Homebuyers in Saskatchewan won’t see dramatic drops in prices!

General Yasmin Zargar Shabestari 27 Jul

Sask. housing market will avoid ‘big swings’ as national prices plummet: RBC

A recent report by RBC has predicted housing prices to fall almost 23 percent across the country. However, homebuyers in Saskatchewan won’t see such a dramatic drop.

“While we project resale activity to cumulatively decline more than 20 percent in every other province (from all-round record levels) this year and next, we think prices will be more resilient in the more affordable regions of the country. We project prices to slip less than three percent in Alberta and Saskatchewan,” the report said.

Chris Guérette, Saskatchewan Realtors Association CEO

“We don’t experience the big swings,” she told CTV News. “It’s showing stability and strength in our market.”
She said the province was forecasted to see less of a drop than other provinces because they saw the smallest increase.

She said the association noted a few years ago that home buyers were willing to move up to 30 minutes to buy a home.

“That 30 minutes has turned into an hour,” she said. “Some people may even be looking at other provinces.

“We’re providing stability and affordability.”

The latest statistics from the association show that sales in June were down compared to last year, but market activity was still 20 percent stronger in the province.

One of the biggest hurdles for homebuyers in the province is the low inventory. Last month, the SRA saw the benchmark home price increase to $ 333,400. That was one percent over the previous month and five percent more than 2021.

NEW HOMEBUYERS

She advised buyers in the province who are still struggling to afford a home to be patient.

“Real estate takes time. It requires patience.”

Guerette said that we live in a culture where we want things immediately, but when it comes to getting a home it might not happen fast. Rather, home buyers need to make a decision that fits their needs at the time, she said. “It’s a journey.”

 

CTV NEWS Saskatoon

Bank of Canada Raises Key Interest Rate by 100 bps!

General Yasmin Zargar Shabestari 14 Jul

The Bank of Canada has raised its overnight target rate by 100 basis points, bringing it to 2.50%.

This is the Bank’s largest rate hike since 1998.

In its statement accompanying the decision, the Bank said, “With the economy clearly in excess demand, inflation high and broadening, and more businesses and consumers expecting high inflation to persist for longer, the Governing Council decided to front-load the path to higher interest rates…”

The Bank added that interest rates “will need to rise further.”

Banks and other financial institutions are expected to raise their prime rate in the coming days, which will increase rates for variable-rate mortgage holders.

———–Complete story———–

Bank of Canada increases policy interest rate by 100 basis points, continues quantitative tightening

 

The Bank of Canada yesterday, July 14th, 2022, increased its target for the overnight rate to 2½%, with the Bank Rate at 2¾% and the deposit rate at 2½%. The Bank is also continuing its policy of quantitative tightening (QT).

Inflation in Canada is higher and more persistent than the Bank expected in its April Monetary Policy Report (MPR), and will likely remain around 8% in the next few months. While global factors such as the war in Ukraine and ongoing supply disruptions have been the biggest drivers, domestic price pressures from excess demand are becoming more prominent. More than half of the components that make up the CPI are now rising by more than 5%.

With this broadening of price pressures, the Bank’s core measures of inflation have moved up to between 3.9% and 5.4%. Also, surveys indicate more consumers and businesses are expecting inflation to be higher for longer, raising the risk that elevated inflation becomes entrenched in price- and wage-setting. If that occurs, the economic cost of restoring price stability will be higher.

Global inflation is higher, reflecting the impact of the Russian invasion of Ukraine, ongoing supply constraints, and strong demand. Many central banks are tightening monetary policy to combat inflation, and the resulting tighter financial conditions are moderating economic growth. In the United States, high inflation and rising interest rates are contributing to a slowdown in domestic demand.

China’s economy is being held back by waves of restrictive measures to contain COVID-19 outbreaks. Oil prices remain high and volatile. The Bank now expects global economic growth to slow to about 3½% this year and 2% in 2023 before strengthening to 3% in 2024.

Canada’s Economy

Further excess demand has built up in the Canadian economy. Labour markets are tight with a record low unemployment rate, widespread labor shortages, and increasing wage pressures. With strong demand, businesses are passing on higher input and labor costs by raising prices.

