Hey there!

Just wanted to drop in with some news from the real estate world. The big headline is that the Bank of Canada's key interest rate is staying put at 5.00%. After a bunch of hikes last year, they're hitting the pause button for now.

So, what's the deal with all this? Well, the Bank's been really focused on inflation, trying to keep it from getting out of hand. They're hoping things will start to cool down, with the economy growing a bit slower this year.

Now, let's talk about what this means for you, especially if you're thinking about buying a home or you've got a mortgage. If your mortgage rate changes with the market (that's a variable-rate mortgage), there's no change for now – your rate stays the same. And if you locked in your mortgage rate (that's a fixed-rate mortgage), you're also not affected by this news.

We're keeping an eye on the next update from the Bank, which is coming up on March 6. And here's the thing – if all this talk about rates and mortgages feels a bit like a puzzle, don't worry. We’re here to help make sense of it all. Whether you're looking to buy soon or just trying to figure out how these changes might affect your plans, let's chat. We can help you understand what this means for you personally and explore your best moves in the current market.

Feel free to reach out anytime. We’re here to help you navigate the real estate world with ease.

Catch you later,

🏡 Tait Real Estate - Realty Executives Saskatoon 🌟
Saskatoon's Premier Real Estate Experts

Jamie Tait
📞 Phone: 306-203-0004
📧 Email: jtait@realtyexecutives.com

Ross Tait
📞 Phone: 306-230-2338
📧 Email: rtait@realtyexecutives.com

🌐 Website: www.taitrealestate.ca

Reach out today and let's make your property dreams a reality in the heart of Canada!

Hey everyone! Let's talk about the recent Bank of Canada news and a bit about how interest rates work, which is super important for understanding your mortgage.

The Bank of Canada has kept the main interest rate at 5.00%. This rate is crucial because it influences the cost of borrowing money, like when you get a mortgage. There are two types of interest rates for mortgages:

Fixed-rate Mortgage: This rate doesn't change throughout your mortgage term. It's great for stability and especially useful if interest rates are expected to rise.

Variable-rate Mortgage: This comes in two flavors. One type changes with the bank's Prime rate, affecting both your interest rate and payments. The other type keeps your payments the same, but how much goes towards your loan principal varies with the Prime rate.

For those with variable-rate mortgages, your payments remain the same right now. Fixed-rate mortgage holders aren't affected by this decision. The Bank is keeping an eye on inflation and might adjust rates in the future. Their next update is on January 24, 2024.

Confused or concerned about how this impacts you? Feel free to reach out, we would be happy to help as much as we can and refer you to a qualified mortgage professional.

For the nitty-gritty details, check out the Bank of Canada's full statement here.

🏡 Tait Real Estate - Realty Executives Saskatoon 🌟
Saskatoon's Premier Real Estate Experts

Jamie Tait
📞 Phone: 306-203-0004
📧 Email: jtait@realtyexecutives.com

Ross Tait
📞 Phone: 306-230-2338
📧 Email: rtait@realtyexecutives.com

🌐 Website: www.taitrealestate.ca

Reach out today and let's make your property dreams a reality in the heart of Canada!

Has the idea of buying an investment property ever crossed your mind?

Maybe you’d like a place to rent out and have someone else pay some or all of your mortgage while you build equity in a tangible real estate asset, or perhaps as a home for your child to live in.

Whatever your reason, investing in an additional property (or multiple properties) can be a good way to accomplish those goals, but there are also some key considerations before you dive in.

Aside from the potential challenge of finding a good tenant, there are some financing hurdles that you should be aware of.

Mortgage Rules for Investment Properties

While there are many Canadian lenders that will finance rental properties, the Department of Finance tightened mortgage lending criteria as part of its rule changes introduced in 2016.

That included eliminating mortgage default insurance, for certain mortgage types, including those for investment properties with less than 5 units.

As a result, you need at least 20% down to purchase a non-owner-occupied rental property. If you plan to live in one of the units, then you can put down as little as 5% (5% on the valued that is less than $500,000, and 10% on the portion above that amount).

Another factor to consider is the number of units the building has. Those with four units or less are typically zoned residential, so qualifying for a mortgage would be similar to the one on your principal residence. Multi-unit properties with five or more units are generally zoned commercial and involve a different type of qualification for a commercial mortgage, which I can advise you about.

Mortgage Rates for Investment Properties

Because the best mortgage rates are generally reserved for those putting down less than 20% or more than 35% of the property value, rates for investment properties (which require at least 20% down) are sometimes priced a little bit higher.

