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Garth Lyon Senior Mortgage Professional

Garth Lyon

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Canadians Need Guidance With Their Mortgages

10/7/2019

THINK OUTSIDE THE BOX: Thats the takeaway from a national survey released last week by Rates.ca, which found half of Canadians arent aware of the mortgage options available to them. Click here to read more.
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How the parties’ housing promises stack up, according to this expert

9/30/2019

THINK OUTSIDE THE BOX: Housing has emerged as a hot-button topic in the federal election campaign, with party leaders unleashing a slew of headline-grabbing promises over the last few weeks. Click here for article.
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Residential Market Commentary – What is a central bank?

9/24/2019

THINK OUTSIDE THE BOX: As we head into the federal election well be hearing a lot about the economy, interest rates and housing. In this country, one of the key players in all of those things is the Bank of Canada, commonly referred to as the central bank. Click here to read more.
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Residential Market Commentary – Treading water in a rising tide

9/16/2019

THINK OUTSIDE THE BOX: It seems pretty clear that the BoC really does not want to trim its trend setting rate. The economic numbers do not warrant it and we are in a federal election cycle. The Bank has a long history of stepping to the sidelines during elections in an effort to preserve its reputation for political neutrality. Click here to read more.
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Everything you need to know about Canada’s new First-Time Home Buyer Incentive

8/29/2019

THINK OUTSIDE THE BOX: Designed to alleviate mortgage costs for first-time home buyers, effective September 2nd, the FTHBI will provide shared equity loans of 5% toward the down payment of a resale home, and 5% or 10% for newly-built homes. Click here to read more.
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It’s official: Canada’s housing-market correction is over

8/22/2019

THINK OUTSIDE THE BOX: An economist with Canadas biggest bank says the countrys housing-market correction is officially over. Click here to read more.
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2 of Canada’s longest-struggling housing markets are finally improving

8/9/2019

THINK OUTSIDE THE BOX: The struggle has been real for Albertas biggest housing markets but the provinces embattled urban centres are showing some signs of improvement, local real estate boards report this month. Click here to read more
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Federal government announces funding for affordable housing projects in Calgary

8/9/2019

THINK OUTSIDE THE BOX: The federal government has committed $28.4 million for the construction of 12 affordable housing projects in Calgary. Click here to read more
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What You Should Know About Collateral Charge Mortgages

8/7/2019

THINK OUTSIDE THE BOX: Collateral mortgages shouldnt be portrayed as a supreme evil of the mortgage universe, when in fact they offer advantages to some. Click here to read more
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Parents to the Rescue for Young Homebuyers

7/30/2019

THINK OUTSIDE THE BOX: Following a huge run-up in prices over the last several years, housing has become very expensive in many of the countrys key markets. Click here to read more.
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Residential Market Commentary – Interest rate early warnings

7/23/2019

THINK OUTSIDE THE BOX: The interest rate dominoes are starting to tumble. Click here to read more
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Latest in Mortgage News: Stress-Test Rate Drops After a Year of No Change

7/19/2019

THINK OUTSIDE THE BOX: The benchmark posted 5-year fixed rate, which is used for stress-testing Canadian mortgages, fell yesterday from 5.34% to 5.19% in its first move since May 2018. Click here to read more.
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Big Data Week Offers Clues on Canadian Rates and Economic Outlook

7/15/2019

THINK OUTSIDE THE BOX: With lawmakers on summer recess and the Bank of Canadas latest decision in the can, attention turns to the economic numbers for signs of whether the recent momentum will continue, and what it might mean for interest rates. Click here to read more.
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Bank of Canada bumps up 2019 growth forecast, keeps rates steady

7/10/2019

THINK OUTSIDE THE BOX: The Bank of Canada is leaving its overnight rate unchanged as positive signs in the Canadian economy are mostly offset by global trade tensions, including Chinas restrictions on Canadian canola and meat. Click here to read more
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8 Ways Canadian Millennial Homebuyers Are Vastly Different From Their Parents

7/8/2019

THINK OUTSIDE THE BOX: Graduate, land a job, buy a house. That was the trajectory many of our parents took to step on the property ladder. But for Millennials living in Canadas largest cities, the path isnt as clear. Click here to read more
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Government lays out fine print of new CMHC program that could contribute 10% to price of first home

6/18/2019

THINK OUTSIDE THE BOX: While a bill would be paid down the line, the savings over the years could add up. In the example, the program would save a would-be borrower $286 a month in mortgage costs over the life of the loan, $3,430 a year. Click here to read more
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This is where Canadian home sales and prices are moving in 2020: forecast

6/17/2019

THINK OUTSIDE THE BOX: With the unemployment rate falling, population growth holding strong, and interest rates on pause, the Canadian Real Estate Association (CREA) has upwardly revised its 20192020 forecast for home sales and prices. Click here to read more
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'Pretty cheap money': Canadian mortgage rates falling to their lowest level in 2 years

6/7/2019

THINK OUTSIDE THE BOX: House prices may be as high as ever in many parts of the country, but Canadian homebuyers are being offered some of the lowest mortgage rates seen in years as lenders battle to drum up new business. Borrowers just about everywhere across the country can take their pick of offerings well below three per cent at the moment. Click here to read more
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Canadian interest rates are on hold. Here’s what that means for mortgages.

6/4/2019

THINK OUTSIDE THE BOX: In a strong economy the bank will typically hike interest rates, whereas in a weaker one it will lower rates to stimulate spending. Standing on the sidelines matches the Bank of Canadas recent wait-and-see approach. Click here to read more
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Residential Market Commentary – Creeping rate cut speculation

5/28/2019

THINK OUTSIDE THE BOX: In the run up to this weeks rate setting by the Bank of Canada, talk of a coming rate cut is creeping into the forecast. Realistically, it is unlikely there will be any interest rate movement down or up in Canada before 2020. Click here to read more
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Andrew Scheer says he wants to scale back Canada’s mortgage stress test

5/16/2019

THINK OUTSIDE THE BOX: Changes to Canadas mortgage stress test could be coming, depending on the outcome of the October federal election. Click here to read more
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BoC’s Call for Longer Mortgage Terms Raises Questions

5/9/2019

THINK OUTSIDE THE BOX: Polozs call to arms for the industry to introduce longer mortgage terms appears to be a response to criticism over the governments stress test, which has sidelined the buying intentions of an estimated 40,000 homebuyers since it was introduced last year. Click here to read more
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Residential Market Commentary – Bank of Canada pulls up a seat on the sidelines

4/30/2019

THINK OUTSIDE THE BOX: The Bank of Canada eliminated references to the need for future interest rate hikes during last weeks setting, signalling it has shifted to a wait-and-see status. Many market watchers do not expect any rate increases (or decreases) until early 2020. Click here to read more.
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Parents need to plan carefully if they are going to help their kids buy a house

4/15/2019

THINK OUTSIDE THE BOX: Buying a home is a big step for anyone and experts say that parents need to make sure it is affordable and that their children are ready for the change. Click here to read more.
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Majority of Canadians Say It’s Better to Own than Rent

4/10/2019

THINK OUTSIDE THE BOX: Despite stratospheric prices in the countrys largest housing markets, a majority of Canadians still see the value in owning a home compared to renting. Click here to read article
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Update on CMHC’s First-Time Home Buyers Incentive

4/5/2019

THINK OUTSIDE THE BOX: Details have been few and far between on the governments new First-Time Home Buyers Incentive (FTHBI) since it was announced in last months budget. But CMHC has finally provided a little more clarification. Click here to read more.
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How the Right Credit Cards Can Help You Recover from Bad Credit

4/5/2019

THINK OUTSIDE THE BOX: If you are recovering from a bad credit event, you should make every effort to restore some lustre to that damaged credit history. Click here to find out how.
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Canadian mortgage rates are falling as bond yields slide lower

3/26/2019

THINK OUTSIDE THE BOX: Whats bad news for some is good news for others, and Canadian mortgage-holders are the unexpected beneficiaries of some of the gloom thats hovering over Canadas economy. Click here to read article.
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Mortgage Industry Reacts to Liberal Budget

3/25/2019

THINK OUTSIDE THE BOX:Hoping for minor tweaks to the mortgage stress test, the Liberal governments 2019 budget instead left many in the industry underwhelmed and with more questions than answers. Click here to read article.
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2019 Federal Budget - Industry Impacts

3/20/2019

THINK OUTSIDE THE BOX: An increase in the eligible RRSP withdrawal amount to $35,000 (previously $25,000) as well as the announcement of the new CMHC FirstTime Home Buyers Incentive Plan will give eligible first-time homebuyers the ability to lower their borrowing costs. Mortgage Professionals Canada welcomes aspects of the housing affordability component of todays Federal Budget. The announcement of a new CMHC First-Time Home Buyers Incentive Plan represents a shared equity mortgage program that would give eligible first-time homebuyers the ability to lower their borrowing costs by sharing the cost of buying a home with CMHC. The incentive would provide funding (equity sharing) of up to five percent of the purchase price of an existing home, or 10 percent of a newly constructed home. No ongoing monthly payments are required. The buyer would repay the incentive, for example at resale. The government has budgeted up to $1.25 billion over the next three years to support this program. For example, if a borrower purchases a $400,000 home with five per cent down and a five per cent CMHC shared equity mortgage ($20,000), the size of the borrowers insured mortgage would be reduced from $380,000 to $360,000, helping to lower the borrowers monthly mortgage bill. This would make it easier for Canadians to buy homes they can afford. The program limits eligibility to households earning a maximum of $120,000 annually, and lets them borrow no more than four times their annual household income. This limits a home purchase to roughly $505,000. This Incentive Plan will be discussed more fully in the coming days, but it is not expected to begin until fall, 2019. In principle, the increased equity share eligibility for newly constructed homes will help incent new construction and supply across Canada. Further analysis is needed, however, some aspiring homebuyers, especially at the lower end of the economic ladder, will have greater opportunities to purchase a home with the assistance of this new program. Also of note is an increase in the eligible RRSP withdrawal amount through the Home Buyers Plan (HBP). Previously $25,000, this has been increased to a maximum to $35,000. The budget included a lengthy defense of the current stress tests but does suggest that adjustments may be made in future. We will continue to discuss this issue with policymakers. While we did not see immediate movement on the stress tests, and the new Home Buyers Incentive Plan can be seen as an alternate and more targeted response than an insurable 30 year amortization, we are encouraged by the announcements made today. The forthcoming federal election will provide opportunities to continue the conversations with policymakers and candidates in the coming months. We will continue our ongoing market analysis and maintain our support for a stable housing market for our members and their customers. Mortgage Professionals Canada March 19, 2019
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The BoC Turns Dovish: What It Means for Mortgage Rates

3/14/2019

THINK OUTSIDE THE BOX: Following the Bank of Canadas decision to hold rates last week, variable rate mortgages are not expected to move higher until our economic landscape looks very different from how it does today. As well, fixed rate mortgages are likely to move lower in the near future. Click here to read more Steve Huebl Canadianmortgagetrends.com March 7, 2019
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Business ownership by gender in Alberta

3/8/2019

THINK OUTSIDE THE BOX: Its International Womens Day, a great opportunity to examine female business ownership and labour force participation. Women are slightly underrepresented in the provinces labour force, making up half (49.6 per cent) of our working age population in 2018 yet accounting for 46 per cent of the labour force. The proportion of women holding a majority ownership in small and medium enterprises (SMEs) with employees was just 14 per cent in 2017. The gap reduces to 30 per cent when considering businesses owned equally between male and female owners. About 13 per cent of SMEs have female owners who have less than a 50 percent stake in the company. To learn more about women entrepreneurs in Alberta, listen to the latest Perch, the Podcast series. It includes interviews with Manjit Minhas, co-founder and co-owner of Minhas Breweries, Distillery and Wineries and Shannon Pestun, Director of Womens Entrepreneurship at ATB Financial. ATB The Owl March 8, 2019
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RRSP or TFSA: Which is the best investment tool for Canadian first-time homebuyers?