Consumption is robust, led by a rebound in spending on hard-to-distance services. Business investment is solid and exports are being boosted by elevated commodity prices. The Bank estimates that GDP grew by about 4% in the second quarter. Growth is expected to slow to about 2% in the third quarter as consumption growth moderates and housing market activity pulls back following unsustainable strength during the pandemic.

The Bank expects Canada’s economy to grow by 3½% in 2022, 1¾% in 2023, and 2½% in 2024.

Economic activity will slow as global growth moderates and tighter monetary policy works its way through the economy. This, combined with the resolution of supply disruptions, will bring demand and supply back into balance and alleviate inflationary pressures.

Global energy prices are also projected to decline. The July outlook has inflation starting to come back down later this year, easing to about 3% by the end of next year and returning to the 2% target by the end of 2024.

With the economy clearly in excess demand, inflation high and broadening, and more businesses and consumers expecting high inflation to persist for longer, the Governing Council decided to front-load the path to higher interest rates by raising the policy rate by 100 basis points today.

The Governing Council continues to judge that interest rates will need to rise further, and the pace of increases will be guided by the Bank’s ongoing assessment of the economy and inflation. Quantitative tightening continues and is complementing increases in the policy interest rate. The Governing Council is resolute in its commitment to price stability and will continue to take action as required to achieve the 2% inflation target.

Information note

The next scheduled date for announcing the overnight rate target is September 7, 2022. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR on October 26, 2022.

By: MORTGAGE PROFESSIONALS CANADA

Canadian Home Prices on The Rise!

General Yasmin Zargar Shabestari 18 Mar

REAL ESTATE NEWS

Canadian Home Prices Just Rose For the 20th Month in a Row

The rise of Canadian home prices is on a seemingly never-ending streak, climbing to new heights for the 20th consecutive month in February.

The new Teranet-National Bank House Price Index, released on Thursday, revealed a 1.7% jump in home prices between January and February across 11 major Canadian markets. Looking at a three-month annualized basis, Canadian home prices were up 20.5% in February — a level not seen since the summer.

The most recent price surge is likely attributable to strong demand in the resale market, the report says, which has been favorable towards sellers. The recent Bank of Canada rate increase — along with several others that are expected to come this year — may also be responsible for pushing buyers into the market.

“There is also reason to think that borrowers who had locked in a lower rate are exercising that option in anticipation of higher mortgage interest rates,” the report reads. “The widespread rise in home prices lends some credence to that thesis with prices rising in all 11 markets for a successive month. While this current wave may weaken as buyers are increasingly under pressure from tighter monetary policy, high immigration quotas (432K) should allow for a soft landing. That figure could also be significantly increased by Ottawa’s decision to allow a potentially “unlimited” number of Ukrainian refugees. All in all, while we do think the housing market could lose some momentum during 2022, the aforementioned factors may keep demand persistent.”

The biggest composite index bump by far was seen in Hamilton, with prices there jumping up 4%. It was followed by Victoria at 2.5%, Toronto at 2%, Vancouver at 1.6%, and Montreal at 1%. Winnipeg, Halifax, Edmonton, Ottawa-Gatineau, Calgary, and Quebec City all saw gains of less than 1%.

Overall year-over-year growth now sits at 17.7% across all 11 markets, with Halifax taking the lead with a 32.5% jump in its composite index. Hamilton followed closely behind at 27.9%, Victoria at 22.5%, and Toronto at 20.8%. Vancouver, Ottawa-Gatineau, Montreal, Winnipeg, Quebec City, Calgary, and Edmonton all came in below average.

Written By: Laura Hanrahan

https://storeys.com/canadian-home-prices-teranet-index-february-2022/

 

BUYING A HOUSE? WHAT TYPE OF MORTGAGE IS RIGHT FOR YOU?

General Yasmin Zargar Shabestari 9 Nov

What is the mortgage rate?

Buying a home and becoming a homeowner is an exciting time in life that requires you to know a bit about the steps to get into your new home and the types of mortgages available.

A mortgage agent will provide you with valuable advice and knowledge and, can help you select the mortgage that’s right for you. The 3 initial terms to understand include rate type, payment schedule, and amortization period (this is the length of time to pay off your new home mortgage).

