Our partners at Spagnuolo Real Estate Lawyers has provided some clarity to the recent changes announced for Property Transfer Tax in BC and First Time Home Buyers.  Here is an outline below:

PTT Exemptions: Based on Completion Date or Contract Date? The Completion Date appears to be the only thing that matters. There does not appear to be any exclusion of contracts entered into prior to April 1, 2024 or any other conditions related to the date of the contract. It appears that a property will qualify for the First Time Home Buyers or Newly Built Home Buyers exemption so long as the fair market value of the property does not exceed $835,000 or $1,100,000 effective April 1, 2024.

Flipping Tax: Pre-Sale Contracts. Based on current guidance, a pre-sale purchaser is deemed to acquire the pre-sale as of the date of the pre-sale contract. Accordingly, if a person enters into a pre-sale contract, completes the purchase and sells within two years of the original pre-sale contract, they will be subject to the BC Flipping Tax. The two year window does not get extended by the actual close of the unit at the Land Title Office. More details on this will emerge when legislation is introduced. They would also be hit if they assigned the pre-sale contract within two years of signing the pre-sale.

Here are more details on their website: CLICK HERE FOR THEIR KNOWLEDGE CENTRE

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Our calculators on our App My Mortgage Toolbox have been updated so head over to our page to download the app if you haven’t already.  You will see a calculator that has a comparison of today’s PTT vs the new exemption.  CLICK HERE TO DOWNLOAD OUR APP

On Wednesday, the Bank of Canada (BoC) left rates unchanged, noting it still remains concerned about the risks of inflation, even as the Consumer Price Index (CPI) came in at 2.9% in January. It also reiterated its pledge to continue its policy of quantitative tightening.  Although inflation came in under expectations and data is leading towards rate cuts, they are not quite ready to do so.  Most analysts are predicting we will not see a rate drop until June of this year and some are expecting that we will see two rate cuts by the end of 2024.  If that was the case, then that would be a rate reduction of .50% to Prime.  Currently Prime rate is at 7.20% so we could see it dropping to 6.70% by year end. Time will tell.

The bond market has dropped this week which has a direct impact on Fixed rates so  you will be happy to hear we are seeing some relief on those rates as well.

Here are some of the economic insights from one of our great lender partners First National Financial.  They have summarized the Bank’s comments below.

Canadian inflation

• Shelter-price inflation remains elevated “and is the biggest contributor to inflation”

• Underlying inflationary pressures persist: year-over-year and three-month measures of core inflation are in the 3% to 3.5% range, and the share of CPI components growing above 3% declined but is still above the historical average

Canadian economic performance and employment

• The Canadian economy grew in the fourth quarter by more than the BoC expected, “although the pace remained weak and below potential”
• Real GDP expanded by 1% after contracting 0.5% in the third quarter
• Consumption was up a modest 1%, and final domestic demand contracted with a large decline in business investment
• A strong increase in exports boosted growth
• Employment continues to grow more slowly than the population, and there are now some signs that wage pressures may be easing
• Overall, the data point to “an economy in modest excess supply”

Global economic performance and bond yields

• Global economic growth slowed in the fourth quarter of 2023
• U.S. GDP growth also slowed but remained “surprisingly robust and broad-based,” with solid contributions from consumption and exports
• Euro area economic growth was flat at the end of the year after contracting in the third quarter
• Inflation in the U.S. and the Euro area continued to ease
• Bond yields have increased since January while corporate credit spreads have narrowed
• Equity markets have risen sharply
• Global oil prices are slightly higher than what was assumed in the January Monetary Policy Report (MPR)

Outlook

The Bank’s statement this month was relatively short and its forward-looking comments limited, except its observation that it expects inflation to “remain close to 3% during the first half of the year before gradually easing.” However, it noted that its Governing Council is still concerned about risks to the outlook for inflation, particularly “the persistence in underlying inflation.” Governing Council wants to see “further and sustained easing” in core inflation and said it continues to focus on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behavior.

Once again, the Bank repeated its mantra that it remains “resolute” in its commitment to restoring price stability for Canadians. So for the timing being, the policy rate will remain at 5.0% where it’s been since July of 2023.

Next Rate Announcement

On April 10, 2024, the Bank returns with another interest rate announcement including updated economic commentary.

If you want to discuss the market with us, book a call with Trish by CLICKING HERE

The Canada Emergency Business Account Loan is a program that offers interest free loans to small businesses and not-for-profit companies of up to $60,000. Thousands of businesses have taken advantage of these loans during the pandemic.

Businesses have until January 18, 2024 to repay their CEBA loan. After this date, outstanding loans will convert to non-amortizing term loans, with full principal repayment due by December 31, 2026.

