Interest rates have dropped, leading to lower monthly payments for many.  While we would all love to save on our mortgages, this week’s 50 basis point rate cut in the prime rate brought some welcome relief for homeowners with variable-rate mortgages and lines of credit specifically.

If you prefer the stability of your fixed rate, transferring your mortgage to another lender right now could still yield significant savings. It’s also worth considering the potential benefits of a variable-rate mortgage, depending on your situation.

By switching to a new lender, borrowers might:

• Secure a lower payment or lower fixed interest costs: Reduce monthly payments or interest costs depending on the amortization length you select.
• Explore the potential savings of a variable-rate mortgage: With the option to lock in a fixed rate later if desired.
• Access a wider range of mortgage options: Fixed, Variable, Hybrid, Lines of Credit, First Time Homebuyer Programs, Reverse Mortgages, Net-Worth, and Self-Employed Borrower Programs, all tailored to your specific needs.

While transferring your mortgage may involve a break fee, the potential savings could significantly outweigh this cost, even if you just renewed or purchased in the last few years. I would be pleased to assess your current mortgage, calculate potential savings, and help you determine if a transfer is the right move for you.

Reach out any time to discuss your particular situation and how you might make the most of the options available to you, my number is above and I’m always happy to help.

Image Credit: Eric Froehling, Unsplash

Today’s Bank of Canada’s 50-basis-point rate cut will decrease Canada’s prime rate to 5.45%. This adjustment means lower variable mortgage and line of credit rates, providing relief to some homeowners facing higher borrowing costs.

Some variable rate borrowers have payments that change with changes to the prime rate, as payments for line of credit borrowers do.  Fixed rates for new mortgages often trend in the same direction as variable rates but not in lock-step.  No changes occur for current fixed rate mortgage holders.

The Bank has indicated it’s adopting a more cautious approach, with 25-bps cuts and possibly a pause. Market projections reflect this sentiment, with the OIS market forecasting just two more rate cuts by mid-2025. For the upcoming Bank of Canada meeting on January 29, the market forecasts a 56% chance of another 25-bps cut and a 44% chance of no change.

The economic backdrop is mixed. While reduced immigration targets are expected to slow GDP growth by 2025, the impact on inflation may be limited. Meanwhile, U.S. inflation remains stubborn, with core inflation rising to 2.7% year-over-year. This inflationary pressure could constrain both Canadian and U.S. central banks in rate-cutting.

The nature of forecasts is one of change, highlighting the importance of strategic mortgage planning. Whether considering a purchase, refinancing, or reviewing your current rate, reach out any time.  I’d be pleased to discuss your particular situation and how you might make the most of the options available to you.  My number is above and I’m always happy to help.

Adapted from MortgageLogic.news

Image Credit: Ussama Azam, Unsplash

Learning how your condo’s major systems work will keep you prepared, save time, and keep things running smoothly. This includes essential information on your plumbing, electricity, heating/cooling, and building-specific systems.  Some of these systems may not apply to your property but knowing how to maintain and troubleshoot the systems you do have is key to ownership peace of mind.

1. Locate the Main Water Shut-Off Valve

• Find your condo’s main water shut-off valve. This valve is typically located near the entry door, in the kitchen, or near the bathroom. It may also be inside a utility closet.
• Knowing where this is helps you quickly stop water flow when needed.

2. Understand Your Condo’s Plumbing System

• Learn how your plumbing is routed through the building. Find out if you have individual shut-off valves for sinks, toilets, or appliances like dishwashers and washing machines.
• This can prevent damage to your or your neighbours’ units.

3. Familiarize Yourself with the Circuit Breaker Panel

• Locate the circuit breaker panel (usually in a closet or hallway). Ensure you know which breaker controls what in your condo. Keep a reference chart inside the panel to identify circuits.
• Knowing how to reset the breakers in case of a power outage, tripped circuits, or electrical issues will save you time and frustration.

4. Understand Your Heating and Cooling System (HVAC)

• Learn how to operate your thermostat and HVAC system. Know where the filters are and how often to replace or clean them. If your condo uses a central system, understand how to control the temperature in your unit.
• A well-maintained system can prevent unexpected breakdowns, improve efficiency, and keep your condo comfortable year-round.

5. Check Your Water Heater

• Find your water heater and check its settings, including the temperature. Make sure you know how to reset it in case it malfunctions.
• Keeping the temperature at the right level helps prevent issues like scalding water or running out of hot water too quickly.

