In this week’s blog, we thought we should take a look at Canadian mortgage news and tips, and  dive into some critical updates from both sides of the border and take a closer look at how these developments might impact the Canadian consumer. ]

The US Federal Reserve Stands Pat

In context of our blog’s topic, it is important to also note that the US Federal Reserve decided to follow in the footsteps of the Bank of Canada (BoC) with a hawkish hold on their policy rate. This decision means that they are keeping interest rates steady for now but have left the door open for future rate increases if necessary.

In their policy statement, the Fed expressed concerns about “tighter financial and credit conditions” potentially weighing on economic activity, hiring, and inflation. Much of this tightening has been driven by surging US bond yields, which have increased borrowing costs and affected the US economy in ways similar to rate hikes.

Interestingly, after the Fed’s announcement, US bond yields actually fell, which mitigated some of the tightening effects caused by rising yields. The US economy continues to show strong growth, with a 4.9% increase in GDP in Q3. However, this momentum is expected to slow as consumers exhaust their pandemic savings.

This slowdown in the bond market is pertinent to Canadian consumers, especially those seeking the best mortgage rates in Vancouver, BC, as it may impact global economic conditions that ultimately affect local mortgage rates.

Canadian Employment Data for October

In Canada, employment data for October revealed the addition of 18,000 new jobs, slightly below the consensus estimate of 23,000. Despite the job growth, the annualized unemployment rate increased from 5.5% in September to 5.7% in October as labour-force expansion outpaced job creation.

Average annual wage growth also slowed from 5.0% in September to 4.8% in October. This data points to a labour market in which supply and demand are approaching balance. The moderate reduction in wage growth indicates that labour costs are easing, albeit not enough to alleviate the Bank of Canada’s concerns about inflation.

For those in Vancouver looking for the best mortgage rates, these statistics are crucial, as the overall health of the Canadian economy plays a significant role in determining mortgage rates.

Canadian GDP Data for August

Recently, Statistics Canada reported that the Canadian GDP remained virtually unchanged in October, marking the second consecutive flat monthly print. This data strengthens the consensus that the Bank of Canada has finished its rate hikes for the current cycle. 

This is exciting news, however, it’s essential to note that slowing economic growth is not sufficient to address the central bank’s primary concern: high inflation. The Bank of Canada remains committed to taming inflation, and any policy changes will be guided by this priority. We are hopeful that we are in the right direction, but it is important to understand that improvements will be gradual over the course of months to years. 

The BoC’s Testimony to Parliament’s Standing Committee on Finance

Bank of Canada Governor Tiff Macklem had some strong words during his testimony to the Standing Committee on Finance. He expressed concerns about government spending potentially adding more to demand than supply can support and urged policymakers to consider the inflationary impact of their actions.

Governor Macklem also emphasized the importance of monetary and fiscal policy working in harmony to manage inflation effectively. This implies that he believes these policies may not be aligned currently.

Furthermore, Governor Macklem pointed out “structural supply shortages in our housing market” as a key factor contributing to inflation. The Bank of Canada has expressed concern about rapid population growth driving strong housing demand and leading to a structural lack of housing supply.

This direct criticism from the central bank governor is a rare occurrence and highlights the urgency of addressing housing issues. It’s an essential point for anyone in Vancouver, where the real estate market has been a focal point of concern and interest.

Conclusion

In conclusion, staying informed about the ever-changing mortgage landscape is crucial, especially when seeking the best mortgage rates in Vancouver, BC. The recent developments, including the Bank of Canada’s hawkish stance and the ongoing housing concerns, highlight the need for vigilance in your mortgage decisions.

At GLM Mortgage Group, we understand the importance of securing the best mortgage rates and navigating the intricacies of the real estate market. We are here to assist you in finding the most suitable mortgage options tailored to your specific needs.

Our team of experts is committed to providing you with the guidance and support necessary to make well-informed mortgage choices. If you’re looking to purchase a home, refinance your current mortgage, or explore investment opportunities, we’re here to help.

Take action today by reaching out to GLM Mortgage Group for personalized mortgage solutions. Your dream home is within reach, and we’re here to make it a reality. Contact us now and let’s embark on this exciting journey together!

