BANK OF CANADA RATE ANNOUNCEMENT: Overnight Policy Rate HOLDS STEADY at 5% for the Third Consecutive Meeting

General Kim Stenberg 6 Dec

It was widely expected that the Bank of Canada would maintain its key policy rate at 5% for the third consecutive time. It will continue to sell government securities (quantitative tightening) to normalize its balance sheet. Market participants weighed and measured each word of the BoC press release and assessed that the Bank took a less hawkish stance.

This time, the release said, “Higher interest rates are clearly restraining spending: consumption growth in the last two quarters was close to zero, and business investment has been volatile but essentially flat over the past year. Exports and inventory adjustment subtracted from GDP growth in the third quarter, while government spending and new home construction provided a boost. The labour market continues to ease: job creation has been slower than labour force growth, job vacancies have declined further, and the unemployment rate has risen modestly. Even so, wages are still rising by 4-5%. Overall, these data and indicators for the fourth quarter suggest the economy is no longer in excess demand.”

At the prior meeting in late October, the Bank said that the labour market remained “on the tight side” but acknowledged today that it was loosening. Indeed, the October Monetary Policy Report suggested that the inflation rate would not hit its 2% target level until late 2025.

Today, the tone was much more optimistic, suggesting that policymakers are increasingly confident interest rates are restrictive enough to bring inflation back to the 2% target. Still, Bank officials want to see more progress on core inflation before it begins to ease. It said, “The Bank’s preferred measures of core inflation have been around 3½-4%, with the October data coming in towards the lower end of this range.”

The central bank focuses on “the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour” and remains resolute in restoring price stability.

Bottom Line

Bond yields peaked in early October and have fallen by nearly 100 basis points. This has led to reductions in fixed mortgage rates; however, those cuts have been far less than historical experience would have suggested, given the rally in 5-year government bonds.

Cuts in variable mortgage rates await a reduction in the overnight policy rate, which triggers a commensurate decline in the prime rate, which is currently stuck at 7.2%. I expect the BoC to begin cutting the policy rate by the middle of next year, taking it down a full percentage point to 4% by yearend.

 

Dr. Sherry Cooper | Chief Economist, Dominion Lending Centres

Winterizing Your Home

General Kim Stenberg 5 Dec

We Canadians are no strangers to the chill of the winter season! As we shift into the final few months of 2023, now is a great time to check your home before the cold front hits. Below I have included a few tips that could help you save on bills, prevent future repair costs, and be more comfortable all winter long.

  • Inspect Your Fireplace: There is no better time than now to have your fireplace inspected to ensure optimal efficiency and heat output. Whether you have a wood-burning, gas, or electrical fireplace, proper maintenance can go a long way for your heating bill!
  • Maintain Your Furnace: While you’re having your fireplace inspected, don’t forget to maintain your furnace! If your furnace is getting up there in age, you may want to also consider replacing it as typically newer furnaces are more efficient than the previous generation, which could help save on energy costs. Either way, ensuring your furnace is in working order will guarantee top output and a cozy winter!
  • Clean The Gutters: The last thing you want is your gutters to be clogged when the snow hits! Cleaning your gutters from Fall leaves and other debris will help ensure proper drainage for melting snow. For those who want to go the extra step, consider gutter guards which can help keep out unwanted objects from your gutters.
  • Examine Your Roof: While you’re prepping your gutters for the winter, it is a good idea to also examine your roof. A few things to look for include broken or missing shingles, damaged flashing, staining from water leakage, and ventilation.
  • Consider a Programmable Thermostat: According to experts, a degree drop in your home temperature can measure up to 1% on your heating bill. For those of us who don’t like to have cold feet all season, smart thermostats are a great way to keep warm and optimize your energy savings! Ideally, you want to set your thermostat to turn on in the morning, off when you go to work, and back on in the evening to ensure a toasty welcome.
  • Insulate Windows: Always be sure to check your windows for any gaps or water leakage and get them resealed as soon as possible. If you live in a particularly cold location, consider swapping out your windows to double-paned glass for an added layer of insulation. Another tip to keep the cold from seeping in through your windows is swapping out your curtains for a heavier, thermal-lined set which can do wonders!
  • Check Your Pipes: Checking pipe joints for leaks that could cause rot and damage will save you trouble in the future. Repair any cracks you find, especially those around electrical outlets and alarm system lines. You can also consider foam pipe insulation, which is fairly easy to install and could help prevent energy loss and potential water damage from frozen pipes.
  • Stock Up on Supplies: There are a few things you might want to consider stocking up on ahead of time for the winter season, such as flashlights and batteries, ice melt, extra pet food and canned goods, and an emergency storm kit that includes an extra flashlight, candles, portable radio, water, and snacks.