If businesses are unable to repay their CEBA loan by the forgiveness repayment date, their financial institution will contact them for a lump sum repayment. Failure to comply may result in the loan being assigned to the government’s CEBA Program for collection efforts.

If paid back on or before January 18, 2024, up to $20,000 of the outstanding balance will be forgiven.

“There’s only one week left to repay the loan while securing the up to $20,000 forgivable portion. And with over 900,000 small businesses holding CEBA loans and 22% not in a position to repay at this time, this decision has huge implications for Canada’s economy.” Says Dan Kelly, CFIB President.

If you need assistance paying back your CEBA loan at this time, contact us! We would love to help.

604-552-6190

support@primexmortgages.com

Trish & The Primex Team

Winter home maintenance is important to ensure your property remains in good condition & you and your family stay warm. Here’s a checklist to get you started and ready for whatever conditions come your way!

Indoor Winter Maintenance:

1. Heating System: Schedule a professional inspection and maintenance for your heating system. Replace the furnace filter to ensure optimal efficiency. Bleed air from radiators, if applicable.
2. Fireplace and Chimney: Inspect the fireplace and chimney for any blockages. Clean the chimney to remove creosote buildup. Ensure the damper is functioning correctly.
3. Windows and Doors: Check for drafts around windows and doors; use weatherstripping or caulking to seal gaps. Consider using thermal curtains to retain heat.
4. Smoke and Carbon Monoxide Detectors: Test detectors and replace batteries if necessary. Ensure detectors are strategically placed throughout the house.
5. Humidifier: Clean and maintain your humidifier to add moisture to dry winter air.

Outdoor Winter Maintenance:

1. Roof and Gutters: Inspect the roof for damaged or missing shingles. Clean gutters and downspouts to prevent ice dams.
2. Exterior Faucets: Disconnect and drain outdoor hoses. Turn off exterior water faucets, and insulate them with faucet covers.
3. Tree Maintenance: Trim tree branches away from the house to prevent damage from heavy snow or ice.
4. Snow Removal Equipment: Check and service snow blowers, shovels, and any other snow removal equipment. Stock up on ice melt or sand for walkways and driveways.
5. Deck and Patio Furniture: Clean and store outdoor furniture or use covers to protect them from winter weather.
6. Winter Emergency Kit: Prepare an emergency kit with essentials like blankets, flashlights, and non-perishable food items.
7. Car Maintenance: Prepare your car for winter by checking the antifreeze, tires, and battery.

Remember that regular winter maintenance helps prevent costly repairs in the future and keeps your mind at ease while being cozy in the comfort of your home.

If you need to make some of these changes or improvements and need access to your equity, call us, we have great solutions for that and can help.

Trish & The Primex Team

Good news today with the Bank of Canada’s last announcement for 2023 and they have left the overnight target rate, which affects the Prime rate unchanged for the past 5 months.  Prime is currently at 7.20%. This means no rate or payment changes for Variable Rate mortgage holders.  Here’s a visual on what the BoC rate has done over the past 18 months.

We also have received welcoming news from some of our top lenders with a reduction to fixed rates today which peaked in October of this year and should have started dropping sooner but haven’t.  Fixed rates are affected by the 5 year Bond yields and they have been dropping consistently for the past 6 weeks but banks have been slow to follow with lowering interest rates for homeowners. Here’s a visual of what the bond rates have done since Spring of this year.

Part of my daily read and research is following the predictions of our top economists. The prediction is that we won’t see any drops to the Prime rate until sometime between April and July of next year but keep in mind that those are just predictions based on data we are seeing today and forecasting of what will come.  Currently we are expecting that we will see rate drops over the course of 2024 by about 1% and 2% by the end of 2025.  That would mean that those in a Variable will experience lower rates and payments within the next 24 months.  Something we will all welcome.

So what is the favorite rate as of today?  Variable for the win again…with rates still high, inflation has not taken care of itself quite yet and the BoC is going to be very careful when they do cut rates to not spur the economy and housing market too much or we will be back at square one. We’re almost guaranteed to get random economic scares that raise doubts about the Variable Rate, yet for well-qualified borrowers, the outlooks suggests: go Variable or go home.  But, it’s still not for everyone, let us help you determine if this is the best fit for you.

The Bank’s next interest rate announcement lands on January 24, 2024.

If you are considering purchasing, refinancing or renewing your mortgage, do not wait.  Buyers are waiting until Spring so don’t get caught up in the frenzy in a few months and buy now while you have more choice, less pressure and declining rates.  We will have all the other details covered for you from a rate hold, recommendations for Real Estate partners, Lawyers and Notaries and everyone in between.

Have a wonderful rest of the week and please contact me with absolutely any questions.