3/1/2019

THINK OUTSIDE THE BOX: If you have to pick just one, you will want to consider a few factors: your current and future income levels, your short-term and long-term goals, and the flexibility you will need to access those funds. Click here to read more. Jenny Morris Livabl_ February 27, 2019
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A first-time homebuyer’s guide to building a healthy credit history for homeownership

2/25/2019

THINK OUTSIDE THE BOX: While a 2018 Public Policy Forum Report found that money management literacy is doing well among younger generations, its important to establish healthy credit habits long before homeownership occurs. A credit history riddled with mistakes, or no credit history at all, can be a major impediment to getting pre-approved for a mortgage loan. Click here to read article. Michelle McNally Livabl_ February 21, 2019
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Mortgages from big banks consistently cost Canadians more, says rate comparison site

2/13/2019

THINK OUTSIDE THE BOX: Mortgage rates from Canadas big banks were consistently more expensive than those offered by smaller lenders last year, according to the latest findings from LowestRates.ca. Click here to read more Rajeshni Naidu-Ghelani CBC News February 12, 2019
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Big-Bank Mortgages Are Comfortable, Popular And The Worst Deal Around

2/8/2019

THINK OUTSIDE THE BOX: Why do we stay with them? Complacency is a big reason. A lack of knowledge is another. We all compare flights and hotels when were taking a trip overseas. We should start doing the same for financial products. After all, the money you can save on a vacation pales in comparison to what you can save on a mortgage. Click here to read article. Justin Thouin February 7, 2019
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5 essential finance tips that every first-time homebuyer should know

2/7/2019

THINK OUTSIDE THE BOX: Although the buying process might appear straightforward to any first-time buyer, financially preparing for homeownership can never happen too early. Click here to read article. Michelle McNally Livabl_ February 4 2019
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Residential Market Commentary – Housing: An early election issue

1/29/2019

THINK OUTSIDE THE BOX: Mortgage Professionals Canada is renewing its call for action to help millennials and other first-time buyers. The association estimates government stress tests will have affected 200,000 families by the time the October election is held; having either reduced or completely eliminated their home purchasing power. Housing appears to be taking root as a key issue in upcoming federal election. We got a preview of that when NDP leader Jagmeet Singh hinted at what an NDP government would do as he launched his campaign in a British Columbia by-election. Singh was light on details but said his Partys program would get 500,000 affordable housing units built over a 10 year period. He also called for the elimination of the GST on the construction of affordable housing, and a doubling of the first-time buyers tax credit to $1,500. In the 2015 election the current Liberal government came to power, in part, on a pledge to revamp Canadas National Housing Strategy and entrench the right to housing. It also promised to help the middle class and those working to join it. Presumably that included making sure housing would remain affordable for those buyers. Steps taken by the Liberals since then have fallen short according to critics and the political opposition. More than a year ago the Liberals unveiled their $40 billion, 10-year strategy for housing and launched ongoing consultations. But advocates say the government has gone quiet on the issue of the right to housing. Many feel it is now too late to get legislation passed before Parliament rises in June, ahead of the October election. The Liberals says they have spent nearly $6 billion building and repairing affordable housing, so far. Overall housing affordability for the middle class also remains an unresolved concern. Rising interest rates, taxes, fees and financial stress tests are seen by many as undue impediments to middle class home ownership. A recent poll by Abacus Data suggests the price of housing is a top issue for millennials, who will outnumber baby boomers when Canadians vote in the fall. Mortgage Professionals Canada is renewing its call for action to help millennials and other first-time buyers. The association estimates government stress tests will have affected 200,000 families by the time the October election is held; having either reduced or completely eliminated their home purchasing power. MPC has put forward a proposal that would make the current B-20 rules less onerous by reducing the stress test interest premium to just 0.75%, from the current 2.0%. First National Financial January 28, 2019
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Canadians weighed down by lines of credit they don’t understand

1/16/2019

THINK OUTSIDE THE BOX: The survey suggested there is a lack of understanding among consumers of how these lines of credit work. Your mortgage broker can answer your questions and provide solutions to get that line of credit back under control. Click here to read article. CBC News Susan Noakes January 15, 2019
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Calgary housing market ‘remarkably resilient’ despite low oil prices: Royal LePage

1/14/2019

THINK OUTSIDE THE BOX: All cities in Alberta that were studied for the report posted year-over-year home price increases, with the exception of Fort McMurray. Click here to read article. Nicole Gibillini, BNN Bloomberg January 11, 2019
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The problem with the Canadian government’s mortgage stress test

1/7/2019

THINK OUTSIDE THE BOX: Too much, too quick? Policymakers could ease stress testing requirements if the Canadian housing market continues on its downward trajectory this year. Click here to read article. Josh Sherman January 5, 2019
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Five predictions for Canada’s mortgage market in 2019

12/21/2018

THINK OUTSIDE THE BOX: Heres what the stars are telling us about whats to come in next years mortgage market. Click here to read article Robert McLister special to The Globe and Mail December 19, 2018
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Tempered Rate Hike Forecasts for 2019

12/11/2018

THINK OUTSIDE THE BOX: After 5 rate hikes within the last 15 months the Bank of Canada is expected to hold firm for the time being with no further increases expected until Spring 2019. Floating-rate mortgage holders who had feared the Bank of Canadas recent full-steam-ahead view towards continued rate hikes can take a breatherat least for now. The central bank adopted a more dovish stance at yesterdays rate hold announcement, which confirmed a growing chorus of analysts who now expect the bank to take a slower pace on future rate hikes. Click here to read article. Steve Huebl Canadianmortgagetrends.com December 6, 2018
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The bond market is now sending a clear signal: Go with a variable-rate mortgage

12/10/2018

THINK OUTSIDE THE BOX: If youre shopping for a mortgage and believe what the bond market is telling us, it implies your odds of success with a fixed rate may have just changed. Click here to read article. Robert McLister Special to The Globe and Mail December 6, 2018
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The Latest in Mortgage News - Economic Growth and Housing Affordability

12/6/2018

THINK OUTSIDE THE BOX: Many homeowners likely to renew at a lower rate in 2019 and housing markets in Alberta remain affordable The latest data released over the past couple of weeks are helping to provide a reading on how different jurisdictions in the country are faring when it comes to economic growth and housing affordability. The Conference Board of Canadas latest Metropolitan Outlook, for example, breaks down real GDP growth forecasts for each of the countrys key metro areas. And a new affordability survey has focused on the current situation across Alberta. In other news, a poll on 2019 mortgage renewals paints a positive picture for many borrowers. Heres a recap of some of the most recent data releases: Many Homeowners Likely to Renew at a Lower Rate in 2019 A new survey published this week by Ratehub.ca suggests 19% of Canadians will be renewing their mortgage in 2019, and that many will be able to renew at a lower rate. Thats despite five Bank of Canada rate increases over the last 15 months. The current average mortgage rate among survey respondents set for renewal next year is 3.65% for those with a fixed rate, noted Ratehub.cas Justin da Rosa, who said the best 5-year fixed rate is now 3.34%. Those currently with a variable rate may also benefit. They have an average rate of 2.89%; the best variable rate today is 2.59%. It seems expectations are high among homeowners of favourable renewal rates, with 48% of those surveyed saying they believe their payments will either stay or decrease next year. Other tidbits from the survey of 2,000 Canadian homeowners: 82% of mortgage holders currently have a fixed rate 17% have a variable rate 76% of homeowners renewing in 2019 plan to shop around 64% of mortgages in Canada are coming up for renewal in the next three years Housing Markets in Alberta Remain Affordable An Albertan earning the median household income would be able to afford a home in all of the provinces 25 major markets. Thats according to a new study from Zoocasa based on median household income and October home price data. Housing affordability is relatively healthy in all markets across the province, as wages have kept pace with home values, the report said. Assuming a 20% down payment, 3.33% mortgage rate and 30-year amortization, the minimum salary required to buy the average home in the provinces least-affordable market, Canmore, is $94,998. Calgary and Lethbridge are the second- and third-least affordable markets, requiring incomes of $63,925 and $40,055, respectively. Fort McMurray is the provinces most affordable market, thanks to its average household income of $195,656 and average home price of $374,360. This means an income of $51,066 would be needed to purchase an average-priced home there. The findings are in sharp contrast to the affordability picture in the priciest provincial housing markets, the report noted. Using the same criteria, only four of British Columbias 19 markets can be considered affordable. In Ontario, 19 out of its 28 markets are considered affordable. Click here for entire article. Steve Huebl November 30, 2018
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Down Payment Assistance Programs Across Canada

11/27/2018

THINK OUTSIDE THE BOX: Utilizing a government down payment program may help you realize home ownership years sooner. So many young people want to build home equity and get out from under their landlords thumb. But they cant. They dont have the down payment to qualify for a mortgage. For many modest-income Canadians, saving up the 5 percent minimum down payment (or 20 percent if you want to avoid CMHC insurance) can take yearsmany, many years. While some are able to rely on gifts from parents/family (39% of first-time buyers according to a 2018 Mortgage Professionals Canada study) or loans from family (25%), or RRSP withdrawals (38%) to make their down payment, those options arent available to everyone. Thats where government down payment programs come in. Scattered across Canada, these little-publicized municipal and provincial programs are helping first-time home buyers fund their down payments and make the transition from renter to owner. Click here to learn more. SteveH ratespy.com November 26, 2018
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New Rule Targets HELOC Holders Seeking a Second Mortgage

