Chris Stewart

Canadians increasingly aware of FHSA features and benefits. Homebuyers divided over how mortgage rate changes will affect their ability to buy a home in the next two years. 23% of parents are expected to use the FHSA to help their children save for a home. BMOs 15th annual Investment Survey reveals more than half (56%) of potential first-time homebuyers are planning to use the First Home Savings Account (FHSA) to help purchase their first home, up from 52% from 2023. The annual survey also finds the understanding of FHSAs is increasing and that parents are finding the FHSA an effective way to help their adult children save for a home. Mind The Knowledge Gap The FHSA knowledge gap is narrowing, with two fifths (40%) of Canadians indicating they have at least some knowledge of the account, up from 31% from last year. Nearly half (48%) of Gen Z are knowledgeable about the FHSAs features and benefits the highest among any age group. A (Tax-Free) Gift That Keeps on Giving The BMO Investment Survey also explores how families across generations may be using the FHSA as a financial gift for their children. Nearly a quarter (23%) of parents will likely use the FHSA to help their adult children save for their first home. Younger parents are also more likely to use the FHSA to help their adult children save for a home, according to the surveys findings: Millennial Parents: 42% Gen Z Parents: 21% Boomer Parents: 7% It is encouraging to see that over half of prospective buyers plan to use the First Home Savings Account to save, and we want to see that number grow because the FHSA is such a powerful tool. Benefits including the ability to make tax-deducible contributions, tax-free growth of the investments and the ability to hold various investment types make this plan the most advantageous way to save for a home. It is like an RRSP and TFSA rolled into one for first-time homebuyers, said Nicole Ow, Vice President and Head, Retail Investments, BMO. For most, buying their first home will be part of a multi-year plan, involving several savings vehicles like the FHSA, RRSP withdrawals through the Home Buyers Plan, and may also involve multiple generations, with parents and grandparents contributing financially. https://newsroom.bmo.com/2024-12-18-BMO-Investment-Survey-Over-Half-of-First-Time-Homebuyers-Plan-to-Use-First-Home-Savings-Account-FHSA-to-Buy-a-Home

2024 is playing out largely as expected across Canadas regional landscape, with most of the Prairie and Atlantic provinces leading economic growth while Ontario, B.C., and Quebec lag. A number of regions are capping off this year displaying moderately stronger momentum in economic growth and job creation than we had envisaged in September. However, any upgrades to 2025 provincial growth forecasts reflecting this positive hand-off have been neutralized by downside growth risks on Canada owing to the imposition of tariffs by the new U.S. administration. The president-elect has threatened to impose a 25% across-the-board tariff on Canadian exports. We assume that Canada will manage to avert this outcome, partly reflecting the energy-heavy nature of its exports to the U.S. Still, this regional forecast incorporates some chill to investment and hiring due to the tariff threat that is likely to linger. Importantly, no province would escape the fallout from a Canada/U.S. trade skirmish, with U.S. export exposure ranging from about 80-90% in Alberta, New Brunswick, and Ontario to a still-lofty 50-60% in B.C and Saskatchewan. Beyond the first-order effects from tariffs on exports, provinces would also feel the hit through damage to other trading partners. PEI, Saskatchewan, and Manitoba source a comparatively large share of their imports from the U.S., potentially leaving them exposed to inflation pressures should Canada impose tariffs of its own. The countrys population growth is set to stall over the next two years through planned reductions in both the pool of non-permanent residents (NPRs) and a scaling back in its annual permanent immigration targets. Ontario, B.C. and Quebec will likely see population growth pull back the fastest. Meanwhile, ongoing affordability advantages in the Prairies and some Maritime provinces will remain a lure for interprovincial migrants. A wave of federal government stimulus is set to reach Canadian consumers in the coming months, with Ontario set to roll out its own measure in the new year. Combined with ongoing interest rate reductions, we expect consumer spending growth to pick up across the provinces despite slower population growth. Provinces with the highest debt burdens, namely B.C., Ontario, and Alberta, should disproportionately benefit from easing conditions. Housing markets across the country are also poised to benefit from supportive federal measures, and gradually falling short-term interest rates. https://economics.td.com/provincial-economic-forecast

The Bank of Canada lowered the target for the overnight rate by 50 basis points for the second straight meeting, a decision in line with consensus and market expectations. This is the fifth rate reduction in as many meetings and brings the policy rate to 3.25%, or the upper end of the BoCs estimated neutral range (2.25% to 3.25%). The move also pushes the BoCs policy rate 150 bps below the Federal Reserves upper bound target, the most since 1997 (although that gap will likely narrow next week). Meanwhile, balance sheet normalization will continue as expected. Here are additional highlights from the communique and the opening statement to the press conference: Driving the decision to cut 50 bps was inflation around 2%, excess supply and softer growth ahead relative to earlier expectations. Macklem added in the opening statement to the press conference that monetary policy no longer needs to be clearly in restrictive territory. As for forward rate guidance, the press release notes we will be evaluating the need for further reductions in the policy rate one decision at a time. In the presser, Macklem said they expect a more gradual approach to monetary policy if the economy evolves broadly as expected. Note they no longer explicitly say they expect to cut their policy rate further. The statement notes that Q3 growth was somewhat below the Banks projection and Q4 growth looks weaker than projected. Slower immigration will ease growth in 2025 while proposed fiscal measures will support demand. They will look through temporary demand effects. The press release highlights that job growth continues to grow slower than labour supply. Wage growth showed some signs of easing, but remains elevated relative to productivity. As for inflation, they still expect CPI to hover around 2% for the next couple of years. They note that the GST holiday will temporarily lower inflation but that will be unwound once the holiday ends. Therefore, watching core inflation will be critical to see underlying trends. The Bank didnt have much to say on tariff threats other than noting that these have increased uncertainty and clouded the economic outlook. \ https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/boc-policy-monitor.pdf

The Bank of Canada today reduced its target for the overnight rate to 3%, with the Bank Rate at 3% and the deposit rate at 3%. The Bank is continuing its policy of balance sheet normalization. The global economy is evolving largely as expected in the Banks October Monetary Policy Report (MPR). In the United States, the economy continues to show broad-based strength, with robust consumption and a solid labour market. US inflation has been holding steady, with some price pressures persisting. In the euro area, recent indicators point to weaker growth. In China, recent policy actions combined with strong exports are supporting growth, but household spending remains subdued. Global financial conditions have eased and the Canadian dollar has depreciated in the face of broad-based strength in the US dollar. In Canada, the economy grew by 1% in the third quarter, somewhat below the Banks October projection, and the fourth quarter also looks weaker than projected. Third-quarter GDP growth was pulled down by business investment, inventories and exports. In contrast, consumer spending and housing activity both picked up, suggesting lower interest rates are beginning to boost household spending. Historical revisions to the National Accounts have increased the level of GDP over the past three years, largely reflecting higher investment and consumption. The unemployment rate rose to 6.8% in November as employment continued to grow more slowly than the labour force. Wage growth showed some signs of easing, but remains elevated relative to productivity. https://www.bankofcanada.ca/2024/12/fad-press-release-2024-12-11/

From Scotiabank There are many uncertainties about the economic outlook as President Trump is set to take the helm of the United States. Those range from uncertainty about the policy actions he will take to uncertainty about the impact of those very policies. A case in point is the recent statement that he would implement tariffs hikes of 25% on all imports from Canada and Mexico, and 10% on imports from China. While we do not believe these tariffs will be implemented (see here), it is very likely that over the next several months, economic forecasts will need to present some alternative paths for the economy around a central scenario. Those alternative scenarios are likely to represent choices made by forecasters as to which policy assumption to include in their forecasts. Only when policy measures will actually be announced and implemented will uncertainty around the policy environment diminish. Given its critical nature to Canada and other trading partners, and to the U.S. itself of course, we thought it would be helpful to provide some rough rules of thumb for estimating the impact of trade policy changes on Canada and the U.S. These rules of thumb, derived from our macroeconometric model of the U.S. and Canadian economies, while by no means meant to be exact, are designed to help provide a quick and dirty assessment of the impact of changes in tariffs on the economy, inflation, and interest rates in both countries. Click to read more https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.insights-views.tariffs--november-28--2024-.html

Home sales activity recorded over Canadian MLS Systems increased 7.7% on a month-over-month basis in October 2024, reaching its highest level since April 2022. Rising home sales activity was broad based, with the Greater Toronto Area (GTA) and British Columbias Lower Mainland recording double-digit increases in October. The jump in home sales last month was definitely an October surprise, although with the big interest rate cut of 50 basis points announced during the last week of the month, the increase was more likely related to the surge in new listings we saw in September, said Shaun Cathcart, CREAs Senior Economist. There probably wont be another rush of new supply like that until next spring, and at that point, mortgage rates should be close to their expected lows, as well. With that in mind, you can think of the October numbers as a sort of preview for what we might expect to see next year. New listings posted a 3.5% month-over-month decline in October, although that followed on the heels of a 4.8% jump in September, so new supply remains at some of the highest levels since mid-2022. The national pullback in October was led by a drop in new supply in the GTA. With sales rising considerably in October and new listings falling, the national sales-to-new listings ratio tightened to 58%, up from 52% in September. The long-term average for the national sales-to-new listings ratio is 55%, with a sales-to-new listings ratio between 45% and 65% generally consistent with balanced housing market conditions. https://stats.crea.ca/en-CA/

Condominium apartments are the most common type of property owned by investors in census metropolitan areas (CMAs) like Toronto and Vancouver. In 2022, nearly two in five condominium apartments (38.9%) in the Toronto CMA were investment properties, while this was the case for about one in three (34.2%) in the Vancouver CMA. In these CMAs, new condominium apartment projects often rely on presales to investors to be built. Investors buy pre-construction units with the goal of making a profit when the buildings are completeeither by renting them out or by selling the unit at a higher price. These pre-construction sales are used by developers to secure financing for the projects. This dynamic means that investor preferences may have an influence on the type of buildings that get built. One concern with this process is that it may lead to the construction of more properties with smaller units. Investors are perceived to prefer these units because rent per square foot of living area tends to be higher for smaller units. This may have contributed to the shrinking size of condominium apartments in CMAs. For example, in the Toronto CMA, the median living area of condominium apartments built in the 1990s was 947 square feet, compared with 640 square feet for those built after 2016. In the Vancouver CMA, the median size also declined over the same period, from 912 square feet to 790. https://www150.statcan.gc.ca/n1/daily-quotidien/241003/dq241003a-eng.htm

HIGHLIGHTS Renewal risk remains as 1.2 million mortgages will come up for renewal in 2025. Most of these will experience higher interest rates than when their term began: 85% of those were contracted when the Bank of Canada rate was at or below 1%. The mortgage delinquency rate continued to rise from historic low levels in 2024, reaching 0.19% in the second quarter, with delinquency rates on other credit products, and allowances for expected credit losses both suggesting it will continue to increase through 2025. However, this remains below pre-pandemic levels and well below averages since 1990. Traditional lenders experienced two very different quarters to begin 2024. The first quarter showed higher risk lending compared to 2023, but in the second quarter newly extended mortgages had lower risk based on traditional risk metrics. Overall mortgage debt increased to $2.2 trillion in July 2024, which exacerbates the vulnerability of elevated household debt. This growth (3.5% year-over-year) is below recent averages, but lower interest rates could accelerate the increase. Alternative lenders saw an increase in lending during the first quarter of this year compared to the fourth quarter of 2023, indicating renewed momentum to sustain their market share from a year ago. However, their risk profile has increased compared to last year. Mortgages with terms of three or more years but less than five years are the most popular, with over half of new mortgages having terms in this range. The traditional five-year, fixed-rate mortgage and variable rate mortgage both represent a small share of the newly extended loans. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/housing-research/research-reports/housing-finance/residential-mortgage-industry-report/2024/residential-mortgage-industry-report-fall-2024-en.pdf

The BMO Real Financial Progress Index reveals that amid growing concerns about the cost of living (54%) and their overall financial situation (36%) 79% of Canadians are planning to cut back on spending this holiday season. The surveys insights provide an outlook on Canadians holiday spending plans, including: The holiday price tag: On average, Canadians plan on spending more than $1,991 this holiday season, including travel ($1,802), holiday gifts ($519), entertaining ($295), decorations ($141) and other holiday expenses ($275). Nearly a quarter (23%) plan on spending more than $2,000 during the holidays. Making a list and checking it twice: 79% plan on buying fewer gifts this year, and over a quarter (27%) will cut down the number of people on their gift list. More than a third (36%) plan on buying less expensive gifts. Sleighing spending: 41% are spending less on fewer gifts, and 44% had cut back on spending on other occasions, including birthdays and anniversaries, throughout the year in order to spend more on holiday gifts. Nearly half (49%) admit to spending more than they know they should. https://about.bmo.com/consumers-plan-to-spend-less-this-holiday-season-heres-how-bmo-can-help-make-holiday-budgeting-easier/

Report by TD Economics Highlights On December 15th, the federal government will roll out mortgage rule changes that make it easier to purchase a home for those taking out insured mortgages. These measures should offer a lift to Canadian home sales and prices next year. However, their impact will be blunted by an array of factors, including the affordability erosion induced by their implementation. Mitigating the impacts of these policies may be positive from a financial stability perspective, as the measures will likely encourage households to take on more debt at a longer term, and insured borrowers have typically been more prone to bouts of financial stress. The federal government has recently announced two changes to Canadian mortgage rules (effective December 15th, 2024) that will make it easier to qualify for purchasing a home. As the surge in home sales early in 2024 (amid a steep drop in bond yields at the end of last year) and in the spring of 2023 (after the Bank of Canada paused its rate hiking campaign) taught us, Canadian housing market activity can be highly reactive. Yet, we dont think that these measures alone will unleash a housing boom. Instead, theyll likely offer a secondary tailwind to a market thats already gaining decent traction in 2025 on the back of lower borrowing costs and a gradually improving economy (see here). Whats more, the affordability boost offered by these measures will likely also erode as home prices are raised by their implementation, thereby limiting their effectiveness. https://economics.td.com/ca-mortgage-rule-changes

Rate Statement The rate cutting cycle was turned up a notch as the Bank of Canada lowered its target for the overnight rate by 50 basis points to 3.75%, a decision in line with consensus and market expectations. This fourth cut in as many meetings marks a cumulative rate reduction of 125 basis points and brings the policy rate to its lowest point since December 2022. The move also pushes the BoCs policy rate 125 basis points below the Federal Reserves, though an expected November Fed cut would narrow that gap. Meanwhile, balance sheet normalization will continue as expected. Here are some additional highlights from the communique and the opening statement to the press conference: Driving the decision to cut 50 bps was a desire to support economic growth and to keep inflation close to the middle of the 1% to 3% range. As for forward rate guidance, the Bank says, we expect to reduce the policy rate further if the economy evolves broadly in line with our latest forecast. As always, the timing and pace of further cuts, will be guided by incoming information. Despite recent soft data, the Bank still expects relatively solid GDP growth ahead: GDP growth is forecast to strengthen gradually over the projection horizon, supported by lower interest rates. The Bank appears to be looking the strength of the September jobs report, as the statement simply says the labour market remains soft. Still, they note that wage growth remains elevated relative to productivity growth. The Bank highlights that inflation has declined significantly thanks to excess supply in the economy. The breadth of price increases have normalized, as have inflation expectations. Policymakers now expect inflation to remain close to target over the projection horizon, with the upward and downward pressures roughly balancing out. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/boc-policy-monitor.pdf

The Bank of Canada today reduced its target for the overnight rate to 3%, with the Bank Rate at 4% and the deposit rate at 3%. The Bank is continuing its policy of balance sheet normalization. The Bank continues to expect the global economy to expand at a rate of about 3% over the next two years. Growth in the United States is now expected to be stronger than previously forecast while the outlook for China remains subdued. Growth in the euro area has been soft but should recover modestly next year. Inflation in advanced economies has declined in recent months, and is now around central bank targets. Global financial conditions have eased since July, in part because of market expectations of lower policy interest rates. Global oil prices are about $10 lower than assumed in the July Monetary Policy Report (MPR). In Canada, the economy grew at around 2% in the first half of the year and we expect growth of 1% in the second half. Consumption has continued to grow but is declining on a per person basis. Exports have been boosted by the opening of the Trans Mountain Expansion pipeline. The labour market remains softthe unemployment rate was at 6.5% in September. Population growth has continued to expand the labour force while hiring has been modest. This has particularly affected young people and newcomers to Canada. Wage growth remains elevated relative to productivity growth. Overall, the economy continues to be in excess supply. GDP growth is forecast to strengthen gradually over the projection horizon, supported by lower interest rates. This forecast largely reflects the net effect of a gradual pick up in consumer spending per person and slower population growth. Residential investment growth is also projected to rise as strong demand for housing lifts sales and spending on renovations. Business investment is expected to strengthen as demand picks up, and exports should remain strong, supported by robust demand from the United States. Overall, the Bank forecasts GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.3% in 2026. As the economy strengthens, excess supply is gradually absorbed. https://www.bankofcanada.ca/2024/10/fad-press-release-2024-10-23/

Home sales edged up 1.9% between August and September, a third increase in four months. On the supply side, new listings jumped 4.9% from August to September, the eighth advance in nine months and the largest increase since July 2023. As a result, they are now at their highest level since February 2022. Active listings edged down 0.5% in September from their highest level since March 2020, the second decrease in three months. Meanwhile, the number of months of inventory (active listings-to-sales) decreased from 4.2 to 4.1 during the month, a level roughly back in line with its pre-pandemic level. Market conditions tightened marginally in September and remained tighter than their historical average in most provinces. They were roughly balanced in B.C. and softer than average in Ontario. Housing starts increased 10.8K in September to 223.8K (seasonally adjusted and annualized), a result below the median economist forecast calling for a 235.0K print. The monthly increase was solely driven by a rise in urban starts (+11K to 210.0K), which were mainly supported by the multi-family segment (+8.6K to 163.4K) while the single-family segment was up marginally (+2.4K to 46.6K). Starts were up in Calgary (+4.4K to 24.3K) and Vancouver (+3.0K to 23.4K) but declined in Toronto (-4.2K to 20.5K) and Montral (-2.1K to 13.0K). At the provincial level, the increases in total starts were registered in British Columbia (+9.3K to 44.0K), Ontario (+4.1K to 64.6K) and Saskatchewan (+2.6K to 6.1K), while the most notable declines were seen in Alberta (-1.5K to 46.8K), and Qubec (-1.1K to 40.3K). The TeranetNational Bank Composite National House Price Index rose by 0.5% from August to September after adjustment for seasonal effects. Eight of the 11 markets in the composite index were up during the month: Montreal (+2.4%), Winnipeg (+1.8%), Victoria (+1.2%), Edmonton (+1.1%), Ottawa-Gatineau (+0.9%), Halifax (+0.8%), Calgary (+0.5%) and Toronto (+0.3%). Conversely, declines occurred in Quebec City (-0.9%), Hamilton (-0.6%) and Vancouver (-0.2%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

Following the Bank of Canadas third interest rate cut of the year, national home sales increased slightly in September compared to August. This follows a similar pattern of gains recorded in the months following the first two rate cuts. Home sales recorded over Canadian MLS Systems climbed 1.9% on a month-over-month basis in September 2024, reaching their highest level since July 2023. The national increase was led by the Greater Toronto Area and Hamilton-Burlington, Montreal and Quebec City, as well as Greater Vancouver and Victoria. Sales gains are now three for three in the months following interest rate cuts, which is a trend even though the increases werent headline-grabbing, said Shaun Cathcart, CREAs Senior Economist. That said, with the pace of rate cuts now expected to be much faster than previously thought, its possible some buyers may choose to hold off on a purchase for now. This could further boost the rebound expected in 2025 at the expense of the last few months of this year. Highlights: National home sales rose 1.9% month-over-month in September. Actual (not seasonally adjusted) monthly activity came in 6.9% above September 2023. The number of newly listed properties jumped 4.9% month-over-month. The MLS Home Price Index (HPI) inched up 0.1 % month-over-month but was still down 3.3% on a year-over-year basis. The actual (not seasonally adjusted) national average sale price was up 2.1% on a year-over-year basis in September. https://stats.crea.ca/en-CA/

Total housing starts in the 6 largest census metropolitan areas (CMAs) rose by 4% in the first half of 2024 compared to the same period in 2023. The level of new construction (68,639 units) was the second strongest since 1990. However, when adjusted for population size, combined housing starts were close to the historical average and werent enough to meet growing demographic demand. Calgary and Edmonton led the growth in housing starts due to record interprovincial migration in recent years, driven by their lower cost for housing and favourable economic conditions. In contrast, housing starts decreased in Toronto, Vancouver and Ottawa. Apartment starts in the 6 CMAs increased slightly, driven by rental construction. Nearly half of the apartments started in the first half of 2024 were purpose-built rentals the highest share on record. This trend aligns with demographic changes and declining homeownership affordability. Except for Calgary and Edmonton, condominium apartment starts fell in the first 6 months of 2024 a trend we expect will continue as developers struggle to reach the minimum pre-construction sales needed to start construction. Both investors and end users have significantly reduced their purchases of new condominiums because of the impact of higher interest rates. Developers prioritized clearing backlogs of projects under construction. As a result, apartment completions increased across the 6 CMAs, setting new records in each one except Montral and Vancouver. Municipalities and provinces are working actively to increase housing supply and variety, with policies aimed at better meeting the needs of a broad range of buyers and renters. https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/market-reports/housing-market/housing-supply-report

From Scotiabank As the reduction in inflation takes hold and economic activity slows down, the Bank of Canada seems to be shifting its priority from inflation control to worries about growth. Using a monetary policy reaction function that estimates the weight on inflation and the output gap over time, we find empirically that that Bank of Canada is now putting more weight on the output gap. This is a break from the last two years in which the estimated weight on inflation dominated that placed on the output gap. Our model suggests that as of 2024Q4, the BoC will focus more on eliminating this economic slack than on fighting inflation. Our current forecast is that the Bank of Canada cuts by 25 bps at each of the two remaining meetings this year. This work suggests there is a risk that Governor Macklem will be more aggressive than that if he indeed is putting more weight on growth going forward. That would translate into a risk of a 50 bps cut at one of these meetings. https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.inflation-reports.boc-rate--october-2--2024.html

Report by TD Economics The Canadian 5-year bond yield has declined over 100 bps since early May, while the Bank of Canada has cut its policy rate 3 times (with two more likely on tap this year). In short, the interest rate environment has significantly improved. Housing market activity is stirring, yet Canadian sales gains have, thus far, trailed what could typically be expected given this rush of rate relief. We chalk up the surprisingly subdued performance to two factors. The first is the continued strained affordability backdrop. Despite their recent decline, rates remain at levels last seen about 15 years ago. And, the second factor relates to the transparent messaging from central bankers that interest rates are set to fall even further. This is keeping potential buyers temporarily sidelined as they wait for additional cuts. The flat trend in Canadian average home prices since the summer means they havent really been penalized for that choice. This relative stillness will likely only last so long. Indeed, conditions are in place for a solid pickup in resale activity. Alongside a further steady decline in the BoCs overnight rate, economic growth is likely to regain some traction going forward, and the federal government will roll out meaningful changes to mortgage rules that will support homebuying at the end of the year. Now, first-time homebuyers (and those that purchase new builds) can access 30-year amortizations (instead of 25), thereby lowering their monthly mortgage obligation. Also, the cap on which a buyer can qualify for an insured mortgage has been raised from $1 million to $1.5 million. This means that, for example, a purchaser who buys a detached home in Toronto valued at $1.2 million (the median price in August) could put down about $95k as a downpayment, instead of needing $240k as before. The federal measures should help unlock powerful gains in Canadian sales and average home prices across Canada in the first half of 2025. However, part of this story will be that some activity that wouldve taken place this year is pushed into 2025, as buyers wait for the new rules to commence before purchasing. https://economics.td.com/ca-provincial-housing-outlook

From the Bank of Canada In June, we began lowering our policy interest rate. We cut the policy rate at our last three decisions, for a cumulative decline of 75 basis points to 4.25%. Our most recent decision on September 4th reflected two main considerations. First, we noted that headline and core inflation had continued to ease as expected. Second, we said that as inflation gets closer to target, we want to see economic growth pick up to absorb the slack in the economy. Since then, weve been pleased to see inflation come all the way back to the 2% target. It has been a long journey. Now we want to keep inflation close to the centre of the 1%3% inflation-control band. We need to stick the landing. What does this mean for interest rates? With the continued progress weve seen on inflation, it is reasonable to expect further cuts in our policy rate. The timing and pace will be determined by incoming data and our assessment of what those data mean for future inflation. As always, we try to be as clear as we can about what we are watching as we chart the course for monetary policy. Economic growth picked up in the first half of this year, and we want to see it strengthen further so that inflation stays close to the 2% target. Some recent indicators suggest growth may not be as strong as we expected. We will be closely watching consumer spending, as well as business hiring and investment. We will also be looking for continued easing in core inflation, which is still a little above 2%. Shelter cost inflation remains elevated but has started to come down, and we are looking for it to moderate further. Our next decision is October 23rd. And we will have a revised economic outlook at that time. https://www.bankofcanada.ca/2024/09/economic-growth-during-uncertain-times/

Report by TD Economics Were most of the way through 2024, and the data seems to be adhering to our long-held view that the Atlantic Region and Prairies would outperform, in terms of GDP growth, this year. We continue to expect Ontario, Quebec, and B.C. to trail the pack. However, the former two provinces have benefitted from growth upgrades for 2024, leaving B.C. as the laggard. Consumption has held up well across Canada so far this year, supported by resilience in Ontario and Quebec and relative strength in the Atlantic. Going forward, a downgraded profile for borrowing costs will offer more of a boost to household spending across Canada than wed previously thought. However, a chunk of highly indebted households in regions like Ontario and B.C. will have to contend with mortgage renewals at (likely much) higher rates. Housing markets are also poised to receive a lift from lower-than-expected interest rates. Indeed, weve notably upgraded our 2024 and 2025 home price forecasts across nearly all provinces except Ontario, where strained affordability and problems in the condo sector will likely weigh. Lower rates are a benefit to homebuilding as well, although we still see Canadian housing starts cooling through 2025 given low home sales levels in the past few years. At last count (Q2-2024), Canadian population growth continued to surge. Specifically, Canadas Big 4 provinces have yet to see any meaningful impact from recently announced federal policies to reduce the pool of non-permanent residents. We expect the effect of these policies to be significant and become evident beginning in Q4-2024, providing an impetus for a meaningful slowdown in population growth across the nation. Population-fueled labour force gains have outpaced employment for most of this year, driving the national unemployment rate to its highest point since mid-2021. Notably, Ontario, Alberta and Quebec have seen the most material increases in their unemployment rates. With population gains expected to cool, the jobless rate is projected to peak at the turn of the year before gently pulling back in 2025. https://economics.td.com/provincial-economic-forecast