The post Unlocking the Best Mortgage Rates in Vancouver, BC: Canadian Mortgage News and Tips appeared first on GLM Mortgage Group.

On December 21, 2022, the Federal Government announced that it will be placing a ban on foreign purchases of real estate property, which took effect on Jan. 1st, 2023.

The Federal Government has brought this Foreign Buyers Ban in to curb the cost of homes to which we know has gone up substantially. The law was passed because politicians believe that foreign buyers were partly responsible by snapping up supply of homes as investments.

The Foreign Buyers Ban is not as straight forward as one might think. Although the law does ban foreigners for purchasing property as an investment, it does not mean that foreigners are completely disallowed from owning a home. The law provides exceptions for home purchases by immigrants and permanent residents of Canada who are not citizens.

The full list of exceptions in the Foreign Buyers Ban are as advertised:

• International students who meet certain requirements
• Foreign workers who have filed tax returns in Canada in three of the last four years
• Those purchasing homes in predominantly rural areas, well outside urban centers.

It is evident above that the requirements for the Foreign Buyers Ban are quite substantial and getting around the foreign ban requires a comprehensive reason.

Why the ban?

The Federal Government wants to encourage home ownership to be geared towards living in and raising a family instead of looking at them as only commodities and investment tactics. The Federal Government also wants to make sure Canadians have an opportunity to flourish in their own country without housing prices being artificially raised by a high number of foreign investors.

The ban, stated to last for two years until January 1st, 2025, is a big announcement that may not have been expected this late into the interest rate hikes.

Canada already was high on housing affordability before the COVID-19 pandemic began, and this ban will help to ease some of our urban areas that had suffered an immense rise in housing prices before and after the pandemic started. For reference, this past summer, the average home in Canada was $777,200, which is more than 11 times the median household income after taxes. That is a mind-boggling amount that shows why investing in Canada in the past decade has been an interest in foreigners, and how well they have profited from it.

“The desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors,” said the campaign website of Prime Minister Justin Trudeau’s party this past year. “This is leading to a real problem of underused and vacant housing, rampant speculation, and skyrocketing prices. Homes are for people, not investors.”

What is the penalty?

As of January 1st, 2023, anyone who breaches the ban is subject to a $10,000 fine.

What are the big questions?

A big question you may have is, is this too little too late as the Bank of Canada has already done a significant amount of work to decrease the price of homes and make things more affordable in the future. It is important to note and view this as something that is not meant as an emergency law, but more meant to help subdue the rising costs in housing prices that Canada has seen for the past decade. This law will not plummet the housing market, but it should help it stabilize and grow at a more reasonable rate for the near future.

Many may have questions about how this may affect the economy or immigration and we urge you to do your own research to figure out how this could shape the Canadian economy moving forward. It is also important to remember that this law is implemented for two years and will likely be reassessed in the 2nd half of 2024.

If you want to learn more about this new law that has been recently enforced by the Federal Government, please check out the Official Act; Prohibition of Residential Property by Non-Canadians Act.

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All About Variable Rates

Variable rates are based on Prime Rate and the Bank of Canada’s overnight rate, can cause fluctuating or static payments. These payments have cheaper penalty when breaking your mortgage.

The banks generally change their prime rates a few days after the Bank of Canada sets its interest rate target for this overnight rate. In other words, when the overnight rate goes up, the prime rate will follow suit, and when it goes down, prime rate will soon follow.

What is a Variable Rate?

A variable rate is slightly lower than a fixed rate in most cases. One of the major risks to a variable rate is that your monthly payment will increase due to the fluctuations. This also means that your rate will most likely change with these inflations. A couple of reasons why a variable rate might be the best fit for you:

• You’ll have a flexible budget and feel comfortable with fluctuating interest rates
• You want to pay mortgage off quickly

Pros:

• Potentially lower costs over time. If interest rates remain the same or fall during your term, you’ll pay less interest with a variable-rate mortgage than you would with a fixed-rate mortgage.
• Minimal break penalties. Most lenders charge three months of interest if you need to break your variable-rate mortgage contract.
• Ability to switch to a fixed-rate mortgage. Many lenders will allow homeowners with a variable-rate mortgage to change to a fixed-rate mortgage at any time.

