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First Bank of Canada Announcement of 2025
General Trish Pigott 12 Feb
General
Energy Efficiency Rebate: A Hidden Benefit
General Trish Pigott 25 Nov
Did you know about these valuable opportunities for buyers of New Construction property with an Insured Mortgage?
Energy Efficiency Refund: A Hidden Benefit
Clients securing an insured mortgage for a new build with energy-efficient certification are eligible for a 25% refund on the default insurance premium.
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In British Columbia:
Most new builds must meet BC Energy Step Code requirements as of May 1, 2023, which means nearly all qualify for this refund. -
Surprising Stats:
75% of eligible buyers don’t apply for this refund—often because they aren’t informed or their broker hasn’t advised them.
Buyers have two years from the mortgage start date to apply, and the program is offered by CMHC, Sagen, and Canada Guaranty. If you bought a new construction property in the past 2 years and paid for mortgage default insurance, you may still have time to apply.
Why This Matters Now
The 30-year amortization option for first-time homebuyers (FTHBs) purchasing new builds took effect on August 1, 2024. This aligns perfectly with the refund program, as buyers may be more likely to purchase energy-efficient properties.
This program applies to all buyers—not just FTHBs—purchasing energy-efficient new builds with insured mortgages.
Resources for Applying
It’s easy to apply, and refunds are processed quickly. Below are direct links to insurer information and applications:
- CMHC – 25% Partial Premium Refund
- Sagen – Energy Efficient Housing
Program - Canada Guaranty – Energy-Efficient Advantage
If you have any questions or need further assistance, feel free to reach out to us at the office.
Thank you to our partners at MCAP and Lisa for sharing this important reminder to our clients.
Tips to Pay off Your Mortgage Faster
Mortgage Tips Trish Pigott 25 Sep
Paying off your mortgage faster in Canada can save you a significant amount in interest and help you become debt-free sooner. Here are the top 5 tips to achieve that:
1. Make Biweekly Payments
Instead of making one monthly payment, switch to biweekly payments. This results in 26 half-payments, which equals 13 full payments each year instead of 12. That extra payment can significantly reduce the interest over time.
2. Pay Extra Toward the Principal
Whenever you can, make extra payments that go directly toward the principal balance. Even small additional amounts such as $100 can have a huge impact, especially if done consistently over the life of the loan. Usually you can make lump sum payments up to 15-20% of your original mortgage amount without penalty.
3. Refinance to a Lower Interest Rate
Refinancing from a higher rate to a lower rate can significantly reduce the interest paid over time. Although you may have to pay a penalty to change the mortgage, often you will save and pay less interest in the long run.
4. Round Up Your Mortgage Payment
Round up your regular mortgage payment to the next $100. For instance, if your bi-weekly payment is $1321, round it up to $1400. Chances are you won’t even remember you did it a month later and that extra amount goes straight to principal.
5. Shorten the Amortization Period
When your mortgage renews, try to shorten the length of your amortization period (e.g., from 25 years to 23 or even 20 years) can dramatically lower the total interest paid and get you mortgage-free faster.
By following these strategies, you can minimize interest and accelerate the path to being mortgage free faster!
Bank of Canada Rate Cut – September 2024
General Trish Pigott 4 Sep
Excellent news as we wrap up summer, the Bank of Canada (BoC) has cut rates again this morning by another .25%. This change affects Variable Rate Mortgage holders and anyone with loans attached to the banks Prime Rate.
Lots of news today. Both in Canada and the US. Both the 5-year Gov’t of Canada bond yield and the 10-year US Treasury are down this morning on all this news (this affects the Fixed Rate Mortgage Market). Good news on adjustable and variable rates in Canada and potentially (hopefully) fixed rates down the line.
Let’s start with Canada. As expected, the Bank of Canada lowered to 4.25%, which translates into a 6.45% Prime. Canada’s imports are down over $1 billion in July. Less imports = less stuff, translates into less discretionary spending. 60% of Canada’s economy is the consumer and when they’re buying less, that translates into potential job losses down the line.
Monetary policy remains restrictive. While the target overnight rate is now 4.25%, core inflation is only roughly 2.4%. Real interest rates remain too high for the economy to reach its potential growth pace of about 2.5%. Weaker growth implies a continued rise in unemployment and excess supply in other sectors.
Now down south; the US released data showing that US job openings fell to their lowest level since January 2021, consistent with other signs of slowing demand for workers. US job growth has been slowing, unemployment is rising, and job seekers are having greater difficulty finding work, fueling fears about a potential recession. Federal Reserve policymakers have made it clear they don’t want to see further cooling in the labour market and are widely expected to start lowering interest rates at their next meeting in two weeks.
