More weight on rates…

General Robyn McLean 30 Jul

A current view on today’s interest rate environment from our friends at FNAT.

Some more weight has been added to the scale that is tipping in favour of an interest cut in the United States.  Economic growth, in the U.S., slowed to 2.1% in the second quarter, down a full percentage point, from 3.1% in the first quarter.

A key factor in the slowdown is a 5.2% drop in exports.  Many analysts see that as self-imposed pain brought on by the Trump administration’s trade fight with China.  The dispute is also contributing to the slowdown in Europe, and elsewhere.

The drop in GDP growth is seen as additional ammunition for those targeting the U.S. Federal Reserve for a rate cut this week.  However, there are prominent analysts who say a cut is not needed at this time.  U.S. growth remains above the five-year average and unemployment is at 50 year lows.

Last week the European Central Bank held the line on its benchmark interest rate, but made it clear it intends to take steps to boost the Euro-Zone’s sagging economy.  The ECB is signalling the distinct possibility of rate cuts and it is also looking at restarting its simulative bond buying program.

The Bank of Canada remains firmly on the sidelines.  It is content with the country’s employment rate, inflation, and its current growth figures.

Jul 29, 2019
First National Financial LP

When is a good time to get into the market?

General Robyn McLean 26 Jul

Some great insight into when it’s the right time to get into the market from our friends at EQ Bank.

When it comes to real estate, one of the most common questions is: when is the best time to buy? The typical response is the best time to buy was yesterday and the second best time is today. That response is a bit clichéd as many homebuyers have heard it before and it doesn’t provide any practical advice.

Buying a home will likely be the largest purchase people make in their lives which is why they want to be as informed as possible when making their decisions. It’s impossible to predict where the markets are headed, but there are some scenarios where it makes sense to get into the market.

Early in the year

Historically, real estate sales slow down at the start of the year. This happens because many people aren’t exactly excited to go out in the winter to search for a new home. Although there’s usually less inventory available during this season, there’s an opportunity for buyers since sellers may be more motivated to negotiate on price to complete the sale.

When interest rates are low

Over the last couple of years, interest rates in Canada have been at near record lows. In 2018, when the Canadian economy was doing well, the Bank of Canada increased interest rates three times from 1% to the current rate of 1.75%. The economy has since cooled and a recent poll found that many economists expect rates to remain flat until the end of 2020.

In the first half of 2020, we’ve seen mortgage rates fluctuate both up and down. In early 2019, 30-year fixed mortgage interest rates rose to between 4.5% and 5.0%. However, right now, we’re seeing rates as low as 2.54% which can be very appealing to potential and current homeowners.

When your financial situation is optimal

Buying a home is a goal for many Canadians, but it’s easier to make that a reality if your financial situation is in good standing. Ideally, you should have a secure income, good credit score, no or limited debt, and a healthy down payment.

By having all of the above, lenders are more likely to approve you for a mortgage in the amount you’re looking for. That’s not to say that lenders will ignore potential homeowners who have debt or are on a single income, it just means that they may not be extended as much money.

When inventories are high

Real estate is cyclical and things can change fast. A seller’s market can quickly become a buyer’s market if a lot of homes are up for sale. Generally speaking, spring and summer are when listings are at their peak, but there’s also an increased amount of buyers so that doesn’t automatically mean buyers will get a deal.

The highest month for home-for-sale inventories is May, followed by April and June which lines up perfectly for potential homeowners who are looking to move in by Labour Day. If there are more homes for sale compared to buyers, then sellers will need to ensure their home is priced competitively so they can get it off the market.

When the economy is doing well

Although interest rates may rise when the economy is doing well, it may still be a good time to buy a home. Those looking to buy who have been pre-approved for a mortgage may not feel the effects of any increased rates and they may be able to take advantage of new market conditions.

With an increased economy, there may be more construction of new homes which means more inventory for potential homeowners to choose from. This scenario also helps current homeowners who are looking to move up on the property ladder since they’ll likely have an easier time selling their current home before buying a new one.