11/22/2018

THINK OUTSIDE THE BOX: A meaningful minority of Canadas 3.1 million HELOC holders will no longer qualify for additional financing like they do today The word is out on a little-known policy used to qualify anyone with a HELOC who is applying for additional financing. Several of the Big Six banks have already adopted the policy, which requires applicants to prove they can afford the theoretical monthly HELOC payment based on the limit of that HELOC, rather than the amount that has actually been used, according to RateSpy.com founder Rob McLister, who first reported the change. TD Canada Trust, the largest provider of HELOCs in Canada, on Tuesday became the latest bank to quietly adopt the new qualification rule, joining RBC and at least one other major bank. Even though you might have a zero balance, the bank assumes you might use all of your available credit, McLister wrote. The change predominantly affects those seeking additional financing for a second home, a rental/investment property or a cottage. For a typical borrower with a $200,000 HELOC limit, McLister says they will now need to prove they can afford a $1,202 monthly HELOC payment based on todays rates. That, he adds, would drive a mortgage applicants Total Debt Service (TDS) ratio over 50%, well above the maximum HELOC TDS limit of 4044%. The result: A meaningful minority of Canadas 3.1 million HELOC holders will no longer qualify for additional financing like they do today, McLister told CMT. That means many will have to restructure their HELOCs, incurring additional cost and losing financial flexibility. As always, tighter credit policies are great when the benefitssystemic risk reductionare greater than the economic loss to consumers. The jury will be out on that for a while to come. Steve Huebl November 8, 2018
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Canadians appear to have dodged that housing crash everybody's been so afraid of for 10 years

11/19/2018

THINK OUTSIDE THE BOX: Growing signs of a sustainable housing market allow the Bank of Canada to keep moving ahead with modest interest-rate increases Canadas once-lofty housing market is achieving a best-case soft landing for policy makers trying to cool things down without triggering a collapse. Click here to read more. Financial Post November 16, 2018
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Why your neighbour's kid is getting a better mortgage rate than you

11/15/2018

THINK OUTSIDE THE BOX: Ted Rechtshaffen: The government has effectively decided to support home buyers who do not necessarily have the funds to buy a house I used to think paying down debt and having a good credit rating would reward me. Then I went to renegotiate my mortgage and was told that my five-year fixed mortgage rate would be 3.84 per cent. I thought that was pretty good until the neighbours 27-year-old kid told me the rate on his mortgage was 3.39 per cent for the same term. Wait. What? How did that kid get such a great mortgage while Im paying an extra 0.45 per cent a year? The answer is that in 2018, he is a much better credit risk for the bank. This may not make sense on the surface, but let me explain how crazy our mortgage system has become. From the banks perspective, they would rather lend to someone who put down very little but had their loan guaranteed by the Canadian Mortgage and Housing Corporation (CMHC), than to someone borrowing $300,000 on a $1.5 million house with no insurance or guarantee on the payment of that mortgage. Now, it is true that in order to qualify for the low mortgage rates you would have to pay a one-time insurance payment to CMHC or another Insurer. At the moment, this insurance cost is usually a little more than the mortgage rate benefit of getting a lower rate for a low down payment, although there have been times this year, when it was actually better to pay for the insurance and get a much cheaper mortgage. To understand how we got here, lets start with the concept of an insured mortgage, an insurable mortgage and an uninsurable mortgage. These terms are key in 2018 to understanding the mortgage-rate mayhem. Today, an insured mortgage is one where the value of the home is under $1 million, the down payment is less than 20 per cent, the amortization period is at a maximum 25 years, and the home is not a rental property. A person in this scenario can get a rate as low as 3.39 per cent on a five-year fixed mortgage. The borrower pays the mortgage default insurance premium. Mortgage insurers in Canada are CMHC, Genworth and Canada Guaranty. An insurable mortgage is one where the value of the home is under $1 million, the homeowner puts down more than 20 per cent of the purchase price and the amortization period must be a maximum of 25 years. This person can get a rate as low as 3.74 per cent on a five-year fixed mortgage. The rate is higher as most lenders are insuring these mortgages at the lenders cost. In other words, the lender is paying the mortgage default insurance premium instead of the borrower. An uninsurable mortgage covers everything else, but is often simply one where the value of the home is more than $1 million. It also includes refinancing an existing mortgage or equity takeouts (meaning borrowing more to take some cash out of your home), or an amortization period up to 30 years. This person can get a rate as low as 3.84 per cent on a five-year fixed mortgage. The rate is the highest of the three scenarios as the lender cannot acquire default insurance for these mortgages. (The bank) would rather lend to someone who put down very little but had their loan guaranteed by CMHC According to Walter Lee, director of business development at First Financial Inc., the person in better financial shape, and with an uninsurable mortgage is facing one more hurdle they didnt expect. Not only are these types of clients facing higher rates, but the renewal rates they receive from their current lender are less competitive than before, because the lender knows that you will face a stress test if you go elsewhere, said Lee. By stress test, Lee is referring to the new rule whereby you must qualify for a mortgage based on a formula that assumes you are borrowing at a rate two per cent higher than the actual rate you have negotiated or the Bank of Canada Qualifying Rate whichever is higher. These days the Bank of Canada Qualifying Rate is 5.34 per cent. While this stress test may not really affect those with high income and good credit, for many people it is restricting the funds available to them to buy a house. With less credit comes lower house prices. Based on these rules, is it any surprise that more expensive homes are suffering the most in terms of price decreases? According to Lee, clients often are shocked at the rate difference. They say You are telling me I can get a better rate to put down less? Not only that, but many irst-time buyers say that they are not going to wait another year to save up more, when they think mortgage rates will be higher in a year. Essentially, the message to them is put down less and buy today. Most people in the market for (a $1 million house) cant purchase it without a mortgage. with higher rates, theyre less likely to pay as much for it. The government has effectively decided to support home buyers who do not necessarily have the funds to buy a house. This may get me in trouble but why do we want this at this stage of the housing cycle with increasing rates? Dont we want people to buy a house when they can afford to do so? Especially now? On the other end of the spectrum, what about the person who has no mortgage but owns a house worth more than $1 million. Even without a mortgage, there is clearly a challenge for them. Most people that are in the market for that house cant purchase it without a mortgage. Because they are now facing a higher rate on their borrowing cost, they are less likely to pay as much for that house. More importantly, because they can get less total credit from a lender, they are less likely to pay the asking price. The big crime is that this person owns a house worth over $1 million. The current mortgage environment is a prime example of how politicians have decided to interfere with the natural market and the result is some very strange rules that make winners of the banks and put higher costs on those who should have the lowest costs in a free market system. Whether it is right or wrong, the end result is a situation that is built in Ottawa and the provincial capitals. It is one that has become misaligned in terms of borrowing costs and borrower risk. In the lending world, that is almost never a good situation. Ted Rechtshaffen is president and wealth advisor at TriDelta Financial, a boutique wealth management firm focusing on investment counselling and estate planning.
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Residential Market Commentary – Financial fretting among Canadians

11/13/2018

THINK OUTSIDE THE BOX: Let your mortgage broker help you come up with a financial plan to ease the stress and assist in making your dream a reality. This is Credit Education Week in Canada and a new report from credit card company Capital One and the credit counselling organization Credit Canada Debt Solutions suggests a lot of Canadians worry about their money. It indicates that a striking 44% of Canadians are so stressed about their finances they feel it is hurting their mental health. The study finds that, on average, Canadians spend about an hour a day fretting over their finances. That is more time than most people spend eating each day. The results indicate that 76% of Canadians have already missed out on special experiences in order to save money. More than half have skipped vacations and more than a third have scrimped on personal grooming. Nearly 60% say they would take drastic steps to become debt-free, including never travelling or vacationing, never eating out, and adopting a no-spend diet. The study does not specifically address worries about mortgage finances. But given homeownership levels in Canada and the amount of mortgage debt in the country, it would be naive not to consider mortgages as a key source of financial stress. For mortgage brokers, this kind of anxiety represents an opportunity. Easing client worries with appropriate, thoughtful and timely mortgage advice will go a long way toward winning their trust, respect and business. First National Financial LP November 12, 2018
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CMHC forecasts housing ‘moderation’ over next 2 years

11/7/2018

THINK OUTSIDE THE BOX: Canada Mortgage and Housing Corp. says the countrys real estate market is expected to moderate over the next two years as the growth in housing prices begins to slow to be more in line with economic fundamentals. Click here to read article. BNN Bloomberg November 7, 2018
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Bank of Canada Raises Rates to 10-Year High

10/25/2018

THINK OUTSIDE THE BOX: With this increase of .25% most adjustable-rate mortgage (ARM) holders and those with lines of credit will see their payments increase as of their next payment date. ARM mortgage holders can expect monthly payments to rise about $12 per $100,000 worth of mortgage. Variable-rate holders wont see their payments increase, but they will see the interest portion of their payments jump while their principal portion declines. Click here to read more. Steve Huebl Canadianmortgagetrends October 24, 2018
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How to decide if you should make the switch from a variable to a fixed-rate mortgage

10/23/2018

THINK OUTSIDE THE BOX: With the Bank of Canada expected to raise rates again, now is a good time to reassess if a mortgage with a variable rate still makes sense for you. You should ask yourself why you decided to choose a variable-rate mortgage in the first place and if anything has changed. Click here to find out more. Craig Wong The Canadian Press October 18, 2018
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These are the Alberta cities with the highest and lowest property-tax rates

10/16/2018

THINK OUTSIDE THE BOX: Its important to factor all regular shelter costs into your budget to determine if you can truly afford a home. Buyers often fail to consider all their carrying costs when looking at houses for sale regularly, just the up-front costs, such as purchase price, home inspection costs, renovations, and legal fees are top-of-mind. Click here to read more and find out how your Alberta city ranks in comparison to other Alberta cities tax rates. Danielle Kubes Livabl_ October 11, 2018
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Here’s where Canadian home prices are headed for the rest of 2018

10/10/2018

THINK OUTSIDE THE BOX: Canadian home prices have been slowly trending upwards for the past few months, with plenty of industry speculation about what the final quarter of the year might have in store for the gradually warming market. Click here to read article. Sarah Niedoba Livabl_ October 9, 2018
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Starting today, self-employed Canadians have a better shot of qualifying for a mortgage

