As you may have heard, The Bank of Canada’s policy rate was 5% as of September. The recent rate hikes over the spring and summer have slowed the housing and mortgage markets as the rise in mortgage rates unsurprisingly spooked potential buyers. More recently, fixed-rate loans have become more expensive because of the increase in longer-term interest rates. As a result, housing affordability became a more significant hurdle and led to a slight decrease in home prices by 6% in major markets over the summer.

With The Bank of Canada currently maintaining the 5% policy rate, many hope this will be the peak in overnight rate changes. If so, homeowners and potential buyers will be granted some breathing room. We will find out more with their upcoming announcement on October 25th.

Analysts forecast stronger housing markets as we turn the corner into Fall and start looking ahead to the coming year. The expectation is that The Bank of Canada will gradually cut interest rates by mid-year, allowing potential buyers to navigate their affordability better.

As the supply shortage continues, new listings will likely rise and provide much-need inventory. As we move into 2024 and see interest rates decrease, motivated sellers will roll off the sidelines, and housing demand is expected to be resilient.

For anyone thinking about purchasing this season, getting pre-approved to guarantee your interest rate for 90-120 days while you shop the market is essential. This way, you will avoid being impacted by potential rate changes and can adequately estimate your budget for mortgage costs. Plus, pre-approval will indicate to the seller that you will be fine with obtaining financing (assuming nothing changes between now and the purchase with your job, savings, etc.), which is crucial during the current economic landscape.

To help you make the best decision possible, download the My Mortgage Toolbox app to determine what you can afford, and what your mortgage would look like at various interest rate levels.

If you are looking for mortgage assistance or would like to start the pre-approval process, you can email us at support@primexmortgages.com, or you can book a call with Trish!

Trish & The Primex Team!

Financial independence is a critical skill for future success that your children will not learn anywhere else. Not only does financial literacy help your children have more success in life, but it allows them to move out sooner, and it avoids delaying your retirement with additional expenses to support them.

So, how do you teach your children about money?

1. Review Your Attitude Towards Money: The first and most important thing is to examine your attitude towards money. Are you a penny pincher? Frivolous spender? Do you buy impulsively or take a long time to make a purchase? How much debt do you have? Your financial habits will shape your children. Parents need to consider what messages they are sending with their money habits to ensure they are setting them up for their best financial future.
2. Give Your Children an Allowance: Providing an allowance to your children (especially one in exchange for chores) is an age-old way of teaching your kids about money. A good guideline is $1.00 per year for your child’s age. For a 10-year-old, this would be $10 per week.
3. Teach Your Child to Save: If you give your child $10 per week in allowance for chores, encourage them to put even just $1 per week into a piggy bank. In six months, show them how much money they have saved and discuss why it is essential and what they can do with that larger amount now.
4. Encourage Kids to Think Before They Buy: While getting a 10-year-old excited about an RRSP is hard, there are other ways to help them plan ahead. One is to encourage them to think about their purchases before they commit. They saw a toy on TV and have to have it – teach them how advertisements are designed to make you want something. Ask them to wait a week. Do they still want it?
5. Involve Your Children in the Family Finances: It is more valuable than you might think to let your kids see and hear you discuss financial planning; let them be part of opening and paying bills or planning vacations. Explain why and how much you pay for certain things and discuss affordable choices. This helps them be part of the conversation and will work to instill a sense of financial responsibility as they grow up.
6. Teach Your Children about Price Awareness: When at the grocery store, show your children the price difference between two products that should be the same. Because children aren’t thinking about costs, they typically don’t look since mom and dad are buying! Involve your kids with the budget, and ask them if they know the price of whichever toy or snack they want. For example, Shampoo. Drug store shampoo can range from $5 to $30, with all different quantities. While a low price might not always be the best quality choice, show your kids the value pack price vs. regular Shampoo.

Remember, you are the best example to your children about money. Don’t be afraid to share the ups and downs with them. Be patient with your kids, but don’t give up! The best thing you can do as a parent is to promote financial security and independence.

Trish & The Primex Team

Today the Bank of Canada announced a pause in their rate hikes, leaving its policy unchanged. Which also means no change to current mortgage payments if you have a Variable Rate Mortgage.

The central bank followed this announcement with a statement, saying that they are “prepared to increase the policy interest rate further if needed.” which will be data dependent and we have two more rounds of reporting to come before our next announcement on Oct. 25, 2023

Canada’s annual inflation rate ticked back up to 3.3% in July from its 2.8% the month before. The Bank of Canada warned that they expect inflation to be higher in the near term thanks to rising gasoline prices.

The Q2 slowdown in output reflected a “marked weakening in consumption growth and a decline in housing activity, as well as the impact of wildfires in many regions of the country. Household credit growth slowed as the impact of higher rates restrained spending among a wider range of borrowers.

Canada’s labour market has also lost some of its steam: the unemployment rate has been on the rise for three consecutive months.

BMO chief economist Douglas Porter said the Bank of Canada’s decision to hold its key rate was widely expected given recent weak economic data, and the focus now turns to what the central bank might do next.

Porter says economic growth will likely continue to stall over the next few quarters, making a recession a possibility.

“We might not fall into the official recession definition, but it’s going to be a close run for sure,” Porter said.

Financial struggles brought on by inflation and higher interest rates are damaging the mental health of more than half of Canadians, with many reporting high rates of anxiety over housing and food, according to a poll released Wednesday by Mental Health Research Canada, a charitable organization. Almost a quarter of respondents – 24 per cent – said they have gone into debt as a result of inflation. Meanwhile, 23 per cent said they are concerned about their ability to make rent or mortgage payments, while 37 per cent are struggling to adequately feed themselves and their families.

Are you struggling to make payments? Let’s chat, we can review your current mortgage and situation and see if we can make any adjustments to bring ease back into your life.

604-552-6190

support@primexmortgages.com

Trish & The Primex Team