Bank of Canada Announces it’s Latest Rate Decision

General Trish Pigott 28 Oct

The Bank of Canada surprised markets on Oct. 27th with a more hawkish stance on inflation and the economy. The Bank released its widely anticipated October Monetary Policy Report (MPR) in which its key messages were:

* The Canadian economy has accelerated robustly in the second half.
* Labour markets have improved, especially in the hard-to-distance sectors. Despite continuing slack, many businesses can’t find appropriate workers quickly enough to meet demand.
* Disruptions to global supply chains have worsened, limiting production and leading to both higher costs and higher prices.
* The output gap is narrower than projected in July. The Bank now expects slack to be absorbed in Q2 or Q3 of next year, one quarter sooner than earlier projected.
* Given persistent supply constraints and the increase in energy prices, the Bank expects inflation to stay above the control range for longer than previously anticipated before easing back to close to the 2 percent target by late 2022.
* The Bank views the risks around this inflation outlook as roughly balanced.

Bottom Line

Since the Bank last met in early September, the Government of Canada five-year bond yield has spiked from .80% by a whopping 60 basis points to a 1.40%. That is an incredible 75% rise. A year ago, the five-year bond yield was only .37%.

The Bank believes the surge in inflation is transitory, but that does not mean it will be brief. CPI inflation was 4.4% y/y in September and is expected to rise and average around 4.75% over the remainder of this year. Macklem now believes inflation will remain above the Bank’s 1%-to-3% target band until late next year.

There is also a good deal of uncertainty about the size of the slack in the economy. This is always hard to measure, especially now when unemployment remains elevated at 6.9%, while sectors such as restaurants and retail are fraught with labour shortages. Structural changes in the labour force are afoot. Many former restaurant employees have moved on or are reluctant to return to jobs where virus contagion risks and poor working conditions. There was also a surge in early retirements during the pandemic and a dearth of new immigrants.
Concerning housing, the MPR says the following: “Housing market activity is anticipated to remain elevated over 2022 and 2023 after having moderated from recent record-high levels. Increased immigration, solid income levels and favourable financing conditions will support ongoing strength. New construction will add to the supply of houses and should help soften house price growth”.

This article was written and provided by our own Chief Economist Dr. Sherry Cooper

CLICK HERE to read the full article and of course if you want to chat more about it, please call us at 604-552-6190.

Fixed Rates Rising? Yes they are…

General Trish Pigott 19 Oct

There has been a lot of chatter in the markets over the past week about fixed rates rising.  This is mainly due to the government bond yields continuously rising which in turn will impact fixed mortgage rates.  While many are enjoying the benefits of ultra low rates since the start of the pandemic, we could expect to see rates rise with lenders over the next week.  We have already had notification from two major banks that fixed rates are rising, some effective late last week and some effective this week.  It’s only a matter of time that they all follow suit.

With that said, it doesn’t necessarily mean time to panic.  We are still at record low variable rate mortgages for those that are a little more comfortable with risk and would rather take advantage of savings and lower payments.  While no one has a crystal ball, each borrower needs to do what is best for you and your risk tolerance. The way to protect yourself?

1. Secure a pre-approval if you think you are about to purchase a property, either a principal residence or investment property.  This will protect you for 120 days while you shop for further increases.

2.  Request a lock in agreement from your lender if you are thinking of locking in your variable rate.  This generally protects you for 7-10 days while you decide what to do.

3.  Set your payments higher on your variable rate so you have more going to principal.  Often we will advise people to set their variable mortgage payment to a fixed rate amount to protect you from rising rates when the day comes.

We are here to chat anytime you need assistance or would like some guidance with your new or existing mortgage.


Types of Homes

General Trish Pigott 15 Oct

When it comes to finding your perfect home, there are so many more options for potential homeowners! From a single-family dwelling to a townhouse to a modular home, the choices are seemingly endless. Before you start widening your search, let’s take a look at what makes these home types different – and which one is perfect for you!