The pros and cons of buying real estate

The above factors are all good reasons to start looking for a home but note that homeownership isn’t for everyone. If you’re looking to enter the real estate market, it’s important to look at the pros and cons early so you know what you’re getting into.


  • As a homeowner, you can choose what to do with your home
  • Over time, you build equity in your home
  • You may be able to generate income from your home by renting it out (or a portion of it)
  • There are some tax benefits e.g. tax deductions on mortgage interest


  • As a homeowner, you’re responsible for all the maintenance and repairs
  • There’s limited flexibility if you need to relocate quickly
  • A huge part of your net worth is locked into your home which makes it difficult to diversify
  • There are additional expenses that renters don’t have such as property tax and repairs

As you can see, deciding on when is a good time to get into the real estate market depends on quite a few things. There’s never an ideal time, but you can look at the current market conditions as well as your own financial situation and then decide if you’re ready to become a homeowner.


Joe Flor
Director, National Sales
Equitable Bank

Tips: Keep your home’s exterior in good shape and preserve its value!

General Robyn McLean 24 Jul

Some great tips from our friends at Pillar & Post on helping to maintain your property’s value!

Exterior Upkeep To Do Now

Try these essential tips to keep your home’s exterior in good shape and to help preserve its value.


  • Use binoculars to check the roof for missing or damaged shingles. Flashing should be tight and secured to prevent leaks. Have any problem areas repaired by a licensed, qualified roofing contractor.
  • Repair any cracks or gaps in the siding and around windows. Make sure these are repaired before you decide to paint.
  • No need to paint? Power washing makes quick work of removing built up dirt and mildew and will brighten your home immediately. You can hire a professional to do this, or rent the equipment by the day or half day.


  • Clean debris from gutters and evestroughs, then flush with a garden hose.
  • Check all downspouts to make sure they direct water away from the house.
  • Clear basement window wells of debris, weeds, and other materials. Don’t use window wells to store items such as garden hoses or tools. Obstructing the wells’ drainage system can cause water to leak into the house.


  • Repair gaps and cracks using materials appropriate for your specific surfaces, such as concrete, asphalt, etc.
  • On walkways and steps, repair uneven or heaved surfaces that can create a tripping hazard.

A well-maintained exterior not only looks good and can help prevent big problems down the road, it will make you feel good about coming home every day.

Qualifying Mortgage Rate Falls For First Time Since B-20 Intro

General Robyn McLean 22 Jul

 Finally some good news for buyers and valuable insight from Dr. Sherry Cooper, Chief Economist at DLC Dominion Lending.
The interest rate used by the federally regulated banks in mortgage stress tests has declined for the first time since 2016, making it a bit easier to get a mortgage. This is particularly important for first-time homeowners who have been struggling to pass the B-20 stress test. The benchmark posted 5-year fixed rate has fallen from 5.34% to 5.19%. It’s the first change since May 9, 2018. And it’s the first decrease since Sept. 7, 2016, despite a 106-basis-point nosedive in Canada’s 5-year bond rate since November 8 (see chart below).

Five-Year Canadian Bond Yield

The benchmark qualifying mortgage rate is announced each week by the banks and “posted” by the Bank of Canada every Thursday as the “conventional 5-year mortgage rate.” The Bank of Canada surveys the six major banks’ posted 5-year fixed rates every Wednesday and uses a mode average of those rates to set the official benchmark. Over the past 18-months, since the revised B-20 stress test was implemented, posted rates have been almost 200 basis points above the rates banks are willing to offer, and the banks expect the borrower to negotiate the interest rate down. Less savvy homebuyers can find themselves paying mortgages rates well above the rates more experienced homebuyers do. Mortgage brokers do not use posted rates, instead offering the best rates from the start.
The benchmark rate (also known as, stress test rate or “mortgage qualifying rate”) is what federally regulated lenders use to calculate borrowers’ theoretical mortgage payments. A mortgage applicant must then prove they can afford such a payment. In other words, prove that amount doesn’t cause them to exceed the lender’s standard debt-ratio limits.The rate is purposely inflated to ensure people can afford higher rates in the future.
The impact of the B-20 stress test has been very significant and continues to be felt in all corners of the housing market. As expected, the new mortgage rules distorted sales activity both before and after implementation. According to TD Bank economists in a recent report, “The B-20 has lowered Canadian home sales by about 40k between 2017Q4 and 2018Q4, with disproportionate impacts on the overvalued Toronto and Vancouver markets and first-time homebuyers…All else equal, if the B-20 regulation was removed immediately, home sales and prices could be 8% and 6% higher, respectively, by the end of 2020, compared to current projections.”