Cons:

• Lack of stability. If interest rates rise, you could end up paying more than you would have with a fixed-rate mortgage.
• Converting could cost you more. If you convert to a fixed-rate mortgage, it will be at the current interest rates — which might be higher than they were when you took out your mortgage.

Types of Variable Rates

When it comes to choosing a variable rate, there’s two common types of a variable rate: static variable and floating variable. Rising rates aren’t just for concern for homeowners, but also causes concern to investors and real estate professionals who rely on the industry and may also be facing uncertainty.

Static Variable:

• The answer is a variable-rate mortgage where payments stay the same instead of rising to reflect higher borrowing costs. Static payments mean your lender is using more of your payment to cover your rising interest costs and applying less against principal.

Floating Variable:

• When prime rate went to a historical low during the pandemic, it lowered mortgage rates for thousands of variable-rate holders. Some are now enjoying floating rates as low as 1.50%.
• But for new borrowers, variable rates have largely lost their appeal since prime rate has very little room left to fall, if at all.

It is PARTICULARLY important to have a clear understanding of the implications when it comes to variable rate mortgages and what’s best for you. It makes a significant difference in future planning and can impact you in incredibly substantial ways.

At GLM Mortgage Group, we know what questions to ask. We have relationships with the lenders that you know about and the lenders you don’t. We would be pleased to educate you on the financial options available to you. We want you to make the best decision possible on the mortgage you are committing to. Call us anytime for a FREE consultation on the mortgage products available to you.

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Home Price Declines Are Likely

The past two years have been very unpredictable as the COVID-19 pandemic has ravaged the globe. The pandemic has brought many differences with the economy in Canada, and one of them is the hot housing market that started in early 2020 and has not let up.

With the housing market, many families have struggled to buy homes because the competition has been very fierce, with some homes going over 30-40% of the asking price.

According to an article by Canadian Mortgage Trends, New Forecasts Suggest Home Prices Declines Are Likely. A growing number of economic forecasts see Canadian housing prices falling in the near term, with some suggesting declines of around 25% or more. Meanwhile, the latest forecast from Oxford Economic has home prices falling 24% by mid-2024.

A big reason for this breaking point is due to the above borrowing capacity of median-income households. In late 2021, prices were 19% above the borrowing capacity of median-income households, and by the middle of this year it could be as high as 38%. Due to the weight of the housing market’s own success, it is likely the housing market will reach a breaking point and crash. Another reason for the potential of a housing market crash is higher borrowing rates, with the Bank of Canada’s policy rate expected to reach at least 2% by 2024. Oxford also expects average 5-year fixed rates will reach 4.25% by the end of this year and 5% towards the end of the decade.

We understand that this news comes with very mixed emotions. For some, a lowering in housing prices allows for a sigh of relief knowing that you may be able to comfortably enter the housing market in the near future. For others, you may be worried that the property you recently purchased in the last few years will start to depreciate and you will lose money on your investment. It is important to understand that these are just forecasts, and although we do anticipate a drop in the near future, the exact amount of the drop is unknown. It is unlikely that the drop will be any more severe than what Oxford is expecting and even if it does it is all relative. If your housing prices drop 12%, you must understand that other housing prices in your area are also likely to drop, making the purchase of your next property still within your purchasing power. 

Oxford notes that even if the anticipated 24% drop was to occur, the real estate market would still be 15% higher than pre-pandemic levels. That is exciting news because it is always great to see growth in the market, and to see growth maintain even after the housing market cools off should be positive news for real estate investors. 

In the meantime, the BC government recently introduced legislation that will allow for a cooling off period following the purchase of a home. The government announced this in an effort to protect buyers in the province’s red-hot real estate market. The legislative announcements, when passed, will give people buying a home more time to consider their offers, ensure financing and obtain a home inspection. This is very exciting news because it decreases the risks that were associated with a lot of these quick turnaround housing sales that left people unprepared and potentially buying a home that had more issues than originally expected. 

We will continue to update you when this piece of legislation gets passed.

We understand that the housing market is scary and we understand that anxiety can be increased with the present incline and the future decline of the market. We are always here to answer any questions you may have at any point. 