  • Single-Family Detached: This is a stand-alone house that sits on its own lot and is the most common type of home. As these are detached dwellings, they provide more privacy with less noise from neighbours. They also tend to be larger dwellings (complete with a yard!) which gives you the space and freedom to really make it your own.
  • Single-Family, Semi-Detached: These homes are suitable for a single family and are typically attached to another house on one side. Semi-detached homes are often more affordable to both buy and maintain. With this affordability does come somewhat less privacy and protection from noise due to the shared walls on one side.
  • Duplex: These structures contain two single-family units on separate levels and are great options for individuals looking to reduce home purchase and carrying costs – live in one unit, rent the second! This type of home also provides unique flexibility for older families, giving you the option to move adult children or aging parents into the second unit as needed. As expected, these units offer less privacy than single-dwelling homes and can sometimes have increased noise through the floor or ceiling.
  • Townhouse or Row House: These are a row of single-family homes, which are connected on both sides to the next home (excluding the end unit, which is only connected on one side). Townhouses typically have private yards but, in some cases, it may be freehold or condo-style with shared ownership rights and responsibilities. However, these homes are typically more affordable and easier to maintain, though you may have to consider strata or maintenance fees. Similarly to duplexes, these home types have less privacy and may have noise from shared walls.
  • Condominium: These are low- or high-rise buildings containing multiple apartment units. Condos are excellent starter homes for single adults, or couples, as they are affordable and require minimal maintenance. Some buildings even have shared amenities, such as a fitness center or swimming pool or party room. QUICK TIP: Always check for these amenities and if you would be interested in using them. If not, why pay for them? In this case, you might be better off finding a condo with less amenities and lower strata fees.
  • Modular or Mobile Home: Growing in popularity are modular homes, which are prefabricated homes delivered to a home-site for installation. These homes are owned by the individual, while the land it sits on could be rented or owned outright. These types of homes are highly affordable and extremely flexible; if you relocate, you can sell the mobile home with the property or keep the home and relocate it! If renting land in a mobile home community, there are also those costs to consider.
  • Carriage House or Urban Infill: A carriage house is located on the periphery of a single-family detached house. Similarly, are urban infill homes which are a modern solution to crowded cities. These homes are often located in interesting, urban environments and have their own character. They are also generally less expensive, but there is potential for noise pollution if you are in a busy location. Due to the size, there is also limited inventory and limited or non-existent yard space. But if you’re looking for something affordable and unique, these are a great option!

Finding the right home to suit your needs means considering your lifestyle and budget now, as well as where you’ll be a few years down the road. Want more information or need help deciding the best option for you? Contact me today to learn more about your options when it comes to buying and owning a home.


Mortgage Terminology: Breaking Down the Anatomy of the Mortgage Process

Mortgage Tips Trish Pigott 14 Oct

Buying a home is one of the most important financial decisions you will make. It’s common for a first-time homebuyer, or even someone who is experienced in the process, to feel overwhelmed when it comes to industry jargon.

To help you understand the process and have confidence in your choices, I have put together some of the more common mortgage terminologies you will encounter during the homebuying process! While I don’t expect you to read all of these now, I hope that this will be a helpful resource for you throughout your homeownership journey.

General Mortgage Terms

Amortization: The number of years that you take to fully pay off your mortgage (not the same as your mortgage term). Amortization periods are often 15, 20, or 25 years long.

Assuming a Mortgage: Taking over the obligations of the previous owner’s (or builder’s) mortgage when you buy a property.

Buy Down Rate: The portion of the interest rate on a buyer’s mortgage that you assume when they buy your home. If you’re selling your home and the prospective buyer doesn’t like the interest rate on their mortgage, you can offer to add a certain percentage of it onto your existing mortgage. You can add a maximum of 3%.

Closing Date: The date on which the sale of a property becomes final and the buyer takes possession of the property.

Down Payment: The money that you pay up front for a house. Typically range from 5%-20% of the total value of the home.

Home Insurance: Insurance to cover both your home and its contents (also referred to as property insurance). This is different from mortgage life insurance, which pays the outstanding balance of your mortgage in full if you die.

Inspection: The process of having a qualified home inspector identify potential repairs to the property you are interested in and their estimated cost.

Lump Sum Payment: An extra payment that you make to reduce the amount of your mortgage principal.

Mortgage: A loan that you take out in order to buy property. The collateral is the property itself.

Mortgage Life Insurance: This form of insurance pays the outstanding balance of your mortgage in full if you die. This is different from home or property insurance, which insures your home and its contents.

