Canadians prefer interest increases over inflation

General Robyn McLean 19 Jan

Interesting insight from our friends at First National. Which do you fear more, rising interest rates or increasing inflation?

Inflation is running at generational highs in this country, and that is a bigger concern for Canadians than higher interest rates.

Canada’s headline inflation rate – the Consumer Price Index – is currently running at just below 5%.  That is the highest level in nearly 20 years.  The most recent numbers out of the U.S. put the rate there at 7% which is a 40 year high.

A Nanos poll taken for Bloomberg News late last month suggests a majority of Canadians would prefer to see the Bank of Canada increase interest rates, in an effort to rein-in rising costs, rather than let inflation get any higher.

The poll found 87% of those surveyed are more concerned about the pace of rising prices that they are about higher interest rates.  Ten percent are more concerned about higher borrowing costs.

Given the level of Canadian household debt the results might seem counter-intuitive.  Fifty-one percent of respondents say they will likely face, at least, some negative impact from higher interest rates.

This might be explained by a generational divide that showed up in the poll.

“Younger Canadians are much more likely to report a negative sensitivity to higher interest rates compared to middle-aged and older individuals,” says Nik Nanos, founder of the Nanos Research Group.

Analysts point out, though, that interest rate increases may cool spending and reduce the demand for debt, such as mortgages, but they will not resolve key inflation drivers like constrained production and supply chain slowdowns.

Canada Has Weathered The Pandemic Storm Relatively Well

General Robyn McLean 15 Dec

Your Federal fiscal economic update from Dr. Sherry Cooper, Chief Economist for Dominion Lending. 

Finance Minister Chrystia Freeland extolled the performance of the Canadian economy in response to the extraordinary support provided by the federal fiscal authorities and the Bank of Canada in the past 21 months. The economic recovery has been the second strongest in the g-7, and the death rate from Covid-19 was the second-lowest. Emergency spending by the federal government was enormous, but the federal government maintained its triple-A credit rating. The Canadian government on Tuesday cut its deficit forecast for the current fiscal year, citing higher tax revenues and less emergency aid spending while earmarking new funds to fight the Omicron coronavirus variant.

“As we look ahead, we are mindful of elevated inflation,” Freeland said in the forward of the update. “We know inflation is a global phenomenon driven by the unprecedented challenge of re-opening the world’s economy. Turning on the global economy is a good deal more complicated than turning it off. We, like other countries, are experiencing the consequences of a time unlike any other.”

Here are some of the key forecasts presented in the fiscal update:

  • The budget deficit came in at $327.7 billion in the last fiscal year (FY) 2020-21–almost $27 billion less than forecast in the spring budget. As it turns out, revenue came in $20 billion stronger than expected, while expenses were $6 billion lower than expected.
  • This year’s red ink is expected to be $144.5 billion versus the $154.7 billion forecast in April.
  • Canada’s debt-to-GDP ratio at 47.5% last FY will peak at 48% this FY versus 51.2% expected in April and fall subsequently to 44% in FY 2026-27. This compares to the pre-pandemic levels of roughly 31%.

“It has been a hard 21 months,” said Freeland. “As we brace ourselves for the rising wave of Omicron, we know that no one wants to endure new lockdowns,” Finance Minister Chrystia Freeland said in prepared remarks.

The Trudeau Liberals are pointing to improvements in the labour market, personal incomes and corporate profits as it forecasts tens of billions of dollars in additional revenue annually through 2026.

There is $13 billion in additional spending since the budget aimed at “finishing the fight against COVID-19” and another $4.5 billion in provisions for any Omicron response this fiscal year. There is $1.7 billion for rapid COVID tests in the fiscal update and $2 billion for COVID therapeutics and treatments. In a nod to the persistence of COVID, the previously announced extensions of the wage, rent and recovery benefits in the fall will put another $6.7 billion on the COVID tab this fiscal year.

When it comes to feeding Canada’s economic growth in the years to come, Ottawa is touting the importance of immigration to address labour shortages. The fiscal update earmarks $85 million in the 2022-23 fiscal year to speed up the application process to bring in workers for key industries hit by labour shortage coming out of the pandemic.

The “Underused Housing Tax Budget 2021” announced the government’s intention to implement a national, annual 1.0% tax on the value of non-resident, non-Canadian-owned residential real estate in Canada that is considered vacant or underused. It is proposed that the tax be effective for the 2022 calendar year.
Bottom Line

Today’s fiscal update document may well be most notable in what it omitted. There was no mention of the many new spending promises marked in the summer’s Liberal election platform. Those promises added up to $78 billion over five years.