With a little preparation, you can keep your home in good shape without needing to feel the cold bite of winter!

 

Published by DLC Marketing Team

Avoid Costly Mistakes When Building a New Home

General Kim Stenberg 28 Nov

Building a new home is a super exciting endeavor as you opt to create the perfect space for you and your family. However, building a home is not without its costs and potential surprises… to mitigate bumps on your homebuilding journey and avoid costly mistakes, consider the following tips:

Set a Realistic Budget

When building your own home, it is vital to be realistic about your budget and what you can afford. Making a list of wants versus needs can be a good way to determine what is required, and where you can spend extra money should your budget allow for it. When constructing your budget, don’t forget to include construction costs from materials to labour, as well as permits, inspections, landscaping and unforeseen contingencies. The contingency fund should be approximately 10-15% of your budget put aside to cover unforeseen issues or changes.

Hire Reputable Individuals

From your architect and your contractor to your landscaper and inspector, it is vital to have the right people in the right positions. This will ensure that you not only get the best advice, but experienced individuals will also help to steer you through the process and mitigate potential issues. Be sure to do your research, ask for references and ensure the individual(s) you hire are licensed and insured.

While you’re researching individuals, it can also be a good idea to get multiple quotes. While you may have a contractor you like, reaching out to other individuals can help ensure you’re getting the best rate.

Review Contracts Carefully

Read and understand all contracts and agreements thoroughly between your contractor and yourself, your designer, your home inspector, etc. Ensure that everything is in writing and that you and your builder are on the same page regarding expectations, timelines, and costs.

Make and Follow Your Plan

Once you have your budget and the right people on the project, it is time to make a plan. You must work with an architect or designer to ensure that your new home aligns with your needs, lifestyle and budget. This should also include future plans – do you want to have children? Plan on adopting a pet or two? Possibly need space for an older family member in a few years? Getting this right from the beginning will help to avoid potential changes to the plan down the line, which will reduce expansions to cost and timelines.

Choose Your Materials Carefully

Choosing to invest in energy-efficient features and materials can help you to reduce long-term utility costs. While initially these installations may be more costly, they will work to save you money in the long run. Whenever possible, make sure these materials are also as durable as possible to ensure longevity and low maintenance requirements.

Secure the Necessary Permits

Ensure that you obtain all required permits and approvals before starting construction. One of the most important reasons to do this is to ensure that the work being done is safe, but having permits and inspections is also vital to ensure you can get insurance on your new build. Non-permitted renovations or build additions, changes, etc. can result in trouble securing insurance, on top of fines and other potentially costly issues.

Invest in Inspections

Having inspections done throughout the process of building your home can save you issues down the line by ensuring that all the installations are done correctly and safely and that your house meets the proper codes for electrical, plumbing, etc.

By taking proper steps and being proactive throughout the home-building process, you can minimize the risk of costly mistakes and ensure that your new home meets your expectations while staying within your budget.

 

Credit: DLC Marketing Team

Is now a good time to buy?

General Kim Stenberg 1 Dec

If you’re wondering if now is a good time to buy a home, you’re certainly not alone — it’s been one heck of a year for real estate in Canada!

If we look back to February 2022, national home sales were up as buyers jumped into an early Spring market; this trend continued for a few months and it was definitely a seller’s market, properties were going into multiple offers (many selling for over list price) and interest rates remained near historic lows.

With inflation rapidly rising, the war in Ukraine continuing, several aggressive rate hikes by the Bank of Canada, we find ourselves in a very different market today – a housing correction.