6. Know How to Contact the Building Management

• Keep the contact information for your condo’s property management or building superintendent handy, especially for emergencies like plumbing issues, heating failures, or any problems with shared building systems.
• If something goes wrong with systems you share with others (e.g., common heating, water supply), it’s important to know how to report and address it promptly.

7. Check for Fire Safety Equipment

• Know the location of your smoke detectors, fire extinguishers, and fire escape routes. Test the smoke detectors and replace batteries if needed.
• Regular maintenance of fire safety equipment is crucial for your safety.

8. Understand The Strata’s Rules for Maintenance

• Review the strata’s guidelines about maintaining and repairing systems like plumbing and HVAC, and whether responsibility falls under the strata or is your own.
• This helps avoid confusion about what you’re responsible for maintaining and the strata’s responsibility and ensures you follow the correct procedures when there’s an issue.

9. Inspect Window and Door Seals

• Check the seals on windows and doors for drafts or air leaks. Make sure they close properly to prevent energy loss.
• Proper insulation saves energy costs and ensures your condo stays comfortable throughout the year.

10. Learn How to Ventilate Your Condo Properly

• Understand how your condo’s ventilation system works, particularly in bathrooms and the kitchen. Ensure that fans are functioning and that vents are clear.
• Proper ventilation prevents moisture buildup, which can lead to mold, and ensures good air quality.

By understanding and maintaining your condo’s systems, you can ensure a safer, more efficient, and comfortable home.

With climate change and energy efficiency top of mind for many Canadians, there’s a growing desire to reduce our eco-footprint and make our homes as energy-smart as possible. Whether it’s lowering monthly bills or contributing to a greener future, adopting a few energy-saving habits offers significant benefits.

If you’re looking to trim costs and make an environmental impact, here are some smart and practical ways to save on energy:

Install a Smart Thermostat: This simple upgrade can help you manage your home’s temperature more effectively. A programmable thermostat is a great option, while advanced models like Google’s Nest learn your habits to anticipate your preferred temperatures. Either way, getting control of your heating and cooling can lead to impressive savings.

Seal Up Drafty Spots: When it’s cold outside, any drafts in your home can lead to wasted heat and higher bills. Beyond just doors and windows, check folding attic stairs, add a fireplace plug to seal the damper, and consider a dryer vent seal to keep drafts out of your laundry room.

Switch to LEDs: LED lights use around 85% less energy than traditional incandescent bulbs, which can add up to big savings, especially in larger homes.

Lower the Water Heater Temperature: Turning down your water heater by just 10 degrees could save you 3% to 5% each month—without much sacrifice on comfort.

Consider ENERGY STAR® Appliances: ENERGY STAR®-rated appliances are designed to be energy efficient. If it’s time to upgrade, start with high-impact items like dishwashers, washing machines, dryers, and refrigerators. Even a few new appliances can help lower your energy bill each month.

Not in the market for new appliances just yet? Here are some easy tips to help make your existing ones run more efficiently:

• Dishwasher: Run an empty cycle with a citric acid-based cleaner occasionally to clear out soap and mineral buildup that can make your dishwasher work harder.
• Washing Machine: For maximum efficiency, try to run full loads, as most washing machines use about the same amount of energy regardless of load size.
• Dryer: Clean your lint filter regularly to boost airflow, and don’t forget to check and clean the outside exhaust vent to help reduce drying time.
• Refrigerator: Keep your condenser coils clean to maintain efficiency, and set the temperature to around 2-3 degrees Celsius to save energy without risking your groceries.

Close the Blinds on Hot Days: When the sun’s blazing, keep your blinds and drapes closed to help your air conditioner run more efficiently and keep your home cooler.

Beyond monthly savings, there’s an extra incentive! Canada Mortgage and Housing Corporation (CMHC) offers a CMHC Eco Plus refund. If you’re CMHC insured and buying or building an energy-efficient home, you may be eligible for a partial premium refund of up to 25%.  Click here for more details.