Pre-Approved Mortgage Certificate: A written agreement that you will get a mortgage for a set amount of money at a set interest rate. Getting a pre-approved mortgage allows you to shop for a home without worrying about how you’ll pay for it.

Offer to Purchase: A legally binding agreement between you and the person who owns the house you want to buy. It includes the price you are offering, what you expect to be included with the house, and the financial conditions of sale (your financing arrangements, the closing date, etc.).

Porting: Transferring an existing mortgage from one home to a new home when you move. This is known as a “portable” mortgage.

Pre-Payment: Repaying part of your mortgage ahead of schedule. Depending on your mortgage agreement, there may be a prepayment cost for pre-paying.

Refinancing: The process of paying out the existing mortgage for purposes of establishing a new mortgage on the same property under new terms and conditions. This is usually done when a client requires additional funds. The client may be subject to a pre-payment cost.

Renewal: Once the original term of your mortgage expires, you have the option of renewing it with the original lender or paying off all of the balance outstanding.

Term: The length of time during which you pay a specific rate on the mortgage loan (i.e., the number of years in your mortgage contract). This is different than amortization; mortgages are amortized over 20-25 years, with a shorter term (typically 6 months to 5 years). After the term expires, the interest rate is usually renegotiated with the lender.

Mortgage Types

Closed Mortgage: This type of mortgage must usually remain unchanged for whatever term you agree to. Prepayment costs will apply if you payout, renegotiate, or refinance before the end of the term.

Convertible Mortgage: These offer the same security as a closed mortgage, but allows you to convert that to a longer, closed mortgage at any time – without prepayment costs. Typically associated with fixed rate mortgages.

High-Ratio Mortgage: This is the mortgage obtained when you have less than 20% of the total purchase price to put down as your downpayment. These mortgages must be insured, typically through CMHC, Genworth Financial or Canada Guaranty.

Open Mortgage: This type of mortgage may be repaid, in part or in full, at any time during the term without any prepayment costs.

Rate Types

Fixed Rate Mortgage: An interest rate that does not change during the entire mortgage term.

Variable Rate Mortgage: An interest rate that will fluctuate in accordance with the prevailing market prime rate during the mortgage term.

Mortgage Rate: The percentage interest that you pay on top of the loan principal. For example, you may take out a mortgage of $100,000 at a rate of 12%. Your monthly payments will consist of a portion of the original $100,000, plus 12% interest.

Closing Costs

These are costs that are in addition to the purchase price of a property and which are payable on the closing date, such as the following:

Appraisal: The process of determining the lending value of a property. There is usually a fee to have an appraisal done.

Interest Adjustment: The amount of interest due between the date your mortgage starts and the date the first mortgage payment is calculated from. Sometimes there is a gap between the closing date of your home purchase and the first payment date of your mortgage, so an extra payment may be required to cover this. The payment is generally due on your closing date. You can avoid all this by arranging to make your first mortgage payment in exactly one payment period (e.g., one month) after your closing date.

Land Transfer Tax: Tax that is levied (in some provinces) on any property that changes hands.

Legal Fees and Disbursements: Some of the legal costs associated with the sale or purchase of a property. It’s in your best interest to engage the services of a real estate lawyer (or a notary in Quebec).

Prepaid Property Tax and Utility Adjustments: The amount you will owe if the person selling you the home has prepaid any property taxes or utility bills. The amount to reimburse them will be calculated based on the closing date.

Property Survey: A legal description of your property and its location and dimensions. An up-to-date survey is usually required by your mortgage lender. If not available from the vendor, your lawyer can obtain the property survey for a fee.

Sales Taxes: Taxes applied to the purchase cost of a property. Some properties are sales tax exempt (GST and/or PST), and some are not. For instance, residential resale properties are usually GST exempt, while new properties require GST. Always ask before signing an offer.

If you are looking to purchase a new home (or your first one!), please don’t hesitate to reach out to me directly to set up a phone call to discuss your needs. I would be happy to help you find the best mortgage to suit your needs!


Refinancing – Process, Consideration, and Benefits

Mortgage Tips Trish Pigott 13 Oct

Refinancing your mortgage refers to the process of renegotiating your current mortgage agreement for a variety of reasons. Essentially, refinancing allows you to pay off your existing mortgage and replace it with a new one.