Buyers can now take a breath and find themselves with more negotiation power than they did earlier this year.  While the Vancouver and Toronto markets saw the biggest shift and decline, here in Alberta (and more broadly, the Prairies) we’re looking pretty solid!  We continue to see an influx of population, strong employment, affordable real estate (and those Vancouver and Toronto investors are also taking notice).

 

March 2022

 -COMPARISON- December 2022

$350,000

 Purchase Price $310,000

$17,500

 5% Down Payment

$15,500

$332,500

 1st Mortgage

$294,500

$13,300

 CMHC Insurance

$11,780

$345,800

 Total Mortgage

$306,280
2.79% 5-year Fixed Rate

4.89%
$1,599 Monthly Payment

$1,705
*OAC. Illustrative purposes only. Payment comparison as of Dec 1/22. Rates subject to change without notice.

 

Remember, the historic low rates of 2020 and 2021 were emergency cuts intended to provide support to the Canadian financial system and the economy during the Covid-19 pandemic (we all knew they wouldn’t last). “NORMAL” interest rates are actually in the range of 5-6% (… and if you’re paying rent, well, that’s pretty much 100% interest!).

So, is it a good time to buy?  Absolutely!

If you are thinking about purchasing, there’s no time like the present — let’s get started!

 

 

 

Second Mortgages: What You Need to Know

General Kim Stenberg 29 Sep

One of the biggest benefits to purchasing your own home is the ability to build equity in your property. This equity can come in handy down the line for refinancing, renovations, or taking out additional loans – such as a second mortgage.

What is a second mortgage?

First things first, a second mortgage refers to an additional or secondary loan taken out on a property for which you already have a mortgage. This is not the same as purchasing a second home or property and taking out a separate mortgage for that. A second mortgage is a very different product from a traditional mortgage as you are using your existing home equity to qualify for the loan and put up in case of default. Similar to a traditional mortgage, a second mortgage will also come with its own interest rate, monthly payments, set terms, closing costs and more.

Second mortgages versus refinancing

As both refinancing your existing mortgage and taking out a second mortgage can take advantage of existing home equity, it is a good idea to look at the differences between them. Firstly, a refinance is typically only done when you’re at the end of your current mortgage term so as to avoid any penalties with refinancing the mortgage.

The purpose of refinancing is often to take advantage of a lower interest rate, change your mortgage terms or, in some cases, borrow against your home equity.

When you get a second mortgage, you are able to borrow a lump sum against the equity in your current home and can use that money for whatever purpose you see fit. You can even choose to borrow in installments through a credit line and refinance your second mortgage in the future.

What are the advantages of a second mortgage?

There are several advantages when it comes to taking out a second mortgage, including:

  • The ability to access a large loan sum (in some cases, up to 90% of your home equity) which is more than you can typically borrow on other traditional loans.
  • Better interest rate than a credit card as they are a ‘secured’ form of debt.
  • You can use the money however you see fit without any caveats.

What are the disadvantages of a second mortgage?

As always, when it comes to taking out an additional loan, there are a few things to consider:

  • Interest rates tend to be higher on a second mortgage than refinancing your mortgage.
  • Additional financial pressure from carrying a second loan and another set of monthly bills.

Before looking into any additional loans, such as a secondary mortgage (or even refinancing), be sure to speak to your DLC Mortgage Expert! Regardless of why you are considering a second mortgage, it is a good idea to get a review of your current financial situation and determine if this is the best solution before proceeding.

 

DLC Marketing Team

3 Advantages of a Pre-Approval

General Kim Stenberg 7 Jul

While getting pre-qualified can give you a ballpark estimate on what you can afford, getting pre-approved is where the real magic happens.

Mortgage pre-approval means that a lender has stated (in writing) that you do qualify for a mortgage and what amount, based on submitted documentation of your current income and credit history.

A pre-approval usually specifies a term, interest rate and mortgage amount and is typically valid for a brief period of time, assuming various conditions are met.