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We at GLM Mortgage Group | Dominion Lending Centres thought it would be great to outline all of the promises that Justin Trudeau made during his election. Although the Liberal Party won, other policies from other parties may take fruition, as a minority government must make some sacrifices based on their objectives to get enough votes to pass each bill. 

Below are all of the promises that the Liberal Party made during the 2021 election platform towards housing initiatives:

• Introduce First Home Savings Accounts for Canadians under 40 to save up to $40,000 towards their first house; deposits and withdrawals are tax-free

• Give $1 Billion in grants and loans to develop rent-to-own projects

• Add the option of a deferred mortgage loan to the First Time Home Buyer Incentive

• Reduce the price of home insurance by the Canada Mortgage and Housing Corp. by 25 percent; increase the mortgage insurance purchase maximum to $1.25 million and index to inflation

• Double the Home Buyers Tax Credit claim amount to $10,000.

• Spend $2 billion on indigenous housing 

• “Build preserve or repair” 1.4 million homes in four years by putting $4 billion in a Housing Accelerator Fund to support municipalities’ housing efforts; increasing the funding to the National Housing Co-investment fund to $2.7 billion over four years; and introducing a multigenerational Home Renovation tax credit for families adding secondary units for relatives.

• Introduce a Home Buyers’ Bill of Rights that will ban blind bidding, create a legal right to a home inspection and ban new foreign ownership of homes for two years.

• Have landlords report rent received before and after renovations and impose a surtax on “excessive” rent to stop renovations.

• Introduce a national tax of one percent annually on the value of non-resident, non-Canadian owner residential real estate that is vacant or underused

• Create an anti-flipping tax for residential properties sold less than 12 months after purchase

• Reallocate $300 million from the Rental Construction Financing Initiative to help convert excess commercial property to rental housing.

We will continue to update our social media platforms when changes and initiatives are brought in that affect our clients. 

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Inflation rate and Mortgages in Canada 

Since the beginning of 2021, inflation rates have been coming in at unprecedented levels. 

Last week, Canada’s inflation rate came in above expected and was at its highest rate in over a decade. The inflation rate came in at 3.7%, above the average of about 2%. 

It has been three consecutive months since the monthly inflation has been above the Bank of Canada’s neutral range of 1.75% to 2.75%. The neutral range is needed to support the economy at full employment/maximum output while controlling inflation. With this high inflation, we see it in the groceries we buy, gas prices, everyday goods, and so much more. 

The Bank of Canada has assured the country that elevated consumer prices will prove temporary and are primarily a result of the economic recovery taking place. 

Unfortunately, if these recent inflation numbers persist, homeowners are likely to expect potential rises again in real estate and a shifting rate-hike. 

Although real estate prices have started to even out after fast rises in the past ten months, we are anticipating a slight surge to continue, now till the end of the year. In 2022 a stabilization of the real estate market could and will likely happen. 

The inflation of the real estate market will end at some point and cannot live forever. Continued and rampant inflation harms an economy on a large scale and a personal scale. It has very devastating effects on those with fixed incomes and students struggling to pay off student debt. 

At some point, inflation will end through the course of events born through devaluation or aggressive action by monetary policy to reduce the currency supply. 

It is impossible to predict how inflation will go. Still, with governments in the next few years to likely focus on economic growth and less overall spending, alongside a private sector that recovers to a regular pattern of the expenditure, we will likely see a stabilization of the economy and inflation. 

How does this affect mortgages? Well, we could see dynamic shifts in rates in the next few years. 

Fortunately, the Bank of Canada has reiterated its commitment to hold the policy rate at its current record-low level until a 2% inflation rate is again maintained. This is expected until likely the second half of 2022. 

For variable-rate mortgage holders, it means potentially another year with no change to the prime rate, and therefore no change to their monthly mortgage payments. 

It is hard to tell for fixed-rate mortgages. Right now, they are at a low, but that could jump higher soon. 

Overall, it is essential to note that mortgage interest rates are at a historical low, and those with variable rate mortgages will likely continue with their same payment until 2022. 

However, as our economy continues to recover, we expect to see the inflation rates stabilize in Canada. This could have impacts on mortgage interest rates, which we will certainly be watching closely for our clients. 