10/4/2018

THINK OUTSIDE THE BOX: The new rules will ask lenders to consider additional factors in their decision-making process for anyone who has been self-employed for less than two years. Click here to read article. Sarah Niedoba Livabl October 1, 2018
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Residential Market Commentary – Increases in the U.S. and the potential ripple effect

10/2/2018

THINK OUTSIDE THE BOX: Market watchers who are forecasting another Bank of Canada rate increase next month have been handed more backing for their prediction. Last week the U.S. Federal Reserve pushed up its policy rate for the eighth time since December of 2015. The Fed increased its benchmark rate by 25 basis points (a quarter of a percent) to a range of 2% to 2.25%, the same level it was at in April 2008, before the height of the global financial crisis. The U.S. central bank also made it clear it intends to continue along that path. The Fed says it expects one more increase this year and is projecting at least three hikes in 2019. It has also changed some of the language in the accompanying statement, eliminating the phrase the stance of monetary policy remains accommodative. The effects of U.S. rate increases routinely ripple across the border influencing bond rates and the value of the Canadian dollar. A declining loonie could trigger further inflation, as the cost of imported goods increase. The Bank of Canada is already facing an inflation rate that is running on the high side of its 1% to 3% target range. Unemployment is at generationally low levels in Canada, and working people exercising their spending power can also fuel inflation. Given these pressures and the BoCs stated desire to normalize interest rates another quarter-point increase seems very likely on October 24th. First National Financial LP October 1, 2018
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Alberta’s population growth: Part One

9/28/2018

THINK OUTSIDE THE BOX: The slower economy and tougher job market may have robbed Alberta of its traditional title as fastest growing province, but its population growth remains among the strongest in the country. New data released from Statistics Canada show the estimated population of Alberta on July 1, 2018, was 4,307,100, an increase of 1.5 per cent compared to a year earlier. During the heady years at the start of the decade, Albertas population had been growing at a rate closer to 2.5 or 3 per cent. Without question, the pace of growth has slowed. Despite this, Alberta still has the third-fastest growth rate among the provinces, behind only Ontario and Prince Edward Island, both of which grew by 1.8 per cent over the last twelve months. The national average was 1.4 per cent. Saskatchewan, Nova Scotia and New Brunswick had the slowest growth rates, all expanding by less than one per cent. Newfoundland and Labradors population contracted by 0.6 per cent. Population growth is a key indicator of the overall economic health and quality of life of a province. The fact that Alberta remains one of the fastest growing in the country suggests the economy is indeed showing gradual improvements. In the second part of our series on population, The Owl will examine which segments of the population are driving Albertas growth. The Owl ATB Financials Economics Research Team September 28, 2018
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Buyer beware: How purchasing property from a non-resident of Canada could leave you with a hefty tax bill

9/17/2018

THINK OUTSIDE THE BOX: You could be personally liable for the vendors Canadian capital gains tax if you dont take certain precautions. Click here to find out what you need to know. Financial Post September 17, 2018 Jamie Golombek
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Residential Market Commentary – Impending rate hikes and transitory factors

8/29/2018

THINK OUTSIDE THE BOX: Many economists believe it would a low-risk stance for the Bank to wait until October before making any move due to the uncertainty surrounding NAFTA and the continuing worries about the debt load being carried by Canadians. There are more interest rate hikes coming. Bank of Canada Governor Stephen Poloz remained on message during the annual meeting of central bankers in Jackson Hole, Wyoming over the weekend. Of course, the questions that also remain are: How many and when? Poloz has been consistent in his message that the Bank will make its decisions based on data, and will move gradually. He maintained that stance in Wyoming. Poloz discounted inflation pressures, saying Julys jump to 3% was not unexpected and was caused by transitory factors such as higher energy prices and mandatory minimum wage increases. He says the Banks reading of core inflation remains near its 2% target. The Bank of Canada Governor did highlight a key concern that will have to be taken into account as further rate increases are considered uncertainty about NAFTA. Poloz says the nature and pace of the re-negotiations and ongoing threats, out of the White House, to tear up the deal have put a drag on investment in Canada. The uncertainty surrounding NAFTA and the continuing worries about the debt load being carried by Canadians mean the central bank may not be able to respond to a rate increase by the U.S. Federal Reserve that is expected in September. Many economists believe it would a low-risk stance for the Bank the wait until October before making any move. First National Financial LP August 27, 2018
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These are Canada’s strongest buyers’ and sellers’ housing markets

8/24/2018

THINK OUTSIDE THE BOX: While most markets remain in balanced territory, not every city is made equal - though the GTA has seen signs of recovery, many of BCs major markets continue to struggle. Click here to read article Sarah Niedoba Livabl August 22, 2018
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Residential Market Commentary - Baby boomers and a housing market shift

8/16/2018

THINK OUTSIDE THE BOX: The housing market shift that is supposed to be led by empty-nest Baby Boomers has been slow to arrive. But a new survey from realtor, Royal LePage, suggests it is coming. Although it might not be as dramatic as forecast. The Boomer Trends Survey suggests as many as 1.4 million Boomers (those born between 1946 and 1964) will be in the market, buying and selling, over the next five years. That is about 17% of this major demographic. That is significant but it is muted by the finding that nearly 60% intend to stay put and renovate their current home, rather than sell and buy another home. For mortgage brokers this represents an opportunity when it comes to refinancing and home equity lines of credit. The long expected shift to downsizing appears to have been stalled by the Great Recession that started in 2008, which led to the rapid escalation of home prices. The survey indicates that 56% of Boomers consider their local housing market to be unaffordable. That jumps to 63% in Ontario and a whopping 78% in British Columbia. Affordability concerns coupled with the fact that the children of Boomers tend to be staying in the family home longer, appear to be holding Boomers in place. Boomers, though, do appear to be keen to have their children benefit from home ownership. Nearly half of the older generation indicated they would help fund a childs home purchase, with just over 40% saying they would contribute up to 25% of the purchase price. First National Financial LP August 13, 2018
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Where are the best places to live in Alberta?

8/8/2018

THINK OUTSIDE THE BOX: MoneySense magazine recently ranked towns and cities across the country, including here in Alberta. The Owl is focusing in on some of the results. We all know Alberta is a great place to live. Everywhere you travel in this province youll find people who swear their community is the best place to hang ones hat. But is there a way to put some objective measurements to the question? MoneySense magazine recently looked at towns and cities across the country and ranked them on metrics such as the health of the economy, affordability, tax rates, crime, amenities and climate. Assigning a weight to each of these and measuring each community, it arrived at a ranking of Best Places to Live. Lacombe took the top honour in Alberta and placed fifth in the entire country. It ranked particularly strong on the strength of its economy (the unemployment rate is 4.9 per cent), demographics and home affordability. Other cities in central Alberta also ranked high, including Camrose and Red Deer, ranking third and fourth respectively. Tucked into the eastern edges of the Rockies, Canmore ranked second mostly because of its strong economy and low taxes. The leafy city of St. Albert rounded out the top five in the province. (See full rankings.) While rankings like this can offer some insights in comparing communities on objective metrics like housing affordability and taxes, we all know that what makes a community great is its people. And because of this, it doesnt matter if its Magrath, Manning or Milk River the community where you live, work and play is the BEST for you! ATB Financial The Owl August 7, 2018
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Looking to boost cash flow? New flexible mortgage could be a game-changer!

8/2/2018

THINK OUTSIDE THE BOX: If youre looking to free up more monthly cash flow, this new product may be a great solution. Theres a great new flexible interest-only mortgage product that could prove beneficial for a number of borrowers, including first-timers, real estate investors, professionals, seasonal workers and others looking for lower monthly mortgage payments. Designed to help borrowers increase monthly cash flow by providing maximum flexibility, this product can be used for both purchases and refinances. I recently tried this product out and was really impressed! My client was a newly-separated single mother who needed a break on monthly mortgage payments. I was able to improve her monthly cash flow on a $354K mortgage from $1,470 down to $1,261 a savings of $209 per month/$2,508 annually! This savings was possible thanks to the ability to place 50% of the mortgage as an adjustable rate mortgage (ARM) and 50% as interest only. Product Highlights Interest-only available up to 65% loan to value (LTV) or 2 components of interest-only and amortizing payments up to 80% LTV Interest-only portion must consist of at least 50% of total mortgage amount Fixed and adjustable rate options available Applicable mortgage amounts range from $200,000 to $2 million Qualification based on 30-year amortization for interest-only portion 20% prepayment privileges, convertible and portable If youre looking to free up more monthly cash flow, this new product may be a great solution. Id be happy to review your current mortgage to ensure youre matched with a product that makes the most sense for your unique needs. Steve Garganis July 31, 2018 CanadaMortgageNews.ca
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CMHC moves to make it easier for self-employed to get a mortgage

7/25/2018

THINK OUTSIDE THE BOX: In the changes, CMHC said several factors could be used in future to support a lenders decision to give a mortgage to self-employed borrowers who have been operating their business for less than two years or have been in the same line of work for less than two years. Click here to learn more. CBC News July 22, 2018
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Here’s which housing type you can buy with your salary in Calgary

7/25/2018

THINK OUTSIDE THE BOX: While home ownership might seem unattainable for many in Toronto and Vancouver, could an annual salary of just $26,300 be enough to get you in to Calgarys housing market? Click here to read more. Kerrisa Wilson July 22, 2018
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Fixed vs. Variable – No Contest

7/16/2018

THINK OUTSIDE THE BOX: Fixed Vs. Variable, its a debate that has been around as long as mortgages. If you are unsure, I promise you, this eight-minute video from Dustan Woodhouse, a fellow broker from BC is well worth the watch!
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Bank of Canada raises rates

7/11/2018

THINK OUTSIDE THE BOX: Bank of Canada paints an economic picture in which higher oil prices, a weaker Canadian dollar and stronger than expected business investment is fully offsetting the negative effect of trade uncertainty. Bank of Canada Governor Stephen Poloz brushed aside concerns about trade wars and pressed ahead with a fresh interest rate increase as inflation hovers at its highest in seven years. Click here to read more. Bloomberg MSN Money July 11, 2018
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Top economist ‘baffled’ by Poloz; urges Bank of Canada to hold rates