According to Rate Spy, for a borrower buying a home with 5% down, today’s drop in the stress-test rate means:

  • Someone making $50,000 a year can afford $2,800 (1.3%) more home
  • Someone making $100,000 a year can afford $5,900 (1.3%) more home
    (Assumes no other debts and a 25-year amortization. Figures are rounded and approximate.)

For a borrower buying a home with 20% down, today’s drop in the stress-test rate means:

  • Someone making $50,000 a year can afford $4,000 (1.4%) more home
  • Someone making $100,000 a year can afford $8,300 (1.4%) more home
    (Assumes no other debts and a 30-year amortization. Figures are rounded and approximate.)

Bottom Line: Almost no one saw this coming due to the stress test rate’s obscure and arcane calculation method (see Note below). This 15 basis point drop in in the qualifying rate will not turn the housing market around in the hardest-hit regions, but it will be an incremental positive psychological boost for buyers. It should also counter, in some small part, what’s been the slowest lending growth in five years.

Note: Here’s the scoop on why the qualifying rate fell. According to the Bank of Canada:
“There are currently two modes at equal distance from the simple 6-bank average. Therefore, the Bank would use its assets booked in CAD to determine the mode. We use the latest M4 return data released on OSFI’s website to do so. To obtain the value of assets booked in CAD, simply do the subtraction of total assets in foreign currency from total assets in total currency.”

The BoC explains further:

“Prior to July 15th, we were using April’s asset data to determine the typical rate as that was what was published on OSFI’s website. On July 15th, OSFI published the asset data for May, and that is what we used yesterday to determine the 5-year mortgage rate. As a result, the rate changed from 5.34% to 5.19%.”

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

4 Common Personal Finance Tips That Will Actually Fail You

General Robyn McLean 15 Jul

When you ask someone where they get most of their financial advice, you’ll likely receive answers that mostly include family and friends. Unfortunately, relying on your social circles to provide financial advice leaves lots of room for (accidental) misinformation. That’s why we’ve rounded up four common personal finance tips that will actually fail you in the long run.

1.  If you have any debt, paying it off is your only priority

It is essential to understand that debt can fall into one of two separate categories: good debt and bad debt. A few examples of good debt include a mortgage or a student loan (basically, any accounts that hold an incredibly low interest rate and was taken on for some sort of investment purpose).

Bad debt is what you have to be cautious of. Most often, bad debt is synonymous with credit cards, as the debt offers you little to no value and credit cards are notorious for having painfully high interest rates (upwards of 20% per month in some cases). The best use of your money is paying off bad debt before paying off any other type of loans.

While there are some circumstances in which it may make sense to pay off your good debt early, like your mortgage, it’s not always in everyone’s best interest. By extending your mortgage and freeing up cash flow to invest and reap the benefits of compounding interest, you’ll likely be in a better situation to reach your goals – whether that be sending a child to school or retirement.

Bottom line, everyone is different and your mortgage and debt decisions should be driven by your financial plan.

2.  If you save 10% of your income throughout your life, you’ll be retirement ready

This one is pretty straight forward to debunk; everyone needs to save a different amount based on their current lifestyle and future goals. Each  dollar that you save won’t be used until the future – figuring out exactly how much to put away (and where to put it) is not always straightforward.

