John Haddock - The Mortgage Centre

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Equifax identified several areas within the mortgage market where borrowers are expected to face financial stress, particularly among the 750,000 mortgages that will be renewing over the next 12 months.

Equifax estimates that 10% of mortgage consumers could see a “renewal-triggered payment shock.” As of March, Equifax says approximately 3% of the total mortgage market has so far seen their mortgage payments increase by 45%, while another 5% have experienced a payment shock of about 30%.

Another 8% of current fixed-rate mortgage holders are expected to face payment shock over the next 12 months.

Among borrowers of all credit products, Equifax said roughly 1.3 million have already missed payments over the past year.

Another three million consumers are considered in the “medium high” risk bucket, which consists of individuals that have a reduced cash flow, high revolving debt, lower income levels and that have reduced their non-mortgage debt payments.

“This cohort is at increased risk of moving towards that financial stress and needs to be monitored closely,” said Kathy Catsiliras, VP of Analytical Consulting at Equifax.

When you know who you are talking to, the conversation with them becomes that much easier. Talking to your clients 55 and better about the CHIP Reverse Mortgage is no exception. HomeEquity Bank’s 55+ clients fall into 4 distinct groups, each with unique financial needs:
“I need to alleviate the stress of debts”
This customer may be struggling with mortgage payments and credit card bills. They may be putting their children’s needs ahead of their own and helping with a down payment on a home. They prefer not to access their savings or investment portfolio. These clients are looking for a solution to ease their financial stresses.

“I need to pay for an unplanned expense”
This customer may face an unexpected home repair, such as a leaky roof. They may have to retrofit their house for mobility reasons or hire in-home healthcare for day-to-day living. They are facing a short-term financial strain and need funds to bridge the gap and care for a necessary cost.

“I want to live life to the fullest”
Many Canadians 55+ finally have the time to do what they want but not the funds to do so. They may want to purchase a summer property or enjoy dining out more. This client wants to live the retirement lifestyle they’ve always dreamed of.

“I need to maintain my standard of living”
Many people find it difficult to adjust their lifestyle after they retire. They are experiencing a shortfall in their retirement funds and may need to supplement their monthly income or augment their pension income.
To identify which group your 55+ client falls into, listen to conversational cues, and ask relevant questions. Their answers will help you determine which group suits them best and how to introduce the idea of the CHIP Reverse Mortgage.
Reply to this email to learn more about this demographic and explore opportunities to grow our business together!

Sincerely,

4.59%
5 year fixed.....DONE!

It’s no secret that many Canadians are approaching retirement with a small windfall in the bank. In fact, a recent study revealed that 32% of Canadians nearing retirement have no savings at all.
This combination of low (or no) retirement savings, increased living costs, and longer lifespans means many Canadians need help to financially support their retirement. They might feel pressure to downsize, rent, or move into a retirement home because they think they have no other options. This often results in leaving the community they call home and having to say goodbye to the personal connections that become even more vital later in life.
Luckily, there’s an alternative solution that can help your clients keep the life they want in the home they love. The CHIP Reverse Mortgage by HomeEquity Bank can help your older clients age in place by giving them access to up to 55% of their home’s equity in tax-free cash. And with no monthly payments as long as they live in their home full-time, they will continue to enjoy the benefits of home ownership, such as the appreciation of the home’s value, enjoying their familiar neighborhood, and living among the memories they’ve created over the years.
Contact me to learn more about how the CHIP Reverse Mortgage can help your clients stay in the home they love and enjoy the retirement they deserve!

Interest rates are hitting hard!

But we can still get 4.88%!

For one would-be property owner, the latest interest rate hike is a setback Another hike in interest rates marks one more step back in Montrealer Elyse Gamache-Belisle's journey to home ownership. The single mother of two works as a project manager and has been collecting thousands of cans and cashing in her empties for a down payment on a property.

