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<p>Today, the Bank of Canada decided to keep its main interest rate steady at 5.0%. They're worried about prices going up too fast (inflation), even though the Consumer Price Index only rose by 2.9% in January. Here's a summary of what the Bank said:</p><p><strong>In Canada:</strong></p><p>- The cost of housing is still high and is the main reason why prices are going up.<br>- Prices for other things are also going up by about 3% to 3.5% each year.<br>- Canada's economy grew a bit more than expected last year, but it's still not doing as well as it could.<br>- People are spending a little more, but businesses aren't investing as much.<br>- More goods are being sold overseas, which is helping the economy.<br>- Not as many people are getting jobs compared to the number of people who want them.<br>-The Bank thinks there's still too much stuff available compared to how much people want to buy.<br></p><p><strong>In the world:</strong></p><p>- The global economy slowed down at the end of last year.<br>- The United States is doing okay, but Europe is struggling.<br>- Prices in the U.S. and Europe are not rising as fast.<br>- Interest rates have gone up a bit, but loans for businesses are becoming cheaper.<br>- Stock markets are doing well.<br>- Oil prices are a bit higher than expected.<br></p><p><strong>Looking ahead:</strong></p><p>The Bank thinks prices will stay high for the first part of this year before coming down a bit. They're worried about prices staying high for too long.<br></p><p>High interest rates are causing households to spend less on non-essential items when they renew their mortgages, facing higher monthly payments. As the economy slows down in the first half of this year, the Bank of Canada (BoC) is expected to hint at easing its policies. This could occur at the next meeting on April 10, where policymakers will update economic projections, potentially paving the way for a rate cut in June.</p><p>If your mortgage is coming up for renewal soon - reach out to us at <a href="mailto:mortgages@snezhana.ca">mortgages@snezhana.ca</a> to discuss your options.</p>