The Opposition parties in the House of Commons harped on rising inflation and its negative impact on Canadian households and businesses. To be sure, the Trudeau government is not responsible for the surge in global inflation arising from the supply disruptions, labour shortages and enormous pent-up demand. Still, with the Bank of Canada poised for rate hikes next year, the Liberals could well be accused of stoking inflation with additional fiscal stimulus. We will undoubtedly hear more on the election promises when the government’s 2022 budget is announced, likely sometime this spring.

How To Hire A Handyman

General Robyn McLean 23 Nov

Need a handyman? Some great tips on finding the right one from my friends at Pillar to Post! 

How To Hire A Handyman

Whether it’s a big project such as a bathroom remodel, something small like putting up shelves, or repairs and routine maintenance, many homeowners turn to handymen to get the job done. Here are our favorite tips to ensure that you choose the right person for the job:

  1. MAKE SURE THEY’RE QUALIFIED
    Certain projects require specific skills that all handymen may not have. Professional licenses may be required to perform certain work. Electrical and plumbing often fall into this category.
  2. ASK FOR REFERENCES
    Online referral sites can give you a good indication of overall customer satisfaction. You can also ask the handyman for references from previous customers. Ask about the quality of the work, timeliness, professionalism and how satisfied they were with their project.
  3. CHECK ON INSURANCE COVERAGE
    Ask for evidence of liability insurance coverage before agreeing to any work. If the handyman or another worker is injured while working on your property, you may be held liable for medical costs.
  4. GET WRITTEN ESTIMATES AND A CONTRACT
    Ideally, ask three handymen for written estimates for the work you have in mind. Be sure that each estimate contains enough detail so that you can make an accurate comparison. Read all contracts carefully and ask about anything that you are unsure of.
  5. DETERMINE THE PAYMENT SCHEDULE BEFORE YOU SIGN
    Asking for 100% payment up front is not an accepted business practice and could leave you open to fraud. Handymen will often ask for 50% when the contract is signed, which will allow them to purchase materials for the job and assure them that you’re committed. Request receipts for all payments and keep them for your records.

7 Tips For Holiday & Winter Fire Safety

General Robyn McLean 23 Nov

Smart tips for the holiday season from my friends at Pillar To Post, the experts in home inspection!

7 Tips For Holiday & Winter Fire Safety

Taking some simple precautions around the home can
help keep your family safe during the holidays, especially
when it comes to decorating.

  1. Always use non-flammable decorations both indoors and outdoors.
  2. Check holiday light strands for damaged or broken wires and plugs. Enjoy indoor lights only while someone is at home and turn them off before going to bed.
  3. Keep live Christmas trees in a water-filled stand and check daily for dehydration. Dried-out trees are extremely dangerous and should be discarded immediately.
  4. Candles add lovely ambience to your holiday home. Place them in stable holders and keep them away from flammable items, drafts, pets and children.
  5. Children should not have access to or be allowed to use matches, lighters or candles.
  6. Keep space heaters away from bedding, curtains, paper—anything flammable. Never leave a space heater unattended while in use.
  7. Busy with holiday cooking and baking? Kitchen fires are leading cause of house fires. Keep an all-purpose fire extinguisher within easy reach and know how to use it. Here’s to enjoying a happy and safe holiday season!

It’s More Like Cooling Off Supply Will Happen With More Government Measures

General Robyn McLean 17 Nov

Lots of information and as always, fabulous insight from Kevin Skipworth, Partner/Broker and Chief Economist from Dexter Realty. 

“Courage doesn’t always roar. Sometimes courage is the quiet voice at the end of the day saying ‘I will tray again tomorrow’.”
Mary Anne Radmacher

It’s More Like Cooling Off Supply Will Happen With More Government Measures

Real estate statistics and opinions on the market mean little at a time like this while so many are suffering due to the catastrophic rains and floods experienced in British Columbia this past weekend. During events like this, take the time to help those in need, provide support where possible and understand how many are having absolutely heart-breaking days. In the coming days and weeks, there will be ways to help or provide for those that need us, I encourage you to do what you can.

In looking at the real estate market, at the start of September active listings in Greater Vancouver were at 9,239 and by mid-October that had dropped slightly to 9,161. We are now at 8,125 total active listings. The lowest we’ve seen at this time of year was in 2003 when there were 8,700 active listings in November. So not only is the supply of homes for sale showing no signs of growth it is decreasing, and quite dramatically. The question is: where will it be when we start 2022.