Trish

This blog post is apart of our newsletter. Join hundred of homeowners who trust our newsletter to keep them informed by CLICKING HERE.

Get to know the basics before you choose your mortgage. You must select the most important to you – lower rates or flexibility. Take some time to study mortgage types:

Closed Mortgage: A closed mortgage is best if you want consistent rates. Interest rates are typically lower (and do not change with the length of the term). However, a closed mortgage does not offer much flexibility in paying off your mortgage sooner – with the exception of a once-a-year lump sum payment up to 20% of your entire mortgage.

• Predictable and consistent payment amount
• Often comes with lower interest rates
• Limited flexibility with paying down the mortgage faster
• Cannot change interest rate during the term of the mortgage

Variable Mortgage: A type of mortgage where the interest rate is based on the lender’s prime rate plus or minus a certain percentage. Your mortgage payments may vary depending on the current interest rate. Variable mortgages can offer lower interest rates than fixed-rate mortgages but also have more uncertainty and risk.

• Uncertainty surrounding payments
• Pay less over time
• Take advantage of lower rates when interest rates are low.

Open Mortgage: If you are looking for flexibility in paying off your mortgage, consider an open mortgage. No penalty is incurred if you decide to make lump sum payments or pay off your mortgage before the term expires; however, this flexibility comes often with a higher interest rate – which can result in higher monthly payments.

• Maximum flexibility: no penalty for making lump sum payments or paying off your entire mortgage before the term expires
• Higher interest rate
• Best for those looking to pay off their mortgage as soon as possible

Choosing the right mortgage can be daunting, but it’s essential to take the time to understand the options available to you. Whether you value consistent payments, flexibility, or the ability to pay off your mortgage sooner, there is a mortgage type that will suit your needs. Do your research, and select the mortgage that aligns with your financial goals. By doing so, you can take the first step towards owning your dream home.

Don’t hesitate to contact us with any questions or if you want to start the mortgage process for yourself!

Trish & The Primex Team 

November is Financial Literacy Month, and we have the tips to ensure your financial game is on point this Fall as we head into the New Year!

Nail Down Your Budget

Understanding the basics of budgeting and tracking your income versus spending is fundamental to financial literacy and control. Building a budget can help you define your spending habits and determine where there is room for adjustments, and this gives you a chance to review your cash flow situation to ensure it aligns with your financial goals.

Ideally, your budget will fall close to the range of the following:

• 32% of your income for housing, including property taxes, maintenance, utilities, etc.
• 26% of your income for life, including groceries, medical, childcare, vacations, fun, etc.
• 16% of your income for transit, including car payments, bus passes, gas, etc.
• 16% of your income for debt, including credit cards, lines of credit, loans, etc.
• 10% of your income for savings, including long-term planning, retirement, etc.

Dedicate Your Savings

Many individuals will have a savings account connected to their chequing account. This can be a bad habit, as using your savings account as a second account becomes too easy versus a dedicated account for emergencies, vacation planning, or more. Ideally, you are putting 10% of your monthly income into savings whenever possible.

Live Within Your Means

This one seems simple, but it isn’t easy to do – especially if you don’t have a proper budget! By putting together a budget, as mentioned above, you can see where you are spending your income and how it compares to what you are bringing in. Ideally, you are adjusting your spending to ensure that you are not going over the cash flow with priority expenses first, followed by leisure.

Understand Your Banking Options and Interest Rates

Having a 16% interest rate loan, a credit card that you’re barely making payments on, or a savings account that doesn’t give much back are all areas for consideration when truly understanding your options. Sometimes, a different bank, account type, or loan type can significantly affect your financial position. There are plenty of options, especially at mortgage renewal time, for consolidating your debt, changing your mortgage, getting a better interest rate, and more!

TIPS TO PAY OFF YOUR MORTGAGE FASTER!

Check Your Credit

An annual review of your credit score and credit report is a huge part of financial literacy, which plays a crucial role in your financial status. Your credit score affects your loans, credit cards, mortgages and the interest rate you can qualify for, so be sure to understand where you fall on the scale.

GET HELP UNDERSTANDING YOUR CREDIT SCORE!

Plan for Big Expenses

Are you looking to replace your car? Planning a family vacation? Need to renovate your kitchen or replace some furniture? These are all typically more significant expenses that should be prepared for in advance. While sometimes an appliance will break and need to be replaced, the goal is to have funds in your budget (or savings) for unexpected things and to plan out spending before large purchases or bookings. This ensures that you know you’re already paid when you get on that plane or drive off that car lot!

Review Your Financial Progress

Many people set up a budget but forget to update it along the way! Ideally, if any of your expenses change, such as an increase in your streaming services bill or utilities, you are updating your budget in real-time to ensure that you are keenly aware of what is coming into your account and going out. An annual review is a good idea for an overall budget clean-up, but maintaining it all year will help you get the best picture of your financial situation.