OTTAWA – On Wednesday, October 26, 2022, the Bank of Canada will announce its decision on the target for the overnight rate. A press release will provide a brief explanation of the decision. The Bank will also publish its quarterly Monetary Policy Report (MPR) at the same time as the rate decision.
https://www.bankofcanada.ca/2022/10/fad-announcement-release-mpr-october-26-2022/

“There is a heightened risk of rapid, disorderly repricing which could interact with – and be amplified by – pre-existing vulnerabilities and poor market liquidity,” said Tobias Adrian, the IMF’s financial counsellor, in the introduction to that report."

IMF cuts 2023 forecast, warns ‘worst is yet to come’ for global economy In its latest outlook, the International Monetary Fund says more than a third of the world economy will contract next year, but central banks still need to raise interest rates to curb inflation

https://news.ontario.ca/en/release/3016/new-measures-make-homeownership-a-reality-for-low-income-renters-in-ontario

New Measures Make Homeownership A Reality For Low-Income Renters In Ontario

t is now easier for Ontario families to buy a home and enter the housing market through new rules under the Canada-Ontario Affordable Housing Homeownership Program.

The Government of Ontario has increased from $62,600 to $75,800 the maximum amount a household can earn to be eligible to receive interest-free down- payment assistance loans under the program. In addition, the maximum price of homes eligible for purchase through the program has risen to reflect average market selling prices.

The maximum amount a household can earn to qualify for the program may vary among municipalities. The maximum price of eligible homes is updated quarterly based on average resale prices in your area. Municipalities may establish their own maximum house price and household income limits provided it is consistent with the program requirements. You may consult the list of maximum house prices and the list of income limit by municipality.

Ontario Newsroom

If there’s one thing Canadians are concerned about right now, it’s inflation. Many Canadians are asking, “How high will prices go?” and “How long will this inflation last?” and the truth is, we’re all uncertain. With rising interest rates and inflation hitting all time highs.

We are still able to secure 3.99% so its not all bad!

The Bank of Canada (BoC) will bring its aggressive rate hike cycle to a close in September with a final 0.75% increase, says CIBC's Managing Director Ian Pollick. In a note sent out to clients, Pollick forecasts that a 75-basis-point increase will come at the BoC's next meeting, bringing the overnight rate to 3.25%.

Economists predict Bank of Canada will hike key interest rate by 0.75 per cent on Wednesday!

Bank of Canada expected to make sharpest interest rate increase since 1998 Canada’s central bank is expected to raise its benchmark rate by three-quarters of a percentage point on Wednesday, three times the size of a typical interest rate hike

https://www.theglobeandmail.com/investing/personal-finance/retirement/article-should-milo-and-maeve-take-out-a-reverse-mortgage-on-their-house/

In their 60s with their house their main asset, Milo and Maeve are finding it tough to get by on government benefits alone. Maeve is age 66, Milo 69. They both earn a little extra working part-time.

“There is about $410,000 in equity in our home, but we are low income seniors and can’t get a line of credit,” Maeve writes in an e-mail. “We have no private pensions, investments or dividends.” Their situation is not unusual.

They are hearing conflicting reports about reverse mortgages, “but for a couple like us, with no kids to worry about leaving money to, it seems to make sense,” Maeve writes.

“We would like some cash on hand for expenses like vet bills for our kitties, new eyeglasses for each of us and perhaps the occasional short trip.”

Their goal is to stay in their house as long as possible by “adapting it to our needs as we age,” she adds. That entails adding a main floor bathroom.

Because they are an hour or so from Toronto, the rental market in the small town where they live is “incredibly tight,” Maeve adds. They don’t want to sell, “but we don’t have a nest egg to help with unforeseen home costs like the new furnace we just got!”

Does a small reverse mortgage make sense?

We asked Warren MacKenzie, head of financial planning at Optimize Wealth Management in Toronto, to look at Maeve and Milo’s situation. Mr. MacKenzie holds the certified financial planner, chartered professional accountant, and chartered investment manager designations.

What the expert says
“For many people, a successful retirement comes from keeping busy, enjoying one’s home and neighbourhood, living in the moment and making the right financial choices,” Mr. MacKenzie says. For Maeve and Milo, though, living on a fixed income has been constraining so they have an important choice to make.