There continues to be a hesitation for sellers to come on the market as finding the next home when you sell continues to be the bigger challenge. And while there are options of renting back the home you sell or longer completion dates, those options are few and far between. Those looking for detached homes don’t have the luxury of more product coming from developers. This is and will continue to be a dwindling stock. Townhouses are not much better. Too few and far between, and for what is available, it is a race to see who can find it first. Even in Tsawwassen, a release of 34 presale apartments were all under contract within a morning last weekend. Real estate in Metro Vancouver isn’t like the Field of Dreams where it was “If you build it they will come” more so it is “we need to build it, they are here.”

So far in November there have been 1,582 properties sold in Greater Vancouver, compared with 1,767 at the mid-point of October and slightly up from 1,505 at mid-month last November. Pretty remarkable considering there were 12,482 active listings in the market at this time last year. Demand is proving to continue to be strong despite less and less being available for buyers to search for. Areas with dwindling inventories are starting to see the effects of less sales as buyers simply cannot find enough to purchase. Areas such as Vancouver East, Richmond, and more so Burnaby, New Westminster, Coquitlam and beyond to the east. In Pitt Meadows there are on 34 active listings available for sale – that for a population of over 18,000 people. It’s not any better in Port Coquitlam that has a population of over 58,000 people and only 123 active listings currently. As more people join these communities, where are they going to live?

New listings so far in November are at 2,142 which is down from the 2,231 at the mid-point of October and down from 2,211 at the mid-point of November last year. And while demand continues to be a strong, the supply of listings in the market will continue to dwindle. At least for those wanting to come on the market now, you know you’ll have an engaged audience of buyers competing for your home.

In order to “help” buyers in British Columbia’s real estate landscape, the provincial government announced a cooling off period for all real estate sales to be legislated in 2022. While the details of this cooling off period were not given, it will be difficult to see how this will help. Essentially what it will do is make every offer about price first and foremost as it will allow a buyer to submit an offer and have a period of time to simply walk away from the accepted offer. There won’t be a need to perform due diligence ahead of time and provide a competitive offer based on that. And while there were some details released that there may be some kind of penalty if a buyer walks away during the cooling off period, this kind of legislation puts the advantage in the buyer’s favour. This will not increase supply; in fact, it will likely choke it as more properties will be under contract with less clarity as to whether the transaction will move forward. And what if a buyer takes advantage of this and enters into multiple accepted offers so they can decide which one they want to move forward on and walk away from the others? Or decides at the last minute to try and renegotiate the price as an enticement to the seller to not see the buyer walk away. This leaves more questions than answers. Such as whether this legislation will apply to transactions not done by licensed individuals. Will private transactions require a cooling off period, and if not, will that lead sellers and buyers avoiding the protections of regulated real estate transactions and the security that affords them so they can offer without conditions. Input will be needed by all parties and consumers to ensure this reflects the needs of everyone.

Here’s a summary of the numbers:Greater Vancouver

1,582 units sold at mid-month in November 2021, compared to:
1,767 at mid-month in October 2021
1,477 at mid-month in September 2021
1,393 at mid-month in August 2021
1,505 sold at mid-month in November 2020.
2,142 new listings so far in November compared to:
2,231 at mid-month in October 2021
2,897 at mid-month in September 2021,
1,967 at this point in August 2021
2,211 at this point in November 2020

Total active listings are at 8,125 compared to 9,161 at mid-month in October 2021, and 12,482 at mid-month in November 2020.

Sales to listings ratio is at 74% compared to 79% at October 15, 2021 and 68% at mid-month in November 2020.

Vancouver West

312 units sold at mid-month in November 2021, compared to:
295 at mid-month in October 2021
254 at mid-month in September 2021
246 at mid-month in August 2021
209 sold at mid-month in November 2020.
480 new listings so far in November compared to:
534 at mid-month in October 2021
730 at mid-month in September 2021,
453 at this point in August 2021
431 at this point in November 2020

Total active listings are at 2,323 compared to 2,498 at mid-month in October 2021 and 2,731 at mid-month in November 2020

Sales to listings ratio is at 65% compared to 55% at October 15, 2021 and 48% at mid-month in November 2020.

Vancouver East

150 units sold at mid-month in November 2021, compared to:
204 at mid-month in October 2021
162 at mid-month in September 2021
135 at mid-month in August 2021
161 sold at mid-month in November 2020.
279 new listings so far in November compared to:
255 at mid-month in October 2021
361 at mid-month in September 2021,
226 at this point in August 2021
265 at this point in November 2020

Total active listings are at 988 compared to 1,043 at mid-month in October 2021, and 1,341 at mid-month in November 2020.

Sales to listings ratio is at 54% compared to 80% at October 15, 2021 and 61% at mid-month in November 2020.