7/4/2018

THINK OUTSIDE THE BOX: With a week to go before the Bank of Canadas next policy meeting, the odds are stacked in favour of rates going up in this country. But some skeptics argue the central bank should hold fire. I do recognize that [Bank of Canada Governor] Stephen Poloz is leaning toward a rate hike, but theres still a lot of things that can happen between now and the rate decision, particularly when it comes to geopolitics, said Stfane Marion, National Banks chief economist and strategist, in an interview with BNN Bloomberg on Tuesday. I think this is one of the rare instances where you could argue that given this uncertainty out there, why would you proceed with a rate hike if things turn from bad to worse later this summer? The implied probability that the Bank of Canada will raise its benchmark lending rate to 1.5 per cent on July 11 has surged recently. Indeed, as of Wednesday morning the market perceived an 81.6 per cent chance that the bank will boost the cost of borrowing at its next meeting. Click here to read entire article. Noah Zivitz BNN Bloomberg July 4, 2018
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Trade dispute, housing to ‘figure prominently’ in central bank’s rate decision

6/28/2018

THINK OUTSIDE THE BOX: The impacts of both the escalating cross-border trade fight and new mortgage rules will figure prominently for the Bank of Canada ahead of its upcoming interest-rate decision, governor Stephen Poloz said Wednesday. In the lead-up to his July 11 rate announcement, the bank has also kept its focus on incoming, individual-level data that shows the effects of Canadas new lending rules on the housing market and mortgage renewals. Click here to read article. The Canadian Press June 27, 2018
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Get Your Latest Housing Market Digest

6/21/2018

THINK OUTSIDE THE BOX: Gain an overview of current data on resale markets, housing stats, employment trends and interest rates, from the latest issue of the national Housing Market Digest. Click here to view the latest issue Mortgage Professionals Canada Will Dunning June 20, 2018
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Canadian home buyers to enjoy enhanced search platform

6/14/2018

THINK OUTSIDE THE BOX: Exciting news.. a new partnership that will allow Canadian home buyers to make a more informed buying decision with an enhanced search platform. Late last week, the Canadian Real Estate Association and real estate information portal Local Logic have announced a new partnership which will see the latter provide property-specific neighborhood data for over 300,000 advertised listings. Local Logic will buttress Canadas largest real-estate website, REALTOR.ca, with crucial information such as proximity to transportation hubs and vital services, along with CREAs precise data on neighborhood discovery and noise levels, nearby facilities like shops and schools, and many others. We are very excited to be collaborating with one of the top brands in real estate, Local Logic CEO Vincent-Charles Hodder stated. This partnership is further evidence that the real estate industry in Canada acknowledges the importance of neighborhood and lifestyle data for home buyers. Click here to read more. Ephraim Vecina June 13, 2018 MortgageBrokerNews.ca
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CBA calls for digital IDs to make transactions safer

6/4/2018

THINK OUTSIDE THE BOX: The Canadian Bankers Association (CBA)brings the discussion on digital ID system. Mortgage borrowers could be verified quickly, safely and securely, if Canada adopts a digital ID system. The Canadian Bankers Association says that a federated digital ID model would protect consumers personal data by only revealing the data necessary for a transaction. The body has published a white paper setting out the benefits of the system, which as well as being used in the mortgage application process would also be used for other financial, business, and government transactions. A federated digital ID approach one interconnected network would transform the way Canadians identify themselves to government, businesses and each other, with ease and rock-solid security, said Neil Parmenter, President and CEO, Canadian Bankers Association. The key benefits The proposed system has been developed in collaboration with banks, telecommunications companies, law enforcement and government. Among its main benefits, the CBA report says, would be: Save costs and eliminate the duplication of identity collection between the public and private sectors. Reduce fraud by removing weaknesses in Canadas current physical ID systems and greatly limiting exposure to online fraud and identity theft. Improve regulatory compliance by streamlining how governments monitor and report complex transactions. Enhance privacy and transparency for Canadians by putting the control and visibility of who accesses their most important information back in the hands of consumers. Make Canada future ready to adopt leading cyber security practices in the digital economy. We hope to kick start an important conversation between the private and public sectors to define a pathway to building a digital ID model that positions our country as a world leader in this increasingly important field, added Parmenter. Steve Randall Real Estate Professional 04 Jun 2018
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Overspending on rent has become the ‘new normal’

5/30/2018

THINK OUTSIDE THE BOX:Burnaby renters spending more of their income on rental housing than even Vancouver. It wont come as a surprise to that Metro Vancouver renters are spending too much of their income on housing, nor will it come as a shock that rental housing costs are climbing faster than incomes. But that was confirmed by the 2018 Canadian Rental Housing Index, a comprehensive, interactive database of rental housing statistics released May 8 by a national partnership of housing associations, credit unions, and municipal associations. Nationally, according to the index, 40 per cent of renter households spend more than 30 per cent of their gross household income on rent, while 18 per cent spend more than 50 per cent. Thirty per cent of household income is generally accepted as the threshold of affordability. In Burnaby, the figures were higher than the national average. Some 45 per cent of rental households were said to be spending more than 30 per cent of their income on rent and utilities, and one-quarter are spending more than 50 per cent. In Vancouver, 44 per cent are spending more than 30 per cent of their income on housing costs, while 22 per cent of Vancouver households are spending 50 per cent or more. West Vancouver was the countrys top municipality in terms of the most renters spending more than 50 per cent of their income on housing costs, at a whopping 37 per cent. Some 58 per cent of West Vancouver renter households spend more than 30 per cent of their income on housing. The information also revealed that more than 417,000 renter households in Canada are considered overcrowded. What this data is showing is that really it is now becoming the new normal, said Jill Atkey, acting CEO of the BC Non-Profit Housing Association. She added that spending 50 per cent is putting those individuals and families at risk of homelessness. Theyre going without other basic necessities like groceries, transportation and childcare. Certainly, anything like music and soccer classes for the kids are out of the question at that point when youve got that critical level of overspending. The index was developed using the latest census data from Statistics Canada and it tracks everything, from average rental costs to how rental housing spending compares with income to overcrowding for more than 800 cities and regions, through a web portal. The tool is designed for governments, local planners, housing organizations and the general public to view an accurate picture of the rental housing market in communities across the country. Atkey said when it was first developed four years ago, most of the focus of the conversation around affordability was on home ownership. We couldnt have told you at that point what are incomes of earners, how much they were spending on rent, how different communities were stacking up against each other or whether the renters were living in suitable conditions, she said. And, we certainly couldnt have told you that in a uniform sense across the country using these same comparators. What we saw, when we released the index, is it really shifted the conversation around affordability and to get the public thinking about renters. In fact, more than a third of Canadians and a third of British Columbians rent. The public and all levels of government are beginning to pay attention to them, according to Atkins. Three years ago, we had no national housing strategy, the province [of B.C.] wasnt making significant investments in affordable housing as they are today. The municipalities werent identifying that they, themselves, had a role, she said. Weve also been educating our membership, so non-profit and co-op housing providers say, Wait, this isnt just a government problem alone to fix. We have a role to play. While it can take a few years for the average renter to see the impact of investments in housing, Atkins said British Columbia, and Vancouver, are turning a corner. Its cold comfort to the renter experiencing challenges today but, for example, in the city of Vancouver, we had the announcement last week of 1,000 new units being built in the next two to four years in the non-profit and co-op sector. Those types of announcements are happening more and more frequently, so the data that we released today is really supporting the need for those continued investments. More information about the index can be found here. Naoibh OConnor Vancouver Courier May8, 2018
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Bank of Canada makes interest rate announcement

5/30/2018

THINK OUTSIDE THE BOX:OTTAWA -The Bank of Canada kept its key interest rate target on hold Wednesday, but hinted that rate hikes could be coming as it noted the Canadian economy was a little stronger than expected in the first quarter. The central bank held its target for the overnight rate _ a key financial benchmark that influences the prime lending rates at the countrys big banks _ steady at 1.25 per cent. Exports of goods were more robust than forecast and data on imports of machinery and equipment suggest continued recovery in investment, the Bank of Canada said in a statement. Housing resale activity has remained soft into the second quarter, as the housing market continues to adjust to new mortgage guidelines and higher borrowing rates. Going forward, solid labour income growth supports the expectation that housing activity will pick up and consumption will continue to contribute importantly to growth in 2018. The central bank also said global economic activity remains broadly on track, but added that ongoing uncertainty about trade policies is dampening global business investment and stresses are developing in some emerging market economies. It noted that recent developments have reinforced its view that higher rates will be warranted to keep inflation near its target, but added that it will take a gradual approach and be guided by the economic data. In particular, the bank will continue to assess the economys sensitivity to interest rate movements and the evolution of economic capacity, it said. Economists had predicted the Bank of Canada would keep its key rate on hold Wednesday, but many have suggested the rate may be headed higher later this year. The central banks decision to keep its trend-setting rate on hold came as inflation sits above the two per cent midpoint of its target range of one to three per cent and core inflation has crept past the two per cent mark for the first time since 2012. It noted that inflation will likely be a bit higher in the near term than was forecast in its April monetary policy report due to recent increases in gasoline prices, but that it will look through the transitory impact of the fluctuations at the pump. The central bank has raised its key rate three times since last summer, increases that have prompted the big Canadian banks to raise their prime rates which are used to set the rates charged for variable-rate mortgages and other variable-rate loans. Its next scheduled interest rate decision is set for July 11 when it will also update its outlook for the economy and inflation in its monetary policy report. Craig Wong Canadian Press30 May 2018
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Poloz’s Holding Pattern on Canadian Rates Can't Last Much Longer