In other news, consistent with a global economic slowdown, oil prices have plunged to new 2024 lows. Weak oil prices are a sign of lower inflation, growth and mortgage rates.
Does this affect Fixed Rates? Bonds rallied in the wake of the disappointing US data, taking the 5-year government of Canada bond yield down to a mere 2.89%, well below the 3.4% level posted when the Bank of Canada began cutting interest rates in June. This decline in market-driven interest rates reduces fixed-rate mortgage yields again resulting in lower fixed mortgage rates.
In summary, today’s cut in the overnight rate will be followed soon by a 25 basis point (.25%) reduction in the prime rate to 6.45%, reducing variable and adjustable mortgage rates as well. This puts a Variable Rate Mortgage today somewhere around 5.65% to 5.45% depending on lender and product.
Looking forward…..The Bank of Canada has two more decision dates this year: October 23 and December 11. At those meetings, the Bank is widely expected to continue its quarter-point rate cuts, taking the overnight rate down to 4.0% at yearend and 2.75% next year. This is welcoming news to all new and current mortgage holders.
And some more information for those that love this topic from our partners at First National Financial
We summarize the Bank’s rationale for this decision by summarizing its observations below, including its forward-looking comments for signs of what may happen next.
Canadian inflation
- As expected, inflation slowed further to 2.5% in July
- The Bank’s preferred measures of core inflation averaged around 2.5%
- The “share of components” of the consumer price index are growing above 3%, roughly at their historical norm
- High shelter price inflation is still the biggest contributor to total inflation but is starting to slow. Inflation also remains elevated in some other services
Canadian economic performance and outlook
- In Canada, the economy grew by 2.1% in the second quarter – led by government spending and business investment – and this rate was “slightly stronger” than forecast in July, but preliminary indicators suggest that economic activity was soft through June and July
- The Canadian labour market continues to slow, with little change in employment in recent months. Wage growth, however, remains elevated relative to productivity
Global economic performance and outlook
- The global economy expanded by about 2.50% in the second quarter, consistent with projections in the Bank’s July Monetary Policy Report
- In the United States, economic growth was stronger than expected, led by consumption, but the labour market has slowed
- Euro-area growth has been boosted by tourism and other services, while manufacturing has been soft
- Inflation in both regions continues to moderate. In China, weak domestic demand weighed on economic growth
- Global financial conditions have eased further since July, with declines in bond yields. The Canadian dollar has appreciated modestly, largely reflecting a lower US dollar. Oil prices are lower than assumed in July
Summary comments and outlook
In making today’s decision, the Bank noted that excess supply in the economy continues to put downward pressure on inflation, while price increases in shelter and some other services are holding inflation up. As a result, Governing Council is “carefully assessing” these opposing forces on inflation. Monetary policy decisions will be guided, therefore, by incoming information and the Bank’s assessment of the implications for the inflation outlook.
And has it has been doing for some time, the Bank said it “remains resolute” in its commitment to restoring price stability for Canadians.”
Feel free to contact me anytime directly to chat about all things mortgages at 604-729-7940
Bank of Canada Rate Cut ~ July 2024
General Trish Pigott 24 Jul
Today the Bank of Canada lowered it’s Overnight Target rate to 4.50% offering a little bit more relief to Canadian consumers suffering under the weight of high mortgage rates and other borrowing costs. This puts us back to what the rate was in June 2023.
Here’s a few quick highlights I have summarized from a variety of our economists reporting this morning that led to the BoC decision today:
- The BoC commented that inflation would be less than 2% if it weren’t for the high mortgage interest and shelter costs – this is a good sign as we are getting closer to where they are comfortable
- Manufacturing sales in Canada plummeted -2.6%, another example of why lower rates will help a struggling economy
- Economic growth “likely” picked up to about 1.5% through the first half of 2024, however with population growth of about 3%,the economy’s potential output is still growing faster than GDP which means excess supply has increased
- Household spending is weak
- Unemployment rates are rising to 6.4% and taking job seekers longer to find work
- Residential investment is expected to grow robustly
- New government limits on admission of non permanent residents should slow population growth in 2025
- Shaves about $15 off monthly payments on your typical new 25-year amortized variable-rate mortgage, per $100,000 borrowed
- Next announcement is September 4, 2024
Fixed rates are still anywhere from .75% to .90% less than the Variable today so most are still choosing fixed rates which are not necessarily impacted by the Bank of Canada announcements. Fixed Rates are driven by the bond market which did fall a bit further today so Fixed Rates are trending downward because of this. Here is a snapshot of how the two have played out for the past 15 years.