“They’re struggling to make ends meet,” the planner says. Their monthly cash outflow is about $4,300. The inflow from Canada Pension Plan, Old Age Security, the Guaranteed Income Supplement and part-time work is $3,900 a month, leaving them with a shortfall of $400 a month. “This is not a huge deficit, but month after month it adds up,” he says. Occasional car expenses, a new appliance, and veterinary bills only add to their financial woes.

The cash flow problem has existed for a few years, Mr. MacKenzie says. “When they last renewed their mortgage, they increased it by enough to pay off their credit cards and give themselves a cushion,” the planner says. “That cushion has been used up and they’re no longer able to get a larger conventional mortgage.”

With their house recently appraised at $600,000, and an existing mortgage of about $190,000, they have home equity of about $410,000. Their only investment is $500 in a tax-free savings account. They have credit card and income tax bills totalling $3,400.

“Aside from the cash flow problem, Milo and Maeve are enjoying retirement,” Mr. MacKenzie says. “They love their home and garden and living in a community where their friends live,” he says. “Their part-time work for a few hours each week gives them a small amount of cash and a real sense of purpose.” Most evenings they enjoy sharing a bottle of wine with dinner, watching a movie and playing with their two cats.

Next year, they want to spend $20,000 to put a bathroom on the main floor to make it easier to “age in place.” When the time comes, if it’s necessary, they’re okay with moving to a government-subsidized nursing home, the planner says.

To solve their cash flow problem, Maeve and Milo have some options.

They could sell their house and rent an apartment, but they don’t want to and rents in their town are high and rising, the planner says. If they sold and invested the proceeds, any taxable income earned on their investments “would result in a significant reduction in their guaranteed income supplement,” he says.

An alternative would be to reduce their discretionary spending. “They can stop drinking wine with dinner, give away their pet cats to save pet food and vet costs, cut back on the movie channels they subscribe to, and spend less on their flower garden and groceries,” Mr. MacKenzie says. “This would solve the cash flow problem, but they’d be giving up many things that now make their lives enjoyable.”

Or they can take a reverse mortgage large enough to pay off the existing debts, including the cost of the new bathroom. “By not having to make the monthly payments of $1,005 on their existing mortgage, they’ll be able to enjoy their home and lifestyle more.”

Maeve and Milo understand that with a reverse mortgage, the compound interest will eat into their estimated $410,000 in home equity. “If we assume 2-per-cent inflation and a 7-per-cent interest rate on a reverse mortgage large enough to pay for the new bathroom and retire the existing debts – and if they make no monthly payments – in 10 years time the reverse mortgage will be about $425,000,” he says.

Over the same 10 years, if their house increases at an average annual rate of 2 per cent, it would be worth about $755,000. “So, in nominal dollars, the equity in their home would be reduced to about $330,000.” If inflation averages 2 per cent per annum, in 10 years time this $330,000 would be worth about $270,000 in dollars with the same purchasing power as they have today, the planner says. This means that over 10 years their net equity will have decreased by about $140,000 (net equity today of $410,000 minus net equity adjusted for inflation of $270,000 in 10 years).

After 20 years, when Maeve is 86 and Milo is 89, using the same assumptions, their equity will have shrunk to about $60,000. “They can’t be forced to sell and they can stay in their home as long as they want to,” Mr. MacKenzie says.

With no monthly payments on the reverse mortgage, and assuming the same level of spending, Maeve and Milo would have an annual cash flow surplus. This could serve as an emergency fund for household maintenance, car repairs, and medical and dental bills for themselves and their pets.

If they can afford to, the couple could tuck away some of this surplus in their TFSAs to partly offset the decline in their home equity.

“They might decide it would be worth using up some or all of their home equity so they could continue to enjoy, and even improve, their current lifestyle,” the planner says. The couple should get legal advice before taking out a reverse mortgage.