Bank of Canada Rate update - March 6th, 2024

<p>Are you in the process of buying a new home but finding yourself in need of some extra financial support to bridge the gap between selling your current home and purchasing a new one? Bridge financing could be the solution you're looking for. In this guide, we'll walk you through everything you need to know about navigating bridge financing as a homebuyer.</p><h2>What is Bridge Financing?</h2><p>If you're in the process of purchasing a home, you might have come across the term "bridge loans" and questioned their purpose and necessity. For first-time homebuyers, bridge loans typically aren't a financial tool to contemplate. However, if you're already a homeowner aiming to sell your current property and purchase another, the possibility of requiring a bridge loan alongside a mortgage becomes relevant, contingent upon your specific circumstances.</p><p><strong>Bridge financing</strong> is a short-term loan that helps homebuyers cover the down payment and closing costs on a new home before selling their current one. It essentially bridges the financial gap between the sale of your old home and the purchase of a new one.</p><p>Also known as a bridge loan, this temporary loan allows you to purchase and move into your dream home before your current home's closing date.&nbsp;</p><h3>How Does Bridge Financing Work?</h3><p>When you secure bridge financing, you can use the equity in your current home as collateral to access funds for the down payment on your new home. Once your current home sells, you can use the proceeds to pay off the bridge loan.</p><p>Bridge loans are short-term loans, usually ranging from a few days to up to a 90 days, depending on the lender. They typically have higher interest rates compared to traditional loans due to their short-term nature and higher risk for the lender.</p><h3>Pros and Cons of Bridge Financing</h3><p><strong>Pros:</strong></p><ul><li>Provides flexibility in buying a new home before selling the current one</li><li>Allows you to make a stronger offer on a new home without a sale contingency</li><li>You are free to accept the best offer on your home, regardless of closing date</li><li>You can take your time moving into your new home—and even complete some renovations—instead of moving everything in one day</li></ul><p><strong>Cons:</strong></p><ul><li>Higher interest rates compared to traditional mortgages</li><li>You must have a firm closing date on the property you’re selling to get a bridge loan from your mortgage provider</li><li>Short repayment terms - up to 3 months (with some exceptions)</li><li>Can be risky if your current home doesn't sell quickly</li></ul><figure id="figure-o188hye18slt64r98u"><img id="o188hye18slt64r98u" src="https://cdn.durable.co/shutterstock/20VfwBgYFCBIJqJPNEf3hvUqgz0OLgE3mxJdQVa4xCzkvSpjvGwaDn0XRxhQLdqc.jpeg" alt="Mortgage concept property. coins are stacked in front of the house puzzles. mortgage and real estate investment. Financial agent complete wooden model of the house with last piece with text mortgage." class="object-cover bg-gray-100 rounded-sm md:rounded-md lg:rounded-lg" style="aspect-ratio: 16/9; object-position: center center;" data-corners="default" data-aspect="16:9" data-caption="" data-positionx="null" data-positiony="null" data-fullwidth="false" data-mce-src="https://cdn.durable.co/shutterstock/20VfwBgYFCBIJqJPNEf3hvUqgz0OLgE3mxJdQVa4xCzkvSpjvGwaDn0XRxhQLdqc.jpeg" data-mce-style="aspect-ratio: 16/9; object-position: center center;"></figure><h3>How to Qualify for Bridge Financing</h3><p>If you need a bridge loan, it won't affect your ability to get a mortgage. You don't have to prove your income to qualify for a bridge loan. You just need to have a firm offer from a buyer to purchase the property you're selling. A bridge loan is like an extra loan on top of your regular mortgage - for which you have to prove your income and qualify in a tranditional manner. </p><p>With the bridge loan, your lender gives you the money you'll eventually get from selling your property to help with the whole process.</p><h3>Costs associated with Bridge Financing</h3><p>Bridge loan interest rates are typically higher compared to conventional rates due to their unsecured nature, short-term duration, and the fact that the lender essentially finances the entire house purchase during the bridge loan period. Anticipate interest rates ranging from Prime Rate + 2% to Prime + 4%, translating to approximately 6.95% to 8.95% currently. Additionally, some lenders may impose an application fee of around $250.</p><p>Despite the higher rate, the bridge loan costs could be minimal if you need the bridge loan only for a couple of weeks!</p><figure id="figure-1ivendlvrlt64rbye"><img id="1ivendlvrlt64rbye" src="https://images.unsplash.com/photo-1502005097973-6a7082348e28?crop=entropy&amp;cs=tinysrgb&amp;fit=max&amp;fm=jpg&amp;ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwxN3x8aG9tZSUyMGJ1eWluZ3xlbnwwfHx8fDE3MDkxNDQ5MjR8MA&amp;ixlib=rb-4.0.3&amp;q=80&amp;w=1080" alt="home buying" class="object-cover bg-gray-100 rounded-sm md:rounded-md lg:rounded-lg" style="aspect-ratio: 16/9;" data-mce-src="https://images.unsplash.com/photo-1502005097973-6a7082348e28?crop=entropy&amp;cs=tinysrgb&amp;fit=max&amp;fm=jpg&amp;ixid=M3wyNjI5NjF8MHwxfHNlYXJjaHwxN3x8aG9tZSUyMGJ1eWluZ3xlbnwwfHx8fDE3MDkxNDQ5MjR8MA&amp;ixlib=rb-4.0.3&amp;q=80&amp;w=1080" data-mce-style="aspect-ratio: 16/9;"></figure><h3>Final Thoughts</h3><p>Bridge financing can be a valuable tool for homebuyers who need temporary financial assistance during the transition between homes. It maximize your flexibility when selling and buying your next home.&nbsp;</p><p>Instead of worrying about lining up your closing dates on the same day, consider bridge financing as an easy and cost-effective way to increase your flexibility when your buy and sell dates don’t overlap.</p><p>However, NOT not all lenders offer bridge financing. an experienced, independent mortgage broker will have access to several who do.</p><p>Remember to consult with a financial advisor or mortgage specialist to discuss your specific situation and determine the best course of action for your home buying journey.</p><p>Feel free to email me at <a href="mailto:mortgages@snezhana.ca" data-mce-href="mailto:mortgages@snezhana.ca">mortgages@snezhana.ca</a> to discuss your mortgage options when selling and buying.</p>