A lot goes into how much you should be saving such as your:

  • Age
  • Marital status
  • Children
  • Pension, if any
  • Career growth opportunities

And many other factors. There is no way one single savings rule could blanket all of those different situations. For example, starting to save 10% at the age of 22 as opposed to starting at 32 will leave two different people in very different retirement situations.

The best way to combat this myth is to have a financial plan. By building a financial plan, you will know exactly how much savings are required to maintain your lifestyle in retirement (and where those savings should be).

3.  You don’t need insurance when you’re young and single

Early in your career, you may not have much in terms of savings and investments yet, so a financial setback could put you in debt. But these are also your prime growth years to get you to those peak earnings. Insurance can help keep things in balance.

Your early career sets the stage for how the rest of your life will play out – it’s your responsibility to ensure you’re doing everything you can to keep things on track. Critical illness insurance is an inexpensive way to protect yourself and should be something young, single people should consider as a key part of their financial plan.

To really understand and combat where this false financial tip is coming from, is to always understand and ask how someone selling insurance gets paid. Then you can protect yourself against being oversold types of insurance that you don’t need or told you don’t need any when you really do.

4.  Invest in something because it’s a “winner”

If you want to be a successful investor, emotions are the enemy. Don’t get overly excited when your investments go up and don’t panic when they go down. Know that you’re in it for the long game. You have to trust that the market has reliably gone up for decades. That means if you’re focused on the long term and keep adding to your portfolio every month, you will be successful.

Knowing that no investment is a sure thing is a key part to being a successful and happy investor. Instead of banking on one mutual fund with high fees or that pot stock your cousin told you about, invest in an efficient, low-cost portfolio of Exchange-Traded Funds (ETFs) that contain stocks and bonds from a broad mix of great companies.

When it comes to taking financial advice, you always have to be cautious. Everyone has different goals, lifestyle expectations and situations so there is no hard and fast rule that applies to everyone across the board. That’s why we built Planswell. We believe everyone needs a personalized financial plan that will take into account their specific situation to optimize their investments, insurance and borrowing.

Bank of Canada Maintains Overnight Rate and Raises 2019 Forecast

General Robyn McLean 11 Jul

Knowing where interest rates are headed is an important part of your home buying journey. Great insight from DLC’s Dr. Sherry Cooper on the recent Fed announcement. 


The Bank of Canada held the target overnight rate at 1.75% for the sixth consecutive decision and showed little willingness to ease monetary policy, as stronger domestic growth offsets the risk of mounting global trade tensions. There has been ongoing speculation that the Bank of Canada would be pushed into cutting interest rates by the Fed. I do not believe the Bank will let the US dictate monetary policy when the Canadian economy is clearly on the mend. To be sure, trade tensions have slowed the global economic outlook, especially in curbing manufacturing activity, business investment, and lowering commodity prices. But the Bank as already incorporated these effects in previous Monetary Policy Reports (MPR) and today’s forecast has made further adjustments in light of weaker sentiment and activity in other major economies.

The Governing Council stated in today’s press release that central banks in the US and Europe have signalled their readiness to cut interest rates and further policy stimulus has been implemented in China. Thus, global financial conditions have eased substantially. The Bank now expects global GDP to grow by 3% in 2019 and to strengthen to 3.25% in 2020 and 2021, with the US slowing to a pace near its potential of around 2%. Escalation of trade tensions remains the most significant downside risk to the global and Canadian outlooks.

The Bank of Canada released the July MPR today, showing that following temporary weakness in late 2018 and early 2019, Canada’s economy is returning to growth around potential, as they have expected. Growth in the second quarter is stronger than earlier predicted, mostly due to some temporary factors, including the reversal of weather-related slowdowns in the first quarter and a surge in oil production. Consumption has strengthened, supported by a healthy labour market. At the national level, the housing market is stabilizing, although there remain significant adjustments underway in BC. A meaningful decline in longer-term mortgage rates is supporting housing activity. The Bank now expects real GDP growth to average 1.3% in 2019 and about 2% in 2020 and 2021.