There are three benefits to pre-approval including:

1. It confirms the maximum amount you can afford to spend

Not only does getting pre-approved make the search easier for you, but helps your real estate agent find the best home in your price range. Temptation will always be to start looking at the very top of your budget, but it is important to remember that there will be fees, such as mandatory closing costs, which can range from 1 to 4% of the purchase price. Factoring these into your maximum budget can help you narrow down a home that is entirely affordable and ensure future financial stability and security.

2. It can secure you an interest rate for 90-120 days while you shop for your new home

Getting pre-approved doesn’t commit you to a single lender, but it does guarantee the rate offered to you will be locked in from 90 to 120 days which helps if interest rates rise while you are still shopping. If interest rates actually decrease, you would still be offered the lower rate. Another benefit to pre-approval is that, when it comes time to purchase, pre-approval lets the seller know that securing financing should not be an issue. This is extremely beneficial in competitive markets where lots of offers may be coming in.

3. It lets the seller know that securing financing should not be an issue

Lastly, pre-approval lets the seller know that you are able to make the purchase. This can be very helpful in competitive markets where lots of offers may be coming in, as it helps to inform the seller that you’re a sure thing versus other potential bidders who may not have pre-approval.

Keep in mind, once you get your pre-approval, you will want to make sure not to jeopardize it. Until your mortgage application and sale is completed, be sure you don’t quit or change jobs, buy a new car or trade up, transfer large sums of money between bank accounts, leave your bills unpaid or open up new credit cards. You do not want your financial or employment details to change at all until you have closed on the new mortgage.

If you have any questions or want to get your pre-approval started today, don’t hesitate to reach out to a Dominion Lending Centres mortgage professional!

5 Tips to Stay Cool and SAVE This Summer

General Kim Stenberg 23 Jun

Today is the first day of summer – otherwise know as summer solstice, which is the longest day of the year! To maximize your enjoyment, we have some great tips for staying cool this summer AND saving money while you do:

1. Cook in the Great Outdoors

Summer is all about enjoying the sunshine, spending time with your friends and family, and relaxing in your own personal backyard oasis. We suggest the grill masters take their place for a few months of BBQ-fuelled meals. By avoiding cooking in the house, not only do you reduce the heat from the kitchen, you are also naturally relaxing in your extended outdoor living space.

2. Take Advantage of Fans

Instead of cranking the A/C (and your electricity bill), consider cooling down with portable fans. Not only are these great options if your home is not equipped with air conditioning, but they can help ease the stress on your unit when used together! Portable fans work by creating a breeze, helping to circulate the air and causing a wind-chill effect that hits your skin and helps keep you cool.

PRO TIP: For an extra blast of coolness, place a bowl of ice in front of the fan to create a refreshing mist of air!

3. Shut Out the Heat

We wait for summer all year but, as nice as it is to have that bright light streaming though, it can also increase the heat in your house and cause extra stress on your A/C unit and fans. On especially hot days, keeping the curtains drawn can help reduce the heat input and allow your home to stay cooler and more comfortable!

4. Maintain Your Air Filters

An often-overlooked aspect of home maintenance are air filters. With summer in full swing, we suggest you check the filters in your home. Dirty or jammed up filters slow airflow and make the system work harder, thereby reducing airflow and causing the heat to build up in your home. Plus, ignoring the maintenance on these can lead to expensive repairs down the road. Replacing your air filters every three months is ideal to keep dirt and dust out of your system and ensure they are working optimally.

5. Swap to Energy Efficient Lighting

You have probably heard some of the reasons why LED lights have become so popular, but did you know that they also produce 75 percent less heat than incandescent bulbs, and can help keep room temperature down? This cannot only help keep your home cooler during those toasty summer months, but it can also help reduce monthly bills!

Whether you implement one or all of these handy cool-down tips, we hope you have an amazing summer season filled with backyard memories and enjoy your home to the fullest!

 

DLC Marketing Team

Insurance Products

General Kim Stenberg 17 Jun

People don’t always want to talk about home insurance, but when it comes to your house there is no better investment than insurance. But, with the number of insurance products available, it can be hard to know where to start! While it can seem overwhelming, it’s a good idea to get familiar with the basics of some of the required and optional insurance coverage when it comes to your home.

default insurance

The first and perhaps most common form of insurance when discussing the mortgage space is known as “default insurance”. The purpose of mortgage default insurance is to protect the lenders, allowing them to lend money more aggressively.