Feel free to contact me anytime directly to chat about all things mortgages at 604-729-7940
Prepare your Grad with Financial Knowledge
General Trish Pigott 5 Jul
Financial Tips for Recent Graduates: Managing Money After School Ends
Whether you are a post secondary graduate or a high school graduate, it’s never too early to gain financial knowledge to build a bright future. As a graduate, you’ve endured years of hard work, late-night study sessions, and perhaps a few too many instant noodles.
As you step into the “real world,” one of the most crucial skills you can develop is financial literacy. Here are some tips to help you navigate the exciting yet challenging journey toward financial independence.
1. Create a Budget and Stick to It
The cornerstone of financial stability is creating a budget. Start by listing all your income sources, whether from your job, side hustles, or any other avenues. Next, list all your expenses, including rent, utilities, groceries, transportation, student loans, and entertainment.
Once you have a clear picture of your income and expenses, allocate your money accordingly. Aim to save at least 20% of your income and allocate the rest to your costs. Apps like Mint or You Need a Budget (YNAB) can help you track your spending and stay within your budget.
2. Build an Emergency Fund
Life is unpredictable, and unexpected expenses can arise when you least expect them. Building an emergency fund to cover these unforeseen costs is crucial without dipping into your savings or turning to credit cards.
As a rule of thumb, aim to save three to six months’ worth of living expenses in your emergency fund.1 Start small if you need to, but make consistent contributions until you reach this goal. Consider opening a high-yield savings account separate from your checking to reduce the temptation to spend this money.
3. Tackle Student Loans Strategically
If you have student loans, you’re not alone; but if you don ‘t have student loans at this point but plan on it, start by understanding the details and the process. This includes interest rates, repayment plans, and grace periods. Then, create a plan to pay them off efficiently without sacrificing your financial well-being. Every graduate’s repayment plan may look different depending on their financial situation, but staying on top of this debt is important.
4. Start Saving for Retirement
Retirement might seem like a lifetime away, but the earlier you start saving, the more time your money has to grow. If your employer offers a RRSP program or employee stock option plan, take advantage, especially if they match contributions.
Consider opening an Tax Free Savings Account or a First Home Savings Account if a workplace plan is unavailable. This will allow you to save your money and withdraw it tax free.
5. Set Financial Goals
Having clear financial goals gives you direction and motivation. Whether it’s saving for a down payment on a house, traveling the world, starting a business, or retiring early, define your goals and create a plan to achieve them.
Break down your goals into small, manageable steps. Celebrate milestones along the way, and don’t be afraid to adjust your plan as life circumstances change. Regularly reviewing your goals keeps you accountable and focused on your financial journey.
6. Seek Professional Financial Advice When Needed
While educating yourself is crucial, don’t hesitate to seek professional financial advice when needed. A financial advisor can provide personalized guidance based on your unique situation and help you pursue your financial goals. If you want to purchase a home in the future, work with a Mortgage Broker now to find out how to prepare. Speak to Realtors to understand real estate and how the market works. You are never too young to start learning these things and the younger you are and learn them, the more financially stable you will be in the future.
This is often the most neglected topic that new graduates learn or focus on yet it can have the biggest impact on their entire future. The choices made today will shape the financial landscape tomorrow.
If you would like recommendations for professionals listed above, call our office, we work with the best. 604-552-6190
Mortgage Renewals in 2024
General Trish Pigott 12 Jun
Canadians are leaving money on the table by not negotiating their mortgage renewal rates. Why? Most likely because they do not have a professional representing them.
In the face of higher costs more Canadians are changing their grocery shopping habits, hunting for bargains, and switching to lower-cost brands — yet many are leaving money on the table when it comes to their single largest transaction, their mortgage.
According to a recent survey conducted by Mortgage Professionals Canada, homeowners are doing less haggling at renewal, despite most facing higher interest rates. The study found that 41% of borrowers accepted the initial rate offered by their lender, up from 37% two years ago. Furthermore, just 8% say they “significantly” negotiated their rate at renewal, down by half since 2021, when 16% haggled aggressively.
Part of our job as your Mortgage Broker is to negotiate those rates on your behalf and there is no cost to you as the home owner. Generally we will review what your bank is offering you, negotiate with them to ensure you are receiving the best rates in the market and if your lender does not come to the table, then we will arrange a new mortgage for you with a lender that wants your business.
