The British Columbia Financial Services Authority’s (BCFSA) report on improving consumer protection in the real estate market has brought about a new mandatory three-business-day Homebuyer Rescission Period.  It took effect on Tuesday, Jan. 3, 2023.  It’s aim is to provide buyers with time to consider their purchase and alleviate pressure to make quick decisions around purchasing certain types of residential real estate.  The rescission period begins the day after the offer is accepted and includes a cancellation fee.  The fee was included to prevent buyers from making offers frivolously.

The 0.25% fee is calculated on the property value.  This means $250 will be charged for every $100,000 of the purchase amount to cancel an agreement. For example, if someone cancels their offer to purchase a $1,000,000 property, $2,500 would be due if the they end the contract during the rescission period.

Properties subject to this rule include:

• Detached houses
• Semi-detached houses
• Townhouses Apartments in duplexes or other multi-unit dwellings
• Residential strata lots, as defined in Section 1(1) of the Strata Property Act
• Manufactured homes affixed to land Cooperative interests, as defined in Section 1 of the Real Estate Development Marketing Act, that include a right of use or occupation of a dwelling.

Exemptions include:

• Residential real property that is located on leased land
• A leasehold interest in residential real property;
• Residential real property that is sold at auction; and
• Residential real property that is sold under a court order or the supervision of a court.

B.C. is the first province to introduce this type of legislation.  Australia and France have similar rules around purchasing property.

For more information about the HBRP visit:

https://www.bcfsa.ca/public-resources/real-estate/consumer-resources/home-buyer-rescission-period-consumer-guide

Photo Credit: Paola Aguilar, Unsplash

The Bank of Canada left the overnight policy rate at 4.5%, as expected, stating their view that inflation will hit 3% by mid-year and reach the 2% target by next year. They admit, however, that demand continues to exceed supply, wage gains are too high, and labour markets are still very tight. The Bank is also continuing its policy of quantitative tightening.

“Economic growth in the first quarter looks to be stronger than was projected in January, with a bounce in exports and solid consumption growth. While the Bank’s Business Outlook Survey suggests acute labour shortages are starting to ease, wage growth is still elevated relative to productivity growth. Strong population gains are adding to labour supply and supporting employment growth while also boosting aggregate consumption. Housing market activity remains subdued.”

The Bank expects consumption spending to moderate this year “as more households renew their mortgages at higher rates and restrictive monetary policy works its way through the economy more broadly.”

“Overall, GDP growth is projected to be weak through the remainder of this year before strengthening gradually next year. This implies the economy will move into excess supply in the second half of this year. The Bank now projects Canada’s economy to grow by 1.4% this year and 1.3% in 2024 before picking up to 2.5% in 2025”.

Most economists believe the Bank of Canada will hold the overnight rate at 4.5% for the remainder of this year and begin cutting interest rates in 2024. A few even think that rate cuts will begin late this year.

In contrast, the Fed hiked the overnight fed funds rate by 25 bps on March 22 despite the banking crisis and the expectation that credit conditions would tighten. This morning, the US released its March CPI report showing inflation has fallen to 5% year-over-year. Next Tuesday, April 18, Canada will do the same. The base year effect has depressed y/y inflation. Canada’s CPI will likely have a four-handle.

Fed officials next meet in early May, and it is widely expected that the Fed will continue to raise the policy rate while the Bank will continue the pause.

Due to the differences in our mortgage markets and the higher debt-to-income level in Canada, our economy is much more interest-sensitive. Despite these disparate expectations, the Canadian dollar has held up relatively well.

Bottom Line

The Bank of Canada upgraded its growth projections for this year in a new forecast, suggesting the odds of a soft landing have increased. This may preclude interest rate cuts this year.

“Governing Council continues to assess whether monetary policy is sufficiently restrictive to relieve price pressures and remains prepared to raise the policy rate further if needed to return inflation to the 2% target,” the bank said.

The April Monetary Policy Report suggests strong Q1 growth resulted from substantial immigration. With the population proliferating, labour shortages should continue to decline, and inflation will fall to 3% later this year. The global growth backdrop is better than expected, though the Bank continues to look for a slowdown in the coming months, citing the lagged effects of rate hikes and the recent banking sector strains.

Governor Macklem said in the press conference that the economy needs cooler growth to corral inflation, although the Bank’s forecast does not include an outright recession.

The Bank will refrain from cutting rates this year. The Governor explicitly said at the press conference that market pricing of rate cuts later this year is not the most likely scenario.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drsherrycooper@dominionlending.ca

Need an Appraisal? Tips for Success.

If you’re planning on selling property this spring, the following tips should help improve your outcome.