This type of insurance is mandatory for any homes where the buyer puts less than 20 percent down on the purchase. In fact, default insurance is the reason that lenders accept lower down payments, such as 5 percent minimum, and actually helps these buyers access comparable interest rates typically offered with larger down payments.

In Canada, there are only three companies that offer default insurance: Canada Mortgage and Housing Corporation (CMHC), which is run by the federal government and two private companies: Genworth Financial and Canada Guaranty.

Default insurance typically requires a premium, which is based on the loan-to-value ratio (mortgage loan amount divided by the purchase price). This premium can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments.

According to CMHC, the minimum down payment required for mortgage loan insurance depends on the purchase price of the home:

  • For a purchase price of $500,000 or less, the minimum down payment is 5 percent.
  • When the purchase price is above $500,000, the minimum down payment is 5 percent for the first $500,000 and 10 percent for the remaining portion.

It is also important to note that default insurance (or mortgage loan insurance) is available only for properties with a purchase price or an improved/renovated value below $1 million.

title insurance

Another insurance policy that potential homeowners may encounter is known as “title insurance”. This is an insurance policy that protects residential or commercial property owners and their lenders against losses relating to the property’s title or ownership. In fact, it is so important to lenders that every single lender in Canada requires you to purchase title insurance on their behalf. It is not a requirement to have coverage for yourself, but that doesn’t mean you should dismiss it outright.

Title insurance can protect you from existing liens on the property’s title, but the most common benefit is protection against title fraud. Title fraud typically involves someone using stolen personal information, or forged documents to transfer your home’s title to him or herself – without your knowledge. The fraudster then gets a mortgage on your home and disappears with the money. As the old adage goes: “It’s better to be safe than sorry” and the same goes for insurance.

Similar to default insurance, title insurance is charged as a one-time fee or a premium with the cost based on the value of your property. Title insurance for the lender is typically $250 to $300, while title insurance for yourself runs around $125 to $150. You can purchase title insurance through your lawyer or title insurance company, such as First Canadian Title (FCT).

mortgage protection insurance

Before you sign off on your mortgage, there is one more type of insurance your mortgage broker should tell you about – Mortgage Protection Insurance. Despite being optional, it should still be considered. Almost every mortgage broker in the business has a story of someone who passed on the extra coverage and tragedy hit.

Unfortunately, life happens but it doesn’t have to happen to your home. While you may not want to spend the money now, or maybe you already have some type of life insurance policy through work, don’t discount this option as it is often a blessing in disguise – especially when it comes to homeowners with a spouse and children. Can they carry on with the mortgage payment? If not, they would be forced to sell on top of everything else. For a few extra dollars a month, mortgage protection insurance provides that safety net in the event it is ever needed.

When it comes to choosing a mortgage protection plan, there are a number of different policies available depending on your budget. Manulife’s Mortgage Protection Plan offers immediate insurance and can be canceled at any given time. If you think you may be covered through your work, it can’t hurt to take a closer look at the policy.

Mortgage insurance is what we consider “debt replacement” and life insurance is more fitting as an “income replacement”. This is an important distinction and you should understand the difference. You also need to see just how much you’re going to get through your life insurance policy; you may be surprised just how little it amounts to.

property + fire insurance

Lastly, after you’ve signed off on your mortgage you need to close on the home. Before you do this, your lender is going to require home insurance. When it comes to home insurance, there are many different types of coverage however it generally protects you from damage to the home that is accidental or unexpected, such as a fire.

Home insurance can also cover the contents of your home, depending on your insurance package. For individuals looking at purchasing condos or townhouses, this is especially important! The insurance from strata typically protects the building itself and common areas, as well as your suit “as is”, but it will not account for your personal belongings or any upgrades you made. Be sure to cross-check your strata insurance policy and take out an individual one on your unit to cover the difference.

One final thing to consider with regards to home insurance is that, just because you have home insurance you’re not necessarily covered in the event of a flood or earthquake. Depending on where you live, you may need to purchase additional coverage to be protected from a natural disaster. It’s best to talk to your insurance provider to confirm that you are covered.