North Vancouver

124 units sold at mid-month in November 2021, compared to:
118 at mid-month in October 2021
87 at mid-month in September 2021
98 at mid-month in August 2021
120 sold at mid-month in November 2020.
149 new listings so far in November compared to:
160 at mid-month in October 2021
203 at mid-month in September 2021,
119 at this point in August 2021
188 at this point in November 2020

Total active listings are at 421 compared to 487 at mid-month in October 2021, and 781 at mid-month in November 2020.

Sales to listings ratio is at 77% compared to 74% at October 15, 2021 and 64% at mid-month in November 2020.

West Vancouver

42 units sold at mid-month in November 2021, compared to:
49 at mid-month in October 2021
33 at mid-month in September 2021
25 at mid-month in August 2021
46 sold at mid-month in November 2020.
59 new listings so far in November compared to:
87 at mid-month in October 2021
115 at mid-month in September 2021,
61 at this point in August 2021
64 at this point in November 2020

Total active listings are at 470 compared to 529 at mid-month in October 2021, and 601 at mid-month in November 2020.

Sales to listings ratio is at 71% compared to 56% at October 15, 2021 and 72% at mid-month in November 2020.

Richmond

213 units sold at mid-month in November 2021, compared to:
234 at mid-month in October 2021
203 at mid-month in September 2021
191 at mid-month in August 2021
163 sold at mid-month in November 2020.
266 new listings so far in November compared to:
284 at mid-month in October 2021
317 at mid-month in September 2021,
247 at this point in August 2021
273 at this point in November 2020

Total active listings are at 1,081 compared to 1,252 at mid-month in October 2021, and 1,674 at mid-month in November 2020.

Sales to listings ratio is at 80% compared to 82% at October 15, 2021 and 60% at mid-month in November 2020.

Burnaby East

15 units sold at mid-month in November 2021, compared to:
23 at mid-month in October 2021
22 at mid-month in September 2021
14 at mid-month in August 2021
20 sold at mid-month in November 2020.
20 new listings so far in November compared to:
70 at mid-month in October 2021
27 at mid-month in September 2021,
26 at this point in August 2021
14 at this point in November 2020

Total active listings are at 51 compared to 70 at mid-month in October 2021, and 106 at mid-month in November 2020.

Sales to listings ratio is at 75% compared to 110% at October 15, 2021 and 143% at mid-month in November 2020.

Burnaby North

86 units sold at mid-month in November 2021, compared to:
87 at mid-month in October 2021
72 at mid-month in September 2021
78 at mid-month in August 2021
73 sold at mid-month in November 2020.
117 new listings so far in November compared to:
102 at mid-month in October 2021
167 at mid-month in September 2021,
127 at this point in August 2021
131 at this point in November 2020

Total active listings are at 338 compared to 419 at mid-month in October 2021, and 607 at mid-month in November 2020.

Sales to listings ratio is at 74% compared to 85% at October 15, 2021 and 56% at mid-month in November 2020.

Burnaby South

102 units sold at mid-month in November 2021, compared to:
103 at mid-month in October 2021
106 at mid-month in September 2021
84 at mid-month in August 2021
71 sold at mid-month in November 2020.
122 new listings so far in November compared to:
126 at mid-month in October 2021
154 at mid-month in September 2021,
148 at this point in August 2021
107 at this point in November 2020

Total active listings are at 400 compared to 506 at mid-month in October 2021, and 717 at mid-month in November 2020.

Sales to listings ratio is at 84% compared to 82% at October 15, 2021 and 66% at mid-month in November 2020.

New Westminster

89 units sold at mid-month in November 2021, compared to:
90 at mid-month in October 2021
56 at mid-month in September 2021
64 at mid-month in August 2021
72 sold at mid-month in November 2020.
106 new listings so far in November compared to:
86 at mid-month in October 2021
123 at mid-month in September 2021,
149 at this point in August 2021
87 at this point in November 2020

Total active listings are at 286 compared to 318 at mid-month in October 2021, and 496 at mid-month in November 2020.

Sales to listings ratio is at 84% compared to 105% at October 15, 2021 and 83% at mid-month in November 2020.

Coquitlam

133 units sold at mid-month in November 2021, compared to:
162 at mid-month in October 2021
117 at mid-month in September 2021
140 at mid-month in August 2021
113 sold at mid-month in November 2020.
167 new listings so far in November compared to:
151 at mid-month in October 2021
189 at mid-month in September 2021,
149 at this point in August 2021
193 at this point in November 2020

Total active listings are at 420 compared to 493 at mid-month in October 2021, and 833 at mid-month in

November 2020.
Sales to listings ratio is at 80% compared to 107% at October 15, 2021 and 59% at mid-month in November 2020.

