Patile Danaoghlian - Mortgage Broker

Les frais de clôture, qu’est-ce que c’est?

1. Interest rates: Mortgage interest rates vary from bank to bank.

2. Terms and conditions: Mortgage terms and conditions can vary considerably from lender to lender. Customers may be looking for flexible terms such as prepayment options, the ability to transfer their mortgage, or the ability to convert a variable rate to a fixed rate or vice versa.

3. Fees and charges: Banks often have different fee structures. Customers compare mortgage-related fees, including origination fees, closing costs and prepayment or refinancing penalties.

4. Special offers and rewards: Some banks offer special rewards, such as cash back or reduced rates for the first few years of the mortgage. Customers should shop around to take advantage of these offers.

5. Credit rating and financial situation: A customer's credit rating and financial situation may have improved since they took out their first mortgage. By shopping around, they can explore options that weren't available to them at the outset, which may enable them to obtain better terms.

6. Refinancing opportunities: Customers may want to explore refinancing opportunities to consolidate debt, access home equity or take advantage of lower interest rates. By shopping around, they can find the best refinancing offers.

In short, shopping around allows you to find the most favorable terms, which can save you money and ensure that your mortgage matches your financial goals and needs.
A mortgage broker has access to many lenders and can help customers compare different offers.

Ratios d’endettement, ABD et ATD à quoi servent ils ?

Happy thanksgiving! 🍂

Mortgages in 2022

Rising rates bring many challenges for home buyers. We are seeing more and more mortgage rejections as well as more and more clients who are no longer able to qualify for the desired amount.
There are several reasons why a bank may reject a file:
High debt to income ratio;
Credit history;
New job;
Started a business less than 2 years ago;
Etc
Example :
A client for whom the maximum loan amount was $400,000 in February 2022, taking the qualifying rate of 5.25%, qualifies today for a maximum of $330,000 taking the qualifying rate of 7.25%. However, if we find a better rate where we can qualify at 6.54%, we will be able to get $355,000 for this same client just by going to this lower rate.
Mortgage brokers have access to all available solutions.
If you have been refused by your bank, you can contact me and I will be able to tell you if a solution exists in your specific scenario.

Contact me for more information!

Interest rates

The interest rate landscape has changed dramatically over the past few months, as has the Bank of Canada's rhetoric. In January 2022, the Bank was talking about temporary inflation caused mainly by the various supply chain problems and labor shortages that were expected to be largely resolved with the "end" of the pandemic. The discourse is now, a few months later, very different. The Bank must act quickly and forcefully to curb inflation.

The Bank's main tool is the policy rate. The war in Ukraine is the turning point that changed everything. The massive sanctions against Russia on all fronts, but mainly on oil, have caused the cost of energy to skyrocket around the world with a direct impact on production costs but also greatly impacting transportation costs. Adding these to the inflation of the pandemic, the global inflation figures have risen rapidly.

What the Bank can control is the household spending component of inflation. By raising rates, the Bank takes a percentage of disposable income out of the pockets of Canadians, reducing the amount of money that can be spent in the economy. The higher the rate, the less money Canadians have to spend. Less demand for the same supply will cause prices to "fall" resulting in lower inflation.

It's a dangerous game to play too hard because if the economy slows down too quickly and severely, it could cause a recession. However, the Bank is willing to take this risk because it is counting on the strong job market to get out of a potential recession rather quickly. Currently, the Bank expects high inflation for the next few months with a significant drop in 2023 and a return to the 2% target in 2024.

For the next few months, the Bank suggests that additional increases may be required. The "good news" is that if it takes a recession to get to the target, rates will have to come down to get the economy going again. So I think the variable rate will always be a good choice because you can benefit from future decreases.

In the meantime, if you are in a variable rate, renewing soon, or looking to refinance, there are different strategies available to lessen the impact of temporary interest rate uncertainty. I invite you to contact me to discuss your particular situation and the options available to you.

The Bank of Canada surprised the markets with a full percentage point hike in the overnight rate to 2-1/2%, taking forceful action to stem inflation before it becomes even more entrenched.

A Super-Sized Rate Hike, Signalling More To Come

The Governing Council of the Bank of Canada raised its target for the overnight policy rate by a full percentage point to 2-1/2%. The Bank is also continuing its policy of quantitative tightening (QT), reducing its holdings of Government of Canada bonds, which puts additional upward pressure on longer-term interest rates.