RATE TYPES:

FIXED-RATE: The interest rate and payment amount are locked in over the term. Great for those who want the security of knowing their payments will remain the same.

VARIABLE RATE: The interest rate will fluctuate with the Prime rate over the term of the mortgage. Great for those who think rates will decline so they can pay down more principal.

PAYMENT SCHEDULES:

MONTHLY-BIWEEKLY-WEEKLY
Some lenders have the option of accelerated payments.

MONTHLY: You make 12 payments a year due on the same day of every month. Great for those who want to keep flexibility in their budgets.

ACCELERATED BI-WEEKLY: Your monthly mortgage payment is divided in two and that amount is due every two weeks. Great for those who want to save in interest and pay off their mortgage faster.

WEEKLY: Your monthly mortgage payment is multiplied by 12 months and divided by 52 weeks to get a weekly payment amount. Great for those who use a weekly budget to keep close track of their finances.

AMORTIZATION AND TERM LENGTHS

AMORTIZATION PERIOD: 25 years is typical. A great choice for first-time buyers with less than a 20% down payment.

TERM LENGTHS: Term length can range, but many first-time buyers choose 5 years. Great for those who want to lock in their interest rate for a longer period of time.

Canadian Real Estate Markets See Price Growth Slowing

General Yasmin Zargar Shabestari 27 Oct

Eventually, what goes up must come down, which many believe is the case when it comes to ever-swelling housing prices across Canada. For all of 2021, and most of 2020 for that matter, Canadian real estate big and small, from coast-to-coast, have set month-over-month records in terms of residential home sales, sales volume, and average sale prices.

Mostly driven by excruciatingly high demand and limited supply, the average price of a home in Canada has grown from $585,609 in August 2020 to $663,503 in August 2021 – an increase of 13.3%. Considering this average price takes into account both big and small markets, this growth is unprecedented, and steadily rising every month for the better part of the last year and a half. However, it seems as though the tides may be changing. With summer in the rear-view mirror and autumn upon us, it appears that markets across Canada may be gently cooling, too.
This is welcome news for side-lined homebuyers who have been crowded out and priced out of their target real estate markets.

Activity & Prices in Canadian Real Estate Markets are Easing Up
According to figures from the Canadian Real Estate Association Across (CREA), home sales slightly decreased 0.5% from July to August 2021, while on a year-over-year basis activity declined 14%.

Despite this slight drop in sales, market activity is still well above the historical average for this time of year. However, this was not evenly spread across all markets. In Canada, it was roughly a 50-50 split in terms of markets that saw an increase in activity and markets that experienced a decrease.

Cliff Stevenson, Chair of CREA, credits the Federal Election for drawing attention to the real estate market, stating that the unresolved issues in the market have been a focal point over the last month. “Ideas on how to fix the housing market have taken centre stage in this election, with many long-simmering issues having had a big spotlight shone on them over the last year-and-a-half by COVID. The numbers for August provided more evidence of what many of us already knew or suspected to be the case this housing crisis will not go away on its own.
It also highlights how there are no quick fixes here, so this market will remain challenging for those who choose or have to engage in it.”

While it may take longer than a couple of months to correct the rampant unaffordability in so many real estate markets in Canada, a promising sign is slowing growth in price changes. In fact, the annual growth of composite benchmark price has dropped in the majority of Canadian real estate markets and over 80% of markets have reported that the annual rate of price growth has finally declined.

In all of Canada, only eight markets have seen flat or accelerated price growth, and the majority have seen a deceleration in price growth. This means that most markets in Canada have seen the rate of property price growth slow down month-over-month, inspiring hope that markets may soon return into more neutral territory.

While the national market still strongly favours sellers, it could be starting to return to pre-pandemic levels, but supply shortages remain a hot-button issue from coast to coast. Shaun Cathcart, CREA’s Senior Economist, adds that if building materials for homes were more readily available, the housing crisis would start to be under control: “As far as campaign promises around building more homes, at least we are finally having the right conversation.
But as anyone who has tried to get even a small project done in the last year knows, availability of materials and skilled labour are not dials that can simply be turned up to 11 whenever we decide we need them. And that’s not to mention all the other barriers to building, of which there are many. It’s definitely easier said than done.”