Port Moody

28 units sold at mid-month in November 2021, compared to:
36 at mid-month in October 2021
36 at mid-month in September 2021
29 at mid-month in August 2021
40 sold at mid-month in November 2020.
39 new listings so far in November compared to:
39 at mid-month in October 2021
57 at mid-month in September 2021,
36 at this point in August 2021
43 at this point in November 2020

Total active listings are at 131 compared to 144 at mid-month in October 2021, and 234 at mid-month in November 2020.

Sales to listings ratio is at 72% compared to 92% at October 15, 2021 and 93% at mid-month in November 2020.

Port Coquitlam

39 units sold at mid-month in November 2021, compared to:
58 at mid-month in October 2021
43 at mid-month in September 2021
48 at mid-month in August 2021
54 sold at mid-month in November 2020.
54 new listings so far in November compared to:
68 at mid-month in October 2021
76 at mid-month in September 2021,
45 at this point in August 2021
43 at this point in November 2020

Total active listings are at 123 compared to 152 at mid-month in October 2021, and 224 at mid-month in November 2020.

Sales to listings ratio is at 72% compared to 85% at October 15, 2021 and 93% at mid-month in November 2020.

Ladner

17 units sold at mid-month in November 2021, compared to:
14 at mid-month in October 2021
14 at mid-month in September 2021
14 at mid-month in August 2021
19 sold at mid-month in November 2020.
19 new listings so far in November compared to:
24 at mid-month in October 2021
23 at mid-month in September 2021,
16 at this point in August 2021
19 at this point in November 2020

Total active listings are at 55 compared to 66 at mid-month in October 2021, and 104 at mid-month in

November 2020.
Sales to listings ratio is at 89% compared to 58% at October 15, 2021 and 100% at mid-month in November 2020.

Tsawwassen

22 units sold at mid-month in November 2021, compared to:
31 at mid-month in October 2021
28 at mid-month in September 2021
28 at mid-month in August 2021
31 sold at mid-month in November 2020.
27 new listings so far in November compared to:
39 at mid-month in October 2021
39 at mid-month in September 2021,
28 at this point in August 2021
47 at this point in November 2020

Total active listings are at 115 compared to 133 at mid-month in October 2021, and 268 at mid-month in November 2020.

Sales to listings ratio is at 81% compared to 79% at October 15, 2021 and 66% at mid-month in November 2020.

 

Canadian Inflation Hits 18-Year High

General Robyn McLean 17 Nov

Some great insight from Dr. Sherry Cooper, Chief Economist at Dominion Lending. 

Inflation Surge Is No Need For Hysteria
StatsCanada today reported that consumer price inflation rose to 4.7% from year-ago levels in October, compared to 4.4% in September. This is in line with market expectations and is well below the US’s 6.2% pace reported for the same period. Inflation is rising all over the world, the direct result of extreme weather events and supply chain chaos generated the creaky reopening of economies around the world. With pent-up demand surging, delays in production and transportation have led to price hikes in many sectors. Extreme weather conditions have exacerbated these price pressures, driving up food, energy and other commodity prices. The pandemic and climate change are unprecedented exogenous forces and should not be compared to the inflation surge in the 1970s. Nor should we assume that traditional monetary tightening would ease these pressures unless we are willing to run the risk of recession.
Last month, prices rose in all eight major components on a year-over-year basis, primarily driven by the surge in gasoline prices, which spiked 47.1% from year-ago levels. Extreme drought, especially in China, led to a dearth of hydroelectric power and shortages in other energy sources such as coal and natural gas. The shift to oil for power generation boosts the cost of oil and gasoline. It also caused a domino effect in shortages of other essential materials that require intensive energy use in their production, such as fertilizer and aluminum. These feed into shortages of food and metal components that raise the price of many consumer goods. Combine this with disruptions at the ports, in trucking and on the rail lines. It is no wonder that increasing costs and excess demand are driving up consumer prices worldwide.

The question is, would central bank tightening reduce this kind of inflation. I doubt it. Instead, we are likely to see these pressures ease over time (see chart below). The problem is we have repeatedly underestimated the time it would take to work this all out, leading some to call for a quicker response by the Bank of Canada and the Fed, among other central banks, for fear that the inflation will become embedded.

