Yahoo!!  A second rate pause in a row!  The Bank of Canada (BoC) left the overnight target rate unchanged which is what affects your banks Prime rate.  That means there is no change to interest rates or payments for Variable Rate mortgage holders and those with loans or lines of credits attached to Prime.  This is some good news after 10 rate hikes since March 2022 by the BoC in their attempt to cool consumer spending.

The First Home Savings Account (FHSA) is a registered savings plan introduced by the federal government in 2022. An FHSA is designed to help you save for your first home tax-free and help you reach your vision of owning a home faster!

What is a First Home Savings Account (FHSA)?

An FHSA combines some of the features of an RRSP and TFSA. Contributions will generally be tax-deductible, and when a qualifying withdrawal is made, the amount withdrawn is not taxable.

How does an FHSA work?

• Annual contributions are capped at $8,000 up to a $40,000 lifetime contribution limit.
• A maximum of $8,000 unused contribution room can continue the following year.
• The account can stay open for a maximum of 15 years or until the end of the year you turn 71

Am I eligible for an FHSA?

To open a First Home Savings Account, you must be:

• A Canadian resident
• 18 years or older
• A first-time home buyer

How is the FHSA different from the Home Buyers’ Plan?

With the current Home Buyers’ Plan, Canadians can withdraw up to $35,000 from their RRSP, subject to eligibility and conditions. The funds must be paid to the RRSP over 15 years.

With an FHSA, eligible withdrawals do not need to be paid back.

What is the difference between the First Home Savings Account, Registered Retirement Savings Plan, and theTax-Free Savings Account?

Every dollar counts when purchasing a first home. This product allows you to save and withdraw tax-free, which can help in the long run.

Interested in setting up a new FHSA?  We’ve done the work for you!

Check out a few banks offering you a Bonus to set up your new FHSA!

• TD currently has a promotion where if you open an FHSA before Oct 31, 2023, and invest $3,000 you could get $100.
• At Scotiabank earn an interest rate of 5.00% on new FHSA deposits with the Savings Accelerator Account until Jan 31, 2023.
• At BMO, the FHSA will be available this November. By signing up today you can take advantage of their special 5.03% Short-Term Investment Certificate rate.
• At Desjardins, open a FHSA and get the introductory promotional rate of 5.00% for a limited time.

If you are curious about the home buying process as a first time home buyer, you can CLICK HERE to book a call to chat about what is required of you on the mortgage half! It is never too early to start preparing for one of the biggest purchases of your life.

Trish & The Primex Team 

As our economy shifts and the Bank of Canada is trying to slow inflation with the continuous rate hikes over the past 18 months, we are at a very different time in the mortgage market, especially for those facing a mortgage renewal.

With over 50% of mortgages in Canada coming due in 2025 and 2026, more and more people are being faced with renewing their mortgage into new terms with much higher rates than what they have been used to.  It’s important to know what to look for, what to expect, and how to plan so you can adjust your budget accordingly if needed.

Rates are the highest we have seen since the early 2000’s. This coupled with the government imposed stress test that was introduced in 2016 is making it much harder to qualify for mortgages today. We also saw our last set of major mortgage rule changes in 2017 which have also impacted home owners when it comes to mortgage renewals and qualification.

When renewing your mortgage, you have a few different options to consider;

1. 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.
2. 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.
3. 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 reply to this email or contact our office

1. Full product and lender review across all banks
2. Expert advice and individual mortgage strategy developed based on your personal situation
3. Rate negotiation on your behalf
4. Zero cost for our services
5. Full VIP service at our office rather than be treated like a number
6. Accessibility, we are available by phone, text or email 7 days a week

CLICK HERE for access to my calendar to book a call to discuss your upcoming mortgage renewal.  Remember to do this at least 4 months in advance of your mortgage maturity.

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

Have a wonderful rest of the week ahead!

Trish

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

When traditional lenders, such as banks or credit unions, deny mortgage financing, it can be easy to feel discouraged. However, there is always an alternative!

If you’re seeking a mortgage, but your application doesn’t fit into the box of the big traditional institutions, you’ll find yourself in what’s commonly referred to in the industry as the “Alternative-A” or “B” lending space. These lenders come in three classifications:

• Alt-A lenders consist of banks, trust companies and monoline lenders. Large institutional lenders are regulated provincially and federally but have products that may speak to consumers who require broader qualifying criteria to obtain a mortgage.
• MICs (Mortgage Investment Companies) are much like Alt-A lenders. Still, they are organized per the Income Tax Act with an incorporated lending company consisting of individual shareholder investors pooling money together to lend on mortgages. These lenders follow particular qualifying lending criteria but operate with a broader qualifying regime.
• Private Lenders are typically individual investors who lend their funds but can sometimes also be a company formed specifically to lend money for mortgages that carry a higher risk of default relative to a borrower’s situation. These lenders are generally unregulated and cater to those with a higher risk profile.

All classifications noted above price based on risk when it comes to a mortgage. The more broad the guidelines are for a particular mortgage contract, the more  the lender assumes. This, in turn, will have a higher cost to the borrower, typically in the form of a higher interest rate and possibly a lender fee.

Before considering an alternative mortgage, here are some questions you should ask yourself:

1. What issue keeps me from qualifying for a traditional “A” mortgage today?
2. How long will I correct this issue and qualify for a traditional lender mortgage?
3. How much do I have to improve my credit situation or score?
4. How much do I currently have available as a down payment?
5. Should I wait until I can qualify for a regular mortgage, or do I want/need to get into a certain home today?
6. Is this mortgage sustainable? Can I afford the higher interest rate and payments?
7. Can I exit this lender if the lender does not renew, or can I not afford this alternative option much longer?

Suppose you are ready to go ahead with an alternative mortgage due to a weaker credit score, or you don’t want to wait until you can qualify with a traditional lender. In that case, these are some additional questions to ask when reviewing an alternative mortgage product:

1. How high is the interest rate? What are the fees involved, and are these fees paid from the proceeds, added to the balance or paid out of pocket
2. What is the penalty for missed mortgage payments? How are they calculated? What is the cost to get out of the mortgage altogether?
3. Is there a prepayment privilege? For example, can you avoid penalties if you give the lender a higher mortgage payment once a month?
4. What is the cost of each monthly mortgage payment?
5. What happens at the end of the term? Is a renewal an option, and what are the costs to renew if applicable?
6. What is the fine print?

When it comes to the alternative lending space, things can get complex. Contact us today if you have been turned away from the bank! We can help you source out various mortgage products and review the rates and terms to ensure it is the best fit for you!

Have any questions or are looking for mortgage assistance? Contact us today at 604-552-6190 or email us at support@primexmortgages.com

CLICK HERE to book a quick call to review your mortgage!

Trish & The Primex Team