default Insurance in Canada. The Canadian Mortgage Housing Corporation (CMHC), Sagen and Canada Guaranty. Open Mortgage A type of mortgage that enables the borrower to pay out the mortgage at any time without any penalties being charged. Open Mortgages generally have higher interest rates than Closed Mortgages. Overnight Rate / Policy Interest Rate The starting point set by the countrys central bank, known as the Bank of Canada, for setting many of the interest rates in the economy (lending investing) that matter to Canadians. This rate is also used as a tool to control inflation. The overnight rate is announced by the central banks Governor on predetermined days throughout the year. Please refer to the Bank of Canada for their Annual Overnight Rate Announcement Dates. Portable Mortgage A mortgage feature that permits the borrower to transfer their mortgage balance to a new property, keeping the same lender and not encountering any penalties. Prime Rate This is the base interest rate used by the majority of Canadian Financial Institutions to price all their lending products, such as mortgages. Each financial institution sets their own prime rate but they generally all follow a spread based on the Bank of Canadas Overnight Rate (aka Policy Interest Rate) Re-Advanceable Mortgage This is a type of mortgage or a feature within a mortgage that enables the borrower to pull additional monies from the mortgage without doing a refinance and incurring additional penalties and costs. The best example of a re-advanceable mortgage is a Home-Equity Line of Credit (HELOC). Refinance A mortgage that is created to payout an existing mortgage and generates additional mortgage proceeds from the propertys available equity for numerous reasons. In Canada, a refinanced mortgage is capped at 80% of the propertys appraised value. Refinancing an existing mortgage will also reset all the mortgage particulars such as rate, term, amortization, etc and may also generate payout penalties from the mortgage being refinanced. Mortgage Lenders could also be changed at this time. Renewal This is when the current mortgage has come to the end of its term and must be extended with the current Mortgage Lender under new terms to continue. Reverse Mortgage A type of mortgage in Canada that is designed for homeowners 55 years of age and older whereby they can obtain a mortgage no more than 55% of the propertys appraised value and are not obligated to make monthly payments. There are designed calculators that provide the maximum amount that could be borrowed within this type of mortgage as the age of the borrowers is a major component of the calculation. Term The length of time that the applicable interest rate is applied to a mortgage. When this timeframe (term) has been completed, the mortgage then matures and a new term must be determined (chosen by the client) which then generally ties into the available interest rate from the mortgage financing institution. The most common terms offered by Canadian Mortgage Institutions are 1, 2, 3, 4, 5, 7 and 10 years. Title The Legal Ownership of the property Title Insurance This is a type of insurance the both a Mortgage Lender and a Homeowner can obtain that offers several types of protection regarding the property and its title. Coverage for Mortgage Lenders is separate from Homeowners so each party must obtain their own if coverage is wanted or required. A company in Canada that offer this service and it can be arranged by the borrowers lawyer at time of purchase or direct at any other time is First Canadian Title (FCT). Total Debt Service (TDS) This is an affordability ratio used by Mortgage Lenders that is required to cover mortgage principal interest payments (PI), property tax payments (T), condo fee payments (CF), and property heating payments (H) plus all other monthly payments (MP) such as loans, credit cards, etc against the total accepted borrowers gross income (GI). There are capped ratios based on the borrowers credit worthiness (FICO Score). The actual equation used for this calculation is: TDS = (PI + T + CF + H + MP) / GI Underwriting / Underwriter The process of deciding whether the Mortgage Lender will or will not provide the requested mortgage financing for the borrower. The process includes the confirmation and analysis of the borrowers employment, income, credit worthiness and history, property equity, risk exposure among many other factors. The underwriter is the trained individual who works for the Mortgage Lender and conducts this process. Variable Rate Mortgage (VRM) This type of mortgage generally has a fixed payment but the principal portion of the payment fluctuates based on the floating interest rate for this type of mortgage. The interest rate may increase or decrease during the mortgage term. This floating rate is generally linked directly to the Canadian Prime Rate. The rate used may be set up as Prime Minus a Percentage or Prime Plus a Percentage.
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Bond Rates Soaring – Fixed Mortgage Rates Expected To Follow