5/30/2018

THINK OUTSIDE THE BOX:Its no longer an issue of if, but when the Bank of Canada raises interest rates. Governor Stephen Poloz heads into a rate decision Wednesday where hes expected to once again refrain from lifting borrowing costs, even as the economy shows signs of strength and is running up against capacity constraints. Its a cautious stance driven by a wait-and-see approach to a long list of uncertainties -- everything from Nafta to the housing market -- rather than any concerns about fundamental economic momentum. After the current pause, which came after three rate increases, most economists are expecting the Bank of Canada will return to a hiking path in July, followed by one more increase at the end of the year. Its all about the timing, said Jean-Francois Perrault, chief economist at Bank of Nova Scotia in Toronto and a former central bank researcher. From our perspective rates are going up theres no question about it, but its just when will they go up. As of late Friday, 21 of 24 economists predict Poloz will hold rates steady, with the rest calling for a quarter-point increase. Investors agree chances of an increase are slim; implied odds of a May 30 rate hike fell to 25 percent last week, from 35 percent about a month ago. An increase by July and another one by December are almost fully priced in. The Bank of Canadas announcement will be a shorter one-page statement -- as opposed to the one in July, which will be accompanied by fresh quarterly forecasts and a press conference -- and any new language on trade tensions, the housing market and economic slack will be important clues for assessing a July increase. Lingering Headwinds Trumps threats this month on the North American Free Trade Agreement and possible tariffs on auto imports from Canada are the latest uncertainties Poloz needs to balance. Another lingering headwind is household debt. Poloz devoted a May 1 speech entirely to how consumers are more sensitiveto higher rates. Poloz has also been a big advocate of the idea Canada has moved to the sweet spot of the business cycle, where companies expand to meet demand and keep the economy at full output without rapid inflation. The Governor has said he has an obligation to nurture this process with stimulative borrowing costs. The sweet spot theory is important, because it allows Poloz to reconcile the idea of a cautious policy stance with an economy growing above what is considered its typical non-inflationary speed limit. After a recent soft patch, consensus forecasts show the expansion will accelerate to an annualized pace of at least 2 percent and that should eat further into Canadas dwindling spare capacity. But the law of economics will eventually prevail, with plenty of signs of a resilient economy that needs higher rates, economists said. Unemployment is at record lows and executives are telling Poloz they remain largely unscathed from policy uncertainty emanating from the Trump administration. Likewise, after five of years of below-target inflation, rising demand has consumer prices poised to meet or beat the banks 2 percent goal through the next year. With inflation at target and the labor market looking like its at full health, one rate hike wouldnt be too much for the economy to handle, especially with growth rebounding, after the first quarter, said Royce Mendes, a CIBC Capital Markets senior economist in Toronto. He predicts a July increase. The big picture remains one of firm inflation and growth, said Silvana Dimino, an economist at JPMorgan Chase Bank in New York. Canadas housing is headed for a soft landing and the U.S. has an interest in a striking a Nafta deal, she said. They feel like they have some room to let things ride out, Dimino said, adding the hiking cycle will resume. When inflation is stable at 2 percent, thats when you expect to be raising interest rates, which is what they are doing. This is the big picture. Greg Quinn Bloomberg May 28, 2018
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Here's how much CMHC returned to taxpayers

5/30/2018

THINK OUTSIDE THE BOX:The Canada Mortgage and Housing Corporation has reported its latest dividend payment to the Government of Canada, its only shareholder. Ahead of its latest full quarterly report, the crown corporation says it paid a dividend of $1 billion. In a statement accompanying the announcement, CMHC said: As a Crown Corporation, we are the only mortgage insurer whose proceeds benefit Canadians. The dividend balances returning excess capital to the Government, while retaining sufficient capital to protect against housing market risks. Our dividend framework is informed by our risk appetite, stress testing and scenarios analysis. We intend to continue to return excess capital to the Government while establishing a dividend that allows us to maintain capital in line with our long-term capital needs. The corporation says that it intends to continue providing quarterly announcements of its dividend payments, subject to the approval of its board of directors. Steve Randall REP 25 May 2018
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Millennial landlords an increasingly popular phenomenon – study

5/30/2018

THINK OUTSIDE THE BOX:Amid ever-increasing price and supply pressures, Canadas millennials are now more open to the idea of becoming landlords and sharing their spaces with other people, according to CIBCs latest poll of Canadian home owners. The CIBC study found that Canadians aged 18-34 are far more likely to be landlords than any other demographic. 30% of millennial home owners are already landlords, while 17% are planning to be. This is in stark contrast to only 29% of home owners aged 35-54 and 12% of those aged 55+ being landlords. of millennial landlords said that they already own properties exclusively for rental purposes, while 40% are renting out portions of their homes for extended stays of a year or more (30%) or short-stays (10%). For those who would be buying homes right now, 54% of millennials said that they would go for homes with sources of rental income, versus 25% of baby boomers. The numbers uncovered by CIBC bore out the economic rationale for space-sharing: Those who earn income by renting out space in their homes reduce their average housing costs by as much as 70%. Also, Canadians who own a separate rental property earn on average $2,189 per month, 50% greater than their monthly costs. Younger Canadians are more open to sharing their space because they see it as financially advantageous, according to real estate investor, contractor, and television personality Scott McGillivray. Theres definitely a shift in attitudes and a growing interest in income properties, in part driven by a desire to offset high housing costs, but also because it can be a smart way to create extra income and build wealth. While 30% of landlords said that their top concern is dealing with unexpected maintenance and repair costs, 52% expressed a belief that its worth the headache, whether for generating passive income now (22%) or in retirement (28%). Ephraim Vecina REP 25 May 2018
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Is co-ownership a good idea?

5/30/2018

THINK OUTSIDE THE BOX:As co-ownership becomes a popular antidote to unaffordability, expect to hear about ensuing acrimony. On paper, it seems like a great idea, but in reality Steve Arruda, a Century 21 Regal Realty sales rep, agrees that unaffordability in cities like Toronto and Vancouver is catalyzing creating living arrangements, but he can see myriad problems arising from ones like co-ownership. Everybody has the best of plans, and on paper it looks perfect, but when they move in with each other, whos responsible for what? What if one person wants to sell early because they got a job on the other side of the country or far outside of the city? While co-ownership between friends can be tricky, it becomes amplified when more than one family owns and shares a home. Ive had ones where two friends bought a place together and thought itd be a great idea and good for their families, but they didnt buy a mansion, said Arruda. It was a crammed space for two families and four children. With the respective families or events they host, there will be issues that way. They have the best intentions, but when youre living in a crammed space, function becomes a different story. It could be happy when two friends share but when you start bringing in partnersmore personalities under one roof could cause a problem. Arruda concedes, however, that the arrangement has better likelihood of succeeding if a duplex is the shared abode. Not to say it wont have its share of problems. I find the best option for that is if the home is divided equally into a duplex, each with its own kitchen and bathroom, and maybe they have a shared living space, he said. But if one person wants to sell, the other has to sell or buy that person out. Manu Singh, a broker with Right At Home Realty, doesnt recommend co-ownership but nevertheless suggests both parties draw up an exit strategy. They should have an agreement in place, an exit strategy, he said. Just a simple contract, not a complicated one, that lays out what the exit strategy is should one party decide to move on. If its for investment purposes, maybe the appreciation rate reaches such and such level and only then can the partner decide to sell. Singh also recommends a minimum hold period of five years to recoup a lot of costs of the transaction, like the Land Transfer Tax. Neil Sharma REP 25 May 2018
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Albertans will need to get used to slower growth says ATB

5/30/2018

THINK OUTSIDE THE BOX:As Albertas economy continues to improve, provincial lender ATB Financial says the pace of growth will be slower than Albertans are used to. Not that its all bad news; the province is seeing some positive signs among non-energy sectors and there is also growth in employment and the housing market. But the 4.9% pace of growth in 2017, which made Alberta the fastest growing province in Canada, will not be repeated in 2018 with real GDP expected to grow 2.7% this year and 2.3% in 2019. That growth will be led by non-energy sectors as while oil prices are rising, the energy sector is still lagging on investment and there are the pipeline concerns weighing on the sector. Risks with respect to oil prices remain including the ongoing opposition to pipeline expansion, said Todd Hirsch, ATB Financials Chief Economist. If there is no resolutionor worse, a negative outcome on pipeline projectsthe short- and medium-term outlook for the sector will dim. Overall, Hirsch says that sentiment and empirical data are telling contrasting stories. In considering the latter, its clear that our provinces economy is expandingbut in new ways and at a more moderate pace than many Albertans are used to. For those people who are still without jobs and facing financial hardship as a result of the downturn, it continues to be a tough time, despite what the data are telling us, he says. Jobs are being created but in low-wage roles The rise in employment in Alberta is welcome, but many of the new roles being created are in low paying sectors and in part-time roles. However, there are signs that burgeoning non-energy sectors will mean new opportunities for prosperity ahead. Steve Randall REP 23 May 2018
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Reverse mortgages turning millennials into homeowners

5/30/2018

As an increasing number of parents help their children attain homeownership, reverse mortgages are being touted as a way to do just that but with fewer encumbrances. It makes sense because these people are in their mid- and late-30s and have older parents, said Anne Brill, owner of Centum Metrocapp Wealth Solutions. We have a few seminars coming out where were inviting first-time homebuyers with their parents and explaining to them that because of the B-20 rules, the interest rate increases and the benchmark being higher, their kids today wont qualify for as much money as they did yesterday. Plus, insurance premiums are higher. While most parents plan on bequeathing their homes to children, reverse mortgages could help the latter contend with the immediate problem of rapidly rising housing prices. Why dont we help them out faster so that they can get into a home today rather than 10, or however many, years down the road? asks Brill. They can potentially take out $100,000 on a reverse mortgage and this way it doesnt cost them any cash. The cash flow stays in line and the reverse mortgage doesnt cost payments, and while the kids get a smaller inheritance, at the end of the day they get some money up front to get into a home today. Brill and her Centum team are educating first-time homebuyers about saving money and ensuring their credit ratings are good, but, in partnership with investment advisors, theyre also teaching parents the many things reverse mortgages can do for them. A lot of times parents want to cash in investments, which affects the investment advisor as well, but we show them how, with reverse mortgages, they can keep their liquid assets, like mutual funds or investments, in place. The biggest concern is usually cash flow, where theyre living paycheque to paycheque on a pension income. This will keep their investments intact and they can use their homes for other things. Reverse mortgages dont just sustain investments, they can also be used to acquire new ones. The younger you are, the less loan-to-value they would do, but a lot of times there are some situations where they pull out enough money to buy a small home, said Brill. You can get about $2,000 a month in rental income while youd pay around $350 a month in property taxes, and maybe $150 in maintenance, and now they can net out $1,500 in extra cash flow to substantiate their lifestyle. According to HomEquity Bank, which offers reverse mortgages, they can be used to purchase vacation properties, too. You can only get our reverse mortgage on a principal residence, said Yvonne Ziomecki, executive vice president of marking and sales, however, some people use the proceeds from their reverse mortgage to buy, for example, a vacation property down south, which they could rent out full-time or when they arent using it themselves. Neil Sharma Mortgage Broker News 15 May 2018
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Researching renewals is imperative