Stay Informed

Whether you’re new to financial literacy and budgeting or want a refresh, taking control of your finances and better understanding your spending, cash flow, and options will help you get the most out of your income! It’s a perfect time to get your finances for the new year!

Trish & The Primex Team

Even though Fall has already started, there are a few things you can do still to ensure your home is well-prepared for the season:

• Examine Your Gutters: This time of year it is important to clean and inspect your gutters (replacing as needed) to ensure they are working properly as the rain and snow season hits. If they are clogged or damaged, it could result in flooding or exterior damage – so don’t wait!
• Check for Drafts: In the Fall and Winter, many homeowners are spending extra money heating their homes due to drafts, but it doesn’t have to be that way! Do a check on all exterior doors and windows to confirm if they are properly sealed. To do this, simply close a door or window on a strip of paper. If the paper slides easily, you need to update your weatherstripping.
• Inspect Your Furnace: We are no strangers to chilly evenings! To ensure you are comfortable throughout the colder months, be sure to have your furnace inspected by an HVAC professional. They can check leaks, test efficiency, and change the filter. They can also conduct a carbon monoxide check to ensure air safety.
• Manage Your Thermostat: As tempting as it is to turn your heat all the way up in the winter, proper thermostat management will help you save costs in the long run. Using a thermostat with a timer can save you even more. Turn them on earlier so the room heats up in time for use and have it turned off 30 minutes before bed or before leaving the home. If you find you are still chilly at night, a safely positioned space heater and closed door is an inexpensive solution.

• Fix Any Concrete/Asphalt Cracks: This one is easy to ignore thinking it will be fine, but it could easily turn into a bigger issue. When water gets into existing cracks during the colder months it will freeze and expand, causing the crack to become even larger.

• Turn Off Outdoor Plumbing: Since your garden will not need attention until the Spring, it is a good idea to shut off and drain all outdoor faucets and sprinkler systems. Depending on where you live, you might also want to cover them to prevent freezing during the Winter months.

• Change Your Batteries: For safety, it is recommended that you check that all smoke detectors and carbon monoxide devices are working at least a couple of times throughout the year. While doing other Fall home prep, add this one to your list!

• Create a Storm Kit: A storm kit is a handy source of essential items in the event of losing power. Consider what you and your family might need, such as a flashlight with new batteries, candles, matches, a portable radio, water, and snacks. Keep your kit somewhere easy to access.

Whatever your plans this season, a quick check of your home will ensure there are no surprises!

Trish & The Primex Team 

As rising household debt puts our country’s financial system on edge, new guidelines from the Office of Superintendent of Financial Institutions (OSFI) have taken effect today, November 1st, that will reduce some Canadian homeowners’ borrowing power.

Those who have a Combined Loan Plan should have received a letter from their bank on whether they have been affected by these new changes. Combined Loan Plans are typically mortgage loans with a home equity line of credit (HELOC). As you pay down your mortgage principal each month, that money becomes immediately available in a line of credit up to a certain threshold, which lets borrowers keep their mortgage balance and line of credit at 80% Loan to Value (LTV).

Banks will introduce the new limit between October 31st – December 31st, depending on their fiscal year. The decrease from 80% to 65% will be gradual, with banks having 25 years to transition current HELOC borrowers.

“If you have a mortgage and pay $1,000, your available borrowing limit on your line of credit grows by $1000,” says Ottawa-based mortgage broker Andrew Thake. “But when banks implement the new limit, for that $1,000 payment on your mortgage, your line of credit will only grow by $875.”

This change won’t affect mortgage payments or the price of housing, only the amount of money you can borrow.

Suppose a homeowner renews their mortgage and the total combined LTV exceeds 65%. In that case, payments to the mortgage principal will increase the available funds on the line of credit on a factor lower than the previous 1-1 ratio.

If the total combined LTV is less than or equal to 65%, payments to the mortgage principal will increase the available funds on the line of credit on a 1-1 ratio to a maximum LTV of 65%.

Here is an example of two scenarios provided by MCAP:

The Combined Loan Plan is a great way to provide homeowners with payment options that match their needs and cash flow. Whether they are looking to take on home renovation, make repairs, major purchases, medical emergencies or unexpected expenses that might arise from a job loss. Secured debt, like a HELOC, is an easy way to take care of major expenses with a low-rate line of credit.

If you are curious as to how this will affect your overall finances, feel free to get in touch with me! Or, if you are looking to add a HELOC to your mortgage, you can CLICK HERE to book a quick call to get started!

Trish & The Primex Team