Most lenders will also upcharge at least 10 to 20 bps more for non-owner-occupied rental properties, as they entail some additional risk. For one, if the borrower came into financial trouble, they’re more likely to prioritize payments on their principal residence before payments on their rental property.

Fixed or Variable for an Investment Property?

This is probably the most commonly asked mortgage question for homebuyers, but it’s a particularly important consideration for investment property owners.

The majority of mortgage holders in Canada opt for the stability of a fixed mortgage rate—72%, or 4.45 million borrowers, according to the latest data from Mortgage Professionals Canada.

But many investment property owners will tell you that a variable rate is the way to go thanks to the flexibility they offer. One of the biggest advantages of a variable rate is a lower prepayment penalty of just three months’ interest should you need to sell or if you want to pay down your mortgage more quickly than the annual prepayment privileges permit.

I Can Help

Everybody’s situation is unique, and no advice applies to everyone equally. If you’re interested in exploring your options relating to buying an investment property, be sure to contact me and I can review your personal situation and offer custom-tailored solutions.

Call me today!

Deb Murdoch
(306) 222-7900
debm@mortgagegroup.com

IMPENDING MORTGAGE RULE CHANGES

OSFI (Office of the Superintendent of Financial Institutions) has propose a change to the uninsured stress test rate. OSFI regulates and supervises more than 400 federally regulated financial institutions (80% of all mortgage lenders). They do not watch over provincial credit unions and private lenders. OSFI reports to parliament through the Minister of Finance and regulates the conventional space.

Proposed change - Effective June 1st the qualifying rate for conventional (uninsured) mortgages will be based on a stress test of 5.25%

Note that Department of Finance regulates insured mortgages who currently have a stress test rate of 4.79%

Timeline - On May 7th the public was invited to provide feedback to the change. By May 24th the feedback will be taken into consideration and the final amendments will be made. As of June 1st the changes will take effect.

What does this mean to clients?

• If you have a signed accepted offer dated prior to June 1, 2021, your mortgage broker can submit and qualify using 4.79% It will not matter when the closing date is or if its insured or uninsured.

• If you have a signed accepted offer dated June 1st or later, your mortgage broker will be qualifying you using 5.25% on conventional files (20% + down payment) and 4.79% on insured files (***this may change) We are hearing whispers that the insured files will be changing to the 5.25% stress test as well but have had no confirmation of it as of yet.

When looking at the numbers and running the scenarios, there will be approximately a 5% decline in buying power.

So for instance: Teacher & research assistant have a combined income of $143K
Today: 4.79% conventional @ 30 yr AM – would qualify for $735K
June 1: 5.25% conventional @ 30 yr AM – would qualify for $700K

If you have any questions please feel free to reach out to me.

For the past year, soaring home prices and a desire for more space have sent homebuyers flocking beyond the suburbs and into beautiful cottage country.

It’s a trend that is playing out right across the county, and one that’s expected to continue throughout 2021. High demand is expected to push average recreational property prices higher by 15% to $502,730, according to an updated forecast from Royal LePage.

Recreational properties in Ontario and Atlantic Canada are expected to see average prices rise 17%, while Quebec and B.C. should see prices increase by 15% and 13%, respectively. That would be on top of the 16% national price gain seen for this segment between 2019 and 2020.

“From coast to coast, the line between primary residence and recreational property is blurring,” Phil Soper, president and CEO of Royal LePage said in a release. “The trend began last summer when the option of travelling abroad was taken away, and continued to gain popularity as it became clear that with access to high-speed internet, many people can do their jobs from just about anywhere.”

That, plus rising prices in many of Canada’s urban markets, have led many buyers to look well beyond the city limits for more affordable housing options. In February, for example, the average home price in Toronto soared above $1 million for the first time, with many of its suburbs not far behind.

“Life during the pandemic has made cottage country and country living more desirable than ever, in every part of Canada,” Soper added.

And in many cases, younger buyers—those between 25 and 35—are making up an increasing share of buyers trading in the big city for country life, with nearly half of buyers in that demographic (47%) saying they would choose a small town or rural living.

Who can blame them, given the world-class beauty found in many of the “cottage country” regions throughout Canada, not to mention pandemic-related concerns about high-density living. Many are thinking about expanding their families and want their kids to grow up with a little more space to roam.

“The flexibility provided by working remotely, excess savings from months sitting at home, and low interest rates have left Canadians young and old alike to seek properties with more space, easy access to nature, and the ability to achieve that ever-elusive work-life balance,” Soper said. Speak to me for more Insight.

Are you currently or soon to be in the market for a home or recreational property? There are still plenty of options available, and I’d be happy to review them with you.

Call Deb Murdoch today!