The post How Inflation is Affecting Mortgages Today appeared first on GLM Mortgage Group.

1. Record Setting Month in Real Estate 

Both August and September were record setting months for Real Estate. You can learn more about the numbers  HERE.

2. Canadian’s look for ways to support family…without Jeopardizing retirement

The pandemic has disproportionately affected millennials, with 76% feeling the squeeze due to a reduction in working hours or job losses. It’s important to consider your options when looking to financially help your family – so you won’t jeopardize your retirement in the process. Click HERE to read more.

3. Mortgage Rates are set to stay low until 2023 Bank of Canada hints

While mortgage rates have been tumbling steadily over the last couple of months, many are now in record-setting territory. To learn more, click HERE.

4. The end of CERB–but there is help

Three new benefits will help millions of Canadians who won’t qualify for EI. Click HERE to learn more about these 3 new programs.

5. Can Mortgage Rates go any lower?

Canadian mortgages rates are at a record low, but should potential home buyers lock in rates right now or will rates go any lower? Click HERE to find out.

The post Fast Five | October Edition appeared first on GLM Mortgage Group.

The post Fast Five | August Edition appeared first on GLM Mortgage Group.

1. CMHC changes Guidelines for Insured Mortgages (those putting less than 20% down payment)

CMHC announced that as of July 1st, 2020 they will be tightening the restrictions and borrowing guidelines in place for people who are putting less than 20% down. An outline of the full guidelines can be found HERE.

2. Know the difference between Cash-back and Cash-bonus mortgages!

We have seen an increase in the number of incentives that lenders are offering to borrowers right now, but often times the terms cash-back and cash bonus are used interchangeably when in truth they mean two very different things! Find out the differences (and save yourself the headache) by clicking HERE. 

3. Mortgage Rates are at an all-time low (including fixed rates!)

While mortgage rates have been tumbling steadily over the last couple of months, many are now in record-setting territory, with certain 1- to 5-year fixed rates now available for under 2.00%. To learn more, click HERE.

4. Canadian Mortgage Debt is up due to deferrals

Canadian mortgage debt is growing at a rapid pace, but it’s not exactly a healthy trend. Bank of Canada(BoC) shows mortgage credit hit a new record high in May. The high was hit with accelerated growth, but this isn’t the bullish trend it normally is. Hundreds of thousands of mortgages had their payments deferred, helping debt growth. Read the full story HERE.

5. COVID-19 Resources available for you, all in one place.

While many people are back at work or have been able to re-open businesses, we also recognize that there are still those in need of assistance during these unusual circumstances.  We have compiled a full list of resources available to you for your convenience in one handy graph. Click HERE to view it.

The post Fast Five | July Edition appeared first on GLM Mortgage Group.

Property Taxes are due July 2^nd

Property taxes are due July 2nd. You should receive your notice in the mail soon! Don’t forget to apply for the homeowner’s grants that are applicable to you. LEARN MORE

Qualifying Rate drops to 4.94%

Thanks to a reduction by many banks, the stress test rate has dropped to 4.94%. You can learn more HERE:

CMHC Housing Level Predictions

Canada’s housing sector indicators, including prices, sales and home starts, aren’t expected to return to pre-COVID levels until at least the end of 2022, according to CMHC’s latest Spring Housing Outlook.

“Following large declines in 2020, housing starts, sales and prices are expected to start to recover by mid-2021 as pandemic containment measures are lifted and economic conditions improve,” said the housing agency’s chief economist, Bob Dugan. READ MORE

Lockdown Hits Canadian Q1 GDP

The hand-wringing about the Q1 GDP data released today misses the point that the data were actually better than expected. The Canadian economy declined at an 8.2% annualized rate in the first quarter, less harsh than the earlier estimate by StatsCan of -10%. Of course, every sector of the economy was hit by the enforced shutdown, but not by nearly as much as most economists anticipated. READ MORE

Mortage Deferral Hits New High 

As of the end of April, mortgage deferrals with the Big Six banks amounted to more than $180 billion, data from the institutions showed.

According to the Bank of Canada, this sum accounted for more than 14% of the $1.24 trillion in residential mortgages that the nation’s chartered banks held as of March. READ MORE

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