At the end of the day, purchasing a home is a huge investment. Why risk it when there are so many great insurance products to ensure your investment – and family – remain protected? Reach out to a Dominion Lending Centres Mortgage Professional today to find out what coverage is needed and how to go about getting it!

 

DLC Marketing Team

Canadian Homes Sales Slow Again in May, Shifting to a Buyers Market in GTA

General Kim Stenberg 16 Jun

Statistics released today by the Canadian Real Estate Association (CREA) show that the slowdown that began in March in response to higher interest rates has broadened. In April, national home sales dropped by 12.6% monthly (m/m). National home sales fell by 8.6% between April and May, building on April’s decline, leaving monthly activity at pre-COVID levels recorded in the second half of 2019. (see chart below).

Sales were down in three-quarters of all local markets, led by many larger census metropolitan areas (CMAs), including those in the Lower Mainland, Calgary, Edmonton, the Greater Toronto Area (GTA) and Ottawa. The actual (not seasonally adjusted) number of transactions in May 2022 came in 21.7% below the record for that month set last year. At a little over 50,000 units sold, the May 2022 sales figure was very close to the 10-year average for that month.

New Listings

The number of newly listed homes climbed 4.5% month-over-month in May. The monthly increase was influenced by a jump in new supply in Montreal, while new listings in the GTA posted a modest decline.

With sales down and new listings up in May, the sales-to-new listings ratio eased back to 57.5% — its lowest level since April 2019. It was also not far off the long-term average for the national sales-to-new listings ratio of 55.1%.

Almost three-quarters of local markets were balanced based on the sales-to-new listings ratio being between one standard deviation above or below the long-term average in May 2022 – the most significant number since the fall of 2019. A little less than one quarter was in seller’s market territory, while a small handful was in buyer’s market territory.

There were 2.7 months of inventory on a national basis at the end of May 2022, still historically low but up by a month from the tightest conditions ever recorded just six months ago. The long-term average for this measure is a little over five months.

Home Prices

The non-seasonally adjusted Aggregate Composite MLS® HPI was still up by 23.8% on a year-over-year basis in April, although this was a marked slowdown from the near-30% record increase logged just two months earlier.

The Aggregate Composite MLS® Home Price Index (HPI) edged down 0.8% m/m in May 2022, following a 1.1% decline in April.

Regionally, most of the monthly declines were in markets in Ontario. While most Ontario markets saw prices dip in May, prices rose in cottage country.

Prices rose in Vancouver Island but were flat in Greater Vancouver. Prices fell modestly in the Fraser Valley and posted a larger decline in Chilliwack. Prices were more or less unchanged across the Prairies save for small gains in Saskatoon and Winnipeg.

Meanwhile, Quebec, New Brunswick and PEI continued to outperform, while prices in Nova Scotia and Newfoundland and Labrador edged up slightly.

The non-seasonally adjusted Aggregate Composite MLS® HPI was still up by 19.8% y/y in May. However, this posted a marked slowdown from the near-30% record increases logged in January and February.

Bottom Line

The three-month slide in Canadian home sales has now returned sales to pre-COVID levels after running roughly 3)% above that level for the  18 months through February. The most significant slowdown has occurred in Ontario, especially outside the core Toronto region. New listings have risen, but inventories remain low. The sales-to-new listings ratio has fallen sharply to 57.5%, its lowest level since early 2019. Prices have fallen moderately, taking the year-over-year gain down to 19.8% from 23.6% y/y in April. The average home price is now up just 3.4% y/y, which is down 11% from the February peak.

Toronto is cooling, but the suburbs are cooling even faster, while the exurbs (think London, Woodstock, Barrie) are seeing the sharpest shifts. The sales-to-new listings ratio for all of Ontario sunk below 50%, a level we’ve only seen during the 2009 recession and the dark days of the early 1990s. Elsewhere, Alberta remains relatively tight, albeit with stalling prices, while Vancouver, Ottawa and Montreal are mixed between the extremes.