1) Hire an Experienced Realtor: Before preparing to sell during the spring market, be sure to hire an experienced realtor to guide you through getting your property ready to sell, then property showings, negotiations, and finalizing the eventual sale. Realtors assist with a host of items given the changing landscape of real estate regulations, ever-evolving safety protocols, virtual viewings, changes in technology, and so on.  A realtor’s expertise is invaluable in helping you navigate the sales process from end-to-end.

2) Prioritize Repairs and Improvements: Before listing, it is important to address any issues room by room.  Do take note of required paint touchups, nail holes in walls, broken fixtures, old appliances, and so on. Taking care of these minor issues will help your property look its best when buyers walk through.

3) Clean and Stage: After you have made the necessary minor repairs, you can start staging your property. Tidy up the yard and wash your windows.  Declutter and deep clean inside.  A professional cleaning service can come in handy for this. Your real estate agent can help stage your property to appear spacious and inviting as well.

4) Consider a Pre-Listing Inspection: Once you are ready to list for sale, consider a pre-listing inspection. An inspector can conduct a complete visual inspection of all interior and exterior elements of your property (including HVAC systems, wiring, ceiling, chimneys, gutters, etc.), which can help put prospective buyers at ease.

5) Organize The Paperwork: Having your documents organized for potential buyers will help speed up the process and allow you to address any questions before the sale is finalized. Permits, renovation or repair receipts, warranties, rental agreements, and copies of your utility bills are all good records to have on hand for potential buyers.

And please contact me if you have any questions about your existing home or mortgage, or if you are looking to sell and relocate in the future.  I’m always happy to help.

Adapted from DLC Marketing

Photo Credit: Annie Spratt Unsplash

Appraisal services help to pinpoint the market value of real estate.  The appraiser checks the general condition of your home and determines a comparable market value based on the sale information of other homes in your area.

Planning in advance of an appraiser’s visit can help you secure the best possible valuation of your property by keeping a few things in mind:

1) Clean Up:  A good rule of thumb is to treat the appraisal like an open house. Clean and declutter every room, vacuum, and scrub to ensure your home is as presentable and appealing as possible.

2) Curb Appeal: First impressions can have a huge impact when it comes to an appraisal. Spending time ensuring the outside of your property from your driveway entrance to front step is clean and welcoming can make a great difference.

3) Visibility: The appraiser must be able to see every room of the home. Take care of any issues with respect to accessing and being able to see everything in each area of your property to allow the appraiser full access.

4) Upgrades and Features: Ensuring the appraiser is aware of any upgrades and features can go a long way. Make a list and include everything from plumbing and electrical updates to new flooring and appliances etc.

5) Know Your Neighbourhood: Noting what similar homes in your neighbourhood have sold for will allow you to discuss examples from your area if you believe your property is worth more than the appraisal suggests.

Don’t hesitate to contact me if you have any questions about your existing home or mortgage, or if you are looking to sell and relocate in the future.  I’m always happy to help.

Adapted from DLC Marketing

Photo Credit: Andrea Davis on Unsplash

Buying a home is one of the largest investments you may ever make. In order to make your home hunting experience the best it can be, here are a few key items to keep in mind before you start your journey:

Get Pre-Qualified: One of the most important aspects of buying a home is the mortgage application and approval process. If you need a mortgage to complete the purchase, getting pre-qualified via a detailed review of your financial picture will determine the actual home price you can afford.

Set a Pre-Determined Budget and Planning: Setting, then following your pre-determined budget and staying within your means will set you up for success. Getting pre-qualified will help determine what you can afford, and will help you select the best mortgage options with your future goals in mind.

Hiring a Real Estate Agent: Realtors help negotiate the purchase price and other purchase terms such as timing and specific items included with your new home.  They can also occasionally provide access to properties that may not be listed publicly.  They understand the home buying process and guide you through from the first viewing to getting the keys to your new home in hand.

Property Features: Price and location should be higher priorities than aesthetic details such as paint color, flooring, or even outdated appliances or light fixtures, which can all be updated.  Sometimes homes may only need a bit of imagination and a few minor updates to become your perfect space.

Think Ahead: What you look for in a house today could be very different from what will suit you in the future. Planning for a growing family or helping aging parents may factor.  You can always sell your home later on if needed, but how that home may accommodate you later could increase a particular property’s appeal to you now.

If you are looking to purchase a new home, whether it be your first space, a step up, or you’re downsizing, I would be happy to help! Even if you’re in or nearing retirement, you may have an opportunity to leverage your home’s equity in the future tax free, which can preserve your investments and provide you savings on capital gains taxes.  Please don’t hesitate to reach out to set up a virtual appointment to find out more.  I am here to discuss your mortgage options, pre-qualifications and to help uncover what you need to know now before you make a move.