Embedded inflation, caused by rising wages and inflation expectations, led to wage-price spiralling in the 1970s and early 1980s. In Canada, inflation remained high well into the early 1990s because of substantial federal and provincial budgetary spending. I do not believe we are anywhere near that reality today. To be sure, fiscal policy in response to the pandemic has generated extraordinary budgetary red ink, but price pressures today are not the result of budgetary actions.
Bottom Line

Market-driven interest rates have already surged and are reflected in the rise in fixed mortgage rates. Maintaining a steady overnight rate at its effective lower bound has kept the prime rate and variable mortgage rates stable at extremely low levels. Undoubtedly, these rates will rise in time. The Bank of Canada has been clear that it will occur soon than they initially thought. They are nervous about inflation and are now saying a return to the 2% target will not happen until the end of next year.

Just this week, senior leadership at the Bank has taken to the news waves to suggest we are getting closer to full employment. Traders are now betting that the overnight rate target will rise 1.5 percentage points in 2022, beginning in April. Rates will increase, but we are not on the precipice of runaway inflation.

Join us for Girls Night Out in beautiful Steveston BC

General Robyn McLean 10 Nov

Join us for Girls Night Out! Thursday, November 18th in beautiful Steveston. Come find us at 12011 3rd Avenue (across from the Save-On Foods & beside The Buck!) for an evening of wine, music, fun photos and nibbles before you start your Christmas shopping in the Village! We hope to see you there!

#stevestongno #stevestongirlsnightout #stevestonmwerchants #shopsteveston #womensupportingwomen

Join us at Girls Night Out November 18th in Steveston BC!

 

 

Preparing to buy your first home? Here are 7 steps to help you get started.

General Robyn McLean 1 Nov

7 Steps for Mortgage Prep
Step 1 – Your Credit Score
Whether you qualify for a mortgage through a bank, credit union or other financial institution, you should be aiming for a credit score of 680 for at least one borrower (or guarantor), especially if you are putting under 20% down. If you are able to make a larger down payment of 20% or more, then a score of 680 is not required.
If your credit score does not meet the minimum requirements, there are a number of things you can do to improve it and your future financial success, including:

  • Paying your bills in full and on time. If you cannot afford the full amount, try paying at least the minimum required.
  • Pay off your debts (such as loans, credit cards, lines of credit, etc.) as quickly as possible.
  • Stay within the limit on your credit cards and try to keep your balances as low as possible.
  • Reduce the number of credit card or loan applications you submit.
  • Considering an Alternative Lender (or B Lender) if you are struggling with credit issues.

I can help review your credit score and provide you with options for your mortgage needs.

Step 2 – Your Budget
When considering your budget, it is important to look at the purchase price budget, as well as your cash flow budget. Being house rich and cash poor makes for a no-fun home! The home price based on your cash flow budget may be dramatically different from the budget home price you qualify for. Not only does having a budget help you to understand your purchase price range and help you to find an affordable home, but it can also help you to see any gaps or opportunities for future savings. This will be instrumental when you become responsible for mortgage payments.

Step 3 – Your Down Payment
The ideal down payment for purchasing a home is 20%. However, we understand in today’s market that is not always possible. Therefore, it is important to note that any potential home buyer with less than a 20% down payment MUST purchase default insurance on the mortgage, and they must have a minimum down payment of 5%.

The down payment on your home could come from your own savings such as a savings account or RRSPs. Thanks to the federal government’s Home Buyers’ Plan, potential first-time home owners are able to leverage up to $35,000 of your RRSP savings ($70,000 for a couple) to help finance the down payment. A gift of a down payment from an immediate relative is also acceptable. If your down payment comes from TFSA or RRSP, the bank will want 90 days of statements to ensure the funds are accounted for. Gifted funds rarely require 90 days of proof.

Step 4 – Your Mortgage Options
Rate is only ONE of the many features in selecting the best mortgage product that meets your financial goals. With access to hundreds of lending institutions, I am familiar with a variety of mortgage products allowing them to help find the best mortgage for YOU! Plus, unlike banks, mortgage agents are a third-party service focused on YOUR needs. This means that you can get the best rates and unbiased advice all for FREE from someone whose only goal is helping you achieve your dream of home ownership.

Step 5 – Your Paperwork
When you apply for a mortgage, you will typically need to provide a standard package of documents, which almost always includes:

  • Your government-issued personal identification
  • One month of recent pay stubs from any applicants who will be listed on the loan
  • Letter of employment
  • Your most recent two years’ worth of personal CRA tax filings and financials (if incorporated)
  • Three months of bank account statements
  • Your down payment (minimum 5%)
  • Documentation to explain any unusual (generally non-payroll) large deposits or withdrawals

Step 6 – Your Pre-Approval
To have the best success with your mortgage, it is recommended that you get pre-approved! This can be done through your Mortgage Professional to ensure that you get the best mortgage product FOR YOU, from the best rate to the best term agreement. Pre-approval helps verify your budget and allows your real estate agent to find the best home in your price range.