Summary Home sales edged up 1.3% between July and August, following a 0.6% decrease the previous month. On the supply side, new listings edged up 1.1% from July to August, the seventh advance in eight months. They are now at their highest level since June 2022. Active listings edged down 1.1% in August from their highest level since March 2020, the second decrease in six months. Meanwhile, the number of months of inventory (active listings-to-sales) edged down from 4.2 to 4.1 during the month, a level roughly back in line with its pre-pandemic level. Market conditions tightened marginally in August and remained tighter than their historical average in most provinces. They were balanced in Manitoba and softer than average in B.C. and Ontario. After a surge in July, housing starts dropped 62.4K in August to 217.4K (seasonally adjusted and annualized), a result well below the median economist forecast calling for a 250.0K print and its lowest level since November 2023. Urban starts decreased by 61.6K (to 199.5K) on an important drop in the multi-family segment (-62.8K to 154.3K) while the single-family segment was up marginally (+1.2K to 45.2K). Starts were down by more than half in Toronto (-40.4K to 24.6K) and decreased more modestly in Vancouver (-9.6K to 20.5K) and Calgary (-9.2K to 19.9K). On the other hand, they increased by 6.0K in Montreal (to 15.2K) after reaching their lowest level since February 2015 (excluding April 2020) the previous month. The TeranetNational Bank Composite National House Price Index rose by 0.6% from July to August after adjustment for seasonal effects. Six of the 11 markets in the composite index were up over the month: Quebec City (+3.9%), Halifax (+3.2%), Ottawa-Gatineau (+1.9%), Vancouver (+1.7%), Montreal (+1.0%) and Toronto (+0.2%). Conversely, declines occurred in Hamilton (-0.1%), Winnipeg (-0.7%), Calgary (-1.1%) and Edmonton (-2.6%), while prices remained stable in Victoria during the month. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

National home sales increased in June following the Bank of Canadas first interest rate cut since 2020, and activity posted another small gain in August on the heels of the second rate cut in late July, but the bigger picture appears to be a market mostly stuck in a holding pattern. Home sales recorded over Canadian MLS Systems edged up by 1.3% on a month-over-month basis in August 2024, reaching their highest level since January and their second highest in over a year. Despite some fledgling signs of life to kick off the long-awaited monetary policy easing cycle, Canadian housing market activity still looks to be stuck in the same holding pattern its been in all year, said Shaun Cathcart, CREAs Senior Economist. That said, with ever more friendly interest rates now all but guaranteed later this year and into 2025, it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country. Highlights: National home sales edged up 1.3% month-over-month in August. Actual (not seasonally adjusted) monthly activity came in 2.1% below August 2023. The number of newly listed properties ticked up 1.1% month-over-month. The MLS Home Price Index (HPI) was unchanged month-over-month but was down 3.9% year-over-year. The actual (not seasonally adjusted) national average sale price was almost unchanged (+0.1%) on a year-over-year basis in August. https://stats.crea.ca/en-CA/

Canadians work hard to be able to afford a home. However, the high cost of mortgage payments is a barrier to homeownership, especially for Millennials and Gen Z. To help more Canadians, particularly younger generations, buy a first home, new mortgage rules came into effect on August 1, 2024, allowing 30 year insured mortgage amortizations for first-time homebuyers purchasing new builds. The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, announced a suite of reforms to mortgage rules to make mortgages more affordable for Canadians and put homeownership within reach: Increasing the $1 million price cap for insured mortgages to $1.5 million, effective December 15, 2024, to reflect current housing market realities and help more Canadians qualify for a mortgage with a downpayment below 20 per cent. Increasing the insured-mortgage capwhich has not been adjusted since 2012to $1.5 million will help more Canadians buy a home. Expanding eligibility for 30 year mortgage amortizations to all first-time homebuyers and to all buyers of new builds, effective December 15, 2024, to reduce the cost of monthly mortgage payments and help more Canadians buy a home. By helping Canadians buy new builds, including condos, the government is announcing yet another measure to incentivize more new housing construction and tackle the housing shortage. This builds on the Budget 2024 commitment, which came into effect on August 1, 2024, permitting 30 year mortgage amortizations for first-time homebuyers purchasing new builds, including condos. These new measures build on the strengthened Canadian Mortgage Charte, announced in Budget 2024, which allows all insured mortgage holders to switch lenders at renewal without being subject to another mortgage stress test. Not having to requalify when renewing with a different lender increases mortgage competition and enables more Canadians, with insured mortgages, to switch to the best, cheapest deal. https://www.canada.ca/en/department-finance/news/2024/09/government-announces-boldest-mortgage-reforms-in-decades-to-unlock-homeownership-for-more-canadians.html

From Scotiabank The Bank of Canada and Federal Reserve should cut policy rates at each meeting for the remainder of the year and well into 2025. Growth is slowing as the impact of past tightening is felt but we expect a gradual strengthening of economic activity as policy rates come down. North American central bankers seem, at this point, to have achieved a soft landing. We remain concerned about potential upside risks to household spending given high savings rates and accumulated savings, solid income growth, the massive gap between supply and demand in the housing market, and historically strong population growth. We assume a gradual improvement in spending but a larger or more rapid rebound in spending could imperil Bank of Canada cuts in mid-2025. The usual disclaimer applies: US election outcomes could lead to significant changes to this outlook. The path forward for interest rates keeps getting clearer. With inflation and growth cooling owing in part to the lagged impacts of monetary policy, central bankers in Canada and the US seem confident in their assessment that interest rates will be cut substantially in coming months. The key questioning surrounding policy rates is the speed at which rates will decline, not whether they will decline from here. Key to that assessment is a view on growth dynamics, inflation, and risks to both. Though growth is weakening in both countries, we believe economies are landing softly and will not require central banks to act in an urgent way to shore up growth. As a result, we expect a gradual pace of cuts in Canada and the US, with two more cuts in Canada this year and three cuts in the US. A multitude of risks exist and while markets and most economists appear to prioritize downside risks to the outlook and interest rates, we continue to believe there are meaningful upside risks to both. https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.global-outlook-and-forecast-tables.scotiabank%27s-forecast-tables.2024.september-10--2024.html

From National Bank of Canada Summary Some forecasters, including the Bank of Canada, had high hopes of an economic recovery and a stabilization of the unemployment rate in the second half of the year, in the wake of interest rate cuts. For several months now, we have been arguing that, although interest rates are starting to come down, monetary policy is far too restrictive for this recovery and stabilization to occur, and recent economic data bears this out. With the Canadian economy stagnating in June and July, the 2.8% growth expected in Q3 by the Bank of Canada is now virtually unattainable. As a result, GDP per capita continues its downward trend that began in 2022, illustrating the fact that the economy continues to grow below potential and that excess supply continues to increase. Not only do companies seem to have an excess of inventories, they also seem to have an excess of workers. For now, this is limited to a hiring freeze at the macro level, as evidenced by average job gains of just 6K per month over the past three months. Those trying to enter the job market - young people and newcomers - are the main victims of Canadas weak hiring climate. With widespread inflation a thing of the past in Canada, we believe the door is wide open for the Bank of Canada to return its policy rate to neutral (between 2.5% and 3.0%) as soon as possible. In the meantime, the damage to the labour market could be greater than necessary. We anticipate economic growth of just 0.9% in 2024 and 1.3% in 2025, which would translate into an unemployment rate of around 7.4% by mid-2025. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/mensuel/monthly-economic-monitor-canada.pdf

From National Bank of Canada For the third time in as many meetings, the Bank of Canada lowered the target for the overnight rate by 25 basis points, a decision in line with the consensus and market expectations. The rate reduction brings the policy rate to 4.25%, the lowest since January 2023. The move also pushes the BoCs policy rate 125 bps below the Federal Reserves (based on their upper bound target), the most since 2000 (although that gap will narrow in September). Meanwhile, balance sheet normalization will continue as expected. Here are additional highlights from the communique and the opening statement to the press conference: Driving the decision to cut was continued easing in broad inflationary pressures and excess supply in the economy [putting] downward pressure on inflation. Once again, forward rate guidance in the press release was vague but the opening statement to the presser reiterated that it is reasonable to expect further cuts if inflation eases in line with their forecast. The statement notes that Q2 growth was stronger than expected but preliminary indicators suggest that economic activity was soft through June and July. Macklem added they want to see economic growth pick up to absorb slack. The press release highlights that the labour market continues to slow, with little change in employment in recent months. However, wage growth remains elevated relative to productivity. In the opening statement to the presser, Macklem added they still expect slack in the labour market to slow wage growth. As for inflation there has been continued easing in broad inflationary pressures, with inflation breadth back to historical norms. Although shelter is holding inflation up, it is starting to slow. Reflecting base effects, Macklem added that inflation may bump up later in the year. However, they need to need to increasingly guard against the risk that the economy is too weak, and inflation falls too much.. Bottom Line: With a 25 basis point rate cut all but assured, the focus of todays decision was always going to be on the Banks guidance/stance. Overall, there was very little changed relative to July as Macklem reiterated it is still reasonable to expect further rate cuts (as long as inflation cooperates). At the margin, there appears to be a bit more confidence on the inflation outlook as shelter prices are seen as starting to slow. And as we got a sense of in July, they increasingly want to guard against too much slack and inflation undershooting over the projection horizon. They therefore need growth to pick up. What does it mean for the meetings ahead? To us, the BoCs base case outlook is for continued 25 basis points cuts at each of the remaining meetings in 2024 (and likely well into 2025 too). However, there is a growing focus on downside inflation/economic risks which should keep markets pricing some probability of a larger-than-25 basis point cut. Thats appropriate in our view given the balance of risks in the labour market and on the growth outlook. The intermeeting period will offer a wealth of information to inform the near-term rate path as were due to receive two employment reports (including one on Friday), two CPI reports, a read on July GDP and a Business Outlook Survey. Undoubtedly, it will be jobs and inflation data that will be most influential. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/boc-policy-monitor.pdf

The Bank of Canada today reduced its target for the overnight rate to 4%, with the Bank Rate at 4% and the deposit rate at 4%. The Bank is continuing its policy of balance sheet normalization. The global economy expanded by about 2% in the second quarter, consistent with projections in the Banks July Monetary Policy Report (MPR). In the United States, economic growth was stronger than expected, led by consumption, but the labour market has slowed. Euro-area growth has been boosted by tourism and other services, while manufacturing has been soft. Inflation in both regions continues to moderate. In China, weak domestic demand weighed on economic growth. Global financial conditions have eased further since July, with declines in bond yields. The Canadian dollar has appreciated modestly, largely reflecting a lower US dollar. Oil prices are lower than assumed in the July MPR. In Canada, the economy grew by 2.1% in the second quarter, led by government spending and business investment. This was slightly stronger than forecast in July, but preliminary indicators suggest that economic activity was soft through June and July. The labour market continues to slow, with little change in employment in recent months. Wage growth, however, remains elevated relative to productivity. As expected, inflation slowed further to 2.5% in July. The Banks preferred measures of core inflation averaged around 2 % and the share of components of the consumer price index growing above 3% is roughly at its historical norm. High shelter price inflation is still the biggest contributor to total inflation but is starting to slow. Inflation also remains elevated in some other services. https://www.bankofcanada.ca/2024/09/fad-press-release-2024-09-04/

Report by TD Economics Highlights The Fed is finally ready to cut interest rates, but questions remain on the speed and magnitude. We penciled in 25 basis points per meeting, with over 250 bps in cuts over this year and next. However, now that the Fed is confident that inflation will return to target, it will prioritize a little more of the other side of its dual mandate developments in the job market to ultimately determine the speed and size of rate cuts. The BoC has moved earlier, established a pace of 25 basis points per meeting, and already gapped 100 basis points to its U.S. counterpart. The economic bar will be higher to deliver on larger cuts than the current pace. The Federal Reserve is just under three weeks away from delivering its first interest rate cut in four years. While at times it felt like the day would never come, inflation has finally stabilized close to the 2% target alongside a noticeable cooling in the labor market. The Feds focus has now pivoted away from just fighting inflation, to striking the right balance on its dual mandate to ensure the economic landing remains a soft one. This is the stage where markets typically get nervous on whether the Fed has got the timing right, evidenced by recent bouts of financial volatility. The emphasis will be on downside misses in the data given that the Feds policy rate is sitting at a lofty level of 5.50%. And with that, we can expect to see pricing jump around between a Fed that needs to act urgently to one that can move in a measured way. But in all circumstances, one prediction will hold firm: the Fed will cut interest rates in September, kicking off a prolonged cycle. This is not a one-and-done deal. https://economics.td.com/ca-dollar-and-sense

Home sales edged down 0.7% between June and July, a decline that follows a 3.4% pick up in the previous month which was due to the beginning of easing monetary policy by the Bank of Canada. On the supply side, new listings edged up 0.9% from June to July, the sixth advance in seven months. Active listings edged down 0.7% in July from their highest level since March 2020, the first decrease in five months. Meanwhile, the number of months of inventory (active listings-to-sales) remained stable at 4.2 during the month, a level back in line with its pre-pandemic level. Market conditions were unchanged in July and remained tighter than their historical average in most provinces. They were balanced in Manitoba and B.C., and softer than average in Ontario. After a slowdown in June, housing starts increased 37.9K in July to 279.5K (seasonally adjusted and annualized), a result well above the median economist forecast calling for a 245.0K print and its highest level since June 2023. Urban starts increased by 38.8K (to 261.1K) on an important gain in the multi-family segment (+38.1K to 217.3K) while the single-family segment was up marginally (+0.7K to 43.8). Starts practically doubled in Toronto (+30.7K to 65.1K), and also grew in Vancouver (+9.6K to 30.1K) and Calgary (+6.6K to 29.1K). On the other hand, they dropped significantly in Montreal (-26.0K to 9.0K) to their lowest level since February 2015 (excluding April 2020). The TeranetNational Bank Composite National House Price Index remained virtually stable from June to July, with a marginal increase of 0.2% after adjustment for seasonal effects. Six of the 11 markets in the composite index were up over the month: Hamilton (+2.3%), Victoria (+1.0%), Halifax (+0.8%), Calgary (+0.7%), Toronto (+0.3%) and Quebec City (+0.2%). Conversely, prices fell in Ottawa-Gatineau (-0.4%), Winnipeg (-0.1%), Vancouver (-0.1%) and Montreal (-0.1%), while they remained stable in Edmonton. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

National housing resale conditions softened from June to July as reflected by the modest decline in the sales-to-new listings ratio. Over this period, national sales declined by 0.7% (sa m/m) while new listings increased 0.9%. In July, sales were higher by 4.8% (nsa) compared to the same month in 2023. After increasing from May to June, the sales-to-new listings ratiowhich reflects how tight resale conditions areedged down to 52.7% from June to July, essentially back to its May level, and still within the range for balanced national resale market conditions (of between 45% to 65%). Months of inventory remained unchanged over this period at 4.2, still below its long-term (pre-pandemic) average of 5.3. And since the national market aggregates very different regional markets, there are wide variations in terms of how this indicator compares to its long-term average across provinces, ranging from less than 2 weeks above average in Ontario and British Colombia and Ontario to 5.7 months below in New Brunswick. About 2/3 of the markets witnessed a decline in their sales-to-new listings ratio from June to July. Consequently, the number of sellers favouring markets declined from 10 in June to 5 in July while the number of balanced markets increased from 16 to 22. https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.housing.housing-news-flash.august-15--2024.html

From National Bank of Canada Q2 2024 marked a second, albeit smaller, improvement in affordability. The amelioration was relatively widespread with 8 of the ten markets covered experiencing a decline in mortgage payment as a percentage of income (MPPI). The most significant improvement occurred in Hamilton, where a home price decline compounded on the broader trend of lower interest rates and rising incomes. On the flip side, Edmonton and Calgary saw rising home prices largely offset any relief. Overall, the composite improved with slightly higher prices not enough to offset the decline in mortgage interest rates and higher incomes. Still, the housing market remains unaffordable with the latest progress bringing the MPPI to 57.9%. Looking ahead, falling mortgage interest rates will likely be the main driver for improvements in affordability. So far, the decline in mortgage interest rates was precipitated by both expectations of rate cuts and the materialization of easing by the Bank of Canada. Given the deterioration in the growth outlook and the weakening in inflation and the labour market, we expect further central bank easing of 150bps over the next 12 months. Although the policy rate and mortgage interest rates do not always follow in lockstep, this development would provide a significant alleviation of the financing burden. At current income and home price levels, it would bring affordability halfway back to pre-pandemic levels. There is the risk, however, that lower interest rates could lift home prices, especially considering the current population boom. That said, between the payment shock from upcoming renewals and the rising unemployment rate, we do not expect much vigour in home prices for the next 12 months. HIGHLIGHTS: Canadian housing affordability posted a second consecutive improvement in Q224. The mortgage payment on a representative home as a percentage of income (MPPI) fell 1.1 percentage points. Seasonally adjusted home prices increased 0.4% in Q224 from Q124; the benchmark mortgage rate (5-year term) declined 11 basis points, while median household income rose 1.2%. Affordability improved in 8 of the ten markets covered in Q2. On a sliding scale of markets from best progression to least: Hamilton, Toronto, Victoria, Ottawa-Gatineau, Vancouver, Quebec, Montreal, Winnipeg. On the flip side, Edmonton and Calgary deteriorated. Countrywide, affordability enhanced 1.1 pp in the condo portion and in the non-condo segment. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf

While there were early signs of renewed momentum in June following the Bank of Canadas first interest rate cut since 2020, activity in Canadas housing market took a pause in July. Home sales activity recorded over Canadian MLS Systems edged back by 0.7% on a month-over-month basis in July 2024, giving back a small portion of Junes post-first rate cut gain. With another rate cut announced on July 24, weve now seen two rate cuts in a row, and the expected pace of future policy easing has steepened considerably, with markets now anticipating rate cuts at every remaining Bank of Canada decision this year, said Shaun Cathcart, CREAs Senior Economist. Combine that with a record amount of demand waiting in the wings, and the forecast for a rekindling of Canadian housing activity going into 2025 has just gone from a layup to a slam dunk. Highlights: National home sales edged back 0.7% month-over-month in July. Actual (not seasonally adjusted) monthly activity came in 4.8% above July 2023. The number of newly listed properties ticked up 0.9% month-over-month. The MLS Home Price Index (HPI) edged up 0.2% month-over-month but was down 3.9% year-over-year. The actual (not seasonally adjusted) national average sale price was almost unchanged (-0.2%) on a year-over-year basis in July. https://stats.crea.ca/en-CA/

Non-mortgage loans are above the levels seen before the pandemic Non-mortgage loans have increased from the first quarter of 2019 and edged up in the first quarter of 2020. Over the next two quarters, non-mortgage debt levels declined as lockdowns came into full effect. Canadians were able to build up savings, reduce debt and reduce spending to bolster their finances against uncertainty as non-essential businesses closed and travel restrictions were imposed. Despite this reduction, since 2022, debt levels have risen, ultimately wiping out the previous effects. This increase in debt levels can be attributed to several factors, including inflation that peaked at 8.1% year over year in June 2022, making everyday goods and services more costly. Uninsured mortgage loans grow faster than insured ones as house prices increase Since 2017, uninsured mortgages have predominated in Canada, overtaking insured ones for the first time that year. From 2012 to 2019, the outstanding value of uninsured mortgages grew quarterly by 3.0% on average, while insured mortgages declined by 0.4%. This disparity widened during the pandemic as house prices soared due to lower borrowing costs and increased demand, with the quarterly growth of outstanding value of uninsured mortgages reaching 3.4% from 2020 to 2022, while insured mortgages declined by 0.5%. Rising interest rates from early 2022 through the third quarter of 2023 cooled housing market activity, decelerating the quarterly growth of uninsured mortgages to 2.0%, compared with a decline of 1.0% for insured mortgages during the same period. Arrears for non-mortgage loans are trending upward Households with loans in arrears, defined as those late on debt payments by 90 days or more, saw a slight increase during the first two quarters of 2020 owing to economic closures. Government support during the pandemic helped reduce arrears by increasing household disposable income. However, as interest rates rose and pandemic-related support diminished, non-mortgage loan arrears climbed again in 2022. Passenger vehicle loans (+0.18%) and credit card loans (+0.07%) saw the largest arrears increases by the third quarter of 2023 compared with the first quarter of 2019. Mortgage loan arrears have not seen a similar rise despite increasing interest rates. By the third quarter of 2023, mortgage arrears were still below pre-pandemic levels, down 0.08% from the first quarter of 2019. Most households have yet to feel the full impact of higher interest rates, as many mortgage renewals are due in the coming years. According to the Canada Mortgage and Housing Corporation, around 2.2 million mortgages, or 45% of all outstanding mortgages in Canada (over $675 billion), will face an interest rate shock in 2024 and 2025. https://www150.statcan.gc.ca/n1/daily-quotidien/240814/dq240814d-eng.htm

This study uses several demographic scenarios to illustrate how Canadas labour force could evolve from 2023 to 2041. This projection exercise produced a number of findings. Despite the baby boomer cohorts retiring, the size of Canadas labour force is likely to increase over the next few years because of migratory increase. The scenarios show that the size of the labour force is sensitive to both immigration levels and above all, the participation rate of the Canadian population. If labour force participation in Canada in 2041 reached the same intensity as in Japan, the size of the Canadian labour force would increase in a similar way to the scenario in which 750,000 permanent immigrants are admitted annually. The increase in the overall participation rate would be five times higher in the scenario where participation rates in Canada converge toward those currently observed in Japan, compared with the increase observed in the scenario in which Canada admits 750,000 immigrants annually. The scenario in which participation rates converge toward those observed in Japan, while unlikely given the significant differences between the two societies, nevertheless illustrates the potential impact of an increase in Canadians participation rate on the growth and demographic weight of the labour force. Canadas strong population growth, driven by large-scale immigration, brings both opportunities and challenges. While it increases the size of the labour force, it has a limited impact on the overall labour force participation rate and on the aging and renewal of the labour force. Beyond its purely demographic impact, immigration also exerts pressure on housing supply, infrastructure construction and the provision of services to the population, while also addressing unfilled job demands in certain employment sectors. The results of this population projection exercise show that immigration is not the only lever for influencing the evolution of the Canadian labour force. According to the projections, various processes will stabilize at the start of the 2030s, when the last baby boomers turn 65. Furthermore, the projections show that immigration levels would not significantly influence the aging or rejuvenation of the future labour force if they remained relatively constant over time. https://www150.statcan.gc.ca/n1/pub/75-006-x/2024001/article/00005-eng.htm

The role of short-term rentals (STRs) in Canadas housing challenges remains a subject of ongoing policy debate in many Canadian cities. While there is a widespread notion that such rentals limit the availability of long-term housing, empirical analysis of their impacts has produced mixed results. This paper provides an overview of STR activity across Canada. The paper focuses on the subset of STRs that could potentially serve as long-term housing. This subset of STRs, referred to as potential long-term dwellings (PLTDs), is intended to capture STR units that are not serving as anyones primary residence, but could potentially function as long-term housing (either as owner-occupied or rental units). The PLTD subset comprises entire units listed for more than 180 days a year, excluding vacation-type properties. Previous research indicates that STR activity plays an increasingly significant role in the Canadian accommodation services subsector, with its share of revenues rising from an estimated 7.0% in 2017 to 15.2% in 2021. However, in the housing market, STRs still account for a small proportion of total housing units. In 2023, the estimated number of PLTDs in Canada was 107,266, a figure that represents less than 1% of total housing units in Canada. PLTDs also accounted for a small share of total housing units in Canadas largest census metropolitan areas (CMAs). However, the share of PLTDs was higher in tourist areas, particularly around ski hills. In Whistler, they constituted 35.0% of all housing units, while in Mont-Tremblant, their share was 16.4%. https://www150.statcan.gc.ca/n1/pub/11-621-m/11-621-m2024010-eng.htm

For the second time in as many meetings, the Bank of Canada lowered the target for the overnight rate by 25 basis points, a decision in line with the consensus and market expectations. The rate reduction brings the policy rate to 4.50%, fully unwinding the two rate hikes delivered in June and July 2023. This move also pushes the BoCs policy rate 100 bps below the Federal Reserves (based on the upper bound target), marking the largest negative gap since the late 1990s. Despite the consecutive cuts and upward pressure on CORRA, balance sheet normalization will continue (as expected). Here are additional highlights from the communique and the opening statement to the press conference: Driving the decision to cut was broad price pressures continuing to ease and ongoing excess supply lowering inflationary pressures. Once again, there wasnt really any forward rate guidance in the press release but the opening statement to the presser reiterated that it is reasonable to expect further cuts if inflation eases in line with their forecast. He added that downside risks are taking on increased weight in our monetary policy deliberations. Note that the statement dropped the focus items that theyd previously been referring to (i.e., the balance between demand and supply, inflation expectations, wage growth, and corporate pricing behaviour). Instead, incoming information will guide future decisions. The statement notes that excess supply is growing: With robust population growth of about 3%, the economys potential output is still growing faster than GDP, which means excess supply has increased. On the labour market, they highlight that there are signs of slack with labour force growth outpacing employment and job seekers having more trouble finding work. Wage growth is showing some signs of moderating but remains elevated. As for inflation, the statement notes that broad inflationary pressures are easing although shelter and some services inflation remains elevated. Governing Council is carefully assessing these opposing forces on inflation. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/boc-policy-monitor.pdf

Artificial Intelligence (AI) has had many breakthroughs in the past few years, and more and more households are beginning to incorporate it in their daily routines. The BMO Real Financial Progress Index reveals a growing number of Canadians, notably Gen Z, are using artificial intelligence (AI) to help manage their finances and investments. Among the 33% of Canadians using AI to help manage their finances, the most common uses include: Learning more about personal finance topics (45%), Creating and/or updating household budgets (43%), Identifying new investment strategies (42%), Building savings (40%), and Creating and/or updating their financial plans (40%). While AI is helping Canadians manage some aspects of finances, over two thirds (68%) say AI cannot understand how emotions influence financial planning. AI is a transformative technology that can instantly analyze information and generate ideas, but peoples relationship with money is complex, personal and emotional. By making it easier to help manage finances, AI is proving a powerful tool to build financial literacy and make informed financial decisions, and together with guidance from a professional advisor, more Canadians can be empowered to conveniently manage their money, achieve their goals and make real financial progress. https://about.bmo.com/artificial-intelligence-has-taken-the-world-by-storm-heres-how-canadians-are-using-it-to-help-with-their-finances/

From Scotiabank Further rate cuts in Canada this year a certainty while we continue to believe that the Federal Reserve will cut in September. Economic data have come in largely as expected so our forecasts remain largely unchanged. Lower interest rates will provide a mild boost to economic growth later this year, but the full impact of rate cuts will take time to materialize given the lags of monetary policy. Clarity on interest rates and the outlook over the next few months may be fleeting. The results of the US election risk muddying the outlook substantially. The long-awaited rate cuts are finally underway in Canada and are likely to start in the United States in September. These will eventually provide relief to the interest rate sensitive parts of the economy and may also lift business and household sentiment. These rate cuts are occurring in the context of slow, but still-positive growth, and solid progress on inflation management even though there remain substantial risks of higher inflation (linked to the sharp rise in global shipping costs and rapid wage growth and low productivity in Canada). We remain comfortable with our view that policy rates will fall by another 75 basis points in Canada this year and that the Federal Reserve will cut its policy rate by at least 50 basis points starting in September. Moreover, economic data have come in roughly as expected over the last several months, leading to only minor tweaks to the outlook for growth. All told, this forecast update is largely similar to our previous forecast. In this sense, the stability in our forecast combined with more certainty on the interest rate path suggest greater clarity in the outlook for the next several months. https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.global-outlook-and-forecast-tables.scotiabank%27s-forecast-tables.2024.july-18--2024.html

