Interest Rate Outlook

General Trish Pigott 30 Aug

Interest Rate Outlook

In light of the deceleration in business investment, the Bank of Canada has little reason to hike interest rates at the Bank’s next policy meeting on September 5. Investors are betting that a rate hike in October is a near certainty according to Bloomberg Canada.

Bank of Canada Governor Stephen Poloz played down inflation worries and the prospect of aggressive interest rate increases last week at a Fed conference in the US. Poloz argued that the recent spike in inflation to 3% in July, the highest in the G-7, was due to transitory factors that would eventually be reversed. The wage measures in today’s GDP report, along with the separate May employment earnings numbers, point to the Bank of Canada’s ‘wage-common’ measure rising 2.4% in Q2,  little changed from the increase in the first quarter.

Even though Canada is bumping up against capacity constraints and labour shortages are rising, Governor Poloz appears to be in no hurry to bring interest rates all the way back to non-stimulative levels. He has repeatedly made a case for gradualism citing heightened uncertainty over geopolitics and trade as well as economists’ inability to measure critical parameters like potential growth.

The Bank of Canada has raised its benchmark interest rate four times since July 2017 to cool the economy, and market indicators suggest investors are expecting as many as three more hikes over the next year, after which the central bank is anticipated to go into a long pause. That will leave the target for the benchmark rate, currently at 1.5%, at 2.25%–below the 3% “neutral” rate the Bank estimates as a final, non-stimulative resting place for overnight borrowing costs.

Sept. 5, 2018 marks the day of the next Bank of Canada announcement.  Economists indicate this week that we most likely will not see any changes as the Bank initially committed to making gradual rate increases.  Since we just had one in July of this year, many analysts are confident they will remain unchanged.  That being said, Scotiabanks economist is one who thinks that we could see an increase as inflation has grown quicker than anticipated.  If you are in a variable rate, you may or may not see an increase next week.  We will be reaching out to our current clients that are in a variable to ensure you are comfortable with your rate and current terms.

Stay tuned, you will find our comments to next weeks announcements on Facebook and Instagram and we will have an update out to all clients shortly after.  CLICK HERE to read an article from the Financial Post.

Get out of debt & purchase your own home!

General Trish Pigott 23 Aug

Here are 5 tips on how to get out of debt and into your own home:

 

  1.  Make a list

Take all of your bills and put them into a chart.  On the chart make sure it shows the name of the bill, the interest rate, balance and what is your minimum monthly payment.
Now figure out how long it will take you to pay the balance down to zero (many credit card statements now have this feature).

  1. Lower your rates

You can actually call up each of your credit card companies, starting with the highest rate ones and ask them to lower your rate.   Tell them that other credit card companies are offering lower rates but you would like them to keep your business.  They don’t normally give you an answer on the phone but you should receive a letter in the mail within a couple of weeks with a lower rate!

  1. Figure out your number

What is the exact number you need to pay off all your debts?  Can you pay this off in 6 months? 12 months? 2 years?  Set yourself a goal!

  1. Create a game plan

Ideally you don’t want any accounts with balances over 75% of the limit of the card.  Example; If you have an account with a $1000 limit and the balance is $900, pay the balance down to $750 as this will now create a positive rating on your credit score.  Do this with all accounts first, then tackle the remaining balances.

  1. Monitor your progress

How is it going?  Are your debts coming down?  Don’t feel discouraged if this isn’t a quick fix… stick to your plan and if you practice self-discipline you can achieve your goals and be debt free!!

We have an excellent Credit Repair Plan that is not just for those with damaged credit, it’s a plan that applies to everyone when it comes to debt repayment and maintaining a strong credit score.  Contact us at 604-552-6190 if you would like to receive a credit plan!

Breaking your mortgage… what is it going to cost you?

General Trish Pigott 16 Aug

Mortgage penalties from anywhere between $1,000 – $20,000 or more – which side of the spectrum are you on?

**ARE YOU AWARE** that if you want to break your mortgage and pay it out, switch lenders, take advantage of a lower rate, access equity in your home (refinance) or anything like this and your term is not over, there will be a penalty. With a 5-year term a fixed rate penalty can be anywhere from $1,000- $20,000 or more. Watch this short and easy to understand video on how YOUR potential penalty will be calculated!

This is a MUST read – if you are purchasing a home that is over 1.25 million dollars

General Trish Pigott 3 Aug

Did you know that most lenders have a “sliding scale” for purchases that are over 1.25 million dollars.

What this means is you will have to put more than 20% down.  The sliding scale differs with each lender, but the majority of them will lend up to 80% of the first 1.25 million and then up to 50-60% of the price above 1.25 million.

For example:  You are purchasing a home for 1.6 million dollars.  The down payment required would be $425,000.

$1,250,000 x 20% down payment = $250,000
$350,000 x 50% down payment = $175,000
Total = $425,000

If you are looking within that price range, please contact us first so that we can make sure you have all the details and understand this sliding scale.