6/24/2022

NEWS As of today (June 14, 2022) at 11:28 AM EDT the Canada 10 Year Government Bond Rate was at 3.564%. That is a current uptick of 0.046 from this morning. The 10 Year Bond has been on the rise for quite sometime and its rise is getting steeper. Up 20 Bps since last Friday. The Bond Rates relate to Fixed Mortgage Rates so with this continued increase, we are already getting notification that Fixed Mortgage rates will increase by midnight Wednesday. The next round of increases will push the fixed rates with most lenders above 5% which would be almost double from the start of the year. In other related news, the US Fed is expected to increase their rates by 75 Bps later this week. Their inflation rate is currently 8.6%, the highest in 40 years. Source: Canadian Mortgage Trends TD Economics
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How Much Will Rising Interest Rates Drive Down Housing Prices?

6/24/2022

NEWS Many Canadian cities have both current homeowners and prospective buyers wondering how low property valuations could go based on the continually rising interest rates and the post-pandemic market really begins to emerge. According to a recent report, Canadian Residential Real Estate Outlook from Desjardins Economic Studies, it depends on where in the country you are living. The study suggests that the more growth a city had during the pandemic, the further that city has to fall. The report predicts that national home prices peaked in February, 2022 and the average sale price in Canada will drop 15% to the end of 2023. The average home price in Nova Scotia and New Brunswick is expected to fall 20% throughout that timeframe. Ontario and Prince Edward Island could experience an 18% drop and British Columbia dropping 15%. Provinces such as Alberta, Saskatchewan and Newfoundland Labrador saw less dramatic increases during the pandemic and are expected to generate less decrease in prices. According to Karen Yolevski, COO for Royal LePage, Canadas housing market is really made up of individual micro-markets and each follows its own path. The impact of each market will be based on the big unknown at this time How High Will Rates Go? Source: Global News
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Housing Market Slow Down Healthy, Bank of Canada Says!

6/24/2022

NEWS During a speech on Thursday, June 9th, 2022, Bank of Canada Governor Tiff Macklem said rising rates arent expected to derail the nations economy and may even produce a Healthy slowdown in the housing market. Macklem was speaking after the Bank of Canadas Annual Report on Financial Stability was released. He explained that the national economy can handle Higher Interest Rates and that Moderation in housing would be healthy. If the economy slowed sharply and unemployment rose considerably, the combination of more highly indebted Canadians and high house prices could amplify the downturn, Macklem told reporters, adding it could have broad implications for the economy and financial system. A concern of the central bank is that they estimated the share of new mortgages this past year are going to highly indebted households. Those carrying loan to income ratios above 450 percent has surpassed pre-pandemic levels to hit new records. According to the report, many Canadians would be left more exposed in the event of a correction as many of these households stretched themselves financially to get into the housing market. Source: BNN Bloomberg
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New To Canada

6/24/2022

PROGRAM The New To Canada Program provides mortgage borrowers who have recently immigrated to Canada the opportunity to purchase a home. Borrower Eligibility Must have a valid work permit or permanent residency Minimum 3 months full-time employment in Canada Immigrated to Canada within the last 5 years Transaction Information Purchase a home with as little as 5% down payment For Properties valued at $500,000 or less, minimum 5% down payment For properties valued over $500,000 Less than $1M, minimum of 5% down for the first $500,000 and an additional 10% for the portion over $500,000 First Mortgage Only Maximum 2 units, where 1 unit is owner-occupied New Construction covered by a Lender Approved New Home Warranty Program Existing Resale Properties Readily marketable residential dwellings, located in markets with demonstrated ongoing resale demand Estimating remaining economic life of the property should be a minimum of 25 years Property Value must be less than $1,000,000.00 Fixed, Standard Variable, Capped Variable and Adjustable Rate Mortgages permitted Current Qualifying Interest Rate is used Maximum Amortization is 25 years Standard income and employment verifications required Minimum of 3 months full-time employment in Canada (Borrowers being transferred under a corporate relocation program are exempt) International Credit Report demonstrating a strong credit profile may be required Two alternative sources demonstrating timely payments (no arrears) for the past 12 months. (Examples Rental Payment, Hydro, Utility, Telephone, Cable, etc) Letter of Reference from a recognized financial institution or six months bank statements from a primary account All debts held outside Canada must be included in debt servicing Rental Income outside Canada is not acceptable for debt servicing Foreign Diplomats or other individuals not paying income tax in Canada are ineligible Clergy assigned to specific church requires only a visitor record Progress Advance Mortgage and Purchase Plus Improvement Mortgage acceptable Guarantors not permitted Further requirements and/or qualifications may be applicable. Contact Chris Stewart to further discuss this mortgage program regarding your specific circumstances.
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Calgary Real Estate Bucking The National Pricing Trend