The Bank of Canada today reduced its target for the overnight rate to 4%, with the Bank Rate at 4% and the deposit rate at 4%. The Bank is continuing its policy of balance sheet normalization. The global economy is expected to continue expanding at an annual rate of about 3% through 2026. While inflation is still above central bank targets in most advanced economies, it is forecast to ease gradually. In the United States, the anticipated economic slowdown is materializing, with consumption growth moderating. US inflation looks to have resumed its downward path. In the euro area, growth is picking up following a weak 2023. Chinas economy is growing modestly, with weak domestic demand partially offset by strong exports. Global financial conditions have eased, with lower bond yields, buoyant equity prices, and robust corporate debt issuance. The Canadian dollar has been relatively stable and oil prices are around the levels assumed in Aprils Monetary Policy Report (MPR). In Canada, economic growth likely picked up to about 1% through the first half of this year. However, with robust population growth of about 3%, the economys potential output is still growing faster than GDP, which means excess supply has increased. Household spending, including both consumer purchases and housing, has been weak. There are signs of slack in the labour market. The unemployment rate has risen to 6.4%, with employment continuing to grow more slowly than the labour force and job seekers taking longer to find work. Wage growth is showing some signs of moderating, but remains elevated. GDP growth is forecast to increase in the second half of 2024 and through 2025. This reflects stronger exports and a recovery in household spending and business investment as borrowing costs ease. Residential investment is expected to grow robustly. With new government limits on admissions of non-permanent residents, population growth should slow in 2025. https://www.bankofcanada.ca/2024/07/fad-press-release-2024-07-24/

Summary Home sales edged up 3.7% between May and June, the first increase in five months following the beginning of the monetary easing cycle by the Bank of Canada in June. On the supply side, new listings increased 1.5% from May to June, the fifth advance in six months. Active listings rose by 1.2% in June, the third consecutive month of growth and the highest level since March 2020. Meanwhile, the number of months of inventory (active listings-to-sales) decreased from 4.3 in May to 4.2 in June, a level back in line with its pre-pandemic level. Market conditions tightened slightly during the month and remained tighter than their historical average in most provinces. They were balanced in Manitoba and B.C., and softer than average in Ontario. Housing starts decreased 23.5K in June to 241.7K (seasonally adjusted and annualized), a result below the median economist forecast calling for a 254.1K print. Urban starts decreased by 23.2K (to 223.2K) on a decline in the multi-family segment (+23.9K to 180.2K) while the single-family segment was up marginally (+0.7K to 43.0). Starts decreased in Vancouver (-3.0K to 20.6K), Toronto (-19.9K to 34.3K), and Calgary (-1.0K to 22.5K), while they increased in Montreal (+6.6K to 35.0K). At the provincial level, the most pronounced decreases in total starts were registered in Ontario (-19.1K to 67.6K), Alberta (-6.0K to 42.3K), and B.C. (-5.3K to 40.8K). Meanwhile, notable increases were seen in Manitoba (+6.3K to 10.3K), Nova Scotia (+3.2K to 12.1K), and Saskatchewan (+2.8K to 4.6K). The Teranet-National Bank Composite National House Price Index remained stable from May to June, after seasonal adjustments. Five of the 11 markets in the composite index were up during the month: Winnipeg (+3.9%), Edmonton (+2.3%), Quebec City (+1.1%), Calgary (+0.1%) and Toronto (+0.1%). Conversely, prices fell in Hamilton (-2.2%), Halifax (-0.8%), Ottawa-Gatineau (-0.8%), Vancouver (-0.3%) and Montreal (-0.3%), while they remained stable in Victoria. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

Key Takeaways for 2024 Overall, the Canadian mortgage landscape in 2024 was relatively similar to 2023. The rate of mortgages contracted in the last 18 months were stable. Renewing vs buying. Consumers renewing their mortgage increased (62% vs 58% in 2023) whereas repeat buyers and first-time buyers decreased. Significantly more mortgage consumers were impacted this year by rising interest rates (65% vs 50% in 2023). However, most consumers had strategies in place to avoid defaulting on their mortgage. It took an average of 4.2 years for consumers to save for a down payment, with 30% of buyers receiving a gift to help with the cost. While consumers continue to have concerns or uncertainty during the home buying process, the majority (79%) still believe it is a good long-term financial investment. Nearly three times as many buyers this year said high interest rates made them delay buying a home (13% vs 5% in 2023). First-time homebuyers and newcomers were the most likely to postpone. The vast majority of consumers did research before their most recent mortgage transaction, with 52% of consumers researching exclusively online, compared to just 34% in 2023. Going green. Among homeowners who did energy efficient renovations, 93% are satisfied with the results of their renovations and 68% saw savings in their energy/electricity bills. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/housing-research/surveys/mortgage-consumer-surveys/survey-results-2024/2024-cmhc-mortgage-consumer-survey-en.pdf

From TD Economics As we had anticipated, its been a quiet spring selling season. Elevated borrowing costs and Bank of Canada uncertainty have kept buyers on the sidelines through May, leaving Canadian home sales at the lower end of their pre-Covid levels. Canadian average home prices have managed to grind higher so far this spring, but largely due to a shift to more expensive homes being sold. In contrast, benchmark prices (which are a more like for like measure) have declined. The resale market is still projected to gain traction in the second half of 2024, although weve dialed back the expected pace of gains in sales and prices relative to our March forecast. This is because borrowing costs are unlikely to fall as much as previously thought, with one fewer cut expected by the Bank of Canada this year. Whats more, the U.S. central bank is now likely to begin cutting its policy rate late in 2024, instead of the summer, which has spilled over to more limited declines in Canadian bond yields over the remainder of this year. 2025 growth forecasts for Canadian home sales and average home prices have been lifted, however, as downgraded activity in 2024 yields additional pent-up demand waiting to be unleashed, and more meaningful rate relief is delivered. Were retaining our view that price growth will outperform in the Prairies going forward, lifted by tight markets, historically strong population growth, solid affordability conditions, and economic outperformance. Elsewhere, relatively tight supply/demand balances should keep prices on the rise in Quebec and the Atlantic, although notable affordability deteriorations will prevent even stronger gains. Interprovincial migration has also begun to slow in the Atlantic, weighing on what is likely a key source of ownership demand in the region. In Ontario and B.C., average home price growth should benefit from the strongest sales gains in the country moving forward, with pent-up demand driving a recovery in activity from low levels in these two markets. In the near-term, price growth will be restrained by loose supply/demand conditions, although compositional forces could offer some offset in Ontario, as theyve done in recent months. Thereafter, historically challenging affordability backdrops should cap the pace of gains taking place in the two regions. https://economics.td.com/ca-provincial-housing-outlook

Nearly half (48%) admit to spending more than they know they should. 15% believe impulse shopping is preventing them from making real financial progress. A special report from the BMO Real Financial Progress Index reveals Canadians plan to spend more on vacations and/or travel (20%), home renovations (15%), weddings for family and/or friends (10%) and special events such as graduations and showers (9%) this summer compared to 2023. Household spending continues to be a primary driver of economic growth. According to BMO Economics, consumer confidence will likely improve following the Bank of Canadas first rate cut in four years, with expectations for another two rate cuts for the rest of 2024 and several more in 2025. Inflation is showing continued signs of calming, opening the door for further rate cuts by the Bank of Canada, said Sal Guatieri, Senior Economist, BMO. Lower borrowing costs and slower-rising living costs should provide sufficient relief to support moderate two per cent growth in consumer spending this year and next. The BMO Real Financial Progress Index explores Canadians summer spending plans and forecasts: Sizzling Summer Travels: One-in-five Canadians (20%) plan to spend more on summer travel, while 38% plan on spending the same as in 2023. 15% plan on spending less than last year. Overcast Conditions for Celebrating Milestones: Nearly a tenth of Canadians plan to spend more on weddings (9%) and special events such as graduations and showers (9%) for family and friends. More than a fifth (22%) plan to spend the same on weddings for family and/or friends and more than a quarter intend to spend the same as last year on special events (27%). Ramping Up Home Renovations: 15% plan to spend more on home renovations, while nearly a quarter (24%) will spend the same as last year. 13% intend to spend less on home renovations in 2024. Summer Splurges: For those planning on making a large purchase, including buying a car, 18% plan to spend the same and 10% plan to spend more than they did in 2023. Climbing Summer Camp Costs: 15% of parents with children under the age of 18 plan to spend more on summer camps and/or childcare and 36% intend to spend the same as last year. https://newsroom.bmo.com/2024-06-18-BMO-Survey-Canadian-Summer-Spending-Heats-Up

Canadas population surpassed 41 million for the first time on April 1, marking an increase of nearly a quarter-million people from the previous quarter. The yearly rise of 1.27 million set a new record, while the 3.2 per cent growth rate was the highest since 1958 and more than twice the historical average, says Sal Guatieri, BMO Senior Economist and Director of Economics in a recent report. Net international migration of 1.24 million drove almost all the rise, with two-thirds (828,000) propelled by temporary immigration. If, as planned, the federal government slashes the number of temporary immigrants from 6.8% of the population to 5% within three years, then overall growth will slow to around 1%. A growing population propelled by permanent immigration targets of half a million per year will still support the housing market, but in a much more sustainable manner. Builders will have a decent chance of keeping up with household formation, reducing the risk of markets overheating and prices overshooting income growth. Poor affordability, namely in B.C. and Ontario, is not (yet) having a serious effect on international migration. Ontarios population grew 3.5% in the past year and B.C.s rose 3.3%, both much faster than usual and still leading all provinces except for Alberta, whose population exploded 4.4%, the most since 1981. Ontario and Albertas population growth is about double the long-run norm. All provinces are attracting more international migrants than usual, even pricey Ontario (net 93,000) and B.C. (40,000), with Alberta (33,000) punching above its weight. But regional affordability differences are influencing where migrants, including longtime residents, eventually end up.The biggest increases in population relative to historical norms are in Saskatchewan, Manitoba, Quebec, and three Atlantic Provinces. What do all six regions have in common? Still-decent affordability. The sole exception is Newfoundland Labrador with still subdued population growth of 1.0%, though thats twice the norm. A total 356,000 people moved between provinces in the past year, also more than usual. This is where differences in housing costs come to the fore. Ontario had a net outflow of 32,000 people, trending at the worst levels on record, while B.C. lost 10,000 folks to other provinces. The hands-down winner of the interprovincial migration sweepstakes is Alberta with a net gain of 53,000, tracking the most on record. And its no coincidence that the biggest contributor to this gain is people leaving B.C. and Ontario. More Canadians are also moving to Atlantic Canada. While NL did see a small net outflow, this followed a rare inflow in the prior two years. Quebec, Saskatchewan and Manitoba also lost residents to other provinces, but Quebecs net outflow was much smaller than usual. Source: https://economics.bmo.com/en/publications/detail/0aa3f8dd-43d3-4167-ac05-682ddb7765be/

TD Provincial Economic Forecast Provincial economies are performing broadly as expected. Activity is likely to remain subpar across most of Canada, as regional economies continue to absorb the impact of elevated rates. We still see scope for growth outperformances in the Atlantic Region and Prairies, with somewhat weaker expansions likely in Ontario, B.C and Quebec. The Bank of Canada has begun to normalize its policy rate. However, the process will be gradual, with more significant progress in 2025. By late this year, the U.S. central bank should also be trimming its policy rate, downwardly pressuring Canadian yields and setting the stage for meaningful rate relief. All provinces will benefit, particularly those with the most highly indebted households such as Ontario, B.C., and Alberta. Falling borrowing costs will also deliver a shot in the arm to Canadian housing markets later in the year, changing the momentum from a spring market that has been subdued. Home sales growth should be particularly sturdy in B.C. and Ontario given pent-up demand, although affordability pressures will limit price gains. In contrast, markets in the Prairies should continue to outperform. Population growth across the nation continued to balloon over the first quarter of 2024, notably in Alberta, Ontario, and PEI. This may be the last surge before we see population growth rates slowly taper as a result of recently announced policies by the federal government. For now, decent employment gains have not been able to keep pace with the quickly growing labour force, leading to higher unemployment rates across most jurisdictions. We see jobless rates generally peaking by the end of this year before gently pulling back in 2025. https://economics.td.com/provincial-economic-forecast

Summary Home sales edged down 0.6% between April and May, a fourth consecutive monthly decline. On the supply side, new listings increased 0.5% from April to May, the fourth advance in five months. Active listings rose by 4.2% in May, the second consecutive month of growth and the highest level since March 2020. Meanwhile, the number of months of inventory (active listings-to-sales) increased from 4.2 in April to 4.4 in May, a level now back in line with its pre-pandemic level. Market conditions loosened during the month but remained tighter than their historical average in most provinces. They were balanced in Manitoba and B.C., and softer than average in Ontario. Housing starts jumped 23.4K in May to 264.5K (seasonally adjusted and annualized), a result well above the median economist forecast calling for a 245.1K print. Urban starts increased by 24.7K (to 246.1K) withs gains in both the multi-family segment (+24.0K to 203.1K) and the single-family segment (+0.8K to 43.0K). Starts increased in Montreal (+14.4K to 28.3K), Toronto (+17.3K to 54.3K), and Calgary (+1.4K to 23.4K), while they decreased in Vancouver (-11.1K to 23.5K). At the provincial level, the most pronounced increases in total starts were registered in Qubec (+19.4K to 59.6K), Ontario (+12.4K to 86.3K), and New Brunswick (+3.5K to 7.0K). Meanwhile, notable decreases were seen in British Columbia (-8.4K to 46.5K) and Manitoba (-4.8K to 3.5K). The Teranet-National Bank Composite National House Price Index rose by 0.5% from April to May, after seasonal adjustments. Seven of the 11 markets in the composite index were up during the month: Halifax (+1.5%), Hamilton (+1.1%), Calgary (+1.0%), Vancouver (+1.0%), Victoria (+0.8%), Toronto (+0.5%) and Quebec City (+0.5%). Conversely, prices fell in Edmonton (0.7%), Winnipeg (-0.6%) and Ottawa-Gatineau (-0.2%), while they remained stable in Montreal. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

ON TRACK IN SOME AREAS, A BUMPY ROAD AHEAD IN OTHERS Population growth continues to surge. Mays Labour Force Survey data reported a 3.6% (S.A.A.R.) increase in the 15 year old+ population compared to April. This 97,600 increase since the release of last months report maintained the trend of robust population growth through 2024 so far, with the last three months averaging growth of 3.7% (S.A.A.R.). Compared to May of last year, Canadas 15+ population is up by almost 1.1 million. The increase in the labour force population is down by roughly half when compared to Aprils explosive growth numbers, although m/m growth of 3% (S.A.A.R.) is still significantly high, especially when compared to pre-pandemic levels. A quarter of the year recorded, a quarter of the goal reached. Canada admitted another 34,785 permanent residents among its major categories in March, totalling 121,620 admissions for the year so far, approximately 25% of the annual goal of 485,000 the federal government set for 2024. https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.canada-and-us-economics-.economic-commentary.population-growth.-june-10--2024-.html

From Scotiabank We expect the Bank of Canada to cut by 25bps at each of the next three meetings. Inflation is on a good downward path though growth in the interest rate-sensitive parts of the economy remains surprisingly strong. Positive risks to the outlook for growth and inflation remain as interest rates come down. We are particularly mindful of the response in real estate markets and household spending. Any materialization of upside risks would imperil future rate cuts. Rate cuts have finally begun in Canada. With inflation hopefully on a sustained downward path despite the interest rate-sensitive parts of our economy performing surprisingly well, it is now clear that the Bank of Canada has decided rate relief is necessary. That is great news for borrowers if the Bank of Canada follows through with additional cuts. We think they will, though we remain concerned about upside risks to inflation given rising wages and falling productivity, the surprising strength in consumption, the serial over-stimulation by the federal and provincial governments, and the potential for a housing market rebound. As a result of the latest decision and the communications around that we are changing our Bank of Canada view and now expect that Governor Macklem will cut the policy rate at each of the next three meetings, for a total of 100bps of cuts this year. https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.global-outlook-and-forecast-tables.scotiabank%27s-forecast-tables.2024.june-6--2024.html

From National Bank of Canada In the first rate decision with material uncertainty in a year, the BoC opted lower the target for the overnight rate by 25 basis points, a decision in line with market expectations and the consensus forecast. This makes the BoC the first G7 central bank to ease policy this year, though the ECB is widely expected to follow suit tomorrow. Citing clear progress in core inflation, in addition to ongoing sub-potential growth and a rebalancing labour market, the press release noted monetary policy no longer needs to be as restrictive. The focus now turns to the pacing of cuts in this nascent easing cycle. In the opening statement to the presser, Macklem said its reasonable to expect further easing as long as inflation continues to ease. That puts a July cut squarely in focus and wed be inclined to bet they will ease again at the next meeting. At the same time, wed note that earlier BoC communications indicated that monetary policy easing this year would be gradual. Macklem confirmed this view in the press conference. So although back-to-back cuts may be instituted to start, were skeptical theyll continue at the same pace thereafter. We agree with market expectations that 50 basis points of additional rate relief is appropriate in 2024. In contrast, the consensus sees this marking the start of a more aggressive easing campaign. The median expectation is for a 4% policy rate by year-end. Three more cuts over the last four decisions of the year, isnt a pace of cuts we would characterize as gradual and isnt as likely to materialize barring a more material slowdown in the economy. The Banks next decision will take place on July 24th. The Summary of Deliberations for todays decision will be released on June 19th. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/boc-policy-monitor.pdf

The Bank of Canada today reduced its target for the overnight rate to 4%, with the Bank Rate at 5% and the deposit rate at 4%. The Bank is continuing its policy of balance sheet normalization. The global economy grew by about 3% in the first quarter of 2024, broadly in line with the Banks April Monetary Policy Report (MPR) projection. In the United States, the economy expanded more slowly than was expected, as weakness in exports and inventories weighed on activity. Growth in private domestic demand remained strong but eased. In the euro area, activity picked up in the first quarter of 2024. Chinas economy was also stronger in the first quarter, buoyed by exports and industrial production, although domestic demand remained weak. Inflation in most advanced economies continues to ease, although progress towards price stability is bumpy and is proceeding at different speeds across regions. Oil prices have averaged close to the MPR assumptions, and financial conditions are little changed since April. In Canada, economic growth resumed in the first quarter of 2024 after stalling in the second half of last year. At 1.7%, first-quarter GDP growth was slower than forecast in the MPR. Weaker inventory investment dampened activity. Consumption growth was solid at about 3%, and business investment and housing activity also increased. Labour market data show businesses continue to hire, although employment has been growing at a slower pace than the working-age population. Wage pressures remain but look to be moderating gradually. Overall, recent data suggest the economy is still operating in excess supply. CPI inflation eased further in April, to 2.7%. The Banks preferred measures of core inflation also slowed and three-month measures suggest continued downward momentum. Indicators of the breadth of price increases across components of the CPI have moved down further and are near their historical average. However, shelter price inflation remains high. With continued evidence that underlying inflation is easing, Governing Council agreed that monetary policy no longer needs to be as restrictive and reduced the policy interest rate by 25 basis points. Recent data has increased our confidence that inflation will continue to move towards the 2% target. Nonetheless, risks to the inflation outlook remain. Governing Council is closely watching the evolution of core inflation and remains particularly focused on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour. The Bank remains resolute in its commitment to restoring price stability for Canadians. https://www.bankofcanada.ca/2024/06/fad-press-release-2024-06-05/

Canadian new home prices increase slightly in April The national index rose by 0.2% monthly in April on the strength of increases in large urban centres such as Edmonton, Calgary, and Vancouver. Overall, prices increased in 5 of the 27 census metropolitan areas (CMAs) surveyed, were unchanged in 15 CMAs and declined in 7. The largest price gains are reported by cities in Alberta The largest month-over-month increases in April were reported in Edmonton (+1.1%) and Calgary (+ 0.9%). Builders attributed the price gains to construction costs along with favourable market conditions. In Alberta, the rapidly growing population is fuelling demand for new housing. According to the latest population estimates of Canada, Alberta (+4.4%) recorded the fastest year-over-year rise in population in Canada in the first quarter of 2024. The largest monthly declines in April were seen in KitchenerCambridgeWaterloo (-0.4%) and Winnipeg (-0.4%), where builders linked the decreases to weak market conditions. National new home prices edge down year over year in April Nationally, the prices of new homes edged down (-0.1%) in April compared with the same month last year. This was less than the year-over-year decline seen in March 2024 (-0.4%). The largest year-over-year declines in April were registered in Ottawa (-4.4%) and Saskatoon (-2.5%), while the largest increases were in Calgary (+3.9%), Vancouver (+1.3%) and Qubec (+1.2%). https://www150.statcan.gc.ca/n1/daily-quotidien/240523/dq240523c-eng.htm

HIGHLIGHTS: Canadian housing affordability posted a first improvement in three quarters in Q124. The mortgage payment on a representative home as a percentage of income (MPPI) fell 3.1 percentage points, the largest one quarter improvement since the second quarter of 2019. Seasonally adjusted home prices decreased 0.6% in Q124 from Q423; the benchmark mortgage rate (5-year term) slumped 32 basis points, while median household income rose 1.2%. Affordability improved in all ten markets covered in Q1. On a sliding scale of markets from best progression to least: Vancouver, Victoria, Toronto, Hamilton, Montreal, Winnipeg, Ottawa-Gatineau, Edmonton, Quebec, Calgary. Countrywide, affordability enhanced 2.2 pp in the condo portion vs. a 3.4 pp betterment in the non-condo segment. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf

Key Highlights Even with a record-high 650,000 construction workers in 2023, Canadas housing production of 240,267 units was below the potential of over 400,000 homes per year. While more human and financial resources have been committed to residential construction over the past several years, housing starts have not kept the pace. Meeting the Governments Housing Plan of achieving the goal of 3.87 million new homes by 2031 demands both regulatory reforms and industry consolidation to increase efficiency and productivity. The Housing Accelerator Fund is a huge step in achieving this outcome. https://www.cmhc-schl.gc.ca/blog/2024/what-canada-potential-capacity-housing-construction

Summary Home sales edged down 1.7% between March and April, a second monthly decrease in five months. On the supply side, new listings increased 2.8% from March to April, the third advance in four months. Active listings jumped 5.8% in April, following stabilization the previous month. Overall, the number of months of inventory (active listings-to-sales) increased from 3.9 in March to 4.2 in April. Market conditions loosened during the month but remained tighter than their historical average in most provinces. They were balanced in Manitoba and B.C., and softer than average in Ontario. Housing starts remained relatively stable in April as they edged down 2.0K to 240.2K (seasonally adjusted and annualized), a result in line with the median economist forecast calling for a 240.0K print. Urban starts decreased by 0.2K (to 220.1K) as a decline for the multi-family segment (-1.2K to 178.5K) was almost fully offset by an increase in the single-family segment (+0.9K to 41.7K). Starts increased in Montreal (+4.0K to 13.9K) and Calgary (+0.1K to 21.9K), while they decreased in Vancouver (-7.1K to 34.6K) and Toronto (-5.0K to 37.0K). At the provincial level, the most pronounced increases in total starts were registered in Alberta (+5.8K to 45.9K), Manitoba (+2.7K to 8.2K) and New Brunswick (+1.4K to 3.6K). Meanwhile, notable decreases were seen in Qubec (-6.7K to 39.9K) and British Columbia (-6.0K to 54.8K). The Teranet-National Bank Composite National House Price Indexremained stable from March to April, after seasonal adjustments. Seven of the 11 markets in the composite index were up during the month: Edmonton (+2.3%), Montreal (+1.9%), Calgary (+1.9%), Ottawa-Gatineau (+0.5%), Vancouver (+0.4%), Hamilton (+0.4%) and Winnipeg (+0.3%). Conversely, declines occurred in Halifax (-0.7%), Toronto (-1.2%), Victoria (-1.9%) and Quebec City (-2.1%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

Employment increased by 90,000 (+0.4%) in April, and the unemployment rate was unchanged at 6.1%. The employment rate held steady at 61.4%, following six consecutive monthly declines. In April, employment rose among core-aged men (25 to 54 years old) (+41,000; +0.6%) and women (+27,000; +0.4%) as well as for male youth aged 15 to 24 (+39,000; +2.8%). There were fewer women aged 55 and older employed (-16,000; -0.8%), while employment was little changed among men aged 55 and older and female youth (aged 15 to 24). Employment gains in April were driven by part-time employment (+50,000; +1.4%). Employment increased in April in professional, scientific and technical services (+26,000; +1.3%), accommodation and food services (+24,000; +2.2%), health care and social assistance (+17,000; +0.6%) and natural resources (+7,700; +2.3%), while it fell in utilities (-5,000; -3.1%). Employment increased in Ontario (+25,000; +0.3%), British Columbia (+23,000; +0.8%), Quebec (+19,000 +0.4%) and New Brunswick (+7,800; +2.0%) in April. It was little changed in the other provinces. Total hours worked rose 0.8% in April and were up 1.2% compared with 12 months earlier. Average hourly wages among employees increased 4.7% (+$1.57 to $34.95) on a year-over-year basis in April, following growth of 5.1% in March (not seasonally adjusted). In the spotlight: Over one in four workers (28.4%) have to come into work or connect to a work device at short notice at least several times a month. https://www150.statcan.gc.ca/n1/daily-quotidien/240510/dq240510a-eng.htm

Following sharp declines during the COVID‑19 pandemic, many indicators of financial stress have now returned to more normal levels. Signs of stress are concentrated primarily among households without a mortgage and survey data suggest that, of these households, renters are most affected. In contrast, indicators of stress among mortgage holders are largely unchanged, remaining at levels lower than their historical averages. Factors such as income growth, accumulated savings and reduced discretionary spending are supporting households ability to deal with higher debt payments. Over the coming years, more mortgage holders will be renewing at higher interest rates. Based on market expectations for interest rates, payment increases will generally be larger for these mortgage holders than for borrowers who renewed over the past two years. Higher debt-servicing costs reduce financial flexibility for households and businesses and make them more vulnerable in the event of an economic downturn. Signs of financial stress have risen primarily among households without a mortgage The combination of higher inflation and higher interest rates continues to put pressure on household finances. Many indicators of financial stress, which had declined during the pandemic, are now close to pre-pandemic levels. Signs of increased financial stress appear mainly concentrated among renters. The rates of arrears on credit cards and auto loans for households without a mortgagewhich includes renters and outright homeownersare back to pre-pandemic levels and continue to grow. In contrast, arrears on these products for households with a mortgage have remained low and stable. https://www.bankofcanada.ca/2024/05/financial-stability-report-2024/

Key takeaways Canadas financial system remains resilient. Over the past year, financial system participantsincluding households, businesses, banks and non-bank financial institutionshave continued to proactively adjust to higher interest rates. However, risks to financial stability remain. The Bank sees two key risks to stability, related to: Debt serviceabilityBusinesses and households continue to adjust to higher interest rates. Indicators of financial stress in both sectors were below historical averages through the COVID-19 pandemic but have been normalizing. Some indicators look to be increasing more sharply and warrant monitoring. Higher debt-servicing costs reduce financial flexibility for households and businesses and make them more vulnerable in the event of an economic downturn. Asset valuationsThe valuations of some financial assets appear to have become stretched, which increases the risk of a sharp correction that can generate system-wide stress. The recent rise in leverage in the non-bank financial intermediation sector could amplify the effects of such a correction. The financial system is highly interconnected. Stress in one sector can spread to others. Participants should continue to be proactive, including planning for more adverse conditions or outcomes. https://www.bankofcanada.ca/2024/05/financial-stability-report-2024/