5/15/2018

A surge in mortgage renewals, rising interest rates and new stress testing rules are conspiring to make refinancing your mortgage more complicated and more expensive. Mortgage broker Kelly Wilson, co-owner of the Wilson Team mortgage brokerage in Ottawa, says a majority of Canadians renew with their same lender, but its still important to check out your options. If you can save yourself 30, 40, 50 basis points, its going to save you thousands of dollars over the next five-year term, Wilson says. Around 47 per cent of all existing mortgages will need to be refinanced this year, according to CIBC estimates, up from the 25 to 35 per cent range in what the bank says is a typical year. It attributes the increase to the unintended consequence of regulatory changes in recent years. The surge in renewals comes as mortgage rates have started to move higher. Several of Canadas big banks have raised their posted rates for mortgages in recent days, while special offer rates have been trending higher since last summer. Offers for five-year fixed mortgage rates have moved north of three per cent in recent weeks compared with under 2.5 per cent a year ago, according to rate-watching website Ratehub.ca. Wilson says that means if youre renewing at a higher rate than youre currently paying it will mean your mortgage payments rise, assuming the amoritization period remains the same. Homeowners with uninsured mortgages who stretched themselves to the limit when they bought their home and are looking to renew their mortgage may also face additional challenges. Under the rules brought in at the start of the year, if they are looking to change their lender when they renew their mortgage they may have to face a new stress test. That means, for some borrowers, it may not be possible to move their mortgage to a different bank, leaving them with less power to negotiate with their current lender. Wilson also says if you have a home equity line of credit, it may cost you a little more if you want to move your mortgage, even if you dont have an outstanding balance on the line of credit. You might save on the rate, but because of the fees you might not be able to move around, she said. Grant Rasmussen, CIBCs senior vice-president of mobile advice, recommends you start doing your homework up to six months ahead of your actual renewal date. He says that means talking not just with your lender, but also with your financial adviser to get an updated look at your expenses and income and how that may have changed since you first obtained your mortgage. Its important to make sure you do the math and you feel like youve figured out how can I do the best for my family, he said. He notes that starting early may allow you to lock in a rate, which could save you a few bucks if rates continue to rise this year. You will also have to weigh the decision of a fixed versus a variable rate mortgage. While the variable-rate offers are lower than the fixed-rate offerings, the Bank of Canada has raised its influential overnight rate target _ which affects variable rate mortgages _ three times since last summer and suggested it is on the path to higher rates. How comfortable are you with risk and how much peace of mind do you want? Thats a trade off, Rasmussen said. But whatever your situation, he stressed to start early. You dont want to end of feeling time pressed and feeling like you have to make these decisions without really mapping out a plan. Craig Wong TheCanadian Press 03 May 2018
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A lender discounts five-year variable mortgage rate amid heated competition

5/15/2018

TD Bank is looking to attract more homebuyers with a hefty discount to its variable mortgage rate as competition among Canadas biggest lenders heats up. The Toronto-based lender decreased its five-year variable closed rate to 2.45 per cent, or 1.15 per cent lower than its prime rate, for the month of May. TDs special rate offer comes roughly one week after the Bank of Montreal discounted its variable mortgage rate to 2.45 per cent until the end of May. Mortgage planner Robert McLister said last week that BMOs special discounted variable rate was the biggest widely advertised discount ever by a Big Six Canadian bank. TD spokeswoman Julie Bellissimo says its special five-year variable closed rate discount applies to new and renewed mortgages, as well as the variable rate term portion of certain TD home equity lines of credit. The moves come amid slowing mortgage growth. The Canadian Real Estate Association says national home sales sank to the lowest level in more than five years in April, falling by 13.9 per cent on an annual basis. The national average sale price decreased by 11.3 per cent year-over-year. The Canadian Press 15 May, 2018
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Canadian homebuyers aren't deterred by rising rates

5/10/2018

THINK OUTSIDE THE BOX:The spring homebuying season is underway and the intentions of potential homebuyers remains strong. But a new report says that although buyers are not put off by rising interest rates, most are not taking recent mortgage regulation changes into account when calculating how much they can afford. The BMO Spring Housing Report reveals that 23% of respondents are planning to buy a primary residence in the next year with an average price of $474,000 nationwide; $580K in Toronto and $603K in Vancouver. There is no doubt in homebuyers minds that interest rates will continue higher (76%) but 53% said they are not stress-testing their mortgages to ensure long-term affordability; although those in Ontario and BC are more likely to do so (53% and 51% respectively). For the first time in years, interest rates are beginning to rise making it increasingly important for Canadians looking to buy a home to stress-test their mortgage against a higher rate to ensure they can afford it over the long term, said Martin Nel, Head, Personal Banking, BMO Bank of Montreal. He added that mortgage professionals can help buyers navigate the regulations to ensure their budget is accurate. Mortgage preferences tend to be based on rates The report also shows that Canadians are generally in favour of fixed rate mortgages 69% have one but around half of respondents said their choice is based on rates available when they apply. Its encouraging to see that Canadians are thoughtful about weighing their mortgage options based on rate, but its equally important that they consider how their choice will affect their day-to-day finances, said Mr. Nel. For example, a customer who likes the certainty of knowing exactly how much of their monthly payment is going to principal versus interest may not be the best fit for a variable mortgage even at a lower starting rate. Steve Randall Real Estate Professional 3 May, 2018
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It just got harder to qualify for a mortgage

5/10/2018

THINK OUTSIDE THE BOX: An important number that affects the ability of millions of Canadians to qualify for a mortgage has changed. The Bank of Canada has raised its conventional five-year mortgage rate from 5.14% to 5.34%. The rate is the one used for stress tests under the B-20 mortgage lending guideline so any borrower with less than a 20% down payment seeking mortgage insurance must be able to afford payments. For those who do not require mortgage insurance, the rate is one of the two stress test benchmarks used, the other being the contractual mortgage rate plus two percentage points. The Canadian Press says that the rate increase coincides with an estimated 47% of mortgages that are due for refinancing in 2018, based on a CIBC Capital Markets report. The big five banks have also recently increased their 5-year FRM rates. When Toronto Dominion increased its rate is was called the biggest move in years. Steve Randall Real Estate Professional 10 May 2018
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Scotiabank hikes interest rate

5/10/2018

THINK OUTSIDE THE BOX:Scotiabank has joined its Big Five banking peers in raising its benchmark fixed-rate mortgage rate. Canadas third-biggest lender raised the posted rate for a five-year fixed-rate mortgage from 5.14 per cent to 5.34 per cent, effective Tuesday, while also increasing the posted rates for other terms. Late last month, TD Bank was the first of the Big Five lenders to raise the benchmark rate, increasing it to 5.59 per cent, due to factors including the competitive landscape, the cost of lending and management of risk. Royal Bank later raised its benchmark rate to 5.34 per cent, followed by CIBC which raised its posted rate for five-year fixed term mortgages from 4.99 per cent to 5.14. The Bank of Montreal earlier this month upped the benchmark rate slightly to 5.19 per cent. The mortgage rate increases from Canadas biggest lenders come as government bond yields rise, signalling higher borrowing costs for corporations. The Canadian Press 08 May 2018
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Bank of Canada reveals country's staggering debt figure

5/4/2018

THINK OUTSIDE THE BOX:Canadians have amassed a $2-trillion mountain of household debt thats casting a big shadow over the timing of the Bank of Canadas next interest rate hike, governor Stephen Poloz said in a speech Tuesday in Yellowknife. To Poloz, the sheer size of debt burden also means its associated risks to endure for a while, although hes optimistic the economy can navigate them. The debt pile, he said, has been growing for three decades in both absolute terms and when compared to the size of the economy _ and about $1.5 trillion of it currently consists of mortgage debt. The central bank has concerns about the ability of households to keep paying down their high levels of debt when interest rates continue their rise, as is widely expected over the coming months. This debt has increasing implications for monetary policy, he said in his address to the Yellowknife Chamber of Commerce. Poloz has introduced three rate hikes since last July following an impressive economic run for Canada that began in late 2016. But the central bank stuck with its benchmark rate of 1.25 per cent last month as it continued its careful process of determining the best juncture for its next hike. The banks next announcement is May 30, but many experts only expect Polozs next increase to come at Julys meeting. Poloz said Tuesday that the volume of what Canadians owe is one of the key reasons why the bank has been taking a cautious approach to raising its trend-setting rate. He called it an important vulnerability for individuals and leaves the entire economy exposed to shocks. This debt still poses risks to the economy and financial stability, and its sheer size means that its risks will be with us for some time, Poloz said. But there is good reason to think that we can continue to manage these risks successfully. The economic progress we have seen makes us more confident that higher interest rates will be warranted over time, although some monetary policy accommodation will still be needed. Poloz said debt is a natural consequence of several factors, including the combination of a strong demand for housing and the prolonged period of low interest rates maintained in recent years to stimulate the economy. The governor also provided detail on issues the bank is examining as it considers the timing of its next rate increase. If it raises rates too quickly, the bank risks choking off economic growth, falling short of its ideal inflation target of two per cent and could lead to the type of financial stability risk its trying to avoid, he said. But if the governing council lifts the rate too slowly, Poloz said it could intensify inflationary pressures to the point it overshoots the banks bulls-eye. Poloz added that moving too gradually could also entice Canadians to add even more debt and further boost vulnerabilities. In his speech, he also noted several other areas of concern the bank is monitoring closely as it considers future hikes. They include the economic impacts of stricter mortgage rules, the ongoing uncertainty about U.S. trade policy, the renegotiation of the North American Free Trade Agreement and a number of competitiveness challenges faced by Canadian exporters. These forces will not last forever, Poloz said. As they fade, the need for continued monetary stimulus will also diminish and interest rates will naturally move higher. The Canadian Press Andy Blatchford Real Estate Professional 02 May 2018
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Calgary prices are holding up despite provincial economic struggles

5/4/2018

THINK OUTSIDE THE BOX:Home prices are steady in the Calgary housing market despite challenges of rising inventory and slower sales. The Calgary Real Estate Board says that supply levels have not adjusted to weaker market conditions which is moderating the recovery of prices. While the rising inventories are being monitored, prices have remained relatively flat as gains in some areas of the city have been offset by declines in other areas, commented CREB chief economist Anne-Marie Lurie. She added that slower sales are to be expected as the provincial economy has yet to improve enough to offset the impact of changes in the mortgage lending industry. Sales were down 20% year-over-year to 1,518 units in April; 25% below the long-term average. Year-to-date sales of detached homes are 27% below the 10-year average with 2,991 units sold since the start of 2018. Meanwhile, inventory is up 32% at 7,324 units but prices have held relatively stable at $436,500 citywide, up 0.21% year-over-year. The reality is that theres selection heading into the active spring market, said CREB president Tom Westcott. For many sellers, they have to decide what price they are willing to accept for a lifestyle change. At the same time, buyers need to understand the supply dynamics and price movements in the specific area, as they may not align with their expectations, he added. Steve Randall Real Estate Professional 02 May 2018
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Six actions to consider taking right now as three major banks hike mortgage rates