Adapted from DLC Marketing

Image Credit: Alessandro Bianchi on Unsplash

Canada’s economy is closely tied to the U.S., and major changes south of the border impact Canadian mortgage rates. Trends to follow include:

Canadian Fixed Mortgage Rates May Trend Up or Remain Buoyant as U.S. Yields Increase:

• • Canadian mortgage rates, often follow changes in the U.S. economy.
  • If U.S. interest rates rise, Canadian rates could increase as well. However, the impact may be less significant for Canada due to our current weaker economic growth.
  • If U.S. GDP growth strengthens and trade tensions ease, Canada’s economy could also improve, potentially pushing Canadian fixed rates higher
  • That being said, global risks— including trade tensions, geopolitical uncertainties, commodity price fluctuations, and currency changes—could delay or limit Canadian rate increases, even if U.S. rates go up.

What About Canada’s Prime Rate?

• • The prime rate in Canada is still expected to decrease, to 5.20% by March from its current level of 5.95% if bond market expectations are met.

What Does This Mean for Borrowers?:

• • Due to global uncertainties and the unpredictable nature of U.S. economic performance, Canadian mortgage rates may fluctuate unexpectedly over the next few months, something we seem to be getting used to hearing of late.
  • Should the new forecasts hold true:
    • Current fixed-rate borrowers will see no difference in their rates over the term of existing mortgages.
    • Variable-rate mortgage borrowers whose payments stay the same with changes to the prime rate will continue to see interest costs and amortizations decrease as prime drops.
    • Adjustable-rate mortgage borrowers and those with balances on lines of credit whose payments change with changes to the prime rate will continue to see payments drop as the prime rate goes down.
  • If you’re planning to sell a property with a fixed-rate mortgage secured against it before the end of the mortgage term, there may be strategies available to you to minimize potential penalty costs.
  • If you’re thinking of buying property, or renewing or refinancing an existing mortgage, it’s important to stay informed about these market shifts so you can plan.

As always, I’m always happy to see how I might help you take full advantage of the options available to you.  Call me any time to set an appointment at 604-992-9891.

Adapted from www.MortgageLogic.news

Image Credit: Stockbyte on Canva

Following last week’s adjustment in interest rates, several key economic events are approaching that could further influence mortgage rates in Canada. Here’s a closer look at the current landscape and what it might mean for you:

What’s Happening?
Doubling its typical 25-basis-point adjustment, the Bank of Canada lowered its overnight lending rate by 50 basis points last Wednesday, impacting variable-rate mortgages and line of credit rates.  Next week, Canada’s economic outlook takes center stage, with a few events that could impact mortgage rates:

1. Tiff Macklem’s Triple Speeches: The Bank of Canada Governor is set to speak Monday through Wednesday, potentially signaling future rate moves.
2. Canadian GDP Release (Thursday): This report will reveal recent growth, with direct implications for Canadian mortgage rates.

What’s at Stake?
Currently, markets are placing an 85% chance on a 25-basis-point rate cut at the Bank of Canada’s December meeting, signaling continued rate relief for variable rate and line of credit borrowers. If Canadian GDP data is stronger than expected, it could shift market sentiment keeping yields and fixed mortgage rates up.

What Does This Mean for Borrowers?
If your mortgage renewal is approaching in the next six months, reach out for an overview of your options.  Starting early can help secure better terms, no matter how rate forecasts shift.  Reach out any time to discuss, my number is above and I’m always happy to help.

Data points from MortgageLogic.news Mortgage Memo October 24, 2024

Image Credit: Martin Newhall Unsplash

Slower GDP growth and easing inflation trends are likely to influence the Bank of Canada’s upcoming rate decision, offering key insights as we approach their October 23 meeting.

The Consumer Price Index (CPI) rose 1.6% year over year in September, the slowest pace since February 2021 and down from a 2.0% gain in August 2024. The main contributor to headline deceleration was lower year-over-year gasoline prices in September (-10.7%) compared with August (-5.1%). The all-items CPI, excluding gasoline, rose 2.2% in September, matching the increase in August for this measure.

Although the rate at which prices increase has slowed, price levels remain elevated. Compared with September 2021, the CPI rose 12.7% in September. Canadians continue to feel the impact of higher price levels for day-to-day basics such as rent (+21.0%) and food purchased from stores (+20.7%), which increased during that same 3-year period.

The CPI fell 0.4% in September after a 0.2% decline in August. Lower gasoline prices led to both the monthly and yearly movement in September. On a seasonally adjusted monthly basis, the CPI remained unchanged at 0.0%.