13% of aspiring homeowners plan on purchasing a home in 2024. 26% plan on doing so in 2025 or later. 62% believe owning a home is still one of lifes biggest aspirations, but 56% of aspiring homeowners feel owning a home is unattainable. The BMO Real Financial Progress Index reveals the majority (72%) of aspiring homeowners are waiting until interest rates drop before purchasing a home a 4% increase from 2023 amid rising concerns about the cost of living (58%), inflation (56%) and their overall financial situation (38%), over the past three months. According to BMO Economics, homebuyers may need to wait longer for affordability relief. The Bank of Canada left interest rates unchanged in April, but left the possibility open for a rate cut by June or July 2024. Demographic forces have allowed some pent-up demand to build, and market psychology is such that many are expecting rate cuts in the second half of the year, said Robert Kavcic, Senior Economist, BMO Capital Markets. This should pull some demand off the sideline and firm up housing activity, but rates have a long way to fall still before affordability is restored to recent norms. The BMO Real Financial Progress Index found 85% of Canadians believe they are making real financial progress and over two thirds (67%) feel confident in their financial situation, but fear of unknown expenses (84%) and concerns about their overall financial situation (81%) and housing costs (74%) are among the leading sources of financial anxiety. https://newsroom.bmo.com/2024-04-29-BMO-Survey-72-of-Aspiring-Homeowners-are-Waiting-for-Rate-Cuts-Before-Buying

Eligible employees who worked from home in 2023 will be required to use the Detailed Method to claim home office expenses. The temporary flat rate method does not apply to the 2023 tax year. As an employee, you may be able to claim certain home office expenses (work-space-in-the-home expenses, office supplies, and certain phone expenses). This deduction is claimed on your personal income tax return. Deductions reduce the amount of income you pay tax on, so they reduce your overall income tax liability. Salaried employees can claim: Electricity, Heat, Water, some utilities, monthly Internet access or part of your rent. Commission employees can also claim: home insurance, property taxes and lease of a cell phone, computer and more. Review the CRA website for more. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-22900-other-employment-expenses/work-space-home-expenses.html

Canadas federal Finance Minister tabled Budget 2024 on April 16th. Gross new spending measures were substantially higher than signalled ahead of budget day, with equally substantial taxation measures partially offsetting the net impact. The budget adds a near-term boost to growth with major new spending, but it introduces another twist as it gives with one hand while taking with the other. While net new spending amounts to 0.4% f GDP over the next two years, gross outlays to Canadians adds up to a much more substantial $22.5 bn (0.7%), while syphoning off $9.5 bn from drivers of growth. This is additive to the $44 bn incremental spending provinces have announced in recent weeks. The budget clearly makes the Bank of Canadas job more difficult. The soft inflation print released into the budget risks fanning complacency around the risk of a resurgence in inflationary pressure particularly with a housing market rebound waiting in the wings (and more potential buyers on the margin after this budget). New spending is hardly focused. A gross $56.8 bn is spread widely across a range of priorities. The new Housing Plan reflects just 1/6th of new outlays. Others were channeled aheadmilitary spending, AI investments, and pharmacarewhile new pledges were tabled towards Aboriginal investments, community spending, and a new disability benefit among others. New tax measures will yield a $21.9 bn offsetnotably a big increase to the capital gains inclusion rate from one-half to two-thirds for individuals and corporations later this Spring. The net cost of new measures in this budget lands at $34.8 bn over the planning horizon. Near-term economic momentum has provided additional offsets ($29.1 bn), leaving the fiscal path broadly similar to the Fall Update. The FY24 deficit comes in on the mark at $40 bn (1.4% of GDP) and is expected to descend softly to $20 bn (0.6%) by FY29. Debt remains largely on a similar path of modest declines as a share of GDP over the horizon. The fiscal plan could have delivered on critical priorities including the Housing Plan, along with AI and Indigenous spending, while still adhering to its fiscal anchors without resorting to substantial new taxation measures that will dampen confidence and introduce further distortions to Canadas competitive landscape. It wont likely trigger an election, but it is clearly a warm-up lap as Canadians brace for the polls within the next 1218 months. The taps are unlikely to be turned off any time soon. Source: https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.fiscal-policy.fiscal-pulse.federal.federal-budget-analysis-.canadian-federal--2024-25-budget--april-16--2024-.html

The Bank of Canada held its target for the overnight rate at 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening. The Bank expects the global economy to continue growing at a rate of about 3%, with inflation in most advanced economies easing gradually. The US economy has again proven stronger than anticipated, buoyed by resilient consumption and robust business and government spending. US GDP growth is expected to slow in the second half of this year, but remain stronger than forecast in January. The euro area is projected to gradually recover from current weak growth. Global oil prices have moved up, averaging about $5 higher than assumed in the January Monetary Policy Report (MPR). Since January, bond yields have increased but, with narrower corporate credit spreads and sharply higher equity markets, overall financial conditions have eased. The Bank has revised up its forecast for global GDP growth to 2% in 2024 and about 3% in 2025 and 2026. Inflation continues to slow across most advanced economies, although progress will likely be bumpy. Inflation rates are projected to reach central bank targets in 2025. In Canada, economic growth stalled in the second half of last year and the economy moved into excess supply. A broad range of indicators suggest that labour market conditions continue to ease. Employment has been growing more slowly than the working-age population and the unemployment rate has risen gradually, reaching 6.1% in March. There are some recent signs that wage pressures are moderating. Source:https://www.bankofcanada.ca/2024/04/fad-press-release-2024-04-10

Consumers believe inflation has slowed, but their expectations for inflation in the near term have barely changed. Consumers link their perceptions of slowing inflation with their own experiences of price changes for frequently purchased items, such as food and gas. Expectations for long-term inflation have increased, though they remain below their historical average. Relative to last quarter, consumers now think that factors contributing to high inflationparticularly high government spending and elevated home prices and rent costswill take longer to resolve. Canadians continue to feel the negative impacts of high inflation and high interest rates on their budgets, and nearly two-thirds are cutting or postponing spending in response. Although weak, consumer sentiment improved this quarter, with people expecting lower interest rates. As a result, consumers are less pessimistic about the future of the economy and their financial situation, and fewer think they will need to further cut or postpone spending. Improved sentiment is also evident in perceptions of the labour market, which have stabilized after easing over recent quarters. Workers continue to feel positive about the labour market and, with inflation expected to be high, they continue to anticipate stronger-than-average wage growth. Source: https://www.bankofcanada.ca/2024/04/canadian-survey-of-consumer-expectations-first-quarter-of-2024

Central bankers took the stage this week, but it was Canadian economic data that stole the show. A significant improvement in inflation for February and a weak reading on retail sales increased expectations for an earlier cut by the Bank of Canada (BoC). Adding to this was the release of the BoCs March deliberations that confirmed the Bank is preparing to cut rates later this year. While the exact timing of the first rate cut is still uncertain, market pricing has rallied around June/July, matching expectations on timing for other major central banks. The inflation reading this week showed a meaningful deceleration, with the headline measure remaining within the BoC 1% to 3% target band. But the big surprise was the heavy discounting on items like clothing, cell phone /internet plans, and food. For the latter, that was the first contraction in three years (seasonally adjusted)! As Deputy Governor Toni Gravelle said at a speech later in the week, this was very encouraging. What was even more promising was the progress on the BoCs preferred inflation metrics. While these have remained stubbornly high over the last few months, they too have started to ease and now sit just above the 3% band. These metrics are starting to follow other measures of inflation lower, including the Banks old preferred inflation measure, CPIX. This index excludes the eight most volatile inflation items such as mortgage interest costs. Importantly, this measure has now reached the BoCs 2% target. Source: TD Economics https://economics.td.com/ca-weekly-bottom-line

Canadian home prices as measured by the seasonally adjusted Aggregate Composite MLS Home Price Index (HPI) were flat on a month-over-month basis in February 2024, ending a streak of five declines that began last fall, according to the latest data from the Canadian Real Estate Association (CREA). The fact that prices were unchanged from January to February was noteworthy given they had dropped 1.3% from December to January. Considering how stable the seasonally adjusted MLS HPI tends to be, shifts this abrupt are exceedingly rare. There have only been three other times in the last 20 years that have shared a sudden improvement or increase in the month-over-month percentage change from one month to the next of this size; all at various points in the last four years when demand was coming off the sidelines. Its looking like February may end up being the last relatively uneventful month of the year as far as the 2024 housing story goes, said Shaun Cathcart, CREAs Senior Economist. With so much demand having piled up on the sidelines, the story will likely be less about the exact timing of interest rate cuts and more about how many homes come up for sale this year. Home sales activity recorded over Canadian MLS Systems dipped 3.1% between January and February 2024, giving back some of the cumulative 12.7% increase in activity recorded in December 2023 and January 2024. That said, the general trend has been somewhat higher levels of activity over the last three months compared to a quiet fall market in 2023. Source: https://stats.crea.ca/en-CA/

The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening. Global economic growth slowed in the fourth quarter. US GDP growth also slowed but remained surprisingly robust and broad-based, with solid contributions from consumption and exports. Euro area economic growth was flat at the end of the year after contracting in the third quarter. Inflation in the United States and the euro area continued to ease. Bond yields have increased since January while corporate credit spreads have narrowed. Equity markets have risen sharply. Global oil prices are slightly higher than what was assumed in the January Monetary Policy Report (MPR). In Canada, the economy grew in the fourth quarter by more than expected, although the pace remained weak and below potential. Real GDP expanded by 1% after contracting 0.5% in the third quarter. Consumption was up a modest 1%, and final domestic demand contracted with a large decline in business investment. A strong increase in exports boosted growth. Employment continues to grow more slowly than the population, and there are now some signs that wage pressures may be easing. Overall, the data point to an economy in modest excess supply. Source: https://www.bankofcanada.ca/2024/03/fad-press-release-2024-03-06/

The deadline for submitting new or updated applications for the First-Time Home Buyer Incentive is March 21, 2024, at midnight ET. No new approvals will be granted after March 31, 2024. Initially designed to alleviate the burden of monthly mortgage payments for first-time buyers, the program involved the government acquiring partial ownership of a property. Under the program, the government provided a loan of up to 10 percent of the purchase price, which could be put towards a larger down payment, thereby reducing monthly payments. However, homeowners were required to repay the incentive after 25 years or upon selling the property, with the repayment amount adjusted to reflect changes in the propertys value. Source:https://www.cmhc-schl.gc.ca/consumers/home-buying/first-time-home-buyer-incentive

From National Bank of Canada The fourth quarter of 2023 witnessed a second consecutive deterioration for housing affordability in Canada. The degradation was widespread with every single market experiencing an increase in their mortgage payment as a percentage of income (MPPI) due to both higher interest rates and rising home prices. This worsening has practically eliminated recent improvements in affordability and our index at the national level is almost back to its worst affordability since the 1980s. That said, the headline index dissimulates a more worrisome picture. Indeed, the condo sub-index has reached its highest level of unaffordability in at least two decades. In other words, it would take nearly half of pre-tax median household income to service the median condo mortgage. With the condo market typically being the entry point for first-time homebuyers it leaves the latter with few options. While homeownership is becoming untenable, the rental market offers little respite. Our rental affordability index has never been worse. It would take nearly one third of pre-tax household income to pay for the average rent of a two-bedroom condo. The outlook for the coming year is fraught with challenges. While mortgage interest rates are showing signs of waning in the face of expected rate cuts by the central bank, housing demand remains supported by unprecedented population growth. As a result, we expect some upside to prices in 2024. On the rental side, in a recently released report by the CMHC, Canada`s rental market vacancy stumbled to a record low of 1.5% which leaves little room for an improvement in rents. Supply for any segment of the market isn`t expected to pick up anytime soon as building permits in many Canadian cities has plummeted at the end of 2023. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf

Following a weak second half of 2023, home sales over the last two months are showing signs of recovery, according to the latest data from the Canadian Real Estate Association (CREA). Home sales activity recorded over Canadian MLS Systems rose 3.7% between December 2023 and January 2024, building on the 7.9% month-over-month increase recorded the month prior. While activity is now back on par with 2023s relatively stronger months recorded over the spring and summer, it begins 2024 about 9% below the 10-year average. Sales are up, market conditions have tightened quite a bit, and there has been anecdotal evidence of renewed competition among buyers; however, in areas where sales have shot up most over the last two months, prices are still trending lower. Taken together, these trends suggest a market that is starting to turn a corner but is still working through the weakness of the last two years, said Shaun Cathcart, CREAs Senior Economist. https://stats.crea.ca/en-CA/

The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening. Global economic growth continues to slow, with inflation easing gradually across most economies. While growth in the United States has been stronger than expected, it is anticipated to slow in 2024, with weakening consumer spending and business investment. In the euro area, the economy looks to be in a mild contraction. In China, low consumer confidence and policy uncertainty will likely restrain activity. Meanwhile, oil prices are about $10 per barrel lower than was assumed in the October Monetary Policy Report (MPR). Financial conditions have eased, largely reversing the tightening that occurred last autumn. The Bank now forecasts global GDP growth of 2% in 2024 and 2% in 2025, following 2023s 3% pace. With softer growth this year, inflation rates in most advanced economies are expected to come down slowly, reaching central bank targets in 2025. In Canada, the economy has stalled since the middle of 2023 and growth will likely remain close to zero through the first quarter of 2024. Consumers have pulled back their spending in response to higher prices and interest rates, and business investment has contracted. With weak growth, supply has caught up with demand and the economy now looks to be operating in modest excess supply. Labour market conditions have eased, with job vacancies returning to near pre-pandemic levels and new jobs being created at a slower rate than population growth. However, wages are still rising around 4% to 5%. Source: https://www.bankofcanada.ca/2024/01/fad-press-release-2024-01-24/

Income inequality increased in the third quarter as the gap in the share of disposable income between households in the two highest income quintiles (top 40% of the income distribution) and two lowest income quintiles (bottom 40% of the income distribution) reached 44.9%, up 0.5 percentage points from the third quarter of 2022. The lowest income householdsthose in the bottom 20% of the income distributionwere the only income group to reduce their average disposable income in the third quarter of 2023 relative to the same quarter of 2022 (-1.2%). Gains in average wages and salaries for the lowest income households (+3.0%) were more than offset by reductions in net investment income (-43.4%). While higher interest rates can lead to increased borrowing costs for households, they can also lead to higher yields on saving and investment accounts. The lowest income households are more likely to have a limited capacity to take advantage of these higher returns, as on average they have fewer resources available for saving and investment. Higher interest rates weighed on average disposable income for the lowest income households in the third quarter. Along with a doubling of the Bank of Canadas policy interest rate from 2.5% in July 2022 to 5.0% as of July 2023, net investment income declined for the lowest income households in the third quarter of 2023 relative to a year earlier. The lowest income earners reduced their net investment income as increased interest payments, more than half of which was due to consumer credit, outweighed gains in investment earnings. Source: https://www150.statcan.gc.ca/n1/daily-quotidien/240122/dq240122a-eng.htm?HPA=1

Home sales activity recorded over Canadian MLS Systems rose 8.7% between November and December 2023, putting it on par with some of last years relatively stronger months recorded over the spring and summer. The actual (not seasonally adjusted) number of transactions came in 3.7% above December 2022, the largest year-over-year gain since August. On an annual basis, home sales totalled 443,511 units in 2023, a decline of 11.1% from 2022. It was technically the lowest annual level for national sales activity since 2008; although it was very close to levels recorded in each of the five years following the 2008 financial crisis, as well as the first year the uninsured stress test was implemented in 2018. While December did offer up a bit of a surprise in sales numbers to cap the year, the real test of the markets resilience will be in the spring, said Larry Cerqua, Chair of CREA. There are only a couple of months left until that gets underway. If youre looking to buy or sell a property in the 2024, youll want a game plan, so contact a REALTOR in your area today, continued Cerqua. Was the December bounce in home sales the start of the expected recovery in Canadian housing markets? Probably not just yet, said Shaun Cathcart, CREAs Senior Economist. It was more likely just some of the sellers and buyers that were holding onto unrealistic pricing expectations last fall finally coming together to get deals done before the end of the year. Were still forecasting a recovery in housing demand in 2024, but well have to wait a few more months to get a sense of what that ultimately looks like. Source: https://www.crea.ca/media-hub/news/canadian-home-sales-see-unexpected-surge-to-close-out-2023/

Higher borrowing costs are leaving a permanent mark on the Canadian families who by the end of 2024 would have to budget for a roughly 30% increase in their monthly mortgage payments, on average. On aggregate, mortgage payments growth is forecast to slow next year, remain relatively flat in 2025 but pick up again in 2026, even if Canadian economy falls into a mild recession in 2024. Elevated mortgage payments will create an enduring drag on consumption and broader economic growth. Despite this, a relatively more resilient job market and largely unspent excess deposits should provide enough support for an average Canadian family to manage an increased debt servicing cost. https://economics.td.com/ca-mortgage-tides-canada-households

Summary On a seasonally adjusted basis, home sales dropped 5.6% from September to October, a fourth monthly contraction in a row and the sharpest slowdown in sales since June 2022. On the supply side, new listings decreased 2.3% in October, a first decline in seven months. Active listing increased by 4.6%, a fourth monthly gain in a row. As a result the number of months of inventory (active-listings to sales) increased from 3.7 in September to 4.1 in October and is now roughly back in line with its pre-pandemic level. The market conditions loosened during the month but remained tighter than its historical average in 7 provinces, while market conditions were balanced in B.C. and Manitoba, and looser than average in Ontario. Housing starts rose 4.0K in October to a 4-month high of 274.7K (seasonally adjusted and annualized), a result comfortably above the median economist forecast calling for a 255.0K print. Urban starts advanced 6.1K (to 257.4K) on gains in both the multi-family (+2.1K to 209.9K) and the single-family segment (+4.0K to 47.5K). Starts decreased in Toronto (-13.9K to 44.6K), Montreal (-13.6K to 18.2K), and Calgary (-9.0K to 34.8K), while they increased in Vancouver (+9.0K to 34.8K). The Teranet-National Bank Composite National House Price Index decreased by 0.4% in October after seasonal adjustment. seven of the 11 markets in the composite index were still up during the month: Montreal (+3.7%), Halifax (+1.1%), Winnipeg (+1.0%), Quebec City (+0.9%), Calgary (+0.6%), Victoria (+0.3%) and Hamilton (+0.2%). Conversely, prices were down in Toronto (-1.6%), Edmonton (-1.2%), Vancouver (-1.1%) and Ottawa-Gatineau (-1.1%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening. The global economy continues to slow and inflation has eased further. In the United States, growth has been stronger than expected, led by robust consumer spending, but is likely to weaken in the months ahead as past policy rate increases work their way through the economy. Growth in the euro area has weakened and, combined with lower energy prices, this has reduced inflationary pressures. Oil prices are about $10-per-barrel lower than was assumed in the October Monetary Policy Report (MPR). Financial conditions have also eased, with long-term interest rates unwinding some of the sharp increases seen earlier in the autumn. The US dollar has weakened against most currencies, including Canadas. In Canada, economic growth stalled through the middle quarters of 2023. Real GDP contracted at a rate of 1.1% in the third quarter, following growth of 1.4% in the second quarter. 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.

From National Bank of Canada The third quarter of 2023 witnessed a considerable deterioration for housing affordability in Canada. This degradation follows three consecutive quarters of improvements and deletes nearly two thirds of the progress that had been made so far. The worsening was widespread with every single market experiencing an increase in their mortgage payment as a percentage of income (MPPI). At the national level the deterioration stemmed from a surge in home prices of 4.6%, the largest in 6 quarters and partially erasing the decline over the last year. A rebound in home prices during a period of rising interest rates could initially appear perplexing. That said, a chronic lack of supply in the resale market compounded by record population growth has allowed prices to rise. Also contributing to lessening affordability, mortgage interest rates rose 32 basis points in the quarter, more than eliminating the two prior declines. While still rising income was a partial offset in the third quarter, it did little to assuage the situation. Looking ahead, we see a moribund outlook for affordability. At the very least, a further worsening is in the cards for the last quarter of the year. Mortgage interest rates have steadily trended up in October on the back of rising longer-term interest rates. If interest rates hold at their current level, it would only take a home price increase of 2% in the fourth quarter to surpass the worst level of affordability in a generation. The outlook remains particularly challenging for first-time homebuyers. HIGHLIGHTS: Canadian housing affordability posted a worsening in Q323 following three consecutive improvements. The mortgage payment on a representative home as a percentage of income (MPPI) rose 4.0 points, more than erasing the previous pullback of 1.6-points in Q223. Seasonally adjusted home prices increased 4.6% in Q323 from Q223; the benchmark mortgage rate (5-year term) surged 32 bps, while median household income rose 1.2%. Affordability deteriorated in all of the ten markets covered in Q3. On a sliding scale of markets from worst deterioration to least: Vancouver, Toronto, Victoria, Hamilton, Calgary, Montreal, Quebec, Ottawa-Gatineau, Winnipeg, and Edmonton. Countrywide, affordability worsened 2.5 pp in the condo portion vs. a 4.5 pp degradation in the non-condo segment. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf

POST - During the latter part of October, 2023 the Canadian Mortgage Insurers (CMHC, Sagen Canada Guaranty) changed their policies regarding Mortgage Switches/Transfers in accordance to the Federal B-20 Guidelines. The change and enhancements have come to great delight with the Mortgage Broker Industry. Effective immediately, mortgage lenders are able to qualify insured transfers and insured collateral transfers using the contract rate. Naturally, there are some conditions to this and are they are listed below: Must be a transfer of an existing insured mortgage where the borrower paid the default insurance premium. The amortization cannot increase and must stay consistent with the original terms of the mortgage No more than $3,000 in penalty and/or fees can be capped (added) onto the mortgage at the time of the transfer Insurable and Uninsurable Transfers will continue to be qualified on the higher of the minimum qualifying rate or the contract rate plus 2%. What does all this mean you ask? It means that if your mortgage is maturing and was originally insured by one of the Canadian Mortgage Insurers and you paid the insurance premium yourself or was added to the mortgage at the time, you may transfer your maturing mortgage from one lender to another and qualify based on the new contract rate being given by the new lender. This will enable borrowers to explore their product and rate options leading into their mortgage maturing and improve the ability to qualify for the transfer to get that better product and/or rate moving forward. Up until now, many borrowers have been unable to do a transfer as they were forced to qualify at the new rate plus 2% and with rate increases, this was becoming more and more difficult to accomplish. This change opens up the door for more Canadian Homeowners to capture a better mortgage structure and cost options so please ensure you explore your options well ahead of your mortgage maturing. As a Licensed Mortgage Broker, I am armed with numerous lender, product and rate choices to provide you during this exercise.

November is Financial Literacy Month across Canada and a great time to stop and take stock in our current finances, our management and payment of our current debt and what we can do to optimize our financial health among other important checks and analysis. A critical aspect of our lives is to learn, understand and practice financial literacy so we can live our life as stress free as possible financially while ensuring we are doing the right things to prepare for a comfortable future. As the years have progressed, governments have and continue to take steps that are generating an uneasiness with our financial future. Even companies have ceased providing the wonderful pension plans of yesteryear so we must take it upon ourselves to do the right things to ensure a comfortable retirement in our later years. Throughout the month, the Financial Consumer Agency of Canada (FCAC) and other organizations will be sharing resources focused at assisting Canadians to further understand our finances and empower us to: * Manage our money and debt wisely * Save for the future * Understand our financial rights This years campaign theme is Managing Your Money in a Changing World that anchors our continued complex and constantly changing financial environment and the importance of checking up on our financial health. Lets take some time to check-in with our financial position of both debt and savings to determine where we are at presently, where we would like to go and how to get there. Available Resource Material Financial Literacy Month 2023 National Financial Literacy Strategy 2021 to 2026 Canadian Foundation for Economic Education CPA Canada Credit Counselling Society

Summary On a seasonally adjusted basis, home sales decreased 1.9% from August to September, a third monthly contraction in a row following the renewed monetary tightening cycle of the Bank of Canada and the surge in long-term interest rates. On the supply side, new listings jumped 6.3% in September, a sixth consecutive monthly increase. Overall, active listing increased by 3.7%, a third monthly gain in a row. As a result the number of months of inventory (active-listings to sales) increased from 3.5 in August to 3.7 in September. This continues to be higher than the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio loosened during the month but remained tighter than its historical average in every province except Ontario, which now indicated a slightly less tight market than the average. Housing starts rose 20.1K in September to a 3-month high of 270.5K (seasonally adjusted and annualized), a result comfortably above the median economist forecast calling for a 240.0K print. At the provincial level, total starts went up in Ontario (+19.3K to 103.6K), Alberta (+8.7K to a seven-and-a-half-year high of 49.1K) and Nova Scotia (+5.1K to 8.1K). Alternatively, declines were recorded in British Columbia (-8.6K to a 7-month low of 40.5K) and Saskatchewan (-2.7K to 3.4K). The Teranet-National Bank Composite National House Price Index rose 0.7% in September after seasonal adjustment. All 11 markets in the composite index were up during the month: Halifax (+1.9%), Ottawa-Gatineau (+1.7%), Victoria (+1.7%), Vancouver (+1.1%) and Calgary (+0. 9%) posted stronger-than-average growth, while Winnipeg (+0.7%) matched the composite index, and Montreal (+0.1%), Hamilton (+0.1%), Edmonton (+0.2%), Toronto (+0.5%) and Quebec City (+0.5%) saw less vigorous increases. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

The Bank of Canada yesterday held its target for the overnight rate at 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening. The global economy is slowing and growth is forecast to moderate further as past increases in policy rates and the recent surge in global bond yields weigh on demand. The Bank projects global GDP growth of 2.9% this year, 2.3% in 2024 and 2.6% in 2025. While this global growth outlook is little changed from the July Monetary Policy Report (MPR), the composition has shifted, with the US economy proving stronger and economic activity in China weaker than expected. Growth in the euro area has slowed further. Inflation has been easing in most economies, as supply bottlenecks resolve and weaker demand relieves price pressures. However, with underlying inflation persisting, central banks continue to be vigilant. Oil prices are higher than was assumed in July, and the war in Israel and Gaza is a new source of geopolitical uncertainty. In Canada, there is growing evidence that past interest rate increases are dampening economic activity and relieving price pressures. Consumption has been subdued, with softer demand for housing, durable goods and many services. Weaker demand and higher borrowing costs are weighing on business investment. The surge in Canadas population is easing labour market pressures in some sectors while adding to housing demand and consumption. In the labour market, recent job gains have been below labour force growth and job vacancies have continued to ease. However, the labour market remains on the tight side and wage pressures persist. Overall, a range of indicators suggest that supply and demand in the economy are now approaching balance. After averaging 1% over the past year, economic growth is expected to continue to be weak for the next year before increasing in late 2024 and through 2025. The near-term weakness in growth reflects both the broadening impact of past increases in interest rates and slower foreign demand. The subsequent pickup is driven by household spending as well as stronger exports and business investment in response to improving foreign demand. Spending by governments contributes materially to growth over the forecast horizon. Overall, the Bank expects the Canadian economy to grow by 1.2% this year, 0.9% in 2024 and 2.5% in 2025. CPI inflation has been volatile in recent months2.8% in June, 4.0% in August, and 3.8% in September. Higher interest rates are moderating inflation in many goods that people buy on credit, and this is spreading to services. Food inflation is easing from very high rates. However, in addition to elevated mortgage interest costs, inflation in rent and other housing costs remains high. Near-term inflation expectations and corporate pricing behaviour are normalizing only gradually, and wages are still growing around 4% to 5%. The Banks preferred measures of core inflation show little downward momentum. In the Banks October projection, CPI inflation is expected to average about 3% through the middle of next year before gradually easing to 2% in 2025. Inflation returns to target about the same time as in the July projection, but the near-term path is higher because of energy prices and ongoing persistence in core inflation. With clearer signs that monetary policy is moderating spending and relieving price pressures, Governing Council decided to hold the policy rate at 5% and to continue to normalize the Banks balance sheet. However, Governing Council is concerned that progress towards price stability is slow and inflationary risks have increased, and is prepared to raise the policy rate further if needed. Governing Council wants to see downward momentum in core inflation, and continues to be focused on the balance between demand and supply in the economy, inflation expectations, wage growth and corporate pricing behaviour. The Bank remains resolute in its commitment to restoring price stability for Canadians. Information note The next scheduled date for announcing the overnight rate target is December 6, 2023. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR on January 24, 2024. https://www.bankofcanada.ca/2023/10/fad-press-release-2023-10-25/

