Soft Landing

With the spike of interest rate increases the Bank of Canada is hoping for a soft landing to our economy instead of a recession. They want people to gradually slow their spending as rates increase so demand for products and services will decline and the prices of these commodities can reduce as a result.

That is the ideal result but it also fails to address the reasons for the inflation in the first place. Which most economists point to the supply chain issues caused by the pandemic and then with the Russian invasion of Ukraine which further jacked up fuel prices thus effecting the costs of anything that is shipped.

However there is a downside risk of a recession. This happens when there is a decline in economic activity from reduced spending and increased unemployment as companies costs dramatically increase as a result of higher costs of borrowing. If this happens then our famously low unemployment rate will increase rapidly and pulling us toward a recession.

One way to protect yourself is lock in your mortgage rate from fixed to variable. Doing this will automatically increase your monthly mortgage payment by about 1.5% as that is the difference between the variable rate discount and the current fixed rate. We all knew that the low rates would not last forever, just make sure that you understand all the risks before you make a decision.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Personalization

As those who have read my posts before you know that I have read and attended the Dale Carnegie’s programs. In fact I have written about his first principal the 3 C’s before, and you can check it out here. Today I am going to touch on another one of his principals and how I am adapting it to my mortgage business.

His 6th principal in working to become a friendlier person is to remember that a person’s name is to that person the sweetest and most important sound in any language. This is why I strive my best to remember and use people’s name when I am taking with them. It is in that vein that I have signed up for a service called Hyperise that will look to personalize your visit to my website.

Whether you are surfing on your phone or your computer at home, most people are also logged into either their Google account, Facebook or Linkedin. This new service recognizes your name from one of your logged in services and places it throughout my website in the aim of personalizing your experience. I would love to get your feedback on your experience, good, bad or indifferent. Also if you want to try it out on your site just let me know and I can set you up with a free trial.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Bank of Canada policy announcement

At 11am Atlantic Standard Time it is widely expected that the Bank of Canada will introduce the latest change in the overnight lending rate to combat inflation. Although I am starting this post prior to the announcement, I will hold off publishing it till it actually has been announced. It is widely expected to increase by 50 basis points. If this is the case it will change the bank prime rate from 2.70 to 3.20%.

The interest rate change is the bank’s attempt to do what it can to control inflation. This is caused by the cost of every day goods rising or CPI ( Consumer Price Index). Just so you know the inflation rate in Canada hit 5.7% in February up from 5.1% in January, however still shy of 8.5% inflation rate in the United States.

So they want us as a result to go out and spend less money. This is somewhat difficult now that the price of gasoline is up 44% from last year. Not sure the BOC and the American Federal Reserve are aware that the price of gas it tied to the price of oil which is controlled by OPEC. So increasing interest rates may have little to no effect on inflation.

The goal here is by increasing interest rates, will thus dampen the demand and overall economic activity in the country. So with higher rates you are less likely to take vacations, buy a new vehicle or buy your first home or your dream home. So with less people buying new products and services the demand for those things will fall and thus taking prices with it. At least this is the hope of the central bankers.

Breaking news is that the BOC actually did it and increased the overnight rate by 50 basis points. See the details here.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Hack the Stress Test

With the cost of housing still increasing by the day, it is vitally important to maximize the amount that you can qualify for when applying for your mortgage. Through most of the pandemic we qualified based on the stress test rate of 5.25%. Now that we are in an interest rate increasing market we have to revert to the other side of that test which is the base rate + 2%. So with the five year discounted fixed rate now at 3.84%, that means that your qualification rate is now 5.84%.

However since the variable rates are still much lower, this may be the way to help you qualify for a little bit more. You see prime rate as of today is still 2.70%. Banks are offering about 1% off of that so you would start at 1.70%. There is many saying that it will increase by .50% tomorrow thus taking you to 3.30% for prime and about 2.30% assuming the discount remained the same. When you add 2% to this you are at 4.3% which is less than 5.25% stress test rate so that is what will be used in qualification.

If variable rates make you nervous in this high inflation market then you always have the ability to lock them in after you close on your mortgage to the 5 year fixed rate. Remember if you do that you will automatically take yourself from 2.3% to 3.84% for the remainder of your term.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Unconventional

In terms of mortgages there are basically two types for the standard A banks, there is high ratio and there is conventional which is when you put down 20% or more down payment. However here I want to talk about being unconventional about looking for solutions to uncommon problems that people are faced with today when looking for a mortgage.

There is your standard or typical downpayment when it has been saved over time in your bank account. Then there is the unconventional down payment which is gifted from your parents or borrowed from your RRSP’s. There is the standard file where both applicants are employed by an employer then there is the unconventional where one or more are self employed. There is also the standard file where they have excellent credit then there is the unconventional when the credit is less than perfect.

The thing is that no two transactions are alike. So being able to find unconventional solutions for clients financing requirements is what I have been doing for almost 20 years now. This is why your fist call when you require mortgage financing should be to a broker. Unconventional thinking is vital to succeed in today’s world.

“I am the greatest, I said that even before I knew I was.” – Muhammad Ali

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

2022 Federal Budget

Yesterday the federal government tabled the 2022 federal budget. While it seems that we are getting away from the spend your way out of the pandemic, this one seems more focused on the need to improve access to housing for Canadian’s. Here is how it is going to effect the real estate sector.