There are a variety of reasons to consider mortgage refinancing, such as wanting to leverage large increases in property value, taking out equity for upgrades or renovations, expanding your investment portfolio, consolidating debt, getting a better rate, paying for post-secondary education, managing a divorce or changing your mortgage from fixed to a variable (or vice-versa).

Refinancing allows you to access up to 80% of your home’s equity. This can help with reducing financial stress and getting you back on track for your financial future, while still allowing you to manage your current needs. Beyond helping you get a better financial footing, refinancing has additional benefits including:

  1. Access a Better Rate: One reason to refinance your mortgage is to get a better rate – this is especially true when done through a mortgage professional such as myself. On average, I have access to over 90 lenders! This allows me to find the best mortgage product for your unique needs.
  2. Consolidate Debt: There are many different types of debt from credit cards and lines of credit to school loans and mortgages. But, did you know that these types of debt have much higher interest rates than those you would pay on a mortgage? Refinancing can free up cash to help you pay out these debts! While it may increase your mortgage, your overall payments could be far lower and would be a single payment versus multiple sources. Keep in mind, you need at least 20 percent equity in your home to qualify.
  3. Modify Your Mortgage: Life is that it is ever-changing and sometimes you need to pay off your mortgage faster or change your mortgage type. Refinancing can help with this too!
  4. Utilize Your Home Equity: If you need funds, you can refinance your mortgage to access up to 80% of your home’s appraised value!

As with everything, refinancing comes at a price! If you think that refinancing your mortgage could be the right solution, it is important to talk to us before making any changes to ensure you are not hit with surprise penalties. Talking to a mortgage broker about refinancing also ensures expert advice, plus access to even greater rates and mortgage plans to best suit your refinancing goals.

Mortgage Toolbox Calculator

General Trish Pigott 12 Oct

Part of trying to be the best team we can for our clients is staying aware of what questions can we easily answer and help with. The biggest topic we see searched is for mortgage calculators. We have an app that can help with that!

The My Mortgage Toolbox application was designed to make it simple for people like you to manage the mortgage process and access all the information you need!

Some of the great features included in this pocket-sized mortgage toolbox are:

  • Payment Calculator
  • All Possible Payment Frequencies
  • Historical rates
  • Stress Test Rules and Qualification
  • Minimum Down Payment Calculator
  • Total Monthly Ownership Calculator
  • Closing Cost Calculator
  • Affordability Calculator
  • Maximum Loan Calculator
  • Extra Payments Calculator
  • Beautiful graphs and illustrations
  • And more!

To download this app, you can visit My Website and click on the app link. You can also download it directly from the Apple App Store or Google Play.

If you have any questions, please let me know!

Is Your Mortgage Portable?

Mortgage Tips Trish Pigott 6 Oct

Selling your current home and moving into a new one can be stressful enough, let alone worrying about your current mortgage and whether you’re able to carry it over to your new home.

Porting enables you to move to another property without having to lose your existing interest rate, mortgage balance and term. And, better yet, the ability to port also saves you money by avoiding early discharge penalties.

It’s important to note, however, that not all mortgages are portable. When it comes to fixed-rate mortgage products, you usually have a portability option. Lenders often use a “blended” system where your current mortgage rate stays the same on the mortgage amount ported over to the new property and the new balance is calculated using the current interest rate.

With variable-rate mortgages, on the other hand, porting is usually not available. As such, upon breaking your existing mortgage, a three-month interest penalty will be charged. This charge – which can be a surprising $1,500-$4,000 penalty at closing – may or may not be reimbursed with your new mortgage.


Porting Conditions


While porting typically ensures no penalty will be charged when you sell your existing property and buy a new one, some conditions that may apply include:

  • Some lenders allow you to port your mortgage, but your sale and purchase have to happen on the same day. Other lenders offer a week to do this, some a month, and others up to three months.
  • Some lenders don’t allow a changed term or force you into a longer term as part of agreeing to port you mortgage.
  • Some lenders will, in fact, reimburse your entire penalty whether you are a fixed or variable borrower if you simply get a new mortgage with the same lender – replacing the one being discharged. Additionally, some lenders will even allow you to move into a brand new term of your choice and start fresh.
  • There are instances where it’s better to pay a penalty at the time of selling and get into a new term at a brand new rate that could save back your penalty over the course of the new term.