With price growth easing in most areas across the country, it is important that the government continue to seek solutions for developing more affordable housing in desired areas, whether through incentives or a reduction in red tape.

Will Growth in the Canadian Housing Market Continue to Slow in 2022?
It is predicted that the market will continue to level out as the second half of 2021 closes out. However, it would be presumptuous to say that the market will swing back towards historical levels in terms of prices and sales. While many markets are heading in the right direction, the national market is not expected to return to a more neutral (or a less frenzied) territory until at least mid-2022.

Sources:

CREA National Price Map
CREA Stats
Better Dwelling

Posted on RE/MAX Canada blog.

What Is The Difference Between An A lender and a B Lender?

General Yasmin Zargar Shabestari 13 Jan

An insight into differences of A LENDERs, B LENDERs, and PRIVATE LENDERs

People will often ask if a mortgage is with an A or B lender; however, few are aware of what these terms mean. The big banks will often refer to themselves as A lenders (which they are) with all others being B lenders in an attempt to make themselves sound superior.

The truth is that this has nothing to do with the quality of the lender. It has to do with the profile of the client.

A lenders cater to borrowers with good credit and qualifying income.  B lenders cater to borrowers who do not fit within the guidelines of an A lender. People with poor credit, non-qualifying income, or other challenges would be declined by an A lender, but they are perfect candidates for B lenders.

How much downpayment do you need?

A lenders look for qualifying credit and income. They offer insured mortgages so their minimum required downpayment is as low as 5%. B lenders focus more on the down payment. The minimum down payment with a B lender is 20%; however, each application is assessed individually, and down payment/equity requirements can vary by the application.  In some cases, the lender may require 25, 30, or even 35% down payment/equity in the property for them to consider lending on it.

Where is the property located?

Location is another important consideration. B lenders have a preference for properties in larger areas, as they consider them to be more saleable. A home in Toronto would be of more interest to them than a home in Parry Sound for example. The further away from a metropolitan area, the harder it can be to find a B lender interested in lending on that property.

 

How Mortgage Rates Differ Between A and B Lenders

As B lenders are taking on more risk, their rates are approximately 1.25% – 2% higher than rates from A lenders.  B lenders will usually charge a 1% lender fee as well. They are meant to be short term solutions, so the term length is usually only one or two years.  The idea is to convert your mortgage to an A lender at significantly lower rates once your credit or income situation improves.  Every situation is a little different, however.

Could an A Lender  Also Be a B lender?

Yes, that’s right!

Many A lenders will also have a B division, just as some B lenders have A divisions.  Therefore, they can be an A lender and a B lender at the same time. They will usually lean to one side more than the other, and each side would have its own unique rules and guidelines.

 

Most monoline lenders fall into the A lenders’ category. And most of them also have strong B divisions. Monoline lenders are a great alternative for banks by offering competitive rates and having lower penalties.

Private Lenders

There are always going to be situations where some may not qualify with either an A or a B lender.  In these cases, private lenders are there to pick up the slack. Private lenders are generally (but not always) individuals looking to invest their money in mortgages.  Rates are often between 7-8% on first mortgages or 10-13% on 2nd mortgages. Private lenders will often charge a 1% fee, but in some situations, the fee can be higher.  While brokers get paid by A and B lenders, we don’t get paid anything by privates, which means there will be a fee from the broker as well.  While private mortgages are the most expensive, they can bail people out of sticky situations without them needing to sell their homes.

Sometimes bad things happen to good people, and even the most solid and creditworthy individuals can go through rough patches where they need a temporary bailout. B lenders and private lenders can fill this requirement until they get their lives back on track.

By Paul Meredith| Mortgage Broker

TOP 5 THINGS MILLENNIALS SHOULD KNOW WHEN BUYING REAL ESTATE

General Yasmin Zargar Shabestari 23 Apr

There are 9 million Millennials in Canada, representing more than 25 percent of the population. Born between 1980 and 1999, the eldest are in the early stages of their careers, forming households and buying their first homes. Buying a home is a daunting process for anyone, but especially so for the first-time homebuyer. This is the largest and most important financial decision you will ever make and it should be done with the appropriate investment in time and energy. Making the effort to be financially literate will save you thousands of dollars and assure you make the right decisions for your longer-term financial security.