I find it truly unethical that a bank rewards it’s customers for their past years of business by not offering them the best rates available and better yet, rates they are offering new customers. It’s like they are punishing home owners for being loyal clients. More often than not, banks are offering higher rates in hopes that you sign on the dotted line without negotiating and everyone just moves on. Then if you do ask for a better rate, they get you to go find out what the competitors are doing and then “maybe, just maybe” they will match the rate.
Leave the haggling to us, let us shop the market and let us do the leg work to ensure you finding the best rate possible for your next mortgage term. A bit more on mortgage renewals;
When renewing your mortgage, you have a few different options to consider;
- Renewing your current balance and amortization (total time left on your mortgage) with your current lender into what ever rate they are offering you, and not making any changes at all. This does not require re-qualification in most cases.
- Renew with a *new* lender, keeping your current balance and remaining amortization the same, but shopping the mortgage with all lenders for best rates in the market. This is the same process of a new mortgage and requires re-qualifying.
- Refinance (means changing the mortgage amount and/or amortization) at best rates in the market which involves seeing a lawyer or notary. Most commonly done when accessing equity to renovate, consolidate debts or make another large purchase. This process requires re-qualifying.
Renewal Timeline:
- 6 months before – we update your file with your current employment and financial situation so that once we are within the 4 month timeline to hold rates, we have all accurate information on file to make the process easier
- 6 months before – we start discussing if there are any potential changes you want to make to your current mortgage as well as your current cash flow
- 4 months before – we can hold a new rate for you with the best lender and rates in the market. This is important as the rate market is so volatile that there can be drastic differences (nearly 2%) by securing a rate early vs leaving it to the last minute. Even though we have a rate held for you, we will continue to then monitor all other banks and if rates come down lower than what we have held with any other lender, we will secure that rate as well so you are protected
- 2 months before your maturity date, we will ask you to obtain or we will request on your behalf, what your current lender is going to offer you so we can compare it to what we have held for you
- 30 days before your maturity date you should have made your decision with what route to go as it does take time to either switch your current mortgage to the new lender or refinance your mortgage. Leaving it to the last minute leaves you at risk of missing on out on previous rate holds or having to accept whatever your current lender offers you
- Reminder: we have room for negotiation with either a new lender or your current in getting the most competitive rate for you
- If we did NOT arrange your current mortgage and would like our help with your upcoming renewal, please reach out to our office
6 Key benefits of have us handle your mortgage renewal for you:
- Full product and lender review across all banks
- Expert advice and individual mortgage strategy developed based on your personal situation
- Rate negotiation on your behalf
- Zero cost for our services
- Full VIP service at our office rather than be treated like a number
- Accessibility, we are available by phone, text or email 7 days a week
CLICK HERE to book a call to discuss your upcoming mortgage renewal. Remember to do this at least 4 months in advance of your mortgage maturity.
If you want to receive regular updates about the mortgage market, join hundred of homeowners who trust our newsletter to keep them informed by CLICKING HERE.
New 30 Year Amortization for First Time Buyers
General Trish Pigott 11 Jun
Calling all First Time Home Buyers! Did you know that as of August 1, 2024, you will be eligible for a 30 year Amortization when you have less than 20% down? Today the maximum time frame is 25 year amortization so this is a big help for affordability.
The example below is based on a new purchase price including GST of $816,900, with the minimum down payment and a rate based on 5.34% for a 3 year fixed rate.
To get a 30-year insured amortization:
- At least one of the borrowers on the application must be a first-time home buyer, meaning they meet one of the following criteria:
- The borrower has never purchased a home before;
- In the last 4 years, the borrower has not had a principal residence that either they or their current spouse or common-law partner owned; or,
- The borrower recently experienced the breakdown of a marriage or common-law partnership.
- The new home must not have been previously occupied for residential purposes. (Note: This does not exclude new condos that have had an interim occupancy period.)
- The mortgage must be high-ratio insured (20% down payment or less)
- This measure applies only to mortgage applications on or after August 1, 2024
- The difference in the insurance premium is minimal and can be added to the mortgage. There is a .20% premium added to the current insurance premium
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A 30 year Amortization results in roughly $200-$300 per month in a lower payment depending on mortgage amount
Like any new government initiated program, details will unfold as we get closer to the roll out date and we will continue to report on it
If you would like more information or to see how you specifically can benefit from this, please reach out to our office.