Adapted from DLC Marketing

Image Credit: Jonathan Borba Unsplash

Photo – Samuel Wolfl from Pexels

Changing your address is just one of your to-do’s when you move, but this can go smoothly with a bit of advance planning.  Before moving just be sure to notify the following groups on this list:

Personal Contacts

• Relatives
• Friends
• Employer
• Schools, colleges, universities, daycares
• Landlord (if necessary)
• Clubs, associations and charities

Healthcare Professionals

• Doctor(s)
• Dentist
• Veterinarian
• Other healthcare specialist(s)

Creditors and Services

• Phone, cable, internet, mobility company
• Electricity / hydro
• Natural gas
• Heating fuel company (ask if you receive a deposit refund)
• Financial institution
• Credit card companies
• Insurance companies / broker(s)
• Lawyer / notary
• Subscriptions (e.g., newspapers, books, music, loyalty programs)

Government Services

Lastly, it is vital to inform the federal and your provincial/territorial government if your address changes to ensure all your data and ID cards are updated:

• Driver’s license
• Health Card
• Vehicle registration
• Canada Post / epost
• Canada Revenue Agency
• Canada Pension Plan / Quebec Pension Plan
• Old Age Security
• Employment Insurance

Whether you are purchasing, upsizing, or downsizing, feel free to give me a call to make a plan for your new mortgage, or to just review your current one.  I’m happy to help.

Adapted from DLC Marketing

Photo by Cande cop on Unsplash

Credit scores are a bit nebulous but can greatly impact whether you are approved for a loan and how much interest will be charged.  Where they come from and what affects them are not very intuitive and may surprise you.  Knowing more can help you leverage your score and put you in a better position when it comes to borrowing money.

1. There are two credit-reporting agencies in Canada: Equifax and TransUnion. Your credit score may vary between the two. Lenders may check one or both agencies when you apply for credit.
2. Your credit score is listed in your credit report.
3. Credit scores range between 300 and 900 with the Canadian average being 650.
4. Your credit score may be used by insurance companies, mobile phone providers, car leasing companies, landlords and potential employers.
5. Five factors affect your credit score: length of credit history, how much of your limit you have used (credit utilization), the mix/types of credit you hold, the frequency you apply for credit, your payment history.
6. Mistakes and omissions are not uncommon and both agencies have a process to report errors and have them corrected.
7. Very roughly, credit scores of 700+ can offer a higher chance of loan approval, greater borrowing limits, and lower or “preferred” interest rates and insurance premiums.
8. Credit scores are continuously evaluated and adjusted. If you have missed a payment in the past, your score can be raised/rebuilt.  See #10.
9. Checking your credit score yourself regularly is a good idea and will help detect errors, monitor improvements, and identify fraud. These are considered “soft” enquiries and will not affect your score.
10. To increase your credit score: make payments on time, pay the full amount owing, use 35% or less of your available credit, hold a variety of credit types, apply for new credit sparingly.

Please let me know if you have questions on your credit or mortgages at any time.  If you have a purchase in mind, or a mortgage you’d simply like to review given the recent changes to rates this last while, I am here to help!

Adapted from DLC Marketing

When it comes to mortgages, there is a common misconception that a low rate is more important than any other factor. However, while your rate does matter for your mortgage, it is not the only consideration.

Other key factors you should look at beyond the interest rate include:

Term: The term refers to the length of time the options and interest rate you choose are in effect, including penalties.  Choosing a duration that matches the market and your goals is important to review.

Amortization: The length of time you agree to take to pay off your mortgage determines how the interest is amortized over time. This impacts how much your mortgage payments will be and how much interest you’ll pay over time.

Payment Schedule: You can make your mortgage payments weekly, every two weeks, or once a month with a few nuances.  The frequency combined with the amount you pay will affect your cashflow and interest paid depending on your choice.

Portability: You can transfer your mortgage to another property with little or no penalty with some lenders.  Mortgage loan insurance can also be transferred to the new home or insure a mortgage switched to another lender.

Pre-Payment Options: Pre-payment terms refer to making extra payments, increasing payments, or paying off a mortgage early without incurring a penalty.  These can greatly affect the amount of interest you pay over time.

Penalty Calculations: Where variable rates typically come with a three-month interest penalty, a fixed rate mortgage penalty is calculated using an Interest Rate Differential (IRD).  This is basically the difference in interest for the remainder of the mortgage term between what is owing and what the lender can earn on a new mortgage for the same period.  However, the calculation has a few nuances slanting in the lenders favour in some cases and can be much higher than a Variable Rate penalty if rates have dropped.

Variable versus Fixed:  For variable rate mortgages the interest rate fluctuates with market rates.  For fixed rate mortgages, the interest rate does not fluctuate over time.

Open versus Closed: An open mortgage allows you to pay off your mortgage at any time with no penalties. A closed mortgage, typically has lower rates but associated penalties to break the term early.

When considering your mortgage, the above components all have a part to play in your overall mortgage.

Contact me to discuss your goals and opportunities regarding mortgage selection, I am always happy to help.

Adapted from DLC Marketing