Deb Murdoch
(306) 222-7900
debm@mortgagegroup.com

Mortgage rates have spent the better part of the past year in near-freefall, with numerous terms setting fresh record lows.

But a couple of weeks ago, rates pulled a U-turn and have been starting to climb higher ever since. And here’s why. Since the beginning of February, 5-year Canada bond yields, which typically lead fixed mortgage rates, have surged. They’ve risen nearly 60 basis points over the past month to a 12-month high.

With funding costs being pushed up and margins being squeezed, lenders could no longer hold rates at those record-low levels.

As for why bond yields are rising—which often coincides with market optimism—the answer is multi-fold.

For one, yields have been soaring south of the border, and when U.S. bond yields move, Canadian yields often follow. Given expectations for rising vaccination rates and ultimately an end to lockdown measures and a return to normalcy, many see greater inflationary pressure ahead, which usually leads to rising interest rates to keep that inflation in check.

Bank of Canada Governor Tiff Macklem addressed rising bond yields in a speech last week. "To some extent, the back-up that we’ve seen in rates reflects the success of the fiscal stimulus, the monetary stimulus, combined with the rollout of vaccines,” he said.

Current Rate Increases Apply to Fixed Rates Only

It’s important to note that only fixed rate mortgage products are currently on the rise. Most lenders have increased rates on several key terms by anywhere from 10 to 30 basis points, again due to higher funding costs.

Variable mortgage rates, on the other hand, take their lead from prime rate, which rises and falls according to the Bank of Canada’s overnight target rate.

That rate is largely expected to remain as is for at least another year, or possibly two.

“We have committed to keeping our policy interest rate at the effective lower bound until economic slack is absorbed so that our inflation target is sustainably achieved," Bank of Canada Governor Tiff Macklem said last week. The Bank has repeated previously that it doesn’t see that happening until “into 2023.”

Keeping Things in Perspective…

Rates Are Still at Historic Lows

Despite the recent 10- to 30-bps rise in some rates that we’ve seen so far, it’s important to note that rates are still not far off their historic lows.

Consider that the lowest nationally available 5-year fixed rate was north of 3.00% just two years ago. Today, you can still find many terms available for under 2.00%.

Speak to a Mortgage Broker for More Insight

Are you considering refinancing or looking for a new mortgage and are concerned about rates trending higher? There are still plenty of options available to you, and I’d be happy to review them with you.

Call Deb Murdoch today!

Deb Murdoch

The Mortgage Group

306.222.7900

debm@mortgagegroup.com

www.debmurdoch.com

A COMMON QUESTION – OTHER THAN DOWN PAYMENT, WHAT OTHER COSTS WILL NEED TO BE PAID TO PURCHASE A HOME?

There are a few different areas of costs when it comes to purchasing a home…costs before you complete the agreement to purchase a new home, costs before you move into your home and ownership costs.

Before you have a firm purchase…

Home Inspection Fee – A home inspection is often a condition of the offer, particularly if it is a pre-owned home. The home inspector goes over the house and provides a report on the condition of the home. The cost of this service can vary.

Deposit – The deposit is required when you make an offer on a property. Once the offer is accepted, the deposit is held in trust until the closing of the sale. At this time it gets applied to the down payment. The deposit amount required is determined usually by the value of the property and what your real estate agent thinks is appropriate.

Appraisal Fee – an appraisal estimates the fair market value of the property. If your mortgage is an insured mortgage (less than 20% down payment), an appraisal is usually not required. If an appraisal is required you should plan on a min $325.

Closing Costs – these are the expenses that you pay when you meet with your lawyer (to sign title transfer and registration of mortgage)

Legal Fees – these are the fees your lawyer charges to complete the paperwork for you

Land Transfer Tax – these are the fees that are paid to land titles when you purchase a new home

Title Insurance – these protect against losses of a property ownership dispute, should there be one; quite often the lender will require one on their behalf. You can also have one on your behalf.

Property Tax Adjustment – if the seller has prepaid taxes for any months after the sale date, they will need be reimbursed

Other Home Ownership Costs

Mortgage Insurance – if you put less than 20% down, then mortgage insurance is required. It can be paid up front but most will have it included in their mortgage. This insurance is provided by either CMHC, Sagen (Genworth) or Canada Guaranty
Home Insurance – all lenders require mortgages to insured against fire and other damage.

So when my clients are planning on purchasing a home and we are going through the preapproval process, I will go through each of these items in detail so my clients can anticipate what their extra costs are going to be. Feel free to reach out to me if you have any questions.

Call Deb Murdoch today!

Deb Murdoch

The Mortgage Group

306.222.7900

debm@mortgagegroup.com