Navigating Bridge Financing: A Guide for Homebuyers

<p>As we bid farewell to 2023 and usher in the new year, let's reflect on the economic landscape of Canada and cast our gaze forward to what economists project for 2024.</p><p>The previous year showcased Canada's economic resilience through robust job growth and increased investments in its early months. However, as the year concluded, the impact of elevated interest rates became evident, contributing to a slowdown in both business and consumer activities. This deceleration has led to forecasts of subdued growth in the initial half of 2024. Nevertheless, economists anticipate a gradual economic rebound in the latter part of the year.</p><p>In 2023, the inflation rate commenced at 5.9% and steadily decreased to 3.1% by November (awaiting December's data). Despite the Bank of Canada's expectation that inflation won't reach its 2% target until late 2025, it aims for comfort within the 3% - 2.5% range. The noticeable impact of the Bank of Canada's rate hikes has caused potential buyers to feel excluded from the market, affecting consumer confidence and fostering a 'wait-and-see' approach throughout 2023. Simultaneously, strategic rate adjustments by the Bank of Canada have effectively tempered the housing market's pace, contributing to a gradual slowdown without significantly affecting property values in most regions.</p><p>Canadians in 2023 also grappled with the reality that historically low interest rates are a thing of the past, with these new normal rates becoming a permanent fixture. While there may be some modest decreases in rates in the upcoming year, many Canadians can no longer postpone their entry into the housing market in hopes of further rate drops.</p><p>Looking ahead to 2024:</p><p>Signs are emerging that the tangible effects of the Bank of Canada's rate hikes are taking root. Coupled with the anticipation of inflation dropping below 3%, movements in rates are finally being observed. Anticipated rate cuts from both the Bank of Canada and the US Federal Reserve have prompted a positive response in bond markets, resulting in lowered fixed rates, particularly the 5-year rates. Some insured rates have dropped as much as 1%, fostering competition among lenders. This competition is advantageous for borrowers, particularly first-time home buyers with less than a 20% down payment, as they prepare for the spring market.</p><p>There's a glimmer of hope for Floating Rate holders (Variable or Adjustable). Most economists and markets predict a potential 100 - 150 bps rate cut to the current policy rate in 2024. However, this transition will likely be gradual, with the Bank of Canada proceeding cautiously, implementing gradual decreases while monitoring inflation and the economy. This will benefit Adjustable Rate holders with reduced mortgage payments and Variable Rate holders seeing a shift towards principal repayment.</p><p>With housing affordability and supply shortages pressing all levels of government, there will be a continued push for new construction developments aimed at bolstering the housing supply. Although this issue won't be swiftly resolved, it remains a top priority for all levels of government, emphasizing the ongoing need to address the housing shortage.</p><p>What this means for consumers:</p><p>Approximately $251 billion in mortgages will come up for renewal in 2024, with another $352 billion worth in 2025. As a result, many Canadians will soon face a significant increase in their monthly mortgage payment, requiring adjustments to their spending. However, with numerous lenders vying for business, working with professionals who have access to multiple lenders is crucial for securing better rates and products. Planning ahead of your renewal allows for adjustments to the family budget to accommodate a certain increase in the monthly mortgage payment.</p><p>For those dealing with high-interest debt, now is an opportune time to consider refinancing for debt consolidation, especially with declining rates. This provides a chance to manage debt effectively, acting as a "reset button" to get finances back on track and increase monthly cash flow.</p><p>Lastly, with a growing anticipation that the period of interest rate hikes might be concluding, this prospect is likely to reignite buyer interest in the market. The expected decrease in fixed and variable rates could enhance purchasing power, leading to increased demand in the housing market and a potential uptick in property values. Opting for a variable rate or a short-term fixed rate now allows you to enter the market before the surge in demand, positioning yourself to secure a potentially lower rate in the near future, rather than waiting for rates to drop significantly.</p><p>While uncertainties persist, it's crucial for those planning mortgage transactions in 2024 to review their needs sooner rather than later. Together, we can determine the best course of action that aligns with your family’s budget and needs. I'm here to assist whenever you're ready.</p>

