Rate increased

Just incase you were not watching the 5 year fixed insured AAA rate went up yesterday from 3.84% to 4.09% or an increase of 25 basis points. This is an increase of 120 basis points or 1.2% since the first of February. So it’s no wonder that the core inflation rate in Canada increased by 6.7% for the month of March. The costs of everything from fuel, food, housing and now mortgage rates have increased drastically.

So what are you doing to protect your self against the rising costs everything all around you. Are you cutting back on using your vehicle as much, have you stopped eating out, have you trimmed back some of the streaming services that you subscribe to for your entertainment or have you just buckled down and focused on working harder and putting more money away in the bank. The thing is the government wants us to continue to spend to keep the economy moving but also to cut back so we can tackle inflation.

We can’t have it both ways, something is going to have to give and if the rates increase too steeply and too quickly it may just push us into a recession as consumers and businesses cut back on any and all unnecessary spending. The next few months may be a bumpy ride so make sure that you are prepared the landing on the other side.

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

Blind Bidding

Blind bidding as it refers to real estate is when you put in an offer on a house with no idea what others have offered on the same property. You don’t see blind bidding at art of luxury car auctions yet they still seem to be getting record amounts for both of those products. So would a change to this rule and or ability help cool the housing market here in Canada?

Before I attempt to answer that, let me tell you a few things about blind bidding. In our current hot housing market, keeping the process of blind bidding in place will help property sellers get the top dollar for their property. Also Realtors get paid more as they earn a % fee of the sale as their commission. Since we are putting this all on the table, us mortgage brokers are paid a % of the total loan amount. So all three of these parties make more money by keeping blind bidding when homes are selling for top dollar.

However there are jurisdictions where there is no blind bidding such as Sweden, Australia & New Zealand. All three of these places have experienced dramatic increases in real estate prices as compared to Canada during the pandemic. So will removing the blind bidding process really help cool our hot real estate market? I don’t think so as the recent price growth has more to do with overwhelming demand in our real estate sector and very limited supply.

As always I welcome your comments and feedback.

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

March 2022 Inflation numbers

Well the inflation numbers for March 2022 just came out this morning and we are now at 6.7% ( up from 5.7 for February) or the highest rate since January of 1991. All the categories that Statistics Canada tracks from food, energy, shelter and transportation were all up. The largest increase is the 11.2% increase in transportation due to the rapid increase of the price of oil. Which is up 39.8% year over year, and now mostly due to the Russian invasion of Ukraine.

It’s this increased transportation costs that are pulling up the cost of food, durable goods and plane tickets. Economists are predicting that the inflation rate will remain higher than the Bank of Canada’s target range of 1-3% till 2023. Lowering your purchasing power as interest rates rise to try to offset the inflation rate.

If you are on a variable rate you can either sit tight and ride it out or pay slightly more and convert it over to a fixed rate.

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

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