While this may sound like a complicated subject, your mortgage professional will be able to explain all of your options and help you select the right mortgage based on your own specific needs.


Mortgages On Leasehold Property

General Trish Pigott 5 Oct

Have you been considering purchasing a home on a leasehold property? Living in Vancouver the market can be expensive, this is an option to owning with a smaller purchase price. There are drawbacks to this route. Like anything its always good to read the fine print.

A leasehold property means that the owner owns the house/townhouse/condo itself but not the land it is built on. That land is leased to the home owner by the land owner. Leasehold land is basically a plot of land that has been rented out to a developer, who then builds on the land and rents the property for a certain sum of money (or a portion of it as with an apartment building or condo). The leases on the plots of land are typically for extended periods of time (think up to 100 years or more), very often pre-paid up front, and often belong to either the City, or in many cases a corporation, a University or are First Nations Reserve lands.

Can I Get a Mortgage on a Leasehold Property?

Unfortunately there is no easy answer to this question. Generally speaking, however, leaseholds are more challenging. To begin with, most lenders will not approve a mortgage for a term or an amortization that is longer than the lease itself, which, depending on the lease’s expiration date can be problematic.

Any time the property is not a freehold strata there will be limits, but some lenders will be more open to the possibility. Your options will be reduced for a First Nations reserve leasehold, and private leaseholds are the most challenging. In many cases the only option may be a private lender but even that is not a guarantee.

When looking for mortgage on a leasehold property, the lender will look at everything: income, credit score, down payment, and of course the property itself. Because leasehold land is less expensive than freehold land for similar properties, you may be able to find homes in areas where you would not have been able to find anything similar at that same price point.

If you choose a leasehold property, you will be limited as to the lenders and mortgage rates. But to put things into perspective, as with any home that you buy there will be lenders that like it and lenders that won’t.

Read the fine print, make sure you know what you’re getting yourself into. We are always available to answer more questions on this topic.


Subject Free Offers and Risks

General Trish Pigott 1 Oct

With multiple offers and bidding wars now the new norm, our clients find themselves, in the heat of the experience, contemplating a subject-free offer.


Most of our clients are totally qualified. They have well established careers and businesses, amazing credit ratings, large down payment funds, etc. They are the type of clients who will almost certainly receive mortgage financing… no problem!

But there’s often an unanticipated hitch: the property itself.

No banker or Broker can give a client 100% assurance of financing without factoring in the actual property details. Until an appraisal is reviewed and approved, the application is not complete. There are some properties that some lenders simply will not lend against.

There are the obvious examples that lenders tend to exclude;

  • Properties containing Asbestos, Aluminium wiring, Underground Oil tanks
  • Re-mediated former grow-ops
  • Re-mediated drug labs.

There are also less obvious ones;

  • live-work units
  • row-homes (attached non-strata properties)
  • properties smaller than 450 sq ft
  • properties on lease land, Government, First Nations, or Private.

When it comes to the appraisal process, there is more than the value to be considered.

Another major piece of the appraisal lenders look at is the ‘Remaining Economic Life or REL’ (as opposed to the ‘physical life’) of the home. This refers to how long this specific house is likely to remain standing on this property under the current care it is receiving.

Example: We have a perfectly habitable home for decades to come ─ lots of remaining ‘physical life’. The problem is that lenders are looking for remaining ECONOMIC life rather than the remaining physical life. The question is not “How long can that house be standing there?” it is “How long does it make economic sense for that house to be standing there given current market conditions?”

What if it is located in a neighbourhood where lots of the homes around it are older homes that are being purchased to be demolished and replaced with multimillion dollar homes. That could be a problem.

The REL is calculated by subtracting the Effective Age from the Total Economic Life.

65 years – 30 years = 35 years Remaining Economic Life (REL)

FEW lenders will lend on a home with a remaining REL of less than 15 years. Also, the effective amortization will be set at the REL minus five years, which drives payments sky high, and often leaves client unable to qualify for such large mortgage payments should they even want to sign on for them.

Clients would be wise to also minimize risk, by either writing offers that contain a ‘subject to inspection’ and a ‘subject to financing’ clause, or by having a conversation with one of us well in advance of writing a subject-free offer.