Should Milo and Maeve take out a reverse mortgage on their house? Couple are otherwise enjoying retirement and want to ‘age in place.’ Is a reverse mortgage the solution?

https://www.theglobeandmail.com/business/article-its-hip-to-be-bear-business-leaders-join-chorus-of-economic-doomsayers/

This is a good article but what it fails to tell you is the cyclical forces at hand.
Remembering the gas shortages of the late 70’s which was a run away supply and demand issue – Canada had just spent an unprecedented amount of money bringing in Health Care and new welfare programs that cost Canadians a small fortune. Inflation began to sore as Canada printed money. Canadians and Americans also had a new form of wealth to go out and spend THE VISA CARD was Launched Internationally in 1974! Mostly due to a new act that was signed by President Gerald Ford (signs) the Equal Credit Opportunity Act, prohibiting creditor discrimination based on protected characteristics along with The rise of inflation in the 1970s altered mortgages into the products we know now. Products that took mortgages up to 30 years. To combat that they raised interest rates. From 5% in 1975 to 12.5% by 1979. Then the eighties hit and more credit was launched than ever before. Charge It became a way of life. It took all of the eighties and then a massive recession at the end of the eighties to halt inflation. The lack of demand simmered the inflation and bank rates to a manageable amount around the 6-9% Interest. It held steady until the tech boom collapse in 2001. When rates were dropped slightly. Again borrowing (new trickery of borrowing and leveraging called “Unconventional Lending”) took off and inflation began to increase until the GREAT RECESSION in 2008 that crippled inflation – Nothing sold or sold for far less than what it was worth. Inflation went negative.
Now we have a pandemic that has allowed us to save money, Governments have spent more on the pandemic than anything else in history (over $600 billion) and leverage wealth causing a huge demand on goods again – Supply and demand – high demand – Higher the cost of goods. So now we see a inflationary rate set to rise again to drive up interest rates – prediction 5.5-7.5% interest rates in the next 18 months and a 5-7 year crawl out in order to manage the inflation problem. Unless we have a reset. If we see a single one day drop in the markets – maybe September or October – that drop is up to 5-6% in a single day – That could push us in to a sell off – the average person losing a substantial amount in the market and their retirement fund. Housing prices drop and settle to a decline in a average home of about 15% to the higher over 2-3 million could see as much as 30% correction.

If we follow the 70’s we could see a consistent inflationary increase month over month. The devaluation of hard currency is a serious concern. Fortunately it is a global issue!

This is just my thoughts.

It’s hip to be bear: Business leaders join chorus of economic doomsayers Those choosing to see the economic bright side are rapidly vanishing, as the word ‘recession’ is tossed around by economists, business leaders, politicians and workers alike

A 50-bps Bank of Canada rate hike in June is now “virtually guaranteed”
https://www.canadianmortgagetrends.com/2022/05/a-50-bp-rate-hike-in-june-is-virtually-guaranteed-after-aprils-hot-inflation-reading/

A 50-bps rate hike in June is "virtually guaranteed" after April's hot inflation reading - Mortgage Rates & Mortgage Broker News in Canada Inflation continued to increase in April, raising the odds that the Bank of Canada will respond forcefully with at least a 50-bps rate hike at its June meeting.

The Bank of England sent a stark warning that Britain risks a double-whammy of a recession and inflation above 10 per cent as it raised interest rates on Thursday to their highest since 2009, hiking by quarter of a percentage point to 1 per cent.
https://www.theglobeandmail.com/business/international-business/european-business/article-bank-of-england-raises-interest-rates-to-1-despite-looming-recession/

Bank of England warns of recession risk, 10% inflation as it raises interest rates again The Bank of England raised interest rates on Thursday to their highest since 2009, hiking by a quarter-point to 1%

WE OFFER:
1 Hour Approvals (from Disclosure)
24 Hour Closings
All in house Private Funds
Up to 80% LTV
Purchases and Refinances
1st mortgage rates starting at 3.99%
2nd mortgage rates starting at 5.99%
Offering fully open and closed mortgages
1 year Interest only terms
No GDS/TDS requirements
Tax Arrears
High rise and Low rise condos
Over 55? Reverse Mortgages as low as 5.99% with no renewal fees.
Minimum Fees less than 1%

With all this extra home equity, many homeowners have the option to unlock cash that they need—without having to sell their homes or take out expensive personal loans. Instead, they can tap into their equity through a home equity loan, a home equity line of credit (HELOC), or a cash-out

The Smartest Ways to Tap Your Home Equity Homeowners have three main options for unlocking their home equity: a home equity loan, a home equity line of credit (HELOC), or cash-out refinancing.