The central bank’s two core inflation measures remain sticky. Both measures were unchanged in September (see chart below). According to Bloomberg calculations, a three-month moving average of those measures fell to an annualized pace of 2.1% from 2.3% in August.

According to Bloomberg News, “After the release, traders in overnight swaps upped their bets that the Bank of Canada will opt for a larger rate cut at next week’s decision, putting the odds of a half-percentage-point reduction at about 75%. Previously, the odds were around 50%.” The Canadian dollar weakened further on the news relative to the greenback. The loonie has fallen for ten days, the longest streak since 2017. Canadian debt rallied across the yield curve, outperforming US Treasuries and pushing the two-year Canada benchmark yield to 3.03% and the 5-year bond yield to 2.92% by mid-day.

Tuesday’s data marks the first time since February 2021 that inflation is below the central bank’s 2% target and is the ninth straight month of headline rates running within its target range. With inflationary pressures continuing to ebb and policymakers focusing more on preserving economic growth, the data give the central bank options to reduce rates quicker after cutting borrowing costs at 25 basis points at the past three meetings.

Bottom Line

While the September employment data were stronger than expected, Q3 GDP growth is slated to be roughly 1.8%, well below the Bank of Canada’s 2.8% forecast. Today’s inflation report is the last important data point before the Bank meets again on October 23. Late last month, BoC Governor Tiff Macklem warned that growth may be below policymakers’ previous expectations in Q3.

Excluding shelter costs, the consumer price index rose 0.4% from a year ago compared to 0.5% in August. Mortgage interest costs and rent remained the most significant contributors to the annual inflation rate change. However, rent prices increased at a slower pace in September, rising 8.2% versus 8.9% in August. Tuition fees, priced annually in September, also grew slower, increasing 1.8% compared with 2.5% last year.

Regionally, inflation is now at or below 2% in every province, with prices rising slower in September than in August in all ten provinces. The central bank will release new economic forecasts in the Monetary Policy Report next week. Macklem has said,  “decisive monetary policy action and the unblocking of supply chains” means “uncertainty about costs and inflation are much lower today than two years ago”.

Dr. Sherry Cooper,

Chief Economist, Dominion Lending Centres

Image Credit: Andre Hunter Unsplash

Multiple meaningful changes are coming to make homeownership and adding revenue to your principal residence more affordable for Canadians like you. Whether you’re a first-time homebuyer, a current homeowner whose mortgage is coming up for renewal, or someone looking to add a legal secondary suite or laneway home, these updates will help you make the most of your investment. Here are the key changes to be aware of:

• Higher insured mortgage availability: Starting December 15, 2024, the government is increasing the insured mortgage price cap from $1 million to $1.5 million. This makes higher-value homes available to buyers in more expensive markets with less than 20% down. This is especially helpful in cities like Toronto and Vancouver, where home prices often exceed $1 million. If you’ve been struggling to save up a large down payment, this change will help get you closer to owning a home.
• Extended 30-year amortizations: If you’re buying your first home or purchasing a new build, as of December 15th, 2024, you’ll have the option to stretch your mortgage payments over 30 years. This may allow you to qualify for a greater purchase price, or may make mortgage payments more manageable, allowing you to balance your monthly budget with other financial goals. More flexibility to afford other things like savings, travel, or education may be more easily within reach.
• Refinancing for secondary suites: Starting January 15, 2025, if you’re planning to add a legal secondary suite to your home (such as a basement apartment or a laneway house), you’ll be able to refinance your mortgage with an insured loan to help fund the construction from the equity in your home. With default loan insurance, the loan amount can be higher relative to the value of your home, allowing you to access more funds for renovations without needing a large down payment. Additionally, insured loans typically come with lower interest rates compared to conventional loans, which can result in significant savings over time. This could be beneficial if you want to build a rental suite to generate extra income or create more living space for family members. Not only does this increase the value of your home, but it also offers a smart financial strategy to support long-term goals.
• Renewing mortgages without a stress test: For those with uninsured mortgages approaching renewal, there’s more good news. The national banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), has announced that it will “no longer require borrowers with uninsured mortgages to undergo a stress test when switching providers.” More will be formally communicated November 21, 2024. This means conventional borrowers will be joining insured borrowers (those who purchased with less than 20% down) to be able to qualify to switch lenders more easily, providing greater flexibility in managing their mortgages and potentially securing better rates and terms.