1. Don’t rush into the housing market–do your homework: learn the basics of savings, credit, and budgeting.

Lifelong savings is a crucial ingredient to financial prosperity. You must spend less than you earn, ideally saving at least 10 percent of your gross income. Put your savings on automatic pilot, having at least 10 percent of every paycheck automatically deducted. The money you don’t see you won’t spend. Contributing to an RRSP, at least enough to gain any matching funds your employer will provide, is essential. The Tax-Free Savings Account (TFSA) is an ideal vehicle for saving for a down payment and now you can contribute as much as $10,000 a year.

Continue reading →

WHAT YOU NEED TO KNOW ABOUT MORTGAGES AN ITS TERMINOLOGY

General Yasmin Zargar Shabestari 22 Oct

Mortgage [ˈmôrɡij] NOUN
With a residential mortgage, a home buyer pledges his or her house to the bank. The bank has a claim on the house should the home buyer default on paying the mortgage. In the case of a foreclosure, the bank may evict the home’s occupants and sell the house, using the income from the sale to clear the mortgage debt.

Mortgages in a Nutshell
Since homes are expensive, a mortgage is a lending system that allows you to pay a small portion of a home’s cost (called the down payment) upfront, while a bank/lender loans you the rest of the money. You arrange to pay back the money that you borrowed, plus interest, over a set period of time (known as amortization), which can be as long as 30 years.

When you get a mortgage loan, you are called the mortgagor. The lender is called the mortgagee.

How Do You Get a Mortgage?
The companies that supply you with the funds that you need to buy your home are referred to as “lenders” which can include banks, credit unions, trust companies etc.

Mortgage lenders don’t lend hundreds of thousands of dollars to just anyone, which is why it’s so important to maintain your credit score. Your credit score is a primary way that lenders evaluate you as a reliable borrower – that is, someone who’s likely to pay back the money in full WITHOUT a lot of hassle. A score of 680-720 or higher generally indicates a positive financial history; a score below 680 could be detrimental, making you a higher risk. Higher risk = higher rates!

How Mortgages Are Structured
Down payment: This is the money you must put down on a home to show a lender you have some stake in the home. Ideally you want to make a 20% down payment of the price of the home (e.g., $60,000 on a $300,000 home), because this will allow you to avoid the extra cost of Mortgage Default Insurance which is mandatory with all down payments of less than 20%.

Every mortgage has three components: the principal, the interest, and the amortization period.

Mortgages are typically paid back gradually in the form of a monthly mortgage payment, which will be a combination of your paying back your principal plus interest.

  1. Principal: This is the amount of money that you are borrowing and must pay back. This is the price of the home minus your down payment
    taking the above example, purchase price $300,000 minus $60,000 down payment to get a mortgage (principal) of $240,000.
  2. Interest rate: Lenders don’t just loan you the money because they’re nice guys. They want to make money off you, so you will be paying them back the original amount you borrowed (principal) plus interest—a percentage of the money you borrow.The interest rate you get from the lender will vary based on: property, lender, credit bureau, employment and your personal situation.
  3. Amortization means life of the mortgage, or how long the mortgage needs to be, in order to pay off the complete loan (principal) plus interest. Mortgage loans have different “amortizations,” the two most common terms are 25 & 30 years.Within the life of the mortgage (amortization) you will have a Term. The length of time that the contract with your mortgage lender including interest rate is set up (typically 5 years). After your term completes, you can renew your mortgage with the same lender or move to a new lender.

WHEN TO GET A MORTGAGE

First Step: connect with a Mortgage Broker for a mortgage before you start hunting for a home. You need to know what you can afford – especially with all the new government regulations.

Ideally you need a mortgage pre-approval, which an in-depth process where a lender will check your credit report, credit score, debt-to-income ratio, loan-to-value ratio, and other aspects of your financial profile.

This serves two purposes:

  1. It will let you know the maximum purchase price of a home you can afford.
  2. A mortgage pre-approval shows home sellers and their realtors that you are serious about buying a home, which is particularly crucial in a hot housing market.