A Look Back At 2023 And What's Ahead For 2024!

man in blue denim jacket facing turned on monitor

<p>The Fall Economic Statement from the federal government focused extensively on Canada's housing situation. Rather than solely addressing the demand for homeownership, most of the new spending aims to tackle the pressing need for adequate and affordable shelter. However, there's a particular item that seems tailored to grab the attention of most homebuyers.</p><p>The Canadian Mortgage Charter aims to strengthen Ottawa's expectations regarding how federally regulated financial institutions should handle vulnerable borrowers. </p><p>It includes provisions such as:</p><p>- Allowing temporary extensions of amortization periods for at-risk mortgage holders</p><p>-&nbsp;Waiving fees and costs that “would have otherwise been changed for relief measures.”</p><p>- Exempting insured mortgage holders from re-qualifying under the stress test during lender switches at mortgage renewal.</p><p>Other requirements involve:</p><p>- Financial institutions contacting homeowners 4 to 6 months ahead of mortgage renewal to make them aware of their options.</p><p>- Granting at-risk homeowners the ability to make lump sum payments without prepayment penalties, and avoiding interest on interest by waiving charges in cases where relief measures result in payments not covering interest.</p><p>While these measures have generally received a positive reception, it's worth noting that most of them are already outlined in guidelines from the Financial Consumer Agency of Canada. They aren't legally binding, and there are currently no plans to enshrine them in legislation.</p><p>Recent surveys indicate that a significant percentage of homeowners facing mortgage renewals, ranging from 35% to nearly 90%, express concerns about potential increases in payments. </p><p>Including the Charter in the Fall Economic Statement seems to be a proactive move to reassure the growing number of homeowners worried about mortgage renewals amid the current high-interest rate environment.</p><p>Reach out if you need to discus your mortgage renewal options. <a data-mce-href="http://www.calendly.com/snezhana" href="http://www.calendly.com/snezhana" data-mce-selected="inline-boundary">Book a call HERE.</a></p>

What is the Canadian Mortgage Charter?