These reforms should go a long way to making buying and owning a home easier for many, providing greater flexibility, and helping borrowers capitalize on their home investment. Whether you’re looking to buy, refinance, or expand, it’s a great time to take advantage of these new options. Reach out any time to discuss to see how these changes can benefit you directly. My number is above and I’m always happy to help.

Sources:

Department of Finance “Backgrounder” October 8, 2024

Department of Finance “News Release” September 24, 2024

BNN Bloomberg, The Canadian Press, “OSFI easing stress test requirements for uninsured mortgages when switching providers” September 25, 2025

Recent rate cuts may help you leverage better mortgage options and increase your savings.  In a third consecutive meeting, the Bank of Canada dropped the overnight rate to 2.25% on September 4^th, resulting in the Prime rate dropping to 6.45% with most lenders.

This means if you’re on an adjustable-rate mortgage, your payment will have decreased by roughly $15 per $100,000 of your balance. For variable rate borrowers whose payments remain the same, more of your payment will go toward the mortgage balance than interest, shortening the time it takes to repay your loan (the amortization).  Line of credit borrowers’ interest costs have dropped by .25% as well.

Should borrowers be selecting variable rates?

Should current fixed-rate borrowers refinance?

Fixed rates are based on the bond market but downward trends on the variable side add to downward pressure for fixed rates.

Variable rates are projected to drop by 1.75% over the next year based on CORRA forward rates as reported by MortgageLogic.news.

Choosing between the two comes with a number of considerations:

• There may only be a short window of time during which you can refinance a fixed-rate mortgage before higher penalties kick in.  If you’re considering exploring this option, please check in with me sooner rather than later to ensure you can capitalize on the opportunity.  If you secured a higher-rate fixed mortgage in the last couple of years, please contact me for a review.

• Payments are higher on variable rate mortgages vs fixed, and most major banks’ Variable Rate Mortgages (VRMs) set the payment at the outset and they don’t change as rates go up or down.  Most non-bank mortgage lenders offer Adjustable Rate Mortgages (ARMs)with payments that do decrease as the mortgage rates go down.

• Qualifying for a variable rate mortgage is more stringent.

• The savings on the variable rate have yet to be realized and are not expected all at once.

• The advantage of Prime rate drops affecting variable rate mortgages will depend on the forecasts being accurate.

• If rates keep dropping, a variable rate mortgage may offer the greatest flexibility.  As rates drop, the penalty to refinance is much lower than that of a fixed rate mortgage generally.  One can also lock into a fixed rate mortgage from a variable at any time.  Some lenders also allow you to lock into a fixed term with a shorter remaining period than others.  Waiting to lock in might allow you to wait for fixed rates to drop further before locking in.

If you’d like to review the market as these changes pertain to you, please reach out any time.  My number is above and I am always happy to help.

For those considering buying real estate, based on the news in the last 24 hours, you might think about making a purchase sooner rather than later.

Yesterday, Canada’s Consumer Price Index (CPI) unexpectedly fell to 1.95%, dipping below the Bank of Canada’s (BoC) inflation target.  The BoC had not anticipated hitting this target until next year, and the overnight rate is still 150 basis points above what’s considered neutral.  And today the United States Federal Reserve dropped rates by 50 basis points, something that won’t go unnoticed by the BoC as they contemplate their next moves.

What Does This Mean For You?

• Potential for Lower Mortgage Rates: The CPI drop suggests weaker inflation, which is why market expectations are for the BoC to lower interest rates to stimulate economic activity.

• Impact on Property Investment: Of course, if you’re looking to buy property, lower rates can be a great opportunity.  With rates potentially decreasing, you might be secure a more affordable mortgage, saving money over time, and you might qualify for more than you might have originally thought.  Evaluating your financing options and considering making a move in the real estate market right now might be a wise choice.

• Potential Impact on Property Values: As more buyers might jump back into the market due to lower mortgage rates, property values may start to rise. Increased demand from buyers looking to take advantage of favorable borrowing conditions could drive up prices, making it beneficial to buy now before values potentially climb.

What Should You Do?

Stay in touch to understand how these changes could impact your options. This unexpected CPI drop might present a timely opportunity for better financing conditions and potentially influence property values in your favour.  Reach out anytime to discuss, I’m always happy to help.

Statistics referenced from MortgageLogic.news Mortgage Memo: Sept 17