6/24/2022

NEWS According to the regional real estate boards across Canada, home sales and their prices have decreased month over month, except in Calgary, Alberta. For the third consecutive month, the average price in the Greater Toronto Area (GTA) fell $122,000 from their February 2022 peak. Real Estate in the GTA started strong in 2022 but has fallen since as many potential home buyers have put their plans on hold due to the rate tightening that has been occurring. It appears the same has been happening in both Vancouver and Montreal. However; in Calgary, has continued to see their average prices increase, though the pace of growth has slowed. Month-over-month, Calgary prices have increased 3.7%. According to Ben Rabidoux of Edge Realty Analytics, I think were still in the early innings of Alberta outperforming the rest of the country. Regional Home Price Data Greater Toronto Area (GTA) Sales: 11,903 -38.8% (YoY) -48.6% (MoM) MLS Price Index Average Price (All Types) $1,212,806.00 +9.4% (YoY) -3.3% (MoM) Greater Vancouver Area (GVA) Sales: 2,918 -31.6% (YoY) -9.7% (MoM) MLS Price Index Average Price (All Types) $1,261,100.00 +14.7% (YoY) -0.3% (MoM) Calgary Sales: 3,071 +3.0% (YoY) -9.7% (MoM) MLS Price Index Average Price (All Types) $546,000.00 +14.5% (YoY) +3.7% (MoM) * Data Information from TRREB, REBGV, CREB CMT
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First-Time Home Buyer Incentive Program Changes In Effect

6/24/2022

NEWS The Federal Governments First-Time Home Buyers Incentive Program (FTHBIP) was first launched September 2, 2019 and was designed to lower a qualifying buyers monthly mortgage payments by increasing the available down payment through a shared benefit between the buyer and the government. The government would then participate in the share of the appreciation or the depreciation of the property. As announced by the Government of Canada in its Budget 2022 Plan, the government would introduce appreciation and depreciation limits within the program. On June 1, 2022 it did exactly that. An appreciation and depreciation cap is now in effect. The 8% Cap is now in effect and this cap limits its share in either the appreciation or the depreciation of a home at the time of FTHBIP repayment. The Canadian Mortgage and Housing Corporation (CMHC) has explained that the share limit (Cap) will be up to a maximum of 8% of the home value gain or loss from the time of the advance to the time of repayment and it will not be compounded. If there is an appreciation, then the 8% will be retroactive to the implementation date of the program (September 2, 2019) but in the case of depreciation, the incentive repayment is calculated on or after the June 1, 2022 effective date. If you purchased your home under this program, it is highly recommended that you read further and understand these changes and how they may affect you moving forward. For further information and explanations, please refer to the link below: First-Time Home Buyer Incentive Program Updates
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Bank of Canada Raises Overnight Rate... AGAIN!

6/24/2022

NEWS On Wednesday, June 1, 2022 the Bank of Canada, as expected, raised the Benchmark Interest Rate another 50 Bps to make it 1.50%. Canadas central bank also signalled that this rate increase is not the end. The Bank of Canada continues to deliver these increases in order to fight, what some economists are saying, out of control inflation. Inflation hit 6.8% in April which is twice the level the central bank likes to see. What does this mean for Canadian Consumers? Simple, it makes borrowing money more expensive as it pushes the consumer lending rates up further, including mortgage rates. It will trigger variable rate lending products, such as mortgages, to increase. Variable Rate Lending Products are generally based on Prime so when Bank Prime Rates increase, so will your variable lending products. Is it time to convert your Variable Mortgage to a Fixed Mortgage?
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Mortgage News, Programs & Resources

6/24/2022

ANNOUNCEMENT This is just not a Blog, it is an area where you can reference important and impactful information pertaining to the Mortgage Financing Industry. Information that will help you make educated mortgage financing decisions based on your current and expected future circumstances. If you wish to discuss things further, I look forward to discussing them with you. Reach out to me and lets discuss your home financing goals and explore the best options.
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