Following a strong rebound in 2021, the global economy is entering a pronounced slowdown amid fresh threats from COVID-19 variants and a rise in inflation, debt, and income inequality that could endanger the recovery in emerging and developing economies, according to the World Bank’s latest Global Economic Prospects report. Global growth is expected to decelerate markedly from 5.5 percent in 2021 to 4.1 percent in 2022 and 3.2 percent in 2023 as pent-up demand dissipates and as fiscal and monetary support is unwound across the world.

https://www.worldbank.org/en/news/press-release/2022/01/11/global-recovery-economics-debt-commodity-inequality

Global Growth to Slow through 2023, Adding to Risk of ‘Hard Landing’ in Developing Economies Following a strong rebound in 2021, the global economy is entering a pronounced slowdown amid fresh threats from COVID-19 variants and a rise in inflation, debt, and income inequality that could endanger the recovery in emerging and developing economies.

Need Money? Need home repairs? Need help to buy that next home? BUT........

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We do that!

JOHN HADDOCK
THE MORTGAGE CENTER
Licence: M17001540
Phone: 1-888-556-7910

11685 Yonge Street, Suite A301
Richmond Hill, Ontario L4E 0K7
https://www.mortgagecentre.com/johnhaddock
https://www.mortgagecentre.com/app/johnhaddock

John Haddock - The Mortgage Centre 30 years experience in private business, I have the ability to listen and work strongly with the cli

At HomeEquity Bank, we’re proud to offer lending solutions that help you help your 55+ clients live their retirement on their terms. Our flagship product, the CHIP Reverse Mortgage, lets your clients access up to 55% of the value of their home in tax-free cash.

Call today !!

John Haddock - The Mortgage Centre updated their address.

Not as bad as the 70's but certainly could be reminiscent of the late 80's!

Prepared? Make sure you have capital at your disposal!

https://www.macleans.ca/economy/inflation-worsening-2022-canada/

Inflation is about to get way worse in 2022—and nearly everyone in Canada will feel the pinch Canada is headed for an economic inflation that won't rival the double digits of the 1970s, but the experts say you'll definitely feel it

Don't Forget!
New mortgage stress test rules are coming June 1.

Need help?

https://globalnews.ca/news/7880498/canada-mortgage-stress-test-rules-osfi/

New mortgage stress test rules are coming June 1 The qualifying rate for residential mortgages with a down payment of 20 per cent or more will rise to the contracted rate plus 200 basis or 5.25 per cent, whichever is higher.

Over Half (53%) of Canadians Within $200 of Not Being Able to Cover Their Bills and Debt Payments, Up 10 Points Since December Reaching a Five-Year High
One in three already technically insolvent, up 7 points
April 08, 2021 07:16 ET | Source: MNP Ltd.

The reality was in 2019 and actually stalled this process in 2020 in many peoples favor.

https://www.globenewswire.com/news-release/2021/04/08/2206577/0/en/Over-Half-53-of-Canadians-Within-200-of-Not-Being-Able-to-Cover-Their-Bills-and-Debt-Payments-Up-10-Points-Since-December-Reaching-a-Five-Year-High.html

Over Half (53%) of Canadians Within $200 of Not Being Able to Cover Their Bills and Debt Payments, Up 10 Points Since December Reaching a Five-Year High One in three already technically insolvent, up 7 points ...

Across the country, first-time homebuyers are getting more anxious about the market they’re facing.

https://ca.news.yahoo.com/no-silver-bullet-fixing-toronto-235257618.html

There’s no ‘silver bullet’ for fixing Toronto’s housing affordability crisis. But here are five ways to ease the pain Across the country, first-time homebuyers are getting more anxious about the market they’re facing. A new survey from Royal LePage and mortgage insurer Sagen conducted in February and March found nearly two-thirds of Canadians who bought their first home within the last two years had feared missin...

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