HIGHLIGHTS Total housing starts across the countrys 6 largest census metropolitan areas (CMAs) increased slightly in the first half of 2023. Significant changes were observed for individual dwelling types and CMAs. Notable strength in apartment starts offset declines in all other dwelling types (single-detached, semi-detached and row homes). Apartment starts were concentrated in Toronto and Vancouver. This led to strong growth in total starts in those CMAs, offsetting lower starts in other CMAs, particularly Montral. As a result, in Toronto and Vancouver, housing starts in the first half of 2023 were well above levels observed over the past 5 years. In most other large centres, meanwhile, they were below these levels. Montral tends to build more small and low-rise apartment structures than Toronto and Vancouver. Because of their smaller size, these structures take less time to plan and build. The decline in housing starts in Montral was, therefore, more reflective of the recent deterioration in financial conditions. Elevated rates of apartment construction are not likely to be sustainable due to various challenges facing developers. These challenges include higher construction costs and higher interest rates. Significant increases in construction productivity are critical to addressing the countrys affordability and housing supply crisis over the longer term. The level of new construction activity remains too low. cmhc-schl.gc.ca

With renewed activity in the residential real estate market in recent months, the seasonally adjusted Teranet-National Bank composite index rose by 1.6% from July to August, the fourth consecutive monthly increase. As a result, the composite index is now just 2.1% below its all-time peak of April 2022, following a record cumulative decline of 8.6% over one year. The widespread nature of Augusts rise is also noteworthy, as this is the first time since March 2021 that monthly increases have been observed in all the CMAs included in the composite index. However, there is reason to believe that this strength is likely to be short-lived, given the slowdown observed in the resale market over the last two months in connection with the renewal of the Bank of Canadas monetary tightening cycle. Although price declines are expected in the coming months due to the growing impact of interest rates and the less favourable economic context, property price decreases should remain limited thanks to the support of historical demographic growth and the persistent lack of housing supply. HIGHLIGHTS: The Teranet National Bank Composite National House Price IndexTM rose by 1.6% in August after seasonal adjustment. After seasonal adjustment, all 11 markets in the composite index were up during the month: Calgary (+3.5%), Vancouver (+2.8%) and Hamilton (+2.4%) reported stronger-than-average growth, while growth Halifax (+1.4%), Quebec City (+1.3%), Toronto (+1.2%), Ottawa-Gatineau (+1.1%), Edmonton (+1.1%), Winnipeg (+0.7%), Montreal (+0.7%) and Victoria (+0.2%) were less vigorous. From August 2022 to August 2023, the composite index rose by 1.1%, the first annual increase in nine months. Growth was seen in Calgary (+6.2%), Halifax (+5.1%), Quebec City (+3.6%), Vancouver (+2.7%) and Toronto (+1.4%), while prices were still down in Edmonton (-0.3%), Victoria (-1.5%), Montreal (-1.7%), Hamilton (-1.7%), Ottawa-Gatineau (-2.3%) and Winnipeg (-3.6%) https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf

Most people are aware of what is meant by Term and Amortization when dealing with a mortgage but for those that may not know or may not truly understand the differences or maximums allowed, here is an overview of both. Mortgage Term The length of time a mortgage contract is written and in effect. Within the contract there are many important items such as interest rate and product type that will be in place for the time period of the agreed upon term. Mortgage terms generally range from a couple of months to five years and at times, even up to ten years. At the end of the term, the mortgage contract will mature and will need to be renegotiated. If the mortgage contract is broken within the term, there is generally a penalty that is charged which is calculated based on a formula outlined within the contract. The most common term in Canada is 5 years whether its a fixed or variable mortgage. Mortgage Amortization The length of time it takes to pay out the mortgage in full provided there are no extra payments made on the mortgage during that time period. If the mortgage is deemed a high ratio (less than 20% property equity) the mortgage must be insured and can carry a maximum amortization of 25 years. If the mortgage is deemed conventional (20% or more property equity), an amortization up to 35 years could be obtained through a lender offering this program and when taken, generally comes with a rate premium added to the terms interest rate. The amortization applied to the mortgage assists in calculating the actual mortgage payment that involves both a principal and interest amount, known as PI. An extended amortization will lower the monthly payment

Summary On a seasonally adjusted basis, home sales decreased 4.1% from July to August, a second monthly contraction in a row following the renewed monetary tightening cycle of the Bank of Canada. On the supply side, new listings increased 0.8% in August, a fifth consecutive monthly increase. Another sign of a loss of momentum in the real estate market is the proportion of listings cancelled during the month, which continues to rise, a sign that some sellers are discouraged by recent interest rate hikes. Overall, active listing increased by 1.9%, a third monthly gain in a row. As a result the number of months of inventory (active-listings to sales) increased from 3.2 in July to 3.4 in August. This continues to be higher than the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio is still tighter than its historical average in every province. Housing starts in Canada decreased slightly in August (-2.4K to 252.8K, seasonally adjusted and annualized), beating consensus expectations calling for a 250K print. Decreases in housing starts were seen in Ontario (-14.9K to 84.6K), Manitoba (-3.2K to 6.8K), and Nova Scotia (-2.5 to 3.2K). Meanwhile, increases were registered in Quebec (+14.8K to 53.1K), New Brunswick (+2.1 to 7.1K), Alberta (+1.1K to 39.6K), and Saskatchewan (+0.2K to 5.5), while starts in Newfoundland (1.1K), P.E.I. (1.2K), and B.C. (50.7K) remained unchanged. The Teranet-National Bank Composite National House Price Index rose by 1.6% in August after seasonal adjustment. All 11 markets in the composite index were up during the month: Calgary (+3.5%), Vancouver (+2.8%) and Hamilton (+2. 4%) reported stronger-than-average growth, while Halifax (+1.4%), Quebec City (+1.3%), Toronto (+1.2%), Ottawa-Gatineau (+1.1%), Edmonton (+1.1%), Winnipeg (+0.7%), Montreal (+0.7%) and Victoria (+0.2%) were less vigorous. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

PROGRAM - The Investment Property Program is designed to offer borrows the ability to purchase or refinance an investment property. Canadian Legislation stipulates that the borrower must have a minimum of 20% equity so the maximum financing for a property is 80% of the propertys deemed value. Not all mortgage lenders offer the same programs as some may have a lower financing caps for an investment property. As an example, a lender may offer 80% financing for a purchase but only 75% if a rental property is being refinanced. General Transaction Information Purchase, Refinance Switch/Transfer are available Property Types 1-4 units, Condo, Townhouse Single Family A minimum of 20% Down Payment required from borrowers own funds Down Payment Source Exceptions may be available Minimum Mortgage Amount is $50,000 Current Rental Lease used for Rental Income No Rental Lease, Market Rent can be used Fixed Variable Mortgage Terms are available Amortization up to 30 years is available Higher Credit Scores are generally required (680+) Financing Percentage may be capped based on Credit Scores Full Property Appraisal Required Number of Investment Properties may be capped by Lenders Alternative Private Mortgage Markets also consider Investment Property Financing Further requirements and/or qualifications may be applicable. Contact Chris to further discuss this mortgage program regarding your specific circumstances.

From CMHC Key Highlights To restore affordability, we maintain our 2022 projection that Canada will need 3.5 million more units on top of whats already being built. Weve adjusted our 2030 projection for how many housing units there will be in Canada in 2030 based on current rates of new construction. Our most recent projection is 18.2 million units, down from our 2022 estimate of 18.6 million. This is largely due to the shortfall in housing construction. About 60% of the 3.5 million housing unit gap is in Ontario and British Columbia. This is because housing supply hasnt kept up with demand over the past 20 years in some of the largest urban centres. Additional supply will also be needed in Quebec. Once considered affordable, the province has become less affordable over the last few years. More supply need is also projected for Alberta due to strong economic growth. Other provinces remain affordable to households with an average level of disposable income. However, challenges remain for low-income households in accessing housing that is affordable across Canada. In addition to our baseline scenario of 3.5 million additional units being needed to restore affordability by 2030, we offer 2 alternate scenarios: a high-population- growth scenario and a low-economic-growth scenario. We provide regional highlights for areas across the country. https://assets.cmhc-schl.gc.ca/

The Bank of Canada on Wednesday held its target for the overnight rate at 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is also continuing its policy of quantitative tightening. Inflation in advanced economies has continued to come down, but with measures of core inflation still elevated, major central banks remain focused on restoring price stability. Global growth slowed in the second quarter of 2023, largely reflecting a significant deceleration in China. With ongoing weakness in the property sector undermining confidence, growth prospects in China have diminished. In the United States, growth was stronger than expected, led by robust consumer spending. In Europe, strength in the service sector supported growth, offsetting an ongoing contraction in manufacturing. Global bond yields have risen, reflecting higher real interest rates, and international oil prices are higher than was assumed in the July Monetary Policy Report (MPR). The Canadian economy has entered a period of weaker growth, which is needed to relieve price pressures. Economic growth slowed sharply in the second quarter of 2023, with output contracting by 0.2% at an annualized rate. This reflected a marked weakening in consumption growth and a decline in housing activity, as well as the impact of wildfires in many regions of the country. Household credit growth slowed as the impact of higher rates restrained spending among a wider range of borrowers. Final domestic demand grew by 1% in the second quarter, supported by government spending and a boost to business investment. The tightness in the labour market has continued to ease gradually. However, wage growth has remained around 4% to 5%. Recent CPI data indicate that inflationary pressures remain broad-based. After easing to 2.8% in June, CPI inflation moved up to 3.3% in July, averaging close to 3% in line with the Banks projection. With the recent increase in gasoline prices, CPI inflation is expected to be higher in the near term before easing again. Year-over-year and three-month measures of core inflation are now both running at about 3.5%, indicating there has been little recent downward momentum in underlying inflation. The longer high inflation persists, the greater the risk that elevated inflation becomes entrenched, making it more difficult to restore price stability. https://www.bankofcanada.ca/2023/09/fad-press-release-2023-09-06/

Summary On a seasonally adjusted basis, home sales decreased 0.7% from June to July, a first monthly contraction in six months following the renewed monetary tightening cycle of the Bank of Canada. On the supply side, new listings jumped 5.6% in July, a fourth consecutive monthly increase. Another sign of a loss of momentum in the real estate market is the proportion of listings cancelled during the month, which is back on the rise, a sign that some sellers are discouraged by recent interest rate hikes. Overall, active listing increased by 2.5%, the second monthly gain in a row. As a result, the number of months of inventory (active-listings to sales) increased from 3.1 in June to 3.2 in July. This continues to be higher than the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio is still tighter than its historical average in the majority of Canadian provinces, with only Manitoba indicating a ratio slightly above historical norm. Housing starts in Canada decreased in July (-28.5 to 255.0K, seasonally adjusted and annualized), beating consensus expectations calling for a 244K print. This decline follows the strongest growth ever recorded the previous month. Decreases in housing starts were seen in Ontario (-21.8K to 99.5K), British Columbia (-15.2K to 50.7K), Nova Scotia (-8.1K to 5.8K) and Saskatchewan (-1.9K to 5.3K). Meanwhile, increases were registered in Alberta (+11.9K to 38.5K), Quebec (+3.1K to 38.0K), Manitoba (+2.1K to 10K), New Brunswick (+0.6K to 5.0K), P.E.I. (+0.6K to 1.2K), while starts in Newfoundland (+0.1K to 1.1K) remained essentially unchanged. The Teranet National Bank Composite National House Price Index rose by 2.4% in July after seasonal adjustment. Eight of the 11 markets in the composite index were up during the month: Halifax (+4.9%), Hamilton (+4.4%), Vancouver (+3.9%), Toronto (+3.5%), Victoria (+1.6%), Winnipeg (+1.3%), Ottawa-Gatineau (+0.6%) and Edmonton (+0.3%). Conversely, prices fell in Quebec City (-1.2%), Montreal (-0.9%) and Calgary (-0.3%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

Following the recovery of the residential real estate market in recent months, the Teranet-National Bank composite index jumped by 2.4% from June to July, the fourth consecutive monthly increase, but also the second highest price increase ever recorded in a single month after the one observed in July 2006. After a cumulative decline of 8.6% since peaking in April 2022, recent rises in the composite index have erased a part of this correction, which now stands at just 3.8%. Interestingly, the recent upturn in prices has been greatest in the cities that have seen the biggest corrections. However, only four of the 32 CMAs covered have completely erased their price declines: Saint John, Lethbridge, Quebec City and Trois-Rivires. Prices could continue to rise in the third quarter, supported by strong demographic growth and the lack of supply of properties on the market. That said, the deterioration in affordability with recent interest rate hikes in a less buoyant economic context should represent a headwind for house prices thereafter. HIGHLIGHTS: The Teranet National Bank Composite National House Price IndexTM rose by 2.4% in July after seasonal adjustment. After seasonal adjustment, 8 of the 11 markets in the composite index were up during the month: Halifax (+4.9%), Hamilton (+4.4%), Vancouver (+3.9%), Toronto (+3.5%), Victoria (+1.6%), Winnipeg (+1.3%), Ottawa-Gatineau (+0.6%) and Edmonton (+0.3%). Conversely, prices fell in Quebec City (-1.2%), Montreal (-0.9%) and Calgary (-0.3%). From July 2022 to July 2023, the composite index fell by 1.9%, a smaller contraction than in the previous month. Price increases in Calgary (+3.3%), Halifax (+2.1%) and Quebec City (+1.1%) were more than offset by declines in Edmonton (-0.1%), Vancouver (-0.6%), Toronto (-2.1%), Montreal (-2.6%), Victoria (-2.7%), Winnipeg (-5.2%), Ottawa-Gatineau (-5.4%) and Hamilton (-7.9%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf

From National Bank of Canada The second quarter of 2023 saw housing affordability in Canada post a third consecutive improvement. While not as substantial as the previous two betterments, it still marked an advancement for 9 of the 10 markets covered. Taken together, the last three quarters represent a 7.1 percentage point decline for the mortgage payment as a percentage of income (MPPI). While that was a positive development, it pales in light of the 24.6pp worsening in affordability in the two previous years and only brings affordability back to levels last seen a year ago. The MPPI now stands at 59.3%, still way off the average since 2000 of 42.5%. The improvement mostly stemmed from a decrease in home prices. The latter declined 1.2% in the quarter which brings the cumulative decline over the last year to 8.1%. This pullback is the largest observed in a generation but could have bottomed out according to house price index data. The Teranet-National Bank Composite HPI rose 2.2% seasonally adjusted in June, and momentum is expected to continue into the third quarter on the back of strong demographics and a lack of supply in the resale market. Compounding that headwind, after providing marginal respite in Q2 (-3 basis points), mortgage interest rates in July have crept up on the back of further tightening by the Bank of Canada and should be detrimental to affordability in the next report. Moreover, the flip side of restrictive monetary policy is a weakening economic outlook. In such a high interest rate environment, we cannot count on significant wage gains to improve affordability, as we expect the labour market to cool in the second half of the year. HIGHLIGHTS: Canadian housing affordability posted a third consecutive improvement in Q223. The mortgage payment on a representative home as a percentage of income (MPPI) declined 1.6 points, a further pullback following the 3.2-point decrease in Q123. Seasonally adjusted home prices decreased 1.2% in Q223 from Q122; the benchmark mortgage rate (5-year term) edged down 3 bps, while median household income rose 1.2%. Affordability improved in 9 of the ten markets covered in Q2. On a sliding scale of markets from best improvement to deterioration: Toronto, Hamilton, Ottawa-Gatineau, Victoria, Vancouver, Winnipeg, Edmonton, Calgary, Montreal, and Quebec. Countrywide, affordability improved 1.2 pp in the condo portion vs. a 1.8 pp improvement in the non-condo segment. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf

If you have ever obtained a mortgage or applied for one, no doubt you have heard the terms GDS and TDS. The big question surrounding these two terms is; Do you know what they are, what purpose they are used and how critical they are within the underwriting process of a mortgage? The term GDS actually stands for Gross Debt Service and TDS stands for Total Debt Service and together they formulate affordability ratios that are critical to the underwriting of a mortgage. They are the process of how a mortgage lender determines whether you are able to afford the mortgage or not. These two terms are calculations that yield a ratio between the applications overall income and the costs of the new mortgage as well as the total outstanding debt. There are actually several factors and number analysis that goes into these two ratio calculations and they are never as straight forward as they seem but the simple calculations are as follows: The Gross Debt Service Ratio is the sum of your total annual cost of the mortgages principal interest (PI) payment plus the municipalitys property tax (T) plus the heat (H) for the home and plus any applicable condo fees (CF) divided by the annual qualifying income (QI) on the application. The formula is written as GDS = PI + T + H + CF / QI and generally can not exceed 39%. The Total Debt Service Ratio is the sum of your total annual mortgage payments (PI), property tax costs (T), heat expenses (H), condo fees (CF) plus installment loan payments (IL), revolving account payments (RA) such as credit cards and other liabilities (OL) such as alimony, child support, etc divided by the annual qualifying income (QI) on the application. The formula is written as TDS = (PI + T + H + CF ) + IL + RA + OL / QI and generally can not exceed 44%. These formulas look like pretty easy math formulas and on the surface they are but the defining of each value can be a bit complex and at times quite subjective. The qualifying income is not always the income written on the application as they are determined by how the income is earned. As an example, if an applicant is paid hourly, the confirmed income value is calculated based on the hourly rate and the guaranteed hours during a pay period as noted by the employer within the provided Employment Letter. Another way to calculate the hourly income across a year is to look at the previous two years of T4 Statements and use an average provided year twos income is higher than year one. As for the liability payments, a default of 3% of the outstanding balance is used for credit card payments, despite what a statement states. As you can see, nothing is done as a straight forward process and this explains why us mortgage professionals request the supporting documentation that we do. We then dive into the documentation and extract the numbers that are acceptable to the potential lenders that we are considering. As with anything, not all lenders operate the same so the knowledge and understanding of what is deemed income and what is not on a per lender basis requires extensive knowledge to work through the application quickly. As with almost everything in the financing world, there are lenders who provide enhanced expanded ratios beyond the general 39% 44% so Canadians who have peeked over these standards still have opportunities to secure their desired mortgage financing but within other required risk and measuring policies. If you wish to explore your Affordability Ratios further and even dive into your mortgage application in detail to determine what mortgage a lender will approve for you, contact me as I would be happy to visit this with you.

The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity and average home prices via Multiple Listing Service (MLS) Systems of Canadian real estate boards and associations for 2023 and 2024. As expected, national home sales came flying out of the gates in April 2023. Buyers who had been sitting on the fence responded to the twin signals of interest rates looking like they were at a top and property values hitting bottom. With the Bank of Canada unexpectedly ending its pause on rate hikes in June and hiking again in July, a major source of uncertainty has returned to the housing market. That said, even before the resumption of rate hikes, the recent sales rally had already shown signs of losing steam. The biggest month-over-month increase in sales activity was back in April, followed by an increase only half as big in May, then by a small 1.5% gain in June. This was likely because new listings had fallen to a 20-year low, which was reflected in month-over-month price gains in April, May, and June that were only bested by those seen during the COVID-19 pandemic. New listings are now catching up to sales, although this isnt expected to translate into further big gains in activity as some buyers will likely be moving back to the sidelines, as they did in 2022, to wait for additional signals from the Bank of Canada and the data it bases policy on. Looking further out, theres also a growing consensus that rates will not just be higher, but likely for longer well into 2024. As a result, CREA has downgraded its forecast for home sales in 2023 and 2024 compared to its April 2023 outlook, along with the trajectory for prices. Thats not to say either are necessarily expected to return to declines on a month-to-month basis, but rather to stabilize or rise at a slower pace than they have in recent months. https://www.crea.ca/housing-market-stats/canadian-housing-market-stats/quarterly-forecasts/

The Spousal Buyout Program is actually a Mortgage Refinance that differs from a traditional one. It is designed to enable one spouse to unlock property equity up to 95% instead of the traditional 80%. Created for couples who are experiencing a relationship breakdown, where one spouse wishes to keep the property and buyout the other spouse. This program can also potentially be used when individuals who jointly own a property are splitting their home partnership. Transaction Eligibility Married, Common-Law Individuals who are jointly on title Lump Sum Payouts to spouse can be included as well as Legal Fees Joint Debt Transaction Information Refinance an existing mortgage with as little as 5% down payment Existing requirements related to income, credit worthiness affordability apply Maximum Mortgage could be as much as 95% of the Property Value High Ratio (above 80% of Property Value) must be insured by a Canadian Mortgage Insurance Company Lending Value is based on the Appraised Value of the property Mortgage Terms are flexible as like other mortgages and both Fixed Variable are available Maximum Amortization is 25 Years, if a High Ratio or 30 Years when it is Conventional For Matrimonial Property only, not designed for a Rental Property Rate Premiums are generally not charged for this type of mortgage Proceeds can be used to buyout the ex-spouse, any matrimonial debt, mortgage penalties and legal fees Further requirements and/or qualifications may be applicable. Contact Chris to further discuss this mortgage program regarding your specific circumstances.

Canadians have several types of mortgages available to them when buying a home, refinancing, switching/transferring or even pulling equity. Here is a list and explanation to assist you with knowing what they are and distinguishing their differences. Many of these mortgages can be combined to achieve your financial goals, short term and long term. Open Mortgage A mortgage that permits repayment of the principal amount at any time, without a penalty. A borrower is able to pay out this type of mortgage at any time without any penalties being charged. Closed Mortgage A mortgage that has restrictions and limitations that prevent its early payout with incurring penalties. A borrower is unable to pay it out early, refinance or renegotiate the mortgage terms without being charged a penalty of some sort. High Ratio Mortgage (HR) A mortgage that covers more than 80% of the homes purchase price. If a borrower is buying a home with a total down payment of less than 20% of the purchase price, the mortgage is deemed to be a High Ratio. In Canada, all High Ratio Mortgages MUST be insured by a Default Mortgage Insurance Company. There are three to choose from in Canada: Canada Mortgage Housing Corporation (CMHC), Sagen and Canada Guaranty. There is a premium charged to the borrower based on the percentage borrowed against the home. The premium can either be paid upfront by the borrower or added to the mortgage (most common). As an example, if a borrower is paying 5% down towards the purchase price, the premium charged would be 4% of the 95% being financed. Conventional Mortgage A mortgage that covers 80% or less of the homes purchase price or value. If the borrower is buying a home and pays a total of 20% down payment or more, the mortgage is deemed to be Conventional and in most circumstances, will not require a mortgage default insurance premium to be paid like a High Ratio Mortgage. There are actually two types of Conventional Mortgages in Canada. The first one is a Conventional Insurable. This means that the conventional mortgage meets the insurers guidelines such as CMHC and could be insured. In many cases, these mortgage types are actually insured by the Lender though the borrower is not charged the premium. The second type is a Conventional Uninsurable. This means that the conventional mortgage does not meet the insurers guidelines and it can not be insured so is deemed by the Lender to be of greater risk and is more difficult to sell as an asset so it generally comes with a slightly higher interest rate. One example of a conventional uninsurable mortgage would be one with an extended amortization. The maximum amortization accepted by an insurer in Canada is 25 years. Fixed Mortgage A mortgage that has an interest rate that is set for a certain period of time and will not change during that time period. Generally, fixed terms of 1 to 5, 7 10 years are available for a fixed mortgage. A fixed rate mortgage offers a borrower rate stability, payment budgeting and overall predictability as the rate and payments will not change throughout the specific term taken by the borrower. This can protect a borrower from a rate increase during the term if rates are increasing but can hinder the borrower from a lower rate if they are decreasing during the fixed term. The borrower can then make new choices when the mortgage matures at the end of the fixed term. Variable Mortgage A mortgage that has an interest rate that fluctuates during the term of the mortgage. The interest rate is generally based on the Prime Lending Rate with an adjustment up or down (generally down). As an example, a VRM rate could be listed as Prime - 1%. If Prime is 7.20% than the mortgages interest rate would be 6.20%. If the Prime Rate increases or decreases during the term of the mortgage, than the mortgage rate will change causing a positive or negative affect on the principal being paid moving forward. There are two types of variable mortgages. The first one is a Variable Rate Mortgage (VRM) which has a static payment like a fixed-rate mortgage but the interest rate changes as Prime changes. The second one is an Adjustable Rate Mortgage (ARM) that has a floating payment that rises and falls based on the movement of prime. When prime moves, the payment will generally be adjusted at the end of the full payment period. Usually the payment after the upcoming change). Convertible Mortgage A mortgage that generally provides the same benefits as a closed mortgage but can be converted to a longer term at anytime without any pre-payment penalties being charged. Prime Mortgage A mortgage that is underwritten by a mortgage lender who generally discounts interest rates and underwrites credit for those borrowers who meet higher minimal criteria such as credit history, credit scores, income and affordability ratios. Lender offering these type of mortgages are Banks, Credit Unions, Insurance Companies and Mono-Lines within the Mortgage Broker Channel. Prime Mortgages can be High Ratio or Conventional. Alternative Mortgages A mortgage that does not fit the criteria of a prime lender due to unique or low income qualifying, credit challenges or low credit scores, affordability ratios beyond the prime lender maximums or due to other types of application challenges. Alternative Mortgage must be conventional. Private Mortgages A mortgage that does not fit the required criteria of a prime or alternative lender. It is an agreement between the borrower and either a Mortgage Investment Corp. or Private Investor. A private mortgage provides much less qualifying criteria than other type of mortgages so risk is deemed much higher and will charge additional fees such as lender, investor and broker fees. Interest Rates will be much higher than other mortgage types and are normally structured with a 1 year term and may even only require interest payments to be made. Private Mortgages can also provide second mortgage financing as another alternative. They are focused more on the subject property than the other application attributes. Private mortgages are generally a conventional mortgage but at times, they may be willing to venture over the 80% Loan-to-Value ratio. Combination Mortgage A type of mortgage that is comprised of two separate mortgage components on the same property. The first component is generally a regular fixed or variable mortgage with standard principal interest payments based on a set frequency such as monthly. The second component is generally a secured line of credit that is revolving based on a variable rate and is deemed to be re-advanceable. This means that this type of mortgage is registered as a Collateral Mortgage. It is like having a Fixed Mortgage or Variable Mortgage combined with a HELOC. In most cases, as the first component balance falls, the limit for the line of credit will increase until the limit has reached the allowable maximum under Canadian Legislation. Home Equity Line of Credit (HELOC) A secured form of credit where the institution uses your primary residence as security. The account is set up as a revolving line of credit with a limit that can be much larger than an unsecured line of credit. Interest is a variable rate based on the Prime Rate and quite often the required monthly payments may only be interest payments. A HELOC can be set up as either a first or second charge. There is Canadian Legislation that caps the maximum limits within a conventional mortgage structure. Collateral Mortgage A mortgage that is fully or contains a component that is re-advanceable. This means that the re-advanceable portion can be paid down and used again within the maximum limit of that portion. These type of mortgages are registered slightly differently to a standard mortgage and can be more complex and costly to switch to a different lender when the non re-advanceable portion matures. Reverse Mortgages A mortgage that allows a borrower to obtain money from their home equity up to a maximum of 55% Loan-to-Value without having to sell the property. These mortgages come with specific required criteria such as all borrowers having to be 55 years old or older. Interest is charged on the amount borrowed but mortgage payments are not required. Available funds for borrowing are determined by the age of the applicants, location of the property, its value among other attributes. Credit history is generally not deemed to be an important attribute. Bridge Financing Mortgages A short-term loan designed to bridge the gap between the property an applicant is selling and the property the applicant is buying when the closing of the purchase is before the closing of the sale and funds from the sale are being used to buy the new property. Mortgage Lenders who offer this program generally charge a floating rate based on prime (ie. Prime + 2%) and will cap the term they allow (ie. 30 days) Not all lenders offer this program so it is important to let your mortgage professional know this is required right up front. Second Mortgages A mortgage that is financed while an existing first mortgage remains in place and both are all for the same property. A second charge will be placed on the propertys title and they come with a higher rate, maximum Loan-to-Value limits and additional fees charged within the transaction. This enables a borrower to pull property equity (cash) without affecting the existing first mortgage that may have a low rate or produce penalties if refinanced within the existing term. Commercial Mortgages A type of loan that is granted to a business to purchase a commercial property. The borrower is generally a business and not an individual and the business may be a partnership, limited company or incorporated. These type of mortgage are much different than a residential Mortgage and it is recommended that the borrowing company use an experienced commercial lender or mortgage professional for these types of transactions as they are more often than not, much more complex than a residential mortgage transaction. EO