<div class="xdj266r x11i5rnm xat24cr x1mh8g0r x1vvkbs x126k92a"><h3 dir="auto"><strong>The Bank of Canada decided to keep the overnight rate unchanged today</strong>!</h3><div dir="auto"><p><br></p></div></div><div class="x11i5rnm xat24cr x1mh8g0r x1vvkbs xtlvy1s x126k92a"><div dir="auto">So, in today's update, Governor Tiff Macklem talked about how September threw a curveball with lower-than-expected inflation and the economy not flexing its muscles. That's why they're sticking with the 5% overnight rate for now.</div><div dir="auto"><br data-mce-bogus="1"></div><div dir="auto"><figure id="figure-snmd0lav4alo5x9dqz"><img id="snmd0lav4alo5x9dqz" src="https://cdn.durable.co/blocks/1bJCaUsc2u1RwsrIpeecEbiOIPtYBWGd9hooaVjdivvjcNUA7IjgQh4kqoAaLOC7.png" alt="" class="object-cover bg-gray-100 rounded-sm md:rounded-md lg:rounded-lg" style="aspect-ratio: 1/1; object-position: center center;" data-corners="default" data-aspect="1:1" data-caption="" data-positionx="undefined" data-positiony="undefined" data-mce-src="https://cdn.durable.co/blocks/1bJCaUsc2u1RwsrIpeecEbiOIPtYBWGd9hooaVjdivvjcNUA7IjgQh4kqoAaLOC7.png" data-mce-style="aspect-ratio: 1/1; object-position: center center;"></figure><p><br></p></div><div dir="auto"><br></div></div><div class="x11i5rnm xat24cr x1mh8g0r x1vvkbs xtlvy1s x126k92a"><div dir="auto">The latest economic info tells us that the recent rate hikes over the last 18 months are starting to kick in.</div></div><div class="x11i5rnm xat24cr x1mh8g0r x1vvkbs xtlvy1s x126k92a"><div dir="auto">People are finally cutting back because higher rates are messing with their budgets. And businesses are thinking twice about hiring and investing as demand takes a breather.</div><div dir="auto"><br></div></div><div class="x11i5rnm xat24cr x1mh8g0r x1vvkbs xtlvy1s x126k92a"><div dir="auto">Basically, while the rest of us are sweating about the economy slowing down, the Bank of Canada is doing a happy dance because their rate hikes seem to be doing the trick.</div><div dir="auto"><br></div></div><div class="x11i5rnm xat24cr x1mh8g0r x1vvkbs xtlvy1s x126k92a"><div dir="auto">And there is always a BUT - and the Bank wants us to know they're not letting their guard down on inflation. It's still way higher than their magical 2% target, and we might get hit with more rate hikes if prices heat up again or people don't keep their spending in check.</div><div dir="auto"><br></div></div><div class="x11i5rnm xat24cr x1mh8g0r x1vvkbs xtlvy1s x126k92a"><div dir="auto">Even though the rate hikes might be tapping out soon, the burning question is when we'll start seeing rate CUTS. Word on the street from economists is that we might see a rate drop in mid 2024.</div><div dir="auto"><br></div></div><div class="x11i5rnm xat24cr x1mh8g0r x1vvkbs xtlvy1s x126k92a"><div dir="auto">Between now and the last announcement of 2023 on December 6th, the Bank of Canada will be watching key stuff like inflation, jobs, what folks are spending, and GDP.</div><div dir="auto"><br></div></div><div class="x11i5rnm xat24cr x1mh8g0r x1vvkbs xtlvy1s x126k92a"><div dir="auto">They're on the lookout for any signs that the economy is still sizzling. So, it's not exactly the end of the road, but hey, at least we can spot the light at the end of the tunnel.</div><div dir="auto"><br></div></div><div class="x11i5rnm xat24cr x1mh8g0r x1vvkbs xtlvy1s x126k92a"><div dir="auto">Reach out if you have any mortgage related questions: <a data-mce-href="mailto:mortgages@snezhana.ca" href="mailto:mortgages@snezhana.ca" target="_blank" rel="noopener">mortgages@snezhana.ca</a></div></div>

Bank of Canada Rate Announcement

man in purple suit jacket using laptop computer

<p>A co-applicant (also referred to as a co-borrower) is an individual who is applying with the applicant and who will be registered on title and/or on the mortgage. The co-applicant’s income and debts are included in all mortgage calculations.</p><p>A co-signer is a person who is helping the applicants get approved for the mortgage by being added to the application in the same way as an applicant or co-borrower and will also be registered on title. A co-signer may be required if the applicant does not have sufficient income to qualify for the mortgage. The co-signer’s income (and debts) will be included. A co-signer is as fully responsible for the mortgage as the applicant.</p><p>A guarantor is an individual who is not registered on title but who is guaranteeing to the lender that if the applicant fails to meet his or her obligations under the loan the guarantor will meet those obligations. The guarantor’s income and debts are not included in the mortgage calculations unless he or she lives in the same home, however the lender still does a full application on the guarantor to ensure that the guarantor can make the mortgage payments if the applicant defaults. A guarantor may be required if the co-applicant(s) have poor credit but enough income to qualify.</p>

Blog

Bank of Canada Rate update - March 6th, 2024

Navigating Bridge Financing: A Guide for Homebuyers

A Look Back At 2023 And What's Ahead For 2024!

What is the Canadian Mortgage Charter?

Bank of Canada Rate Announcement

Co-Applicant vs Co-Signer vs Guarantor