June 2024 Rate Announcement
General Trish Pigott 5 Jun
From our partners at First National Financial, here is some insight on the Bank of Canada announcement and rate drop.
Today, the Bank of Canada reduced its overnight policy interest rate by 0.25% to 4.75%. This welcome and widely expected decision comes on the heels of evidence pointing to a deceleration of the rate of inflation.
We examine the Bank’s rationale for this move by summarizing its observations below, including its all-important outlook comments that are sure to shape market expectations for the remainder of the year.
Canadian inflation
- Inflation measured by the Consumer Price Index (CPI) eased further in April to 2.7%
- The Bank’s preferred measures of core inflation also slowed and three-month indicators suggest continued downward momentum
- Indicators of the breadth of price increases across components of the CPI have moved down further and are near their historical average,
- however, shelter price inflation remains high
Canadian economic performance and housing
- Economic growth resumed in the first quarter of 2024 after stalling in the second half of last year
- At 1.7%, first-quarter GDP growth was slower than the Bank previously forecast with weaker inventory investment dampening activity
- Consumption growth was solid at about 3%, and business investment and housing activity also increased
- Labour market data show Canadian businesses continue to hire, although employment has been growing at a slower pace than the working-age population
- Wage pressures remain but look to be moderating gradually
- Overall, recent data suggest the economy is still operating in excess supply
Global economic performance and bond yields
- The global economy grew by about 3% in the first quarter of 2024, broadly in line with the Bank’s April Monetary Policy Report projection
- The U.S. economy expanded more slowly than was expected, as weakness in exports and inventories weighed on activity
- In the euro area, activity picked up in the first quarter of 2024 while China’s economy was also stronger in the first quarter, buoyed by exports and industrial production, although domestic demand remained weak
- Inflation in most advanced economies continues to ease, although progress towards price stability is “bumpy” and is proceeding at different speeds across regions
- Oil prices have averaged close to the Bank’s assumptions, and financial conditions are little changed since April
Summary comments and outlook
The Bank cited continued evidence that underlying inflation is easing for its decision to change its policy interest rate. More specifically, it said that “monetary policy no longer needs to be as restrictive.”
Also welcome was the Bank’s statement that “recent data” have “increased our confidence that inflation will continue to move towards” its 2% target.
However, it also added this to its outlook: “Nonetheless, risks to the inflation outlook remain. Governing Council is closely watching the evolution of core inflation and remains particularly focused on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour.”
And has it has been doing for some time, it said the Bank “remains resolute in its commitment to restoring price stability for Canadians.”
Next up
The Bank returns on July 24th with its next monetary policy announcement.
What Will the Bank of Canada do on June 5, 2024?
General Trish Pigott 4 Jun
Home owners and real estate and mortgage professionals have all been waiting patiently for the past two years for some relief in interest rates and June 5, 2024 may be our lucky day!
Last Fridays reporting on GDP (gross domestic product) came in at a disappointing number for the Bank of Canada (BoC) at 1.7% with an expectation of 2.2% This signals a weakened economy in simple terms. This along with all other data collected over the past few months such as inflation and employment, is what we have been waiting for to have enough of an impact to trigger our first rate drop.
Keep in mind, this weeks rate announcement if it does drop, will only affect the Variable Rate mortgage holders or anyone with a loan attached to Canada’s prime rate of 7.20%. We may see that come down to 6.95% if we are all lucky. After Friday’s announcement on GDP, 75% of economists are predicting a rate cut, up from 66% last Thursday.
The Fixed rates are affected by the Bond market which did see a drop in as well with Friday’s news so we could potentially see fixed rates being affected tomorrow as well but we will report more on that on June 5th.
So many home buyers are waiting on this announcement before making any sort of move but what some are forgetting is that the minute we see a slight reduction in rates, the market will pick up steam and offers become more competitive and often end up over asking. So if you are waiting to see, be reminded that there is no time like the present as today you could be the only offer yet as soon as rates drop, there will most likely be many more home shoppers out there costing you a lot more in purchase price than the slight difference in rate.
Here’s a few quick reminders;
- If rates drop by .25% next week, it means about $16 per month for $100,000 in mortgage
- Most home buyers and home owners are choosing the 3 year fixed rate right now as it’s over 1% less than the current Variable Rate so they will not be impacted by the next announcement
- Getting Pre-Approved and Pre-Qualified is your best attempt at a smooth offer without any delays or extensions needed. Always be prepared and get the process started in advance of looking at properties
Stay tuned for tomorrows full details once the BoC announces it’s next move.