Types of Mortgages
How do you figure out which mortgage is right for you? Here are the 2 main types of home loans to consider:

  1. Fixed-rate mortgage:This is the most popular payment setup for a mortgage. A fixed mortgage interest rate is locked-in and will not increase for the term of the mortgage.
  2. Variable rate mortgage aka Adjustable Rate Mortgages (ARM) A variable mortgage interest rate is based on the Bank of Canada rate and can fluctuate based on market conditions and the Canadian economy. A mortgage loan with an interest rate that is subject to change and is not fixed at the same level for the life of the term. These types of mortgages usually start off with a lower interest rate but can subject the borrower to payment uncertainty.

How to Shop for a Mortgage?
Use a mortgage broker, a professional who works with many different lenders to find a mortgage that best suits the needs of the borrower.

Brokers specialize in Mortgage Intelligence, educating people about mortgages, how they work and what lenders are looking for. Everyone’s home purchasing situation is different, so working with us will give you a better sense of what mortgage options are available based on the 4 strategic priorities that every mortgage needs to balance:

  • lowest cost
  • lowest payment
  • maximum flexibility
  • lowest risk

Most Canadians are conditioned to think that the lowest interest rate means the best mortgage product. Although sometimes that is true, a mortgage is more than just an interest rate. You can save yourself a lot of money if you pay attention to the fine print, not just the rate.

Banks tend to concentrate on the 5 year fixed mortgage rate (since that’s the best option for them)… rates are important, however your Dominion Lending Centres mortgage professional will look at the total cost of the mortgage. Brokers will advise & explain mortgage options, help you understand the implications of your choice and help you avoid the pitfalls of choosing a mortgage based on rates alone.

 

KELLY HUDSON
MORTGAGES 101 – WHAT YOU NEED TO KNOW ABOUT MORTGAGES
Dominion Lending Centres – Accredited Mortgage Professional

4 Ways to Make Your Mortgage Process Smoother

General Yasmin Zargar Shabestari 5 Sep

Tips for an easier and smoother home-buying process

Mortgages are complicated—we get it! But there are steps that you as a home-buyer can take to make the process a much smoother one (plus let you walk away with the sharpest rate!)

1. Use a Broker
This should be the first step you take when getting a mortgage! Enlisting a trusted broker to work with you can help you secure the sharpest rate and the right mortgage product too! This is one of the biggest (if not the biggest) purchase you will make in your lifetime. Working with a professional will make all the difference.

2. Budget, Budget, and Budget Some More
Budgets aren’t the most glamorous element of home-buying but they are a necessity. Why? Because often you will have overlooked costs that can make or break you getting into your home. A few things to consider:
• Property transfer taxes
• Legal fees
• Home inspection/appraisal fees
• Down payment (this is kind of a big one)
• Mortgage insurance
And the costs don’t stop once you own the home.

3. Understand the Importance of the Down-Payment
Many home-buyers focus on just simply putting money aside for the down payment. While this is crucial, there are other considerations.
• How big of a down payment can you make? You must meet the federally mandated minimum down payment: 5% for all mortgages up to $500,000, and 10% on any portion above $500,000 up to $999,999.99 (CMHC-insured mortgage loans are only available on properties valued under $1 million). But the size of the down payment will also reduce the interest you pay out over the life of your mortgage and reduce the size of the CMHC mortgage premium too.
• Take advantage of the Home Buyer’s Plan to withdraw up to $25,000 tax free from their Registered Retirement Savings Plan (RRSP). This can help to supplement your down payment as long as you understand the rules for paying it back.
• Leave plenty of time to transfer the funds from whichever source you are pulling them from. You will also need to leave adequate time for a certified or cashier’s cheque to be produced before the closing

4. Don’t Become Hyper Focused On the Rate
Yes, the rate is important, but don’t be hasty and jump into a mortgage purely based on the rate. Consider other areas such as the terms, the penalty to break, the amortization, and all other factors before signing on the dotted line. Your broker can help you to understand the ins and outs of a mortgage.

Considering these four things can help you be more prepared when beginning the mortgage process. Remember, a Dominion Lending Centres mortgage broker will help you and guide you through each of these things to ensure you are getting the best mortgage possible and with minimal stress too!

 

4 Ways to Make the Mortgage Process Smoother
Geoff Lee
Dominion Lending Centres – Accredited Mortgage Professional