Following the recovery of the residential housing market in recent months, the Teranet-National Bank composite HPI jumped 2.2% from May to June, marking the third consecutive monthly increase, but also the largest price rise in a single month since November 2006. After a cumulative decline of 8.7% since peaking in April 2022, recent rises in the composite index have erased part of this correction, which now stands at just 6.2%. This rebound is even more impressive given that 81% of cities covered in June saw an increase during the month, the best diffusion of growth since the composite index peaked last year. While prices could continue to be supported by strong demographic growth and the lack of supply of properties on the market, and continue to rise in the third quarter, the Bank of Canadas recent rate hikes and the economic weakness expected in subsequent quarters will represent a headwind for house prices thereafter. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index rose by 2.2% in June after seasonal adjustment. After seasonal adjustment, 9 of the 11 markets in the composite index were up during the month: Toronto (+2.9%), Vancouver (+2.6%), Quebec City (+2.6%), Halifax (+2.3%), Calgary (+2.1%), Victoria (+1.9%), Montreal (+1.4%). Ottawa-Gatineau (+1.0%) and Edmonton (+0.2%). Conversely, prices fell in Winnipeg (-0.2%), while remaining stable in Hamilton. From June 2022 to June 2023, the composite index fell by 5.1%, a smaller contraction than in the previous month. Price growth in Calgary (+6.5%). Quebec City (+5.2%) and Edmonton (+1.3%) was more than offset by declines in Montreal (-3.6%), Victoria (-3.8%), Vancouver (-5.0%). Halifax (-5.6%), Winnipeg (-5.7%). Toronto (-6.7%), Ottawa-Gatineau (-8.4%) and Hamilton (-13.4%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf

Summary On a seasonally adjusted basis, home sales increased 1.5% from May to June, a fifth consecutive monthly increase. However, this was a much smaller rise than the 4.6% in May and 11.1% in April, a slowdown that could have been induced by the additional tightening of the Bank of Canada. On the supply side, new listings jumped 5.9% in June, a third consecutive monthly increase. Overall, active listing increased marginally by 1.5% in Canada, keeping the number of months of inventory (active-listings to sales) unchanged at 3.1 in June. This continues to be higher than the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio is still tighter than its historical average in the majority of Canadian provinces, with only Manitoba indicating a ratio above average. Housing starts in Canada increased in June (+81.4K to 281.4K, seasonally adjusted and annualized), beating consensus expectations calling for a 220.0K print. This increase more than offset Mays 58.9K decrease and was the sharpest ever. In urban areas, increases in housing starts were seen in Ontario (+50.2K to 116.8K), British Columbia (+24.9K to 63.6K), Quebec (+3.7K to 25.0K) and the Maritimes (+8.9K to 17.6K). Meanwhile, a decrease was registered in the Prairies (-5.5K to 39.2K) on gains in Saskatchewan (+4.6K to 6.7K) which were offset by losses in Alberta (-10.1K to 25.7K) while starts in Manitoba (-0.1K to 6.7K) remained essentially unchanged. The Teranet-National Bank Composite National House Price Index rose by 2.2% in June after seasonal adjustment. Nine of the eleven markets in the composite index were up during the month: Toronto (+2.9%), Vancouver +2.6%), Quebec City (+2.6%), Halifax (+2.3%), Calgary (+2.1%), Victoria (+1.9%), Montreal (+1.4%). Ottawa-Gatineau (+1.0%) and Edmonton (+0.2%). Conversely, prices fell in Winnipeg (- 0.2%), while remaining stable in Hamilton. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

The Bank of Canada increased its target for the overnight rate to 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is also continuing its policy of quantitative tightening. Global inflation is easing, with lower energy prices and a decline in goods price inflation. However, robust demand and tight labour markets are causing persistent inflationary pressures in services. Economic growth has been stronger than expected, especially in the United States, where consumer and business spending has been surprisingly resilient. After a surge in early 2023, Chinas economic growth is softening, with slowing exports and ongoing weakness in its property sector. Growth in the euro area is effectively stalled: while the service sector continues to grow, manufacturing is contracting. Global financial conditions have tightened, with bond yields up in North America and Europe as major central banks signal further interest rate increases may be needed to combat inflation. The Banks July Monetary Policy Report (MPR) projects the global economy will grow by around 2.8% this year and 2.4% in 2024, followed by 2.7% growth in 2025. Canadas economy has been stronger than expected, with more momentum in demand. Consumption growth has been surprisingly strong at 5.8% in the first quarter. While the Bank expects consumer spending to slow in response to the cumulative increase in interest rates, recent retail trade and other data suggest more persistent excess demand in the economy. In addition, the housing market has seen some pickup. New construction and real estate listings are lagging demand, which is adding pressure to prices. In the labour market, there are signs of more availability of workers, but conditions remain tight, and wage growth has been around 4-5%. Strong population growth from immigration is adding both demand and supply to the economy: newcomers are helping to ease the shortage of workers while also boosting consumer spending and adding to demand for housing. https://www.bankofcanada.ca/2023/07/fad-press-release-2023-07-12/

From TD Economics Huge second-quarter upside surprises in both Canadian home sales and average home prices, relative to our March projection, have left their mark on our updated forecast. Our modelling had suggested that sales had undershot levels consistent with underlying fundamentals (such as income and population growth, for example). However, with the recent surge, this gap has effectively been closed. The sharp rise in prices also deteriorated affordability by more than we thought would take place, which is also a negative for go-forward activity. In light of resilient housing and consumer spending data, the Bank of Canada nudged its policy rate higher in June after a 4-month hiatus. By the time July is over, policymakers will have injected an additional 50 bps of tightening relative to our prior expectations. Beyond the direct hit to affordability from a higher policy rate, a more hawkish central bank should chill the psychology of buyers who were previously rushing into the market after the Bank went on pause earlier in the year. Indeed, Bank of Canada signaling appears to be playing a major role in shaping housing market dynamics. Our bond yield forecast has also been materially upgraded. We expect Canadian home sales to decline in the second half of this year, reversing part of their recent strength. Furthermore, we anticipate purchases growing at a slower quarter-on-quarter pace than previously envisioned in 2024. Tight markets amid restrained supply should keep Canadian average price growth positive in the third quarter, but we anticipate prices dropping slightly in Q4. Like sales, weve marked down our quarterly growth profile next year relative to our March forecast. https://economics.td.com/ca-provincial-housing-outlook

After adjusting for seasonal effects, the Teranet-National Bank composite HPI resumed its upward trend (+0.6%) after ten consecutive monthly declines, which saw home prices correct by a total of 8.6%. This turnaround in property prices is due in particular to the rebound in the resale market over the past four months. This recovery is taking place against a backdrop of record demographic growth, which is accentuating the shortage of housing supply on the market. With domestic housing starts falling to their lowest level in three years in May, there is no reason to believe that the shortage of properties on the market will be resolved any time soon. However, the resumption of the monetary tightening cycle by the Bank of Canada in recent weeks and the expected slowdown in economic growth could moderate price growth later this year. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index rose by 0.6% in May after seasonal adjustment. After seasonal adjustment, 8 of the 11 markets in the composite index were up during the month: Toronto (+1.6%). Winnipeg (+1.5%), Victoria (+1.3%), Edmonton (+1.3%), Quebec City (+1.2%), Montreal (+1.0%), Hamilton (+0.5%) and Calgary (+0.1%). Conversely, prices fell during the month in Halifax (-2.6%), Vancouver (-1.2%) and Ottawa-Gatineau (-0.3%). From May 2022 to May 2023, the composite index fell by 7.6%, a smaller contraction than in the previous month. Price growth in Calgary (8.3%). Edmonton (4.9%) and Quebec City (3.1%) was more than offset by declines in Montreal (-3.0%), Winnipeg (-6.8%), Victoria (-8.4%), Halifax (-8.5%), Vancouver (-8.6%), Ottawa-Gatineau (-9.5%), Toronto (-10.3%) and Hamilton (-16.8%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf

On a seasonally adjusted basis, home sales increased 5.1% from April to May, a fourth consecutive monthly increase. Sales growth continues to be widespread across the country again this month, with the biggest increases seen in P.E.I. (+22.3%), Saskatchewan (+9.2%) and Alberto (+8.0%). Conversely, Nova Scotia (+0.9%) and Manitoba (+1.0%) saw smaller increases. On the supply side, new listings jumped 6.8% in May, a second consecutive monthly increase. Overall, supply decreased in Canada as testified by the number of months of inventory (active-listings to sales) decreasing from 3.3 to 3.1 in May. This remains up from the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio is still tighter than its historical overage in the majority of Canadian provinces, with only Manitoba indicating a ratio above average. Housing starts in Canada decreased in May (-58.9K to 202.5K, seasonally adjusted and annualized), falling short of consensus expectations calling for a 240.0K print. This decline more than offset Aprils 47.8K increase and was the sharpest since December 2021. In urban areas, declines in housing starts were seen in Ontario (-43.1K to 67.7K), British Columbia (-20.1K to 38.2K), Quebec (-6.6K to 22.5K) and the Maritimes (-1.5K to 8.1K). Meanwhile, an increase was registered in the Prairies (+12.6K to 46.0K) on gains in Manitoba (+3.0K to 7.0K) and Alberta (+9.6K to 36.5K) while starts in Saskatchewan (+0.1K to 2.5K) remained essentially unchanged. The Teranet-National Bank Composite National House Price Index rose by 0.6% in May after seasonal adjustment. After seasonal adjustment, 8 of the 11 markets in the composite index were up during the month: Toronto (+1.6%), Winnipeg (+1.5%), Victoria (+1.3%), Edmonton (+1.3%). Quebec City (+1.2%), Montreal (+1.0%), Hamilton (+0.5%) and Calgary (+0.1%). Conversely, prices fell during the month in Halifax (-2.6%). Vancouver (-1.2%) and Ottawa-Gatineau (-0.3%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

Recent mortgage market trends High inflation, rapidly rising interest rates and cooling housing markets across Canada have resulted in decelerating mortgage growth in 2022. Mortgage activity by non-bank lenders accelerated up until 2022Q3 and has now reached the pace of mortgage growth in the banking industry. Despite increasing worries around the ability of Canadians to make their mortgage payments on time, mortgages in arrears remained at low levels. Mortgage borrowers are opting for shorter-term fixed rate mortgages, with fixed-rate 5-year mortgages falling to less than 15% of new mortgages, and variable-rate mortgages dropping to less than 20% of new mortgages. Housing finance research at a glance While demand surges, alternative lenders are lending more conservatively as the industry faces shifting investor appetite. Their risk profile remains at relatively low levels. A larger share of alternative loan mortgage borrowers are renewing their loans in this space as it is increasingly difficult to qualify for a conventional loan. Interest rate differences are not a significant source of inequality in the housing finance system. CMHC

The Bank of Canada today increased its target for the overnight rate to 4%, with the Bank Rate at 5% and the deposit rate at 4%. The Bank is also continuing its policy of quantitative tightening. Globally, consumer price inflation is coming down, largely reflecting lower energy prices compared to a year ago, but underlying inflation remains stubbornly high. While economic growth around the world is softening in the face of higher interest rates, major central banks are signalling that interest rates may have to rise further to restore price stability. In the United States, the economy is slowing, although consumer spending remains surprisingly resilient and the labour market is still tight. Economic growth has essentially stalled in Europe but upward pressure on core prices is persisting. Growth in China is expected to slow after surging in the first quarter. Financial conditions have tightened back to those seen before the bank failures in the United States and Switzerland. Canadas economy was stronger than expected in the first quarter of 2023, with GDP growth of 3.1%. Consumption growth was surprisingly strong and broad-based, even after accounting for the boost from population gains. Demand for services continued to rebound. In addition, spending on interest-sensitive goods increased and, more recently, housing market activity has picked up. The labour market remains tight: higher immigration and participation rates are expanding the supply of workers but new workers have been quickly hired, reflecting continued strong demand for labour. Overall, excess demand in the economy looks to be more persistent than anticipated. CPI inflation ticked up in April to 4.4%, the first increase in 10 months, with prices for a broad range of goods and services coming in higher than expected. Goods price inflation increased, despite lower energy costs. Services price inflation remained elevated, reflecting strong demand and a tight labour market. The Bank continues to expect CPI inflation to ease to around 3% in the summer, as lower energy prices feed through and last years large price gains fall out of the yearly data. However, with three-month measures of core inflation running in the 3-4% range for several months and excess demand persisting, concerns have increased that CPI inflation could get stuck materially above the 2% target. https://www.bankofcanada.ca/2023/06/fad-press-release-2023-06-07/

From National Bank of Canada Housing affordability in Canada in the first quarter of 2023 posted a second consecutive improvement. It marked the largest betterment in affordability in nearly 4 years as all markets covered saw a net amelioration (which was a first since 2020Q3). Nonetheless, the reversal of the worsening which occurred in the last two quarters was tepid compared to the slide that has occurred during the post-pandemic period. Indeed, after having reached its most unaffordable level in over 30 years, the mortgage payment as a percentage of income (MPPI) registered at a still elevated 60.9% in 2023Q1, down 5.4 points from the recent high mark. Feeding into the improvement, home prices declined for a third consecutive quarter. The retracement in home prices has now reached -7.3%, the biggest drawdown in a generation due to the restrictiveness in interest rates. The correction in prices was the sharpest in Vancouver, Hamilton and Toronto which translated into the biggest improvements in affordability during the quarter. Still, mortgage interest rates appear to be tapering out. In this latest report, our 5-year benchmark mortgage rate used to calculate affordability declined by 14bps, which helped contribute to the moderation. In addition, we note that still rising incomes also contributed to the enhancement. Looking ahead, for the second quarter of 2023, we expect a slight easing of pressure on the interest rate side. That said, a stabilization in home prices is likely given the pickup in activity with sales increasing while listings have moderated. However, we have doubts as to whether this price rise will be sustained, given restrictive monetary policy which is contributing to maintaining affordability at a challenging level. HIGHLIGHTS: Canadian housing affordability posted the largest improvement in 15 quarters in Q1`23. The mortgage payment on a representative home as a percentage of income (MPPI) declined 3.2 points, a consecutive pullback following the 2.2-point decrease in Q422. Seasonally adjusted home prices decreased 2.4% in Q123 from Q422; the benchmark mortgage rate (5-year term) fell 14 bps, while median household income rose 1.3%. Affordability improved in all ten markets covered in Q1. On a sliding scale of markets from best improvement to deterioration: Vancouver, Hamilton, Toronto, Victoria, Montreal, Winnipeg, Ottawa-Gatineau, Calgary, Edmonton, and Quebec. This was the first time in 10 quarters that all markets improved. Countrywide, affordability improved 1.8 pp in the condo portion vs. a 3.8 pp improvement in the non-condo segment. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf

Summary On a seasonally adjusted basis, home sales increased 11.3% from March to April, a third consecutive monthly increase and the first double-digit gain since the summer of 2020. Unlike the previous month, the increase in sales was spread across all provinces, with New Brunswick (-2.5%) and Newfoundland (-17.0%) being the exceptions. On the supply side, new listings increased by 1.6% during the month, a first increase in three months. Overall, supply decreased in Canada as testified by the number of months of inventory (active-listings to sales) decreasing from 3.8 to 3.3 in April. This remains up from the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio is still tighter than its historical overage in the majority of Canadian provinces, with only Manitoba indicating a ratio above average. Housing starts in Canada increased in April (+47.8K to 261.6K, seasonally adjusted and annualized), more than consensus expectations calling for a 220.0K print. This increase more than offset Marchs 27.7K decline and was the sharpest since November 2021. In urban areas, rises in housing starts were seen in Ontario (+35.8K to 110.7K), British Columbia (+9.9K to 58.1K), the Maritimes (+4.0K to 9.8K) and Quebec (+2.3K to 29.4K). Meanwhile, a decline was registered in the Prairies (-2.8K to 33.2K) on losses in Manitoba (-3.5K to 4.0K) and Saskatchewan {-0.3K to 2.4K) while starts in Alberta posted an increase (+1.1K to 26.8K). The Teranet-National Bank Composite National House Price Index remained relatively stable in April with a slight decrease of 0.1% compared with the previous month and after adjusting for seasonal effects. After seasonal adjustment, 5 of the 11 markets in the composite index were down during the month: Edmonton (-2.5%). Ottawa-Gatineau (-2.1%), Vancouver (-0.9%), Hamilton (-0.5%) and Montreal (-0.2%). Conversely, prices increased during the month in Quebec City (+1.2%), Toronto (+0.7%), Winnipeg (+0.5%), Calgary (+0.3%) and Victoria (+0.1%), while they remained stable in Halifax. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

From CMHC Key highlights from the 2023 release We expect house prices and supply in Canada to decrease between 2022 2023. Price declines are expected to end sometime in 2023 before increasing for the remainder of the forecast period. Our analysis forecasts a significant drop in housing starts in 2023 and we can see some recovery starting in 2023 to 2024 and onward. Rental affordability is also set to decline due to demand outstripping supply, especially in Vancouver and Toronto. Prairie provinces expect more positive housing market conditions due to interprovincial migration and affordable homeownership. Ontario, British Columbia and Qubec will see significant drops in housing starts compared to other regions. The Atlantic regions economy remains stable and moderate relative to other regions. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/market-reports/housing-market-outlook/2023/housing-market-outlook-spring-2023-en.pdf?rev=5c29bc91-2310-435f-b2c9-b801866d0ede

Highlights from the April 2023 Housing Supply Report: Growth in residential construction was mixed across Canadas 6 largest census metropolitan areas in 2022. Current new home inventories are at historic lows even though housing starts were strong during the pandemic. Housing starts increased in Toronto, Calgary, Edmonton and Ottawa. Starts were stable in Vancouver and decreased in Montral. New research completed by the University of British Columbia using CMHC data shows that most housing starts were built in low-amenity neighbourhoods. Apartments, however, tend to be in high-amenity areas . As interest rates increased, homebuyer purchasing power dropped. Prices decreased slightly in most markets. Apartment construction both purpose-built rental and condominiums continued to grow. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/market-reports/housing-supply-report/housing-supply-report-2023-04-en.pdf?rev=5558faea-840d-4a27-a9a3-c49e421abd1a

From National Bank of Canada Even though the resale housing market is showing its first signs of stabilization and the non-seasonally adjusted Teranet-National Bank Index has seen its first monthly increase in ten months, it is still too early to say that the real estate market in Canada is on the rise. In fact, once adjusted for seasonal effects, the composite index contracted by 0.8% during the month, as price growth is generally stronger in the spring with the start of the high season. It should also be noted that, on an annual basis, the index in March fell by 6.9% compared to March 2022 and thus equaled the record contraction recorded during the 2008-2009 financial crisis. With the Bank of Canada expected to keep its policy rate in restrictive territory for much of 2023 and mortgage rates remaining high, we believe that the impact on property prices should continue to be felt in the coming months. All in all, we anticipate that the price correction that currently stands at 8.8% could continue through the end of 2023 (-5% additional), but this assumes that policy rate hikes are over, and declines begin at the end of the year. Although corrections are observed in all markets covered by the index (except Sherbrooke), the CMAs that have experienced the largest price growth over the past two years are also those that have recorded the sharpest declines to date. Ontario and British Columbia thus appear to be more vulnerable, while the Prairie markets are less so, as affordability problems are less acute. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index decreased 0.8% in March compared with the previous month and after adjusting for seasonal effects, the ninth consecutive monthly decline. After seasonal adjustment, 7 of the 11 markets in the composite index were down during the month: Victoria (-4.5%), Winnipeg (-2.4%), Toronto (-1.9%), Edmonton (-0.9%), Hamilton (-0 .1%) Conversely, prices increased during the month in Halifax (+2.3%), Montreal (+0.5%), Vancouver (+0.3%) and Calgary (+0.1%). From March 2022 to March 2023, the composite index decreased by 6.9%, matching the record annual decline observed during the 2008-2009 financial crisis. Price growth in Calgary (7.6%), Quebec City (4.1%) and Edmonton (2.2%) was more than offset by declines in Montreal (-0.8%), Ottawa-Gatineau (-4.7%), Halifax (-4.9%), Vancouver (-5.0%), Winnipeg (-6.3%), Victoria (-8.7%), Toronto (-12.1%) and Hamilton (-13.5%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf

From National Bank of Canada Summary On a seasonally adjusted basis, home sales increased 1.4% from February to March, the first time since February 2022 that they experienced two consecutive monthly increases. Unlike the previous month, the increase in sales was not spread across all provinces. On the supply side, new listings dropped by 5.8% in the month, a seventh decrease in nine months. Still, we continue to see that there is a high proportion of sellers who are changing their minds, as we estimate that 19% of listings have been withdrawn in the last three months. Overall, supply decreased in Canada as testified by the number of months of inventory (active-listings to sales) decreasing from 4.1 to 4.9 in March. This remains up from the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio is still tighter than its historical average in the majority of Canadian provinces, with only Manitoba indicating a ratio above average. Housing starts in Canada decreased in March (-27.1K to 213.9K, seasonally adjusted and annualized), which was below consensus expectations calling for a 237.5K print. This drop almost fully erased Februarys 27.9K gain. In urban areas, decreases in housing starts were seen in Ontario (-20.7K to 75.4K), the Prairies (-8.0K to 35.9K), Quebec (-11.8K to 27.0K) and the Maritimes (-0.3K to 6.3K). Starts in BC (+13.6K to 48.0K), meanwhile, increased after reaching their lowest level since March 2022 in February, thanks to a gain in multiples (+14.1K to 43.2K) while single units starts were essentially steady (-0.5K to 4.8K). The Teranet-National Bank Composite National House Price Index decreased 0.8% in March compared with the previous month and after adjusting for seasonal effects, the ninth consecutive monthly decline. After seasonal adjustment, 7 of the 11 markets in the composite index were down during the month: Victoria (-4.5%), Winnipeg (-2.4%), Toronto (-1.9%), Edmonton (-0.9%), Hamilton (-0.1%) Conversely, prices increased during the month in Halifax (+2.3%), Montreal (+0.5%), Vancouver (+0.3%) and Calgary (+0.1%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

From National Bank of Canada On a seasonally adjusted basis, home sales increased 1.4% from February to March, the first time since February 2022 that they experienced two consecutive monthly increases. Unlike the previous month, the increase in sales was not spread across all provinces. In fact, this growth is largely explained by a notable jump of 10.0% in sales in B.C. and to a lesser extent by increases in Manitoba (1.2%), Ontario (1.1%) and Quebec (0.8%). Despite signs of stabilization, the level of sales in Canada remains very low on a historical basis and has declined by 39.5% since the start of the monetary tightening. As we expect the Bank of Canada to keep its policy rate at its current restrictive level for most of 2023, the outlook for a recovery in the housing market remains limited. As a result, sales are expected to remain below their historical average in the coming months and it is still too early to interpret recent increases in sales as a rebound in the housing Market. On the supply side, new listings dropped by 5.8% in the month, a seventh decrease in nine months. Still, we continue to see that there is a high proportion of sellers who are changing their minds, as we estimate that 19% of listings have been withdrawn in the last three months. Overall, supply decreased in Canada as testified by the number of months of inventory (active-listings to sales) decreasing from 4.1 to 4.9 in March. This remains up from the trough of 1.7 reached in the pandemic but remains low on a historical basis. As a result, the active-listings to sales ratio is still tighter than its historical average in the majority of Canadian provinces, with only Manitoba indicating a ratio above average. On a year-over-year basis, home sales were down 34.4% compared to the second-strongest month of March in history last year. Sales were down in every province on a year-over-year basis, with the largest decline observed in Alberta (-41.3%) and the smallest in Saskatchewan (-20.2%). For the first quarter of 2023, cumulative sales were down 37.0% compared to the same period last year. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-canada.pdf

The Bank of Canada today held its target for the overnight rate at 4%, with the Bank Rate at 4% and the deposit rate at 4%. The Bank is also continuing its policy of quantitative tightening. Inflation in many countries is easing in the face of lower energy prices, normalizing global supply chains, and tighter monetary policy. At the same time, labour markets remain tight and measures of core inflation in many advanced economies suggest persistent price pressures, especially for services. Global economic growth has been stronger than anticipated. Growth in the United States and Europe has surprised on the upside, but is expected to weaken as tighter monetary policy continues to feed through those economies. In the United States, recent stress in the banking sector has tightened credit conditions further. US growth is expected to slow considerably in the coming months, with particular weakness in sectors that are important for Canadian exports. Meanwhile, activity in Chinas economy has rebounded, particularly in services. Overall, commodity prices are close to their January levels. The Banks April Monetary Policy Report (MPR) projects global growth of 2.6% this year, 2.1% in 2024, and 2.8% in 2025. In Canada, demand is still exceeding supply and the labour market remains tight. Economic growth in the first quarter looks to be stronger than was projected in January, with a bounce in exports and solid consumption growth. While the Banks Business Outlook Survey suggests acute labour shortages are starting to ease, wage growth is still elevated relative to productivity growth. Strong population gains are adding to labour supply and supporting employment growth while also boosting aggregate consumption. Housing market activity remains subdued. https://www.bankofcanada.ca/2023/04/fad-press-release-2023-04-12/?fbclid=IwAR0a-4yHJVIhZA_NbWespXWZn49Q7XwhCTvrCV92O8ATLiiGCG0Rwi0K6Vg