In its press release this morning, the Bank said that "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%."

The Bank is particularly concerned that inflation pressures will become entrenched. Consumer and business surveys have recently suggested that inflation expectations are rising and are expected to be higher for longer. Wage inflation has accelerated to 5.2% in the June Labour Force Survey. The unemployment rate has fallen to a record-low 4.9%, with job vacancy rates hitting a record high in Ontario and Alberta.

Central banks worldwide are aggressively hiking interest rates, and growth is slowing. "In the United States, high inflation and rising interest rates contribute 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 expects global economic growth to slow to about 3½% this year and 2% in 2023 before strengthening to 3% in 2024."

Further excess demand is evident in the Canadian economy. "With strong demand, businesses are passing on higher input and labour 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."

In the July Monetary Policy Report, released today, the Bank published its forecasts for Canada's economy to grow by 3.5% in 2022--in line with consensus expectations--1.75% in 2023 and 2.5% in 2024. Some economists are already forecasting weaker growth next year, in line with a moderate recession. The Bank has not gone that far yet.

According to the Bank of Canada, "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."
Bottom Line

Today's Bank of Canada reports confirmed that 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." Once again, the Bank asserted it is "resolute in its commitment to price stability and will continue to take action as required to achieve the 2% inflation target."

At 2.5%, the policy rate is at the midpoint of its 'neutral' range. This is the level at which monetary policy is deemed to be neither expansionary nor restrictive. Governor Macklem said he expects the Bank to hike the target to 3% or slightly higher. Before today's actions, markets had expected the yearend overnight rate at 3.5%.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

Happy mother’s day! 💐

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Happy Easter to all my clients, family & friends 🌷 🐣

https://globalnews.ca/news/8757132/bank-canada-interest-rate-april-2022/?utm_medium=Facebook&utm_source=GlobalNews&fbclid=IwAR2v8vMYDb7Delv9FUicnQUeEM6x5t9j7SNaNS2yBcMvoUNaM9DIpNkfEvw

Bank of Canada hikes key interest rate 50 basis points for 1st time in 22 years - National | Globalnews.ca The Bank of Canada is raising its key interest rate by half a percentage point, up to an even one per cent, in its first move of that magnitude in more than 20 years.

https://www.centris.ca/en/houses~for-sale~montreal-pierrefonds-roxboro/27066783?view=Summary

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https://www.livabl.com/2022/03/interest-rate-hikes-declines.html

Interest hikes may 'topple' housing market, spark price declines A senior Canada economist with Capital Economics is warning that hikes may “topple,” the country’s housing market and lead to moderate price declines.

Happy International Women's Day!

https://www.livabl.com/2022/03/new-mortgages-dropped-equifax-canada.html

New mortgages noticeably down in Q4-2021: Equifax Canada According to insights in Equifax Canada’s quarterly Market Pulse report, new mortgages fell 8.1 per cent between Q4-2020 and Q4-2021.

https://mailchi.mp/dominionlending/bank-of-canada-hikes-policy-rate-by-25-bps-and-sustains-current-bond-holdings?e=5f3d6a2df5

Bank of Canada Starts Hiking Rates, Signalling More To Come

Bank of Canada Hikes Policy Rate by 25 bps, and Sustains Current Bond Holdings

https://www.livabl.com/2022/03/bank-canada-raises-rates.html

Bank of Canada raised its key lending rate to 0.5 from 0.25 per cent. This rate hike will affect the cost of borrowing for various loans, including mortgages.

Bank of Canada raises rate to cool inflation and hot economy The rate decision comes after months of speculation and plenty of warning from the bank, which wants to raise rates to help calm inflation.

https://www.livabl.com/2022/01/bank-of-canada.html

Bank of Canada holds off on raising interest rates Photo: Supplied Despite soaring inflation, the Bank of Canada opted to hold off on rate hikes until later in the spring, keeping its benchmark interest...

Happy New Year!

INFLATION NEAR 20-YEAR HIGH!

Inflation Surge Is No Need For Hysteria
StatsCanada today reported that consumer price inflation rose to 4.7% from year-ago levels in October, compared to 4.4% in September. This is in line with market expectations and is well below the US's 6.2% pace reported for the same period. Inflation is rising all over the world, the direct result of extreme weather events and supply chain chaos generated the creaky reopening of economies around the world. With pent-up demand surging, delays in production and transportation have led to price hikes in many sectors. Extreme weather conditions have exacerbated these price pressures, driving up food, energy and other commodity prices. The pandemic and climate change are unprecedented exogenous forces and should not be compared to the inflation surge in the 1970s. Nor should we assume that traditional monetary tightening would ease these pressures unless we are willing to run the risk of recession.