  1. Pre-approval guarantees the rate offered and locks it in for up to 120 days. This protects you from any increases in interest rates while you are shopping (phew!).
  2. Pre-approval lets the seller know that securing financing should not be an issue, which is beneficial in competitive markets!

Quick Tip: Don’t forget about the closing costs! These range from 1 to 4% of the purchase price and should be factored into your budget.

Step 7 – You’re Ready to Shop
You made it!! Once you have your down payment and have qualified for a pre-approved mortgage (your credit score is in order and all documentation has been provided), you are ready to start searching for your perfect home. If you’re stuck, I would be happy to give you recommendations for a realtor, if you don’t have one already.

Bank of Canada holds benchmark interest rates steady, ends special quantitative easing

General Robyn McLean 27 Oct

Great insight on today’s Bank of Canada announcement from my friends at First National. 

  • Oct 27, 2021
  • First National Financial LP

The Bank of Canada made its seventh interest rate decision of the year and for the seventh time, left its overnight benchmark unchanged at 0.25%. This low rate has been the order of the day since March 2020. As a result, the Bank Rate stays at 0.5%. It also ended its massive, pandemic-induced quantitative easing program in place since March 2020.

The Bank also made some new comments on the state of the economy at home and abroad as summarized below:

Global economy

  • The Bank projects global GDP will grow by 6.5% in 2021 – a strong pace but less than projected in the July Monetary Policy Report – and by 4.25% in 2022 and about 3.5% in 2023.
  • The global economic recovery is progressing although vaccine availability and distribution worldwide remain uneven and COVID variants pose risks to health and economic activity.
  • Due to strong global demand for goods, pandemic-related disruptions to production and transportation are constraining growth.
  • Inflation rates have increased in many countries, boosted by these supply bottlenecks and by higher energy prices.
  • While bond yields have risen in recent weeks, financial conditions remain accommodative and continue to support economic activity.

Canadian housing & economic performance

  • Robust economic growth has resumed, following a pause in the second quarter.
  • The Bank now forecasts Canada’s economy will grow by 5% this year before moderating to 4.25% in 2022 and 3.75% in 2023.
  • Demand is expected to be supported by strong consumption and business investment and a rebound in exports as the US economy continues to recover.
  • Housing activity has moderated, but is expected to remain elevated.
  • Shortages of manufacturing inputs, transportation bottlenecks and difficulties in matching jobs to workers are limiting the economy’s productive capacity.
  • This output gap is likely to be narrower than the Bank had forecast in July, although the impact and persistence of these supply factors are hard to quantify.
  • Strong employment gains in recent months were concentrated in hard-to-distance sectors and among workers most affected by lockdowns and this has significantly reduced the “very uneven” impact of the pandemic on workers.

Canadian inflation

  • A recent increase in CPI inflation was anticipated in July, but the main forces pushing up prices – higher energy prices and pandemic-related supply bottlenecks – “now appear to be stronger and more persistent” than the Bank expected.
  • BoC now expects CPI inflation to be elevated into 2022 and ease back to around the Bank’s 2% target by late 2022.
  • The Bank is “closely watching” inflation expectations and labour costs to ensure that the temporary forces pushing up prices do not become embedded in ongoing inflation.

Outlook

The Bank’s Governing Council believes that in view of ongoing excess capacity, the economy continues to require considerable monetary policy support. That support will continue to come from the Bank’s ongoing commitment to holding its policy interest rate at what it defines as the “effective lower bound” until economic slack is absorbed so that its 2% inflation target is “sustainably achieved.” In the Bank’s projection, this happens sometime in the middle quarters of 2022, which is perhaps a little earlier than the central bank originally forecast.

Accordingly, and in light of the progress made in the economic recovery, the Bank’s Governing Council decided to “end quantitative easing” and keep its overall holdings of Government of Canada bonds roughly constant. This is not entirely surprising since the Bank has signaled its intention to taper its special bond-buying activity for some time. The end of QE also broadly aligns with the approach undertaken by central bankers in the United States.

The Bank noted that it will continue to provide the “appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation target.”

A great time to borrow

With the benchmark rate unchanged (for now), employment at pre-pandemic levels and Canada’s borders re-opening now might be the best time on record to finance a residential or commercial property purchase.

The BoC’s next scheduled policy announcement is December 8, 2021.