Inflation remains at roughly the 2% target, with some upward pressure from higher food and auto prices. Core measures of inflation are also close to 2%. CPI inflation will likely dip this year because of the dynamics of gasoline prices and some other temporary factors. As slack in the economy is absorbed, and these temporary effects wane, inflation is expected to return sustainably to 2% by mid-2020.

Bottom Line: The Canadian economy is returning to potential growth. “As the Governing Council continues to monitor incoming data, it will pay particular attention to developments in the energy sector and the impact of trade conflicts on the prospects for Canadian growth and inflation.” With this statement, Governor Poloz puts Canadian rates firmly on hold as Fed Chair Jerome Powell signals openness to a rate cut as uncertainty dims the US outlook.

The Canadian central bank is in no hurry to move interest rates in either direction and has signalled it will remain on hold indefinitely, barring an unexpected exogenous shock.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

Early Data for June  Housing Mixed

General Robyn McLean 8 Jul

Some insight on the market in both Toronto & Vancouver. If you want to understand our current real estate market, it’s worth a read.

Local real estate boards report that GTA home sales jumped again in June, while home sales fell to a 19-year low in the GVA. This continues a well-established pattern.

GTA sales were up 10% year-over-year last month. New listings fell 0.4%. Buyers started moving off the sidelines in the spring, while new listings remained virtually unchanged, so market conditions have tightened, and price growth has picked up, especially for condos as more affordable housing has outperformed.

In direct contrast, sales in the GVA were down 14.4% year-over-year last month and are a whopping 34.7% below the 10-year average for June according to the Real Estate Board of Greater Vancouver–the slowest sales pace for June since 2000. Moreover, the residential benchmark price slipped to $998,700, down from a record high of $1.1 million in May 2018. The benchmark figure, an industry representation of the typical home sold in Greater Vancouver, has declined month-over-month for the 13th consecutive time.
The slowdown in the Greater Vancouver housing market is the result of intentional actions by regulators and government. Provincial actions compounded the January 2018 introduction of the B-20 stress-testing rules, which made it more challenging to qualify for a mortgage. Since February 2018, the provincial government has rolled out tax measures, including a ‘speculation and vacancy tax’ targeted primarily at out-of-province residents who don’t rent their homes. Also, there are new taxes on properties valued at more than $3-million, such as an extra land-transfer tax and an annual surtax. Last year, the province also raised the foreign-buyers tax to 20% from 15% in the Vancouver region while also expanding the tax to other urban BC markets.

Also, the province is about to publish a property ownership registry to reveal the actual owners of all properties to combat money laundering through real estate transactions. Formerly, many properties were registered in the name of numbered companies. As well, the Chinese government is now enforcing capital export limitations and penalizing those who broke these restrictions in the past. The new registry will make these activities far more transparent and could well contribute to the weakness in foreign transactions in BC, where foreigners accounted for a proportionately more significant share of the housing market than in other parts of Canada. The recent turmoil in Hong Kong might change these dynamics, but it is too soon to tell.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

Self-employed? Here’s How to Qualify for a Mortgage

General Robyn McLean 4 Jul


When you’re self-employed, qualifying for a mortgage can be difficult. Here’s some great tips from our friends at rate hub.

Self-employment certainly comes with its benefits; you get to be your own boss, you get to make your own hours, and you get to build a company that’s all on your own, enjoying the spoils along the way. It does, however, have its challenges; long hours, a lack of support, and, in the case of buying a home, higher barriers to entry.

It’s no secret that qualifying for a mortgage as a self-employed Canadian is more difficult than for those in more traditional professional roles but, with some planning, self-employed Canadians won’t have too much trouble getting into the housing market.

The key, according to James Laird, president of CanWise Financial, is to be organized and avoid cutting corners when it comes to taxes.