Despite the higher mortgage rates and tougher mortgage qualifying in todays environment, there are still plenty of Canadians wanting to buy their first home, so it is recommended that you take some time to learn about the financing programs available, especially those specifically for First-Time Home Buyers. Most of the programs require planning and time so it is important to understand them so you can choose the one(s) that are best for you. Lets take a brief look at some key highlights of the programs. Home Buyers Plan (HBP) Introduced in 1992 and since then, more than 650,000 Canadians have withdrawn over $6.2 Billion from their RRSP Accounts to purchase or construct their first home. Enables eligible participants to withdraw funds from their Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home for themselves or a relative with a disability. Currently limits participants to withdrawing a maximum of $35,000 under the program.The limit was increased back in 2019 from its original $25,000. Funds withdrawn under this program MUST be paid back into the RRSP over a 15-year period. Failure to fulfill the annual repayment requirements will result in the cancelled payment being considered income and taxed accordingly. The repayment period begins during the second year after the year of your withdrawal. This is known as the Grace Period Repayment is tracked by the government through your annual Income Tax filings and can be monitored by the participant through their online CRA Account. The full details of the program as well as answers to detailed questions can be found HERE. Tax-Free Savings Account (TFSA) Implemented in 2009 as a way for individuals who are 18 years of age or older with a valid Social Insurance Number (SIN) to save money as tax-free throughout their lifetime. Contributions to the TFSA are not deductible for income tax purposes but the interest, investment income and capital gains earned within the TFSA are generally tax free, even when the funds are withdrawn. Encompasses an annual contribution limit that is indexed to inflation in $500 increments. The limit applies to ALL Canadians as it is not based on an individuals income and in 2023, the annual limit is $6,500.00. The Annual Contribution Limit can be carried over so they are cumulative, meaning individuals can make up annual limit portions not previously paid, in future years. Growth acquired within the TFSA is not taxed. The program is not specific to first time buyers, as any qualified participant is able to set up a TFSA. Funds withdrawn do not need to be repaid. The full details of the program as well as answers to detailed questions can be found HERE. First-Time Home Buyers Incentive Program [FTHBIP] This program was implemented in September 2019 and providesassistance for First-Time Home Buyers with the down payment aspect of the purchase. The government will add an additional 5% towards a down payment if the individual is purchasing a resale home or up to 10% down payment if the individual is purchasing a newly constructed home. The program generates a lower mortgage and improves the affordability in qualifying for the mortgage. The government fundsare deemed to be borrowed but are not required to be paid back until the home is sold. If the property is sold at a gain, the government will then split the profit to a maximum of 8% per annum, not compounded. A loss on the sale means the funds do not need to be paid back. Borrowers MUST qualify while not having a combined incomeabove $120,000 and a house price of no more than 4.0 times the income ($150,000 4.5% for Toronto, Vancouver Victoria). For further details pertaining to this program along with accessing the program application, please click the links below: CMHC First-Time Home Buyer Incentive | National Housing Strategy First Home Savings Account [FHSA] Launched by the Federal Government on April 1, 2023 but is not expected to be available until later in the year when the banks have are positioned to offer, coordinate and manage these types of accounts. Designed for first-time home buyers to save money for their down payment within a registered tax-free account. Maximum Annual Contribution is $8,000 Maximum Lifetime Contribution is $40,000 Account investment growth is not taxed but any account withdrawals not going to a first-time home buyers purchase will be treated and taxed.as income. For further details pertaining to this program and answers to further questions, please click HERE. Which Program is Better For Me? First of all, I am a Sr. Mortgage Professional who has extensive experience in securing mortgage financing and analyzing credit and its accompanied risk. Although I have significant knowledge with investments, I am by no means an Investment Professional or Tax Expert, so I do not pretend to have these answers for you. To gain further professional insight, I suggest you consult an Investment Professional and maybe even a Tax Professional. Keeping all that in mind as well as the fact that everyone has unique circumstances and different goals and abilities to achieve those goals, I would suggest the best program is actually a combination of more than one. Each program has its own pros and cons that they deliver so which program (s) fits you better? Is it better to not put all your eggs in one basket or better yet, engage in savings beyond the limits of some of these programs? The HBP has clearly been around the longest and is certainly the most common, at least with clients I have been partnered to secure their financing. That actually makes sense as well as so many employers offer RRSP Income Deductions from pay cheques and many even provide vested matching or a company percentage contribution so RRSP Accounts tend to grow a bit faster than the others but, this program comes with restrictions such as the cap that can be withdrawn to avoid tax implications along with having to pay it back. The required repayment means that there is a further commitment moving forward and if not fulfilled properly, can create significant tax charges. However, looking at the maximum commitment, a $35,000 withdrawal would produce an annual repayment into the RRSP of $2,333.33 across the 15 years. Would this commitment work for you? The FTHBIP can be an excellent support source that at times, actually does assist a borrower with qualifying for a mortgage. There are times where a first-time buyer does not qualify for financing based on a 5% down payment so the extra 5% from this program can and has made the difference in qualifying. Although this program will generate another interest on title as the government does file registration on title, repayment is only required when the home sells at a profit or the full 25 years have lapsed on the ownership of the property. In addition, the government just released a shared profit cap of 8% per annum, not compounded, so the impact of the governments share is now lower than when the program first came out and does offer some protection of sharing the profit benefits of major renovations. On the flip side, having the government registered on title could affect future financing on the property such as a HomeEquity Line of Credit (HELOC) or a Second Mortgage down the road, if required or wanted. As for the TFSA and the newly launched FHSA, these are easy accounts to manage and use but do come with annual deposit limits so they can be restrictive is saving significant amounts. When analyzing these programs and as I previously mentioned, it appears to me the best road to take is one where a combination of programs is utilized. Work with the applicable experts so you gain professional insight to the best combination of programs for you. Remember, your age, how much you have saved to date, when you wish to buy, how much the home will cost and how much of a mortgage you are able to afford and qualify for are just some of the factors that must be considered to finalize the best results for your situation. Keep In Mind! When qualifying for mortgage financing, the greater of the: Benchmark Rate (5.25%) OR Contract Rate + 2.00% is used for qualifying purposes. This requirement represents the Stress Test and is naturally another determining factor in qualifying for a mortgage and how much down payment will be required based on the purchase price of the home. Please be advised that any information provided and/or calculations are subject to change without notice as legislation and government and/or market regulations are altered. Always check with the applicable professionals for environment / market updates. EO

Statistics released by the Canadian Real Estate Association (CREA) show national home sales were up on a month-over-month basis in February 2023. Highlights: National home sales rose 2.3% month-over-month in February. Actual (not seasonally adjusted) monthly activity came in 40% below February 2022. The number of newly listed properties dropped 7.9% month-over-month. The MLS Home Price Index (HPI) edged down 1.1% month-over-month and was down 15.8% year-over-year. The actual (not seasonally adjusted) national average sale price posted an 18.9% year-over-year decline in February. Home sales recorded over Canadian MLS Systems posted a 2.3% increase from January to February 2023. Gains were led by the Greater Toronto Area (GTA) and Greater Vancouver. The actual (not seasonally adjusted) number of transactions in February 2023 came in 40% below an incredibly strong month of February in 2022. The February 2023 sales figure was comparable to what was seen for that month in 2018 and 2019. https://stats.crea.ca/en-CA

Summary On a seasonally adjusted basis, home sales increased 2.3% from January to February, a third monthly gain in five months. The increase was widespread across provinces, with only Manitoba (-7.9%), Nova Scotia (-0.9%), and Alberta (-0.4%) registering decreases. On the supply side, new listings dropped by 7.9% in the month, a sixth decrease in eight months. Still, we continue to see that there is a high proportion of sellers who are changing their minds, as we estimate that about one in five listings have been withdrawned in the last three months. Overall, supply decreased slightly in Canada as testified by the number of months of inventory (active listings to sales) decreasing from 4.2 to 4.1 in February. This remains up from the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio is still tighter than its historical average in the majority of Canadian provinces, with only B.C. and Manitoba indicating a ratio above average. Housing starts in Canada increased in February (+27.4K to 244.0K, seasonally adjusted and annualized), which was above consensus expectations calling for a 220K print. This jump almost fully erased Januarys 32.4K pullback. In urban areas, increases in housing starts were seen in Ontario (+26.4K to 98.4K), the Prairies (+10.5K to 43.8K), Quebec (+5.1K to 40.4K) and the Maritimes (+0.8K to 5.8K). Starts in BC (-12.8K to 33.7K), meanwhile, declined to their lowest level since March 2022 on a weakness in multiples (-12.3K to 28.4K) while single units starts were essentially steady (-0.5K to 5.3K). The Teranet-National Bank Composite National House Price Index decreased by 0.5% in February compared to the previous month and after seasonal adjustment, the tenth consecutive monthly decrease. After seasonal adjustment, 7 of the 11 markets in the composite index were down during the month: Toronto (-2.7%), Calgary (-2.4%), Halifax (-1.8%), Edmonton (-0.8%), Hamilton (-0.3%), Montreal (-0.3%) and Ottawa-Gatineau (-0.2%). Conversely, prices increased in Vancouver (+3.8%), Victoria (+1.9%) and Quebec City (+0.1%). while they remained stable in Winnipeg. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

From National Bank of Canada The Teranet-National Bank Index continued to decline in February so that the cumulative decline in prices since their peak in May 2022 totaled 11.2%, the largest contraction in the index ever recorded. The current decline in prices has even surpassed the 9.2% loss in value that occurred during the 2008 financial crisis. With the Bank of Canada expected to keep its policy rate in restrictive territory well into 2023 and mortgage rates remaining high, we believe that the impact on property prices should continue to be felt in the coming months. All in all, we still anticipate a total correction of about 15% nationally by the end of 2023, but this assumes that policy rate hikes are over and declines begin at year-end. Although corrections are being seen in all markets covered by the index, the CMAs that have seen the largest price growth over the past two years are also those that have seen the largest declines to date. Ontario, British Columbia and the Maritimes thus appear to be more vulnerable, while the Prairie markets are less vulnerable, as affordability issues are less acute. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index decreased by 0.5% in February compared to the previous month and after seasonal adjustment, the tenth consecutive monthly decrease. After seasonal adjustment, 7 of the 11 markets in the composite index were down during the month: Toronto (-2.7%), Calgary (-2.4%), Halifax (-1.8%). Edmonton (-0.8%), Hamilton (-0.3%), Montreal (-0.3%) and Ottawa-Gatineau (-0.2%). Conversely, prices increased in Vancouver (+3.8%), Victoria (+1.9%) and Quebec City (+0.1%), while they remained stable in Winnipeg. From February 2022 to February 2023, the composite index decreased by 4.7%, the second consecutive month in which the annual change in the index was in negative territory. Price increases in Calgary (8.8%), Quebec (5.0%). Edmonton (1.9%) and Montreal (0.8%) were entirely offset by decreases in Victoria (-1.4%), Ottawa-Gatineau (-2.3%), Winnipeg (-2.7%), Halifax (-3.2%), Vancouver (-3.9%), Toronto (-8.8%), and Hamilton (-14.0%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf

For the first time in 9 quarters, housing affordability improved in Canada. Not only was it the largest improvement in over 3 years, but it also ended the longest sequence of declining home affordability since the 1986-89 episode. Still, that is not to say that the median home is now affordable in Canada as the mortgage payment as a percentage of income (MPPI) registered at 64.6%, the second highest level since 1981. Feeding into the refinement, home prices declined for a second consecutive quarter and did so at the fastest pace since 1990. Although our 5-year benchmark mortgage rate used to calculate affordability rose by 17 bps in the fourth quarter, that was more than compensated for by falling prices and still rising incomes. The slight rise in rates nonetheless brought the benchmark rate to its highest level since 2008. Preliminary data for the first quarter of 2023 as well as our outlook for monetary policy in Canada suggest that we may be peaking in terms of mortgage interest rates. The current level for interest rates is restrictive and signals that home price declines are not over yet. Moreover, incoming data for the first quarter of 2023 confirms that prices have weakened while resale market data from CREA indicates that sales have significantly declined with listings concurrently increasing. Given our view for further declines in home price and decreasing mortgage rates, we expect affordability to improve in the coming quarters. HIGHLIGHTS: Canadian housing affordability improved for the first time in 9 quarters in Q422. The mortgage payment on a representative home as a percentage of income (MPPI) declined 2.1 points, a pullback from the 4.0-point increase in Q322. Seasonally adjusted home prices decreased 3.9% in Q422 from Q322; the benchmark mortgage rate (5-year term) rose 17 bps, while median household income rose 1.0%. Affordability improved in 8 of the ten markets covered in Q4. On a sliding scale of markets from best improvement to deterioration: Victoria, Hamilton, Toronto, Vancouver, Ottawa-Gatineau, Montreal, Winnipeg, Quebec, Edmonton, Calgary. This was the first time in 9 quarters that a majority of markets improved. Countrywide, affordability improved 0.6 pp in the condo portion vs. a 2.9 pp improvement in the non-condo segment. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf

The Bank of Canada today held its target for the overnight rate at 4%, with the Bank Rate at 4% and the deposit rate at 4%. The Bank is also continuing its policy of quantitative tightening. Global economic developments have evolved broadly in line with the outlook in the January Monetary Policy Report (MPR). Global growth continues to slow, and inflation, while still too high, is coming down due primarily to lower energy prices. In the United States and Europe, near-term outlooks for growth and inflation are both somewhat higher than expected in January. In particular, labour markets remain tight, and elevated core inflation is persisting. Growth in China is rebounding in the first quarter. Commodity prices have evolved roughly in line with the Banks expectations, but the strength of Chinas recovery and the impact of Russias war in Ukraine remain key sources of upside risk. Financial conditions have tightened since January, and the US dollar has strengthened. In Canada, economic growth came in flat in the fourth quarter of 2022, lower than the Bank projected. With consumption, government spending and net exports all increasing, the weaker-than-expected GDP was largely because of a sizeable slowdown in inventory investment. Restrictive monetary policy continues to weigh on household spending, and business investment has weakened alongside slowing domestic and foreign demand. The labour market remains very tight. Employment growth has been surprisingly strong, the unemployment rate remains near historic lows, and job vacancies are elevated. Wages continue to grow at 4% to 5%, while productivity has declined in recent quarters. Inflation eased to 5.9% in January, reflecting lower price increases for energy, durable goods and some services. Price increases for food and shelter remain high, causing continued hardship for Canadians. With weak economic growth for the next couple of quarters, pressures in product and labour markets are expected to ease. This should moderate wage growth and also increase competitive pressures, making it more difficult for businesses to pass on higher costs to consumers. https://www.bankofcanada.ca/2023/03/fad-press-release-2023-03-08/?fbclid=IwAR2176FL0YpgrqcA-0CAxpkw1SEwR7InkZY3Pb1NZxGjS9tc70Bw6ARkj-Q

On a seasonally adjusted basis, home sales decreased 3.0% from December to January, a second monthly decline in three months. As a result, sales slipped to their lowest level since August 2010 (excluding the pandemic). As the Bank of Canada raised its policy rate in January and is expected to keep monetary conditions restrictive for most of 2023, the resale market could experience further declines in the months ahead and remain at a level of activity well below its historical overage. Adding to the weakness of the report, the decrease in sales was widespread across provinces, with only Ontario (+0.4%) and PEI (+6.0%) registering increases. On the supply side, new listings were up 3.3% in the month, a first increase in three months and the fastest one since February 2022. Still, we continue to see that there is a high proportion of sellers who are changing their minds, as we estimate that about one in five listings are withdrawn during the month. Despite this, the increase in listings combined to the low level of sales is allowing supply to rise in Canada as testified by the number of months of inventory increasing from 4.1 to 4.3 in January. This is up from the trough of 1.7 reached in the pandemic but remains low on a historical basis. As a result, the active-listing to sales ratio is easing but is still tighter than its historical average in the majority of Canadian provinces, with only B.C. and Manitoba indicating a ratio above average. On a year-over-year basis, home sales were down 39.4% compared to the second-strongest month of January in history last year. Sales were down in every province on a year-over- year basis, with the largest decline observed in B.C. (-49.0%) and the smallest in Newfoundland (-13.5%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-canada.pdf

Statistics released by the Canadian Real Estate Association (CREA) show national home sales were down on a monthover-month basis in January 2023. Highlights: National home sales declined 3% month-over-month in January. Actual (not seasonally adjusted) monthly activity came in 37.1% below January 2022. The number of newly listed properties rose 3.3% month-over-month. The MLS Home Price Index (HPI) declined by 1.9% month-over-month and was down 12.6% year-over-year. The actual (not seasonally adjusted) national average sale price posted an 18.3% decline year-over-year in January. https://stats.crea.ca/en-CA/

Growth in demand outpaced strong growth in supply, pushing the vacancy rate for purpose-built rental apartments down from 3.1% to 1.9%. This was the vacancy rates lowest level since 2001. Rent growth, for its part, reached a new high. Rental demand surged across the country. This was a reflection of higher net migration and the return of students to on-campus learning. Another factor was higher mortgage rates, which drove up already-elevated costs of homeownership. Despite higher overall supply, the share of rental units that are affordable for the lowest-income renters is, in most markets, in the low single digits or too low to report. This is especially true in Ontario and British Columbia (B.C.). New data: Average rent growth for 2-bedroom units that turned over to a new tenant was well above average rent growth for units without turnover (18.2% vs. 2.8%). This increased affordability challenges. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/market-reports/rental-market-report/rental-market-report-2022-en.pdf?rev=2a0ed640-6c4c-435d-b13a-0faca94c0667

From National Bank of Canada The Teranet-National Bank HPI continued to decline in December so that the cumulative drop in prices since their peak in May 2022 totaled 10.0%, the largest contraction in the index ever recorded. The current decline in prices has even surpassed the 9.2% loss in value that occurred during the 2008 financial crisis. However, there is some consolation in that the seasonally adjusted monthly decrease in prices in December was less significant than in November, going from -1.0% to -0.3%. With the Bank of Canada raising its key interest rate again in December and mortgage rates remaining high, we believe that the impact on property prices should continue to be felt in the coming months. All in all, we still expect the total correction to be limited to about 15% nationally by the end of 2023, but this assumes that policy rate hikes are coming to an end and that declines occur in the second half of 2023. Although corrections are occurring in all markets covered by the index (except Lethbridge), the CMAs that have experienced the largest price growth over the past two years are also the ones that have experienced the largest declines to date. Ontario, British Columbia and the Maritimes therefore appear to be more vulnerable, while the Prairie markets are less so, helped by a buoyant economic environment. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index decreased by 0.3% in December compared to the previous month and after adjusting for seasonal effects, the sixth consecutive monthly decrease. After adjusting for seasonal effects, 6 of the 11 markets in the composite index were down during the month: Winnipeg (-1.8%), Calgary (-1.1%), Ottawa-Gatineau (-1.1%), Edmonton (-0.9%), Montreal (-0.5%) and Toronto (-0.4%). Conversely, the Quebec City (+1.3%), Victoria (+1.1%), Hamilton (+0.8%), Halifax (+0.4%) and Vancouver (+0.1%) markets were up. From December 2021 to December 2022, the composite index remained stable, the first time since the financial crisis of 2008-09 that the index did not increase over one year. Price increases in Calgary (12.4%), Edmonton (6.3%), Halifax (4.7%), Quebec City (4.7%} and Montreal (2.5%) were entirely offset by decreases in Victoria (-0.1%), Ottawa-Gatineau (-1.0%), Vancouver (-1.5%), Toronto (-1.9%), Winnipeg (-2.0%) and Hamilton (-2.9%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf

The Bank of Canada today increased its target for the overnight rate to 4%, with the Bank Rate at 4% and the deposit rate at 4%. The Bank is also continuing its policy of quantitative tightening. Global inflation remains high and broad-based. Inflation is coming down in many countries, largely reflecting lower energy prices as well as improvements in global supply chains. In the United States and Europe, economies are slowing but proving more resilient than was expected at the time of the Banks October Monetary Policy Report (MPR). Chinas abrupt lifting of COVID-19 restrictions has prompted an upward revision to the growth forecast for China and poses an upside risk to commodity prices. Russias war on Ukraine remains a significant source of uncertainty. Financial conditions remain restrictive but have eased since October, and the Canadian dollar has been relatively stable against the US dollar. The Bank estimates the global economy grew by about 3% in 2022, and will slow to about 2% in 2023 and 2% in 2024. This projection is slightly higher than Octobers. In Canada, recent economic growth has been stronger than expected and the economy remains in excess demand. Labour markets are still tight: the unemployment rate is near historic lows and businesses are reporting ongoing difficulty finding workers. However, there is growing evidence that restrictive monetary policy is slowing activity, especially household spending. Consumption growth has moderated from the first half of 2022 and housing market activity has declined substantially. As the effects of interest rate increases continue to work through the economy, spending on consumer services and business investment are expected to slow. Meanwhile, weaker foreign demand will likely weigh on exports. This overall slowdown in activity will allow supply to catch up with demand. https://www.bankofcanada.ca/2023/01/fad-press-release-2023-01-25/

NEWS The Bank of Canada announced a 25 basis-point (Bps) Overnight Rate increase this morning bringing the Banks Target Rate to 4.75%. The bank also announced that will continue its policy of quantitative tightening. Tiff Macklem, Governor of the Bank of Canada, stated that Global inflation remains high and broad-based. Although inflation is dropping in many countries primarily due to lower energy prices and improvements to global supply chain, Chinas abrupt lifting of Covis restrictions poses a risk to commodity prices and the war in Ukraine continues to generate uncertainty. In Canada, economic growth has been stronger than expected and the economy remains in excess of demand. However, there is growing evidence that restrictive monetary policy is slowing activity. As the effects of interest rate increases continue to work through the economy, spending on consumer services and business investment are expected to slow. Meanwhile, weaker foreign demand will likely weigh on exports. The overall slowdown in activity will allow supply to catch up with demand. In conjunction with the Bank of Canadas Rate Announcement, the central bank also released its Quarterly Monetary Policy Report that outlines inflation being projected to fall around 3% in the middle of 2023 and reach the targeted 2% in 2024. A decrease rate that will generate a bumpy ride for consumers throughout 2023. The Bank of Canadas Media Release Monetary Policy Report January 2023 According to Ben Rabidoux of Edge Realty Analytics and author of the latest Housing and Mortgage Report done for Mortgage Professionals Canada, mortgage arrears is a lagging indicator that tells us more about how consumers were faring 9-12 months ago than it does about the near future. But, Canadas National Arrears Rate experienced an uptick from its all-time low back in October 2022. According to data from the Canadian Bankers Association, mortgage payments that are behind 3 months or more, rose to 0.15% from 0.14% where it was since June 2022. That seems to be a very small percentage but the 0.01% increase represents just over 7,400 mortgages in arrears out of a total of over 5.1 million. The numbers do tell us households are likely going into potential recession in a better position than during other turndowns, according to Ben. Sources: Bank of Canada, Canadian Mortgage Trends Mortgage Professionals Canada

Summary On a seasonally adjusted basis, home sales increased 1.3% from November to December, a second monthly gain in ten months. Despite this relative stabilization of the market in December, sales were still down 37.8% from their February 2022 level. New listings were down 6.4% from November to December, a fifth contraction in six months which shows that both buyers and sellers remain on the sidelines in the current market environment. It should also be noted there is still a high proportion of sellers who are changing their minds, as we estimate that about one in five listings are withdrawn during the month. The low level of sales is still allowing supply to rebuild, with the number of months of inventory increasing from 4.1 to 4.2 in December. While easing, market conditions are still pointing in the direction of a favourable to sellers market with supply still very low on a historical basis. Housing starts fell 14.4K in December to a 9-month low of 248.6K (seasonally adjusted and annualized). Urban starts dropped 12.9K to 227.7K on declines in both the single-family (-5.5K to a post-pandemic low of 44.9K) and the multi-family segment (-7.4K to 182.9K). The Teranet-National Bank Composite National House Price Index decreased by 0.3% in December compared to the previous month and after adjusting for seasonal effects, the sixth consecutive monthly decrease. After adjusting for seasonal effects, 6 of the 11 markets in the composite index were down during the month: Winnipeg (-1.8%), Calgary (-1.1%), Ottawa-Gatineau (-1.1%), Edmonton (-0.9%). Montreal (-0.5%) and Toronto (-0.4%). Conversely, the Quebec City (+1.3%), Victoria (+1.1%). Hamilton (+0.8%), Halifax (+0.4%) and Vancouver (+0.1%) markets were up. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

Sales in November were down 3.3% on a month-over-month basis, rejoining the trend of moderating sales that began back in February. The Aggregate Composite MLS Home Price Index (HPI) edged down 1.4% on a month-over-month basis in November, which, as with sales activity, continues the trend that began in the spring. The national MLS HPI now sits about 11.5% below its peak level but there are considerable regional differences. While prices are down more in Ontario and parts of British Columbia, they have softened to some degree almost everywhere. Calgary, Regina and Saskatoon stand out as markets where home prices are barely off their peaks. https://www.creacafe.ca/whats-happening-in-canadian-housing-markets-as-we-head-into-2023/

From National Bank of Canada For the first time since the financial crisis of 2008, all of the cities covered by the Teranet-National Bank HPI have seen prices decline from their peak reached over the past 12 months, marking the end of a prosperous period for the Canadian real estate market. Indeed, price declines were observed in all markets covered, with the last cities on the list to experience contractions being Calgary, Edmonton, Lethbridge and Trois-Rivieres. Since its peak in May 2022, the national composite index has already fallen by 9.0%, almost as much as during the last financial crisis (-9.2%). With the Bank of Canada raising its key interest rate again in December and mortgage rates remaining high, we believe that the impact on property prices should continue to be felt in the coming months. All in all, we still anticipate a total correction of about 15% in house prices nationally by the end of 2023, assuming that the policy rate does not increase further and begins to decline in the second half of 2023. Although corrections are being observed in the vast majority of markets covered by the index, the CMAs that have experienced the most significant price growth over the past two years are also those that have recorded the sharpest declines to date. Ontario, British Columbia, and the Maritimes therefore appear to be more vulnerable, while the Prairie markets are less so, helped by a buoyant economic context. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index decreased by 1.1% in November compared to the previous month and after adjusting for seasonal effects, a fifth consecutive monthly decrease. After adjusting for seasonal effects, 8 of the 11 markets in the composite index were down during the month: Montreal (-2.2%), Hamilton (-1.9%), Vancouver (-1.5%), Ottawa-Gatineau (-1.3%), Winnipeg (-1.1%), Quebec City (-1.1%), Toronto (-0.9%) and Calgary (-0.8%). Conversely, the Halifax (+1.6%), Victoria (+0.9%) and Edmonton (+0.3%) markets were up. From November 2021 to November 2022, the composite index increased by 2.0%, the lowest annual growth since November 2019. This growth was driven by Calgary (14.6%), Edmonton (7.6%), Halifax (6.2%), Quebec City (5.7%), Montreal (4.7%) and Victoria (3.0%). Growth was lower than average in Winnipeg (1.2%), Vancouver (0.7%) and Ottawa-Gatineau (0.4%), while it remained stable in Toronto and was down in Hamilton (-0.9%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf

Summary On a seasonally adjusted basis, home sales decreased 3.3% from October to November, an eighth monthly decline in nine months. After recording a gain in October, the real estate market has resumed its downward trend of recent months, accumulating a decline in sales of 38.8% since their February level. New listing were down 1.3% from October to November, a fourth contraction in five months which shows that both buyers and sellers remain on the sidelines in the current market environment. It should also be noted that a very high proportion of sellers are changing their minds, while we estimate that about one in five listings are withdrawn during the month. The level of sales is still allowing supply to rebuild, with the number of months of inventory increasing from 3.9 to 4.2 in November. While easing, market conditions are still pointing in the direction of a favourable to sellers market with supply still very low on a historical basis. Housing starts were essentially steady in November at a level way above historical trends (-0.4K to 264.2K, seasonally adjusted and annualized). This was better than consensus expectations calling for a decline. That said, the prior months result was revised downwards from 267.1 to 264.6K. The Teranet-National Bank Composite National House Price lndexTM decreased by 1.1% in November compared to the previous month and after adjusting for seasonal effects, a fifth consecutive monthly decrease. After adjusting for seasonal effects, 8 of the 11 markets in the composite index were down during the month: Montreal (-2.2%), Hamilton (-1.9%), Vancouver (-1.5%), Ottawa-Gatineau (-1.3%), Winnipeg (-1.1%), Quebec City (-1.1%), Toronto (-0.9%) and Calgary (-0.8%). Conversely, the Halifax (+l.6%), Victoria (+0.9%) and Edmonton (+0.3%) markets were up. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