Canadian Home Sales Rise in September For The First Time Since March

General Robyn McLean 18 Oct

The Canadian housing market…updates and insight from Dr. Sherry Cooper, Chief Economist for Dominion Lending Centres.
Canadian Home Prices Continued to Rise As Insufficient Supply Creates Excess Demand
Today the Canadian Real Estate Association (CREA) released statistics showing national existing-home sales rose 0.9% between August and September 2021, posting the first monthly gain since March (see chart below). On a year-over-year (y-o-y) basis, the number of transactions last month was down 17.5%. Nevertheless, it was still the second-highest sales figure ever for the month of September.

“September provided another month’s worth of evidence from all across Canada that housing market conditions are stabilizing near current levels,” said Cliff Stevenson, Chair of CREA. “In some ways that comes as a relief given the volatility of the last year-and-a-half, but the issue is that demand/supply conditions are stabilizing in a place that very few people are happy about. There is still a lot of demand chasing an increasingly scarce number of listings, so this market remains very challenging.”

Housing supply remains a major constraint, forcing many buyers to either pay up for scarce properties or to remain on the sidelines. This is particularly troublesome for first-time homebuyers as mortgage rates are coming under renewed upward pressure as inflation concerns have forced yield curves to steepen and longer-term bond yields to rise worldwide.
New ListingsExacerbating supply problems, the number of newly listed homes fell by 1.6% in September compared to August, as gains in parts of Quebec were swamped by declines in the Lower Mainland, in and around the GTA and in Calgary.

With sales up and new listings down in September, the sales-to-new listings ratio tightened to 75.1% compared to 73.2% in August. The long-term average for the national sales-to-new listings ratio is 54.8%.

Based on a comparison of sales-to-new listings ratio with long-term averages, a small but growing majority of local markets are moving back into seller’s market territory (see chart below). As of September, it was close to a 60/40 split between seller’s and balanced markets.

There were 2.1 months of inventory on a national basis at the end of September 2021, down slightly from 2.2 months in August and 2.3 months in June and July. This is extremely low and indicative of a strong seller’s market at the national level and in most local markets. The long-term average for this measure is more than 5 months.
Home PricesIn line with tighter market conditions, the Aggregate Composite MLS® Home Price Index (MLS® HPI) accelerated to 1.7% on a month-over-month basis in September 2021.

The non-seasonally adjusted Aggregate Composite MLS® HPI was up 21.5% on a year-over-year basis in September, up a bit from the 21.3% year-over-year gain recorded in August.

Looking across the country, year-over-year price growth is creeping up above 20% in B.C., though it is lower in Vancouver (13.9%), on par with the provincial number in Victoria, and higher in other parts of the province (see table below).

Year-over-year price gains are in the mid-to-high single digits in Alberta and Saskatchewan, while gains are into the low double digits in Manitoba.

Ontario saw year-over-year price growth pushing 25% in September; however–as with B.C.–big, medium and smaller city trends, gains are notably lower in the GTA (19.0%) and Ottawa (16.4%), around the provincial average in Oakville-Milton (26.9%), Hamilton-Burlington (26.5%) and Guelph (26.4%), and considerably higher in many of the smaller markets around the province.

Greater Montreal’s year-over-year price growth remains at a little over 20%, while Quebec City is now at 12.7%. Price growth is running a little above 30% in New Brunswick (higher in Greater Moncton, a little lower in Fredericton and Saint John), while Newfoundland and Labrador is now at 12% year-over-year (a bit lower in St. John’s).
Bottom Line

Canada continues to contend with one of the developed world’s most severe housing shortages. As our borders open to a resurgence of immigration, excess demand for housing will mount. The impediments to a rapid rise in housing supply, both for rent and purchase, are primarily in the planning and approvals process at the municipal level. Liberal Party election promises do not address these issues.

It is noteworthy that while Canada suffers one of the most acute housing shortages, housing affordability is getting worse in many OECD countries (see chart below).
Adding to the affordability problem, interest rates have bottomed as an inflation-induced selloff in bonds mount despite the assertion of most central banks that inflation is temporary. Very recently, Governor Tiff Macklem admitted that inflation is likely to remain a problem until the end of the year.

Some of the inflation is coming from disruptions on the supply side emanating from COVID-related disruptions, which may work themselves out in time. However, they’re still getting worse, and many suggest the timeline could be much longer than just this year. In addition, extreme weather events and climate change initiatives–both of which are more or less permanent–have also boosted inflation pressure. Consumer demand for goods and housing and business capital expenditures have surged in the face of labour shortages. Wage rates are beginning to rise. All of this has raised prices spilling into next year. Higher interest rates are likely sustainable even though the Bank of Canada and the Federal Reserve will likely hold overnight rates steady for the next year (see charts below).
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drcooper@dominionlending.ca
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