  1. They will invest 4 Billion over 5 years starting this year on a new housing accelerator fund aimed at increasing municipal housing.
  2. $1.5 Billion over the next two years on a rapid housing initiative with 25% aimed at financing for Women focused housing projects.
  3. A $7,500 tax credit to renovate your home or create a back yard suite for family or someone with a disability.
  4. The creation of a new tax free savings account for those under 40, that will allow first time home buyers to save up to $40,000 with tax free investments and tax free withdrawals.
  5. Increasing the firs time home buyers tax credit up to $10,000 with $1,500 in support directly to home buyers and it will be retroactive to home purchased since January 1st/2022.
  6. They are also increasing the home accessibility tax credit to $20,000, this is for renovations or alterations that improve a home’s accessibility.
  7. They are putting aside $475 million to provide a one time $500 payment to those facing a housing affordability challenge
  8. There will be a new rule implemented as of January 1/2023 labeled as the anti flipping rule as it will impose a tax on the profits of a sale of a home if it was owned for less than 12 months. This will focus on those who attempt to flip for profit rather than those who’s family situations require the sale of the home.
  9. They have also announced $5 million towards the creation of a home buyers bill of rights aimed at ending blind bidding. This will also include a legal right for home inspections something buyers have been waiving in favour of winning the bid.
  10. A temporary ban of foreign buyers ( non owner occupied) from buying residential properties here over next two years.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Changing Rates Again

Bond yields increased again yesterday so therefor the fixed mortgage rates on which they are based also increased. If you are putting down less then 20% your 5 year fixed AAA rate is now 3.84% which is up by .05 basis points since last week. However if you are putting down 20% or more your AAA rate is now at least 4.09%.

The prime rate on the other hand is still 2.70%, and most lenders are offering discounts of prime less .90% now where last week they were offering discounts of up to prime less 1.10. So if you have a variable rate or are pre approved on a variable rate take note that the bank of Canada meets next on April 13th to announce the next change to the over night lending rate which will then change the prime rate. The prediction is that it will go up by .50% to 3.20%.

To put it in a little bit of perspective the last time that we had rates in the mid to high 3% range was in November and December of 2018. When the 5 year fixed rate got up to 3.69% for two months before going back down slowly. Then with the onset of the Pandemic in 2020 the 5 year fixed rates bottomed out at 1.79%. However bond yields are up due to inflation levels that we have not seen in 30 years and the instability of the War in Ukraine is not helping calm things down much either.

My role as your advisor is to give you the best advice so you can make a knowledgable decision about what to do about your mortgage. There are pro’s and con’s to all the options, it is best to chose the option that will allow you to comfortably sleep at night. Ask me and I will tell you the facts about the 5 year fixed vs the variable vs the short term 1 year fixed. Ask as many questions as you want as this is an important decision to make.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Hire an expert

Generalist are fine when the problems or issues are minor, but when they are important or vital it is time to consult an expert. I was having issues with my feet this winter and asked my GP about it when I saw her. While the level of care is normally great for minor issues, if you have a specific problem then it’s time to see the expert. A quick visit to a podiatrist quickly fixed my issues.

When people are a jack of all trades they tend to be a master of none. We can’t all be polymaths like Leonardo Da Vinci who excelled in engineering, science, medicine and art. The same also applies to your need to finance your next home or your dream home. There are those who work for the big 5 banks who do mortgages, lines of credit, investments, checking & savings accounts and insurance. While I am quite sure that they are good at a few of those fields they can’t possibly be an expert in all of them.

Your home for most people is your single most important investment over your lifetime. You should not put this in the hands of someone who is only average at doing it. You should be dealing with an expert, someone who specializes in that field.

Today I am thankful for the fact that I sought the advice of an expert, having a busy schedule and having options for challenging files.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

NS budget 2022

Just as a point of reference I am not going to delve into all the items on the 2022 budget here in NS, but only how it effects the real estate market. It doesn’t matter the political strip of the government just the details on how it effects your ability to purchase property here in NS.

The new 2022 budget was announced yesterday and in it includes a revenue generating plan to tax foreign buyers of real estate. By foreign buyers this covers anyone who will not be a resident of Nova Scotia after they purchase the property. It turns out that there are approximately 27,000 non resident property owners here in Nova Scotia. This covers those who have cottages, condo’s or investment properties here but live elsewhere.

The first new tax will increase the deed transfer tax for foreign buyers from 1.5% of the purchase price to 5%. The change is scheduled to take effect April 1st/2022 and will apply if you don’t move here within 6 months of purchasing the property. The second will be an increase in the property tax to $2 per $100 applied to properties of 3 units or less bought by foreign buyers. They expect the changes will result in over 80M of new revenue for the province.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Buckle Up

Buckle up as it may be a bumpy ride. Since Russia decided to invade Ukraine, I am not saying because of it but this did start around the same time, that bond yields have been steadily rising thus the fixed mortgage rates have also been increasing.

In the past month the 5 year discounted fixed rate has increased by 90 basis points from 2.89% to 3.79%. There are many in the mortgage industry who say that they see this increasing further to over 4% and only then possibly settling down. There is also talk of the Bank of Canada increasing the overnight lending rate by 50 basis point on the next meeting on April 13th. Doing so will then increase the prime rate from 2.70% to 3.20%.

While the costs of almost everything has been increasing lately from the homes we buy, the wood we use the construct them and the gas we use to get ourselves around. Just be thankful that we live in a safe and free country. Do your best to help those around you who are in need. So until this all settles down, just buckle up and do your best to get through it.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here