Interest rates have risen sharply from their COVID-induced lows. Mortgage rates have risen sharply from lows of about 1.5% to nearly 5% for 5-year fixed rates. Variable mortgage rates are on their way to 4%-to-4.5% by yearend. By late summer, any still-favourable rate holds will be gone, and this new interest-rate reality will fully sink in. Stress tests at the contract rate plus 200 bps are now nearing 7%; they’ll also be pushing above 5.25% in the variable space.

Many potential Canadian homebuyers now expect home prices to continue to fall in some regions. This shift in psychology will also contribute to the housing correction. In a separate report, CMHC reported that housing starts increased sharply in May. Homebuilding is at its most robust pace on record, going back to the 1950s. Given the record-low unemployment rate, home construction is constrained by record-high job vacancies in the sector, shortages of materials, and rising wage rates. Construction costs have risen sharply in the past year. With higher mortgage rates in the future, the deceleration in sales could lead to slower housing starts next year.

Finally, the Federal Reserve hiked interest rates by 75 bps today, intensifying the inflation fight. This opens the door for a 75 bps hike by the Bank of Canada when it meets again on July 13. It is now widely expected that the US policy rate, the overnight fed funds rate will exceed 4% by yearend. Canada’s central bank had already announced its intention to hike the overnight rate here more forcefully and has suggested that it will take an overnight rate above 3% to break the back of inflation. The overnight rate now is only 1.5%. A further correction in housing is likely in the coming months. As the economy’s most interest-sensitive sector, housing is the key transmission mechanism for tighter monetary policy to slow the economy and bring inflation under control.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

The Pros and Cons of Living to 100

General Kim Stenberg 14 Jun

Everybody wants to live a long and healthy life with time to enjoy their golden years. But while living to 100 years old is a lofty and laudable goal, there may be some unexpected aspects that are worth considering.

Here are some of the good and the bad when it comes to making it to 100.

Pro #1: More time to learn

Learning a new skill is truly one of the great joys in life. And with more time comes more opportunities to pick up skills people often don’t have time for in their younger years. While your first six or so decades might be spent working, raising children, and building a foundation for long-term wealth, you can spend your retirement trying new things. Whether that means learning a new language, starting a new hobby, or volunteering, living to 100 means you can have more time to do what you love.

Con #1: Financial shortfalls

While there are many perks to getting older, and possibly living to 100, people often don’t account for the extra funds needed. Many retirement plans are based on a life expectancy of 85, so it’s important to look ahead at what you’ll need and plan as best you can. Something like a reverse mortgage is a great tool to provide any needed funds for your later years – so you can live your best lifestyle as long as possible.

Pro #2: Seeing family members grow up

While many people plan and expect to raise their children, and even their grandchildren, one of the great joys of becoming a centenarian is the opportunity to meet, raise, and spend time with great grandchildren. A reverse mortgage offers the chance to provide these family members with an early inheritance, fund their education, or even help them break into the real estate market with money for their down payment.

Con #2: Health issues

It’s hard to make plans around your health, but when it comes to living a long, fruitful life, it’s likely that some health-related issues will arise. And while many people have an idea of what they’ll do if they fall ill, and perhaps have health or critical illness insurance, a reverse mortgage is another option that should be considered. With the average cost of nursing care ranging from $2,000-$10,000 per month, a reverse mortgage can provide the cashflow to cover these costs or retrofit your home to allow you to age in place.

Pro #3: New horizons

Whether it’s travelling to a dream destination, or starting a new project close to home, retirement allows many people the time to chase their dreams, but a reverse mortgage can allow you to afford those dreams and tick off your bucket list. Perhaps there is a business you’ve always wanted to start, an organization you’d like to volunteer with, or a dream trip or hobby you want to fund; in any case, heading toward year one hundred means more opportunities to attain your retirement dreams.

Con #3: Aging in place

Did you know 93% of Canadians want to stay in the home they love? To ensure your home stays just as you love it, and to help you maximize the lifestyle you enjoy, unlocking the equity in your home with a reverse mortgage is a great way to continue living your dream life in your dream house well into retirement.

Contact your DLC mortgage broker to find out how the CHIP Reverse Mortgage by HomeEquity Bank can be a viable option to help you live your best retirement!

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