Last month, prices rose in all eight major components on a year-over-year basis, primarily driven by the surge in gasoline prices, which spiked 47.1% from year-ago levels. Extreme drought, especially in China, led to a dearth of hydroelectric power and shortages in other energy sources such as coal and natural gas. The shift to oil for power generation boosts the cost of oil and gasoline. It also caused a domino effect in shortages of other essential materials that require intensive energy use in their production, such as fertilizer and aluminum. These feed into shortages of food and metal components that raise the price of many consumer goods. Combine this with disruptions at the ports, in trucking and on the rail lines. It is no wonder that increasing costs and excess demand are driving up consumer prices worldwide.

The question is, would central bank tightening reduce this kind of inflation. I doubt it. Instead, we are likely to see these pressures ease over time (see chart below). The problem is we have repeatedly underestimated the time it would take to work this all out, leading some to call for a quicker response by the Bank of Canada and the Fed, among other central banks, for fear that the inflation will become embedded.

Embedded inflation, caused by rising wages and inflation expectations, led to wage-price spiralling in the 1970s and early 1980s. In Canada, inflation remained high well into the early 1990s because of substantial federal and provincial budgetary spending. I do not believe we are anywhere near that reality today. To be sure, fiscal policy in response to the pandemic has generated extraordinary budgetary red ink, but price pressures today are not the result of budgetary actions.

Bottom Line

Market-driven interest rates have already surged and are reflected in the rise in fixed mortgage rates. Maintaining a steady overnight rate at its effective lower bound has kept the prime rate and variable mortgage rates stable at extremely low levels. Undoubtedly, these rates will rise in time. The Bank of Canada has been clear that it will occur soon than they initially thought. They are nervous about inflation and are now saying a return to the 2% target will not happen until the end of next year.

Just this week, senior leadership at the Bank has taken to the news waves to suggest we are getting closer to full employment. Traders are now betting that the overnight rate target will rise 1.5 percentage points in 2022, beginning in April. Rates will increase, but we are not on the precipice of runaway inflation.
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
[email protected]
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French translation of this email will be available by 5pm ET November 19.
La traduction de ce courriel sera disponible d’ici 17 heures, le 19 novembre.
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Canadian Inflation Hits 18-Year High - Dominion Lending Centres Inflation Surge Is No Need For Hysteria StatsCanada today reported that consumer price inflation rose to 4.7% from year-ago levels in October, compared to 4.4% in September. This is in line with market expectations and is well below the US’s 6.2% pace reported for the same period. Inflation is ris...

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First time home buyer tips!

Bank of Canada RespondsTo Mounting Inflation: Ends QE and Hastens Timing of Rate Hike

https://mailchi.mp/dominionlending/hawkish-bank-of-canada-decision?e=5f3d6a2df5&fbclid=IwAR0DJnMCp70QbdvKeU7CuGgcgWa7A8EpUNxl3zgmlHVOBfpEKvjhAiwO0H8

Hawkish Bank of Canada Decision In response to the Bank's revised view, it announced that it is ending quantitative easing, shifting to the reinvestment phase, during which it will purchase Government of Canada bonds solely to replace maturing bonds. The Bank now owns about 45% of all outstanding GoC bonds.

https://dominionlending.ca/economic-insights/canadian-inflation-rises-once-again

Canadian Inflation Rises Once Again - Dominion Lending Centres Prices are Rising Everywhere–Transitory Can Last A Long Time Today’s release of the September Consumer Price Index (CPI) for Canada showed year-over-year (y/y) inflation rising from 4.1% in August to 4.4%, its highest level since February 2003. Excluding gasoline, the CPI rose 3.5% y/y last mont...

Refinancing your mortgage

https://www.ctvnews.ca/business/cmhc-changes-underwriting-practices-on-mortgage-loan-insurance-1.5497079

CMHC changes underwriting practices on mortgage loan insurance Canada Mortgage and Housing Corp. is easing its underwriting criteria for mortgage loan insurance after changes it made last year were not effective and caused it to lose market share.

Changes to mortgage qualification rule!