5/4/2018

THINK OUTSIDE THE BOX:If Toronto-Dominion Bank wanted to put the housing market on alert, its rate hike this week did just that. The bank boosted its posted five-year fixed rate a walloping 0.45 percentage points, to 5.59 per cent. Most banks are likely to follow to some degree (Royal Bank and National already announced more conservative hikes on Friday). The bottom line: its going to become that much harder for more indebted Canadians to get a mortgage. As for why TD boosted its five-year posted rate by so much is a curious question. It certainly wasnt justified by rising funding costs alone. Those costs have risen less than 0.20 percentage points since the time the banks benchmark posted rate last rose. Banks tend to announce supersized rate hikes for a variety of reasons, such as when they want to: Add a revenue buffer to offset potential risk. (The national average home price is down 10-plus per cent year over year. Thats not what you love to see as a lender who has to set aside reserves for losses.) Float a trial balloon and see if other banks follow their lead with similarly oversized hikes. Encourage people to lock in. Conveniently for big banks, a jump in five-year posted rates (relative to actual rates) also creates potential for bigger mortgage penalties. These penalties apply if you break a fixed mortgage early, and they get even bigger if rates subsequently fall. The Stress Test Effect Some breathed a sigh of relief when the Royal Bank of Canada followed TDs move on Friday. RBC hiked its posted five-year fixed just 0.20 percentage points, instead of 0.45. That means theres a chance the rate that lenders use to calculate whether you qualify for a mortgage may not rise as much as TDs hike would suggest. Thats good news for young people trying to shoehorn themselves into a big-city mortgage. Newbie buyers are already under pressure from surging condo prices, rising rates and Ottawas new mortgage stress test. Where to Now There are two types of fixed mortgage rates: posted rates and discounted rates. Posted rates may be surging, but that doesnt mean the best rates available will rise as much. The best fixed mortgage rates are more directly tied to competitive forces and government bond yields than the illusory posted rates that banks advertise. This week, bond yields approached seven-year highs. While the markets betting theyll keep going, theres no indication theyll rise enough to shatter home prices or shut out millions from getting a mortgage. How to Play It If youre on edge about surging rates, consider these tips: Get a full preapproval at todays rates. Make sure the lender reviews all of your documentation and doesnt just provide a rate hold. That will minimize your risk if rates keep climbing. More importantly, if you have a high ratio of debt to income (near or above 40 per cent), it could also help you qualify for a bigger mortgage. If youve got a mortgage already and absolutely need to lock in, ask your lender if you can early renew into a competitive fixed rate. Competitive being the key word. Lenders know that borrowers in closed mortgages have to pay a penalty to switch lenders, so theyre often not too generous. If locking in is your best move, talk to a broker to compare the savings of breaking your current rate and locking in at a better rate elsewhere. Depending on your penalty and closing costs, breaking up with your lender early sometimes makes sense. If youve got a manageable debt load and liquid savings to fall back on and can stomach a few more Bank of Canada hikes, variables are still worth a look. But to improve your odds versus locking in, you need to find one thats at least 0.75 of a percentage point below a comparable five-year fixed. If youre up for renewal and your bank is quoting a pitiful rate because it thinks you are less rate-sensitive, higher risk and/or cant qualify elsewhere, phone a broker. There are a few different ways to avoid the stress test and brokers know the most tricks to do it. Rate sites still show insured five-year fixed rates as low as 2.99 per cent or less, and uninsured rates (applicable to refinances and properties over $1-million) at 3.19 per cent. If need be, use these as leverage with your lender of choice. RobertMcListerspecial to The Globe and Mail April 27, 2018
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CIBC hikes interest rate

5/2/2018

THINK OUTSIDE THE BOX:The Canadian Imperial Bank of Commerce says it will raise its five-year fixed-rate mortgage rate Tuesday by 15 basis points. Spokesman Tom Wallis says in an email that the rate will change from 4.99 per cent to 5.14 per cent. Wallis says seven-year and 10-year fixed-rate mortgage rates will also rise 15 basis points, whereas one- and two-year rates will go up 10 basis points. The Royal Bank of Canada and Toronto Dominion Bank announced last week that they would raise their benchmark mortgage rates. The increases come as government bond yields rise. Fixed-rate mortgages tend to move with government bond yields of a similar term, reflecting the change in borrowing costs. The Canadian Press 1 May, 2018
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Two Big Six banks hike benchmark rates

5/2/2018

THINK OUTSIDE THE BOX: Two of Canadas biggest banks are raising their benchmark rates for five-year, fixed-rate mortgages. TD says as of Wednesday it increased its posted rate for five-year fixed mortgages to 5.59 per cent from 5.14 per cent. Mortgage planner and rate comparison website founder Robert McLister says the increase is unusualas the benchmark rate hasnt seen a jump of 45 basis points or more since March 2010. TD spokeswoman Julie Bellissimo says a number of factors are considered when determining rates including the competitive landscape, the cost of lending and managing risk. Meanwhile, Royal Bank spokesman AJ Goodman says the lender plans to raise its posted rate for a five-year fixed mortgage on Monday to 5.34 per cent compared with the 5.14 per cent currently posted. McLister says the actual rates banks offer to borrowers are not seeing an increase but notes the Bank of Canada uses the posted rates at the big banks to calculate the rate used in stress tests to determine whether homebuyers qualify for loans. The Canadian Press 27 April, 2018
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Young Canadians want to own a home but aren't planning for it

5/2/2018

THINK OUTSIDE THE BOX:The dream of owning a home is still very much alive among Canadian millennials, but when it comes to saving for it they are lagging. A new poll of 18-37 year-olds by CIBC has found that 46% intend to buy a home in the next five years but 76% have yet to start saving or have saved less than a quarter of their down payment. Our survey reveals that few millennials are taking the necessary steps to make the move to homeownership, says Grant Rasmussen, Senior Vice President, Mobile Advice, CIBC. You cant buy a home with intent and desire alone. Its important to have a financial plan to make the most of your income and set yourself up with the right savings plan to achieve your goals now and in the years ahead. Four in 10 Canadian millennials currently rent and almost a quarter live with their parents with 94% of those intending to become homebuyers. However, 45% say they dont believe it is realistic or desirable anymore. More than a third are already homebuyers but 58% are concerned that rising interest rates will impact their ability to manage current household expenses. While most still dream of owning a home one day, higher house prices, the prospect of higher rates, and new qualifying rules are prompting some millennials to pause and question whether being a homeowner is realistic or even desirable for them, says Mr. Rasmussen. The key is to understand your total housing costs and start planning early so you can consider your rent versus buy options in the context of your overall financial plan and desired lifestyle. Although many respondents to the poll say that renting can be as expensive as homeownership, they are concerned about the costs of ownership. But millennial homeowners manage to save more each month ($566 on average) than renters ($368) or live-at-homers ($360), and homeowners have amassed an average nest-egg of just over $60,600 - more than double that of their peers who rent or live at home. Steve Randall Real Estate Professional 26 Apr 2018
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Here’s the income you need to pass the mortgage stress test across Canada

4/16/2018

THINK OUTSIDE THE BOX: The latest set of federal mortgage rules has been blowing a cool wind over almost every Canadian real estate market. With the exception of Ottawa, Montreal and a few others, home prices have slowed down or dipped, sometimes upsetting the calculations of homeowners counting on windfall sales. The average price of a home in Canada stands at$491,000, down 10 per cent from March of last year, according to the Canadian Real Estate Association (CREA). But that isnt making much of a difference for many homebuyers. On the one hand, if you take out Toronto and Vancouver, the national average home price slipped just 2 per cent in the last 12 months not enough to make up for the fact that, under the new stress test, prospective buyers now have to show theyd be able to keep up with their bills even if their mortgage rate rose by two percentage points. On the other hand, in Canadas two most expensive markets, the stricter mortgage rules are pushing many buyers toward less pricey condo and town homes, which is in turn driving up the price of those properties. Condo prices are up 26 per cent and 14 per cent since last March in Vancouver and Toronto respectively. So how much does one need to make these days to qualify for a loan to buy an average-priced home in some of Canadas largest cities? We looked at the numbers using the mortgage affordability calculator of rate-comparison siteRateHub.ca. Heres what we got: In Toronto and Vancouver, you need well north of a six-figure salary to buy a middle-of-the-road property, which in both cities is likely to mean a condo or a townhouse if youre lucky. The picture isnt so bad in most of the rest of Canada, where an average income is enough to buy an average home (the countrys median household income stands at $76,000, according to the latest Census data). Our calculations also include a downpayment of 20 per cent, an amount of cash that may be out of reach for many, especially first-time homebuyers. We also based our math on a 5-year fixed mortgage rate of 2.99 per cent, which is among the lowest in the country but not necessarily available everywhere. Still, perhaps most importantly, we assumed buyers had no other debts. This is a big if as 54 per cent of Canadians have non-mortgage debt, which makes it even harder to qualify, saidRobert McLister,founder of rate-comparisons siteRateSpy.comand mortgage planner atintelliMortgage.com Things like credit card payments and car loans also factor into the stress test, with lenders looking at total debts taking up no more than 42 per cent of your annual pre-tax income. Every $450 of monthly [debt] obligations reduces the mortgage you can qualify for by [about] $100,000, according to Bryan Freeman, senior vice president and mortgage agent at CanWise Financial, a brokerage associated with RateHub. There are a host of other factors that might push buyers over the edge, Freeman said. For example, if you rely on freelance income that varies from year to year or on commissions, bonuses or overtime, what goes into the calculation is your two-year average pay. If youve just started [on the job], the bank will only look at your base income, Freeman said. Then there are property taxes, which are part of the housing costs that shouldnt take up more than 30-32 per cent of your gross monthly pay. The property tax rate can vary significantly from region to region and is definitely a consideration, Freeman noted. Still, there are ways in which todays house-hunters can stretch their affordability, McLister said. One of them is turning to credit unions, which are regulated provincially and not subject to the latest federal mortgage rules. The income required is roughly 12-13 per cent lower for borrowers who use a credit union that qualifies them at the 5-year fixed contract rate, McLister said. Another possibility, if you have a down payment of 20 per cent or more, islengthening your amortization from 25 to 30 years, which boosts buying power by about 8 per cent, according to McLister. Logging in more kilometres will also help you get the house you want. If youre open to commuting, you can drive an hour and get at least 30-50 per cent more home for the same income, he said. And, then, obviously, theres buying a smaller house. The rule of thumb Freeland advises clients to use is to aim for a mortgage no larger than four times their income. Even 4.5 times is pushing it, he said. Erica Alini Global News April 14, 2018
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