“Make sure your documentation is all in order,” he said. “Anyone self-employed who might be considering minimizing their income through earning in cash and not declaring it, or writing down as much as they possibly can should realize there is a trade-off for their tax strategy and getting a mortgage.”

Self-employment in Canada

First, some background on self-employment in Canada.

At the end of 2017, 2.8 million Canadians (15% of the workforce) were self-employed, according to Statistics Canada. Those numbers were backed by up CMHC in mid-2018.

That’s a lot of Canadians who, just like more traditionally employed Canadians, dream of home ownership. However, self-employed Canadians tend to have a more arduous process when qualifying for a mortgage.

Qualifying for a Self-employed Mortgage

The problem with qualifying for a self-employed mortgage is that it’s difficult to prove income to lenders. That, coupled with the fact that many business owners tend to expense as much as possible to minimize the taxes they pay, lenders have to be a little more discerning when it comes to issuing mortgages to them.

Prior to 2014, self-employed Canadians had a fairly easy time qualifying for a mortgage. However, at the end of that year, the Office of the Superintendent of Financial Institutions (OSFI)—the country’s banking regulator—introduced Guideline B-21, which requires federally regulated banks to look more closely at self-employed incomes before approving a mortgage application.

So, along with providing 2-3 years’ worth of notices of assessment and tax returns, self-employed borrowers must also provide the following;

  • Proof that your HST and/or GST is paid in full;
  • A copy of your business licence or articles of incorporation showing you’re licenced;
  • Financial statements for your business. You have to ready to explain your business—your income, expenses, and when you’ll break even;
  • Proof that you are a principal owner in the business;
  • Client contracts showing expected revenue for the coming years; and
  • Have a down payment available of at least 15%.

The good news, though, is that the government has made efforts to address the additional hurdles self-employed Canadians face when trying to purchase a home.

The Canada Mortgage and Housing Corporation (CMHC) announced last summer changes that are meant to make it slightly easier for certain self-employed Canadians to get a mortgage.

The changes were meant to allow lenders more flexibility when evaluating applications for these borrowers. They went into effect in October and allow borrowers to submit Proof of Income Statements, and Statements of Business or Professional Activities as additional ways of proving income.

So, while self-employed Canadians might have to provide more documentation, an applicant with the right documents in order – and the right risk profile — shouldn’t have too much trouble qualifying for a mortgage in 2019.

The Bottom Line

It might be a little more time consuming to get a mortgage as a self-employed Canadian, but with diligent planning, strong organizational skills, and a dedication to properly recording income for tax purposes, achieving the dream of homeownership is easily attainable. And, to make sure you get the best mortgage rate available, make sure to speak to a mortgage broker.

Affordability improves, a little…

General Robyn McLean 3 Jul

Affordability has been such a key topic in Vancouver for the past five plus years… have the regulatory changes helped us? Some insight from our friends at FNAT.

Housing affordability got a little better in Canada in the first quarter of this year, but not so much that anyone would really notice.

The latest report from one of the country’s big banks shows a 0.3 percentage point drop in its affordability measure for Q1.  It is a small reduction but it marks the second straight quarter of decline.  The measure now puts the cost of home ownership at 51.4% of household, pre-tax income, including mortgage payments, utilities and property taxes.

The report cites “policy-engineered market downturns” for the improvement in affordability.  It also points out that those downturns have not happened where they would have the greatest impact, namely Vancouver and Toronto.  Cost of ownership in the GTA clocks-in at 66%.  In Vancouver it is a staggering 82%, even after a 2 percentage point drop in the first quarter.

Victoria and Montreal are also showing up as hot spots.  Even though Victoria saw affordability improve by a full percentage point, it still stands at 58.6%.  Montreal is 44.3%; steady for the last two quarters but up from the long term average of 38.6%.

Encouragingly the report notes that, in nine of the 14 markets tracked for the survey, between 46% and 56% of families “would be able to cover the cost of owning an average home.”

Jul 2, 2019
First National Financial LP