From CMHC In this Fall 2022 edition, we find the following: Recent mortgage market trends Mortgage growth slowed down as interest rates hiked in the second quarter of 2022. Mortgage consumers are increasingly turning back to fixed rates as interest rates rapidly increase and the discount on variable interest rates vanishes. Declining ratios of mortgage loan approvals to applications show it is increasingly difficult for potential borrowers to get qualified for loans subject to the stress test. The share of mortgages in arrears (i.e. delinquent for 90 days or more) have continued to trend downwards across all types of lenders. Housing Finance Research at-a-glance In the third quarter of 2022, consumers without a mortgage registered notable delinquency rate increases in auto loans and credit cards. Mortgage lending growth by alternative lenders outpaces conventional lenders. Their portfolio metrics indicate a decreasing risk profile. Mortgage borrowers in the alternative lending space are more likely to renew their loans as it becomes harder to qualify with traditional lenders. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/housing-research/research-reports/housing-finance/residential-mortgage-industry-report/2022/residential-mortgage-industry-report-fall-2022-en.pdf?rev=239fc8ea-a885-430f-97fe-dd700161d872

The Bank of Canada today increased its target for the overnight rate to 4%, with the Bank Rate at 4% and the deposit rate at 4%. The Bank is also continuing its policy of quantitative tightening. Inflation around the world remains high and broadly based. Global economic growth is slowing, although it is proving more resilient than was expected at the time of the October Monetary Policy Report (MPR). In the United States, the economy is weakening but consumption continues to be solid and the labour market remains overheated. The gradual easing of global supply bottlenecks continues, although further progress could be disrupted by geopolitical events. In Canada, GDP growth in the third quarter was stronger than expected, and the economy continued to operate in excess demand. Canadas labour market remains tight, with unemployment near historic lows. While commodity exports have been strong, there is growing evidence that tighter monetary policy is restraining domestic demand: consumption moderated in the third quarter, and housing market activity continues to decline. Overall, the data since the October MPR support the Banks outlook that growth will essentially stall through the end of this year and the first half of next year. CPI inflation remained at 6.9% in October, with many of the goods and services Canadians regularly buy showing large price increases. Measures of core inflation remain around 5%. Three-month rates of change in core inflation have come down, an early indicator that price pressures may be losing momentum. However, inflation is still too high and short-term inflation expectations remain elevated. The longer that consumers and businesses expect inflation to be above the target, the greater the risk that elevated inflation becomes entrenched. https://www.bankofcanada.ca/2022/12/fad-press-release-2022-12-07/

From National Bank of Canada We remain in the midst of the longest sequence of declining home affordability since the 1986-1989 episode (11 quarters). The magnitude of the deterioration, however, is much more pronounced this time (25.5 p.p. vs. 20.2 p.p. in the 1980s). As a result, the mortgage ona representative home in Canada now takes 67.3% of income to service, the most since 1981. A first since the second quarter of 2019 is the downturn in housing prices that has mitigated slightly the impact on affordability of still rising mortgage rates. Our 5-year benchmark mortgage rate used to calculate our affordability metrics rose 75 bps in the third quarter of the year. While this surge was less significant than the one observed in the previous quarter, it propelled the benchmark mortgage rate to its highest level since 2010. To give an idea of scale, all else being equal, a 75-bps increase represents an extra 300$ (or an 8.1% increase) on the monthly mortgage payment for a representative home in Canada. With our affordability indexes at extreme levels in most markets, we see further declines in housing prices. The slowdown in real estate activity in several markets is expected to result in a cumulative 15% decline in home prices in 2023 from the peak (-7.7% to date). This, combined with a stabilization of the benchmark 5-year mortgage rate, should improve affordability in the coming quarters. HIGHLIGHTS: Canadian housing affordability deteriorated for a seventh consecutive quarter in Q322. The mortgage payment on a representative home as a percentage of income (MPPI) rose 3.8 points, a deceleration from the 10.2-point increase in Q222. Seasonally adjusted home prices decreased 1.1% in Q322 from Q222; the benchmark mortgage rate (5-year term) rose 75 bps, while median household income rose 0.9%. Affordability deteriorated in all the ten markets covered in Q3. On a sliding scale of markets from worst deterioration to least: Vancouver, Victoria, Calgary, Montreal, Toronto, Quebec, Edmonton, Ottawa-Gatineau, Hamilton, Winnipeg. This was the seventh consecutive quarter with a worsening in all markets. Countrywide, affordability deteriorated 2.7 pp in the condo portion vs. a 4.8 pp deterioration in the non-condo segment. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf

Summary On a seasonally adjusted basis, home sales increased 1.3% from September to October, the first monthly gains in eight months. Despite this growth in sales, this should not be seen as the beginning of an upward trend, but more like a stabilization of the market, with sales now 35.6% below their February level. This is the first time in four months that new listings are up with an increase of 2.2% from September to October. Despite the increase in soles, the increase in new listings allowed supply to accumulate, resulting in the number of months of inventory increasing from 3.7 to 3.8 in October. We are not yet seeing a large influx of sellers at this time, so supply is still very low on a historical basis and market conditions are still pointing in the direction of a favourable to sellers market. This situation is also present in the majority of Canadian provinces, while only B.C. and Manitoba close to indicating a favourable to buyers market. Housing starts declined by 31.8K in October to 267.1K (seasonally adjusted and annualized) after having reached their highest level for 2022 in the prior month while the consensus was calling for a decline to 275K. Storts continued to be well above their long-term average, despite still increasing interest rates. The Teranet-National Bank Composite National House Price Index decreased by 0.8% in October compared to the previous month and after seasonal adjustments. Nine of the 11 markets in the composite index were down during the month: Halifax (-4.7%), Hamilton (-2.8%), Winnipeg (-2.4%), Victoria (-2.0%), Quebec City (-1.7%), Toronto (-1.1%), Ottawo-Gotineau (-1.1%), Montreal (-1.0%) and Vancouver (-0.3%). Conversely, the Calgary (+1.8%) and Edmonton (+2.0%) markets were still up. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf

Statistics released by the Canadian Real Estate Association (CREA) show national home sales edged a little higher in October 2022. HIGHLIGHTS National home sales were up 1.3% on a month-over-month basis in October. Actual (not seasonally adjusted) monthly activity came in 36% below October 2021. The number of newly listed properties edged up 2.2% month-over-month. The MLS Home Price Index (HPI) declined by 1.2% month-over-month and was down 0.8% year-over-year. The actual (not seasonally adjusted) national average sale price posted a 9.9% year-over-year decline in October. https://stats.crea.ca/en-CA/

From National Bank of Canada In September, the seasonally adjusted composite index fell by 2.0%, matching the previous months record decline and representing a fifth consecutive monthly contraction. Since its peak in May, the composite index (not seasonally adjusted) has already declined by 7.0%, whereas during the 2008 financial crisis, prices fell by only 6.2% over the same period and by 9.2% in total over eight months. In a context where monetary policy will continue to be tightened in the coming months, house prices should continue their contraction and exceed that experienced during the financial crisis of 2008. Indeed, we anticipate a record cumulative decline of about 15% nationally by the end of 2023, assuming a policy rate that tops out around 4.0% and a Bank of Canada that throws some weight behind lowering rates in the second half of 2023. Although corrections are observed in the vast majority of markets covered by the index, the CMAs that have experienced the most significant price growth over the past two years are also those that have experienced the most significant declines to date. As a result, the price correction is expected to be more significant in Ontario, British Columbia and the Maritimes, while it is expected to be less significant in the Prairies, which are favoured by a buoyant economic environment. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index decreased by 2.0% in September compared to the previous month and after seasonal adjustments. After adjusting for seasonal effects, 8 of the 11 markets in the composite index were down during the month: Victoria (-5.9%), Vancouver (-3.5%), Hamilton (-2.1%), Montreal (-1.9%), Toronto (-1.8%), Winnipeg (-1.7%), Ottawa-Gatineau (-1.0%), and Quebec City (-0.1%). Conversely, the Calgary (+1.2%), Halifax (+1.1%) and Edmonton (+0.2%) markets were still up. From September 2021 to September 2022, the composite index increased by 6.0%. This growth was driven by Halifax (16.4%), Calgary (14 .7%) and Montreal (10.5%). Growth was lower than average in Winnipeg (5.9%). Hamilton (5.6%), Edmonton (5.6%), Ottawa-Gatineau (5.0%), Victoria (4.7%), Toronto (4.5%) and Vancouver (3.9%). https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf

From National Bank of Canada On a seasonally adjusted basis, home sales fell 3.9% from August to September, bringing the level of sales 18.9% below its 10-year average. This was the seventh consecutive decline for this indicator, with sales down a cumulative 36.2% between February and September. Declines were observed in every province and in 60% of all local markets. We expect the current moderation in sales to continue going forward as the Bank of Canada continues to increase its overnight rate in restrictive territory. The rapid rise in interest rates by the central bank is certainly limiting the purchasing capacity of households while also having a psychological effect on some buyers who are waiting to see how high rates will stabilize before taking action. Rising interest rates and the slowdown in the market did not provoke an influx of sellers for the moment. On the contrary, new listings declined 0.8% between August and September, a third monthly drawback in a row. Overall, the number of months of inventory rose from 3.5 to 3.7 months in September, the highest level since May 2020. Based on the active-listings-to-sales ratio, market conditions loosened in the country and are still indicating a balanced market. Six provinces out of 10 are now in balanced territory: B.C., Alberto, Saskatchewan, Manitoba, Ontario and P.E.. The others continued to indicate market conditions favourable to sellers mainly due to lack of supply. On a year-over-year basis, home sales were down 32.2% compared to the second-strongest month of September in history last year. Sales were down in every province on a year-over-year basis, with the largest decline observed in B.C. (-45.2%) and the smallest in Saskatchewan (-7.3%). For the first three quarters of 2022, cumulative sales were down 21.9% compared to the same period in 2021. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf

The Bank of Canada today increased its target for the overnight rate to 3%, with the Bank Rate at 4% and the deposit rate at 3%. The Bank is also continuing its policy of quantitative tightening. Inflation around the world remains high and broadly based. This reflects the strength of the global recovery from the pandemic, a series of global supply disruptions, and elevated commodity prices, particularly for energy, which have been pushed up by Russias attack on Ukraine. The strength of the US dollar is adding to inflationary pressures in many countries. Tighter monetary policies aimed at controlling inflation are weighing on economic activity around the world. As economies slow and supply disruptions ease, global inflation is expected to come down. In the United States, labour markets remain very tight even as restrictive financial conditions are slowing economic activity. The Bank projects no growth in the US economy through most of next year. In the euro area, the economy is forecast to contract in the quarters ahead, largely due to acute energy shortages. Chinas economy appears to have picked up after the recent round of pandemic lockdowns, although ongoing challenges related to its property market will continue to weigh on growth. Overall, the Bank projects that global growth will slow from 3% in 2022 to about 1% in 2023, and then pick back up to roughly 2% in 2024. This is a slower pace of growth than was projected in the Banks July Monetary Policy Report (MPR). In Canada, the economy continues to operate in excess demand and labour markets remain tight. The demand for goods and services is still running ahead of the economys ability to supply them, putting upward pressure on domestic inflation. Businesses continue to report widespread labour shortages and, with the full reopening of the economy, strong demand has led to a sharp rise in the price of services. https://www.bankofcanada.ca/2022/10/fad-press-release-2022-10-26/

Highlights After a boom recorded last year, housing starts in the countrys six largest census metropolitan areas (CMAs) fell 5% in the first half of 2022. The decrease observed for apartments (-9%) is the main cause of this drop. On an annualized basis, however, housing starts in the first half of 2022 remained high compared to the level of construction over the past five years. Additionally, there was a lot of contrast between the six urban centres studied. Indeed, in the first half of the year, housing starts were up in Edmonton, Calgary and Toronto, while declines were observed in Vancouver, Ottawa and Montral. The effects of rising interest rates and construction costs could have an even greater impact on housing starts in the coming months. New data on physical construction time for housing reveal important differences across centres and dwelling types, which has an impact on the affordability of the end product. Cities that build a lot of large, tall apartment structures will risk having housing construction sectors that are less responsive to a rapid need for new housing units. This is consistent with what is observed in Vancouver and Toronto. Low-rise apartment structures, such as those built in abundance in Montral, take much less time to build than taller apartment structures with a similar number of units. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/market-reports/housing-supply-report/housing-supply-report-2022-11-en.pdf?rev=74c50e35-d0a7-4131-b6a5-5829967ed5d1

Highlights Inflationary pressures have been stronger and more persistent than expected since we published our Housing Market Outlook in April 2022. This has led to significantly sharper than predicted interest rate hikes in Canada and other economies. Interest rates are expected to rise further given the need to reduce inflation. The Canadian economy will enter a modest recession by the end of 2022 and start recovering in the second half of 2023. The national house price is expected to decline by close to 15% by Q2 2023 from its historical peak in Q1 2022 as housing demand slows with rising interest rates and deteriorating economic and income conditions. Despite this house price decline, ownership affordability will not improve as the benefit from lower prices will be offset by rising interest rates. Rental affordability pressures will increase with rental demand as fewer renter households can access ownership. https://www.cmhc-schl.gc.ca/en/blog/2022/road-ahead-economy-housing-fall-2022-update

NEWS The never-ending movement of interest rates continue to not let us down. They are on the move again and expected to be moving even more come October 26th, 2022 when the Bank of Canada makes their next announcement. The banks, along with other mortgage lenders have been pushing Fixed Mortgage Rates up a bit further the last 24 hours. Naturally, we are just so excited about this news, we can hardly hold our enthusiasm. Canadians have recently been battling interest rate hikes by taking shorter term rates, thinking it will buy time for the rates to come down in a couple years. We are not really too sure they will when those mortgages are due for renewal, but in the meantime, the Big Banks have increased their short-term rates due to their popularity. Rate hikes for primarily 1 to 3 year terms have ranged from 10 to 55 basis-points (Bps). Not to be left out, many monoline lenders have jumped on-board and are doing the same with their short-term fixed rates. As a mortgage shopper, what should you do? Well, the answer is different for everyone. Compare these short-term rates against a 5-year fixed and where the payments would sit with your budget. Maybe you feel it is still worth to mitigate these fixed rates by going with a variable or maybe a hybrid that supplied both a fixed and variable. Term selection would be the first thing to review regarding your risk management around interest rates. Generally, the more qualified and liquid you are, the more you can gamble on shorter terms or variable exposure. As we are approaching the end of September, economists believe that the Bank of Canada will most likely deliver another rate uptick of 50 Bps to 75 Bps on October 26th, 2022 therefore, moving prime once again, to around 6.20%. With this type of increase in prime, where are your thoughts on Fixed vs Variable? Sources: Bank of Canada, Canadian Mortgage Trends General Reading

NEWS On September 7, 2022 the Bank of Canada did not falter on the predictions as it increased the Overnight Rate another 75 basis-points (Bps) bringing the central banks rate to 3.25%.. As the bank continues to fight inflation, there have been some signs that the rate hikes are having some effect as inflation has eased in July to 7.6% from the previous months 8.1%. The Canadian economy continues to operate in excess of demand and labour markets are remaining tight. The countrys GDP did grow 3.3% in the years second quarter but was still weaker than the central bank had projected. Several Canadian Major Banks have expressed the opinion that the rates will continue to increase so the Overnight Rate will be brought to 4.00% and maybe even higher. Bank of Canada Rate Announcement Media Release Despite the rate hikes forcing Canadian Mortgage Borrowers to qualify at rates in excess of 6.00% and 7.00%, the Office of the Superintendent of Financial Institutions (OSFI) squashed the prospect of loosening the Stress Test for conventional insured or uninsured mortgages. Peter Routledge, head of OFSI, explained Rising policy interest rates will lead to higher debt servicing costs which, combined with heightened inflation, will pressure Canadian households. Sources: Bank of Canada, Canadian Mortgage Trends

NEWS The Bank of Canada will be making their next Interest Rate Announcement the morning of September 7, 2022 and according to a recent report from CIBC Economics, they expect the countrys central bank to deliver a 75 basis-point hike that yields an Overnight Target Rate of 3.25% and then hold that rate for the remainder of the year. They also anticipate the 5-year bond yielding an average rate of 2.45% in 2022 and 2.3% in 2023 which will generate close to $19 billion of additional debt payments in 2022. CIBC Economics does not see any further rate hikes in 2023 but also does not see an easing of rates either through 2024. Other Canadian economists have agreed with the CIBC Economics vision but others have not and they predict further rates hikes could continue into next year with the Overnight Target Rate reaching 3.75%. Sources: CIBC Economics, Financial Post, Canadian Mortgage Trends

NEWS In case you missed it, on June 22, 2022 the Bank of Canada announced that the Deputy Governor, Timothy Lane, will retire on September 16, 2022. Deputy Governor Lane joined the central bank in August 2008 after spending 20 years with the International Monetary Fund (IMF). He was appointed Deputy Governor of the Bank of Canada in February 2009 and has overseen the analysis of the Canadian Economy, the Banks work on financial markets along with the Banks analysis of international economic developments. The Bank of Canada is now left with the process in finding a new Deputy Governor which we begin immediately. The Board of Directors will form a selection committee to conduct the search and selection process with the assistance of a global executive recruiting firm. The Bank of Canadas Board of Directors has since completed a full analysis of the Deputy Governors role and have decided to change this role by breaking it into two Deputy Governors. They will add an external, non-executive Deputy Governor position that is focused on contributing to the Banks monetary policy and financial stability mandates. This role will be considered part-time and is being advertised as a two-year contract position with the option to extend it for another year. Sources: Bank of Canada Media Relations

NEWS Has inflation hit its peak in Canada? According to Statistics Canada, it appears it has as they have reported growth of 7.6% for the month of July. Huray!!! That is the first month-over-month decline in the past twelve months as June had brought a 40 year record of 8.1%. Analysis of the CPI Index brings good news to Alberta as the June numbers had the province over the Canadian average of 8.1% to being at 7.4% for July, just below the countrys 7.5%. Further details and analysis can be found on the Stats Canada site:Click Here Not everything is rosy though, as the Bank of Canada is still expected to raise their Overnight Rate during their next announcement, September 7, 2022. The rate increase seems to be anticipated at 75 basis-points to 100 basis-points. Another 1% increase in the central banks rate would be even more significant historically and could be a final dagger to many Canadians in the house buying market, especially those First-Time Home Buyers. The consolation in this type of increase is that some economists believe that may be it for the year and the Bank of Canada will then allow the economy to adjust between then and the end of the year. Regardless of the details of the expected rate hike in September, it wont improve the central banks Housing Affordability Index (HAI) that was released last week. According to their first quarter numbers, housing affordability decayed to its worst level in over thirty years. Their report provides data that households must devote 42.8% of disposable income to housing related expenses, an increase from 39.7% in Q4 of 2021 and 34.7% a year earlier. The data used to calculate these numbers does not include property taxes which are also on the rise for most Canadians so housing carrying-costs are really higher than the numbers reported. Home Prices are expected to continue to fall into 2023 and rents continue to increase across the country except maybe in some specific pockets. Will locations in Alberta be in some of those pockets? Well, it is hard to say but provincial numbers in either category are not falling or rising as significantly as in most other places in Canada. Alberta is trending to match these rises and declines but with much lower percentages. Oil prices have been keeping the Alberta economy propped up but they are falling once again as WCS is priced at 67.63 and WTI is 86.78, so the Province of Alberta is now taking a bit hit on revenue compared to what they were generating just a few months ago. Pressure remains across the economy and it will force us to dip into our wallets a little deeper as we all try to find our way through the ups and downs. Sources: Statistics Canada, Storeys, Canadian Mortgage Trends, BNN Bloomberg

NEWS The Canadian Inflation Rate was showing as 8.1% recently which is the highest it has been since 1983. The Bank of Canada has been tackling this issue through several rate hikes, since March 2022. The rise of the central banks overnight rate has been the focus of battling inflation and slowing the economy. In the meantime, the Bond Market has started to slide down due to growing expectations of an economic downturn. What does all this have to do with Fixed and Variable Mortgage Rates we all ask? They have a significant impact on both types of rates and are the foundation of them going in different directions presently. The bond market influences fixed rate mortgages so as the Government of Canadas 5-Year Bond Yield falls, national mortgage lenders, especially mono-lines, are able to drop their high ratio and insurance interest rates. This has actually occurred the last week as fixed rates have begun to drop below 5%. A decline of roughly 10 basis-points and a bit more within some lender rate promos. On the other hand, variable rates are tied directly to Prime that is set by what the overnight rate from the central bank sits at. As the Bank of Canada increases the overnight rate, it increases the Prime Rate that variable rates are based on. In conjunction with the increase in the Prime Rate, now at 4.70%, lenders have also backed off their discount percentage from prime in setting their overall variable rate. Not long ago, a borrower could secure a variable mortgage rate of Prime minus one percent or maybe even a bit more. Now, many lenders are offering prime minus .90% or less that could go as low as .75% The result, a variable is now based on a higher prime rate and a lower discount from prime that yields an overall higher rate within an environment where rates are expected to increase again on September 7, 2022 when the Bank of Canada makes its next rate announcement. At present, it is clear that fixed and variable rates are going in opposite directions so a borrower should keep this in mind if seeking mortgage financing currently. Borrowers should know what their long term goals are regarding their mortgage and also assess their risk tolerance when it comes to rate influx, despite the falling of home prices. Remember, rates can change extremely quickly, so have a plan going in and discuss it further with your mortgage professional for additional updated information so you can make the best and most educational decision on whether to take a variable or a fixed rate. Sources: Canadian Mortgage Trends

NEWS The Bank of Canada has published its Interest Rate Announcement Schedule for 2023 that also includes the dates when their Monetary Policy Reports will be released. All Rate Announcements will take place at 10:00AM ET by the central banks governor. Here is the released schedule: Wednesday, January 25* Wednesday, March 8 Wednesday, April 12* Wednesday, June 7 Wednesday, July 12* Wednesday, September 6 Wednesday, October 25* Wednesday, December 6 * denotes when the Monetary Policy Report will be concurrently released with the rate announcement The Bank of Canada Business Outlook Survey and Canadian Survey of Consumer Expectations Reports for 2023 publish dates will be announced at a later date. Sources: Bank of Canada

NEWS According to a Statistics Canada release the morning of July 20, 2022, Canadas Inflation Rate has hit the mighty number of 8.1% year-over-year for the month of June. We now have the highest inflation rate our country has seen in almost 40 years. The Bank of Canada has been fighting inflation that is stampeding across Canada by increasing interest rates since this past March and made a historic announcement earlier this month by providing a 100 basis-point increase and pushed the countrys Prime Rate to 4.70%. These factors have greatly impacted the market, cost of living and even fixed and variable mortgage rates. Fixed Rates are effected more based on the Canadian Bond Market but Variable Rate Mortgages (VRM) are directly impacted by the Bank of Canadas rate increases as they are based on the Prime Rate. With rates rising regularly, it is important to understand that when your mortgage application has been approved by the Lender and by the Insurer when the financing is deemed to be a High-Ratio (When you are paying less than a 20% down payment), any changes to the mortgage will need to be re-approved by both parties. A rate increase alters the required Stress Test (Mortgage Qualifying Rate) so changes to the mortgage post approval could result in a decline and a loss of the original approval. To counter this possibility, it is now, more than ever, critical that the application is structurally sound prior to submitting the application to the Lender. To assist your Mortgage Professional with this, it is even more crucial that the supporting documentation required is collected up front to ensure the applications information is accurate and supported according to Lender and Insurer underwriting guidelines and that the numbers involved are correct prior to a Lender Submission. Working this way will better position the application so when the Conditional Approval is received, there will not be any further changes to the mortgage so a Lender and/or Insurer will not need to underwrite the file again and expose your original approval to be declined. Good advice is that once your mortgage is approved, you should not create any changes and ensure everything stays the same. A minor change could be deemed material and force the application to be reviewed again. Sources: Storey, Canadian Mortgage Trends, Statistics Canada

NEWS The Bank of Canada announced another rate hike this morning as expected but the hike was beyond what experts were calling. Rather than the expected 75 basis-point increase, Tiff Macklem, Bank of Canada Governor, increased their target rate by 100 basis-points that reset the rate now at 2.50%. Referring to their Monetary Policy Report, that was also released this morning, the central bank explained that inflation is higher than expected based on their Monetary Policy Report from back in April, 2022 and they now expect inflation to remain around 8% over the next several months. Global inflation is also higher with the war in Ukraine delivering the biggest impact. Many central banks across the globe are tightening their monetary policy to battle inflation and control growth, so Canada is striving for the same. Todays rate increase has been the highest single day increase since 1998 and the new overnight rate, now sitting at 2.5%, is the highest it has been since 2008. This now pushes the Bank Prime Rate to 4.7% and delivering further impact on mortgage rates, especially Variable Rate Mortgages (VRM) as well as Lines of Credit and other lending products being priced directly from prime. Bank of Canada Media Release Bank of Canada Monetary Policy Report July 2022 The next Bank of Canada Rate Announcement is scheduled for September 7, 2022 and the next Monetary Policy Report will be issued on October 26, 2022. Source: Bank of Canada

NEWS On July 13, 2022 the Governor, Tiff Macklem, of the Bank of Canada is expected to announce that the Overnight Rate is being bumped up another 75 basis-points. This will be the forth time in a row that the Bank of Canada has raised rates. The expected increase in the rate will naturally push the Prime Lending Rate up further from its current 3.70%. This will have a significant impact on lending products with floating rates based on prime such as Lines of Credit and Variable Mortgages. Experts are saying that if the Bank of Canada is forced to continue raising rates to fight inflation, as they are expected to, then it will slow the consumer price growth. The economy would be thrown into a reverse for two straight quarters to finish off 2022 CMHC Chief Economist Bob Dugan has explained. Their models show how the central banks inflation fighting would push home prices further down, slow home sales further and create what is known as a Technical Recession during 2023. Earlier in July, the Royal Bank of Canada was the first Canadian Major Bank to predict the nations economy will fall into a recession during 2023 amid a four-decade high inflation, historic labour shortages and continued aggressive interest rate hikes. RBC Economists have projected back to back quarter negative growth in 2023 that will yield a Technical Recession. RBC projection of this recession is illustrated by Canadas resource heavy economy. A resource heavy economy, such as Alberta, is benefiting from the recent energy prices boom but still remains vulnerable to global economic headwinds and higher borrowing costs that threaten to stall expansion in most advanced economies, such as Canada according to the RBC Economists. At present, the projected recession we will be so fortunate to experience in 2023 will be mild. Mild or not, a recession generally brings on struggles within the economy, people do lose jobs, companies sell less helping the countrys output to decline. Canadians are already scaling back on food, utilities and housing as the cost-of-living surges. According to a survey recently done by MNP, nearly half of those surveyed have cut back on non-essentials, including travelling, dining out and entertainment. No matter where Canadians turn, there is no reprieve as everything is more expensive. Not a favourable time for any of us. Source: BNN Bloomberg, CMHC, RBC Economics

NEWS According to the Calgary Real Estate Board (CREB), sales eased up in June relative to the past several months. With a total of 2,842 sales, the market fell by two percent year-over-year, though last year at this time the market served up a record high. CREBs analysis unveiled that the decline of detached and semi-detached homes has been the driving force behind the drop. Naturally, higher interest rates are starting to have a greater impact as well. The pullback in Calgarys market has not been met with the easing in home prices as the average home price reached $517,059 in June, that is up approximately five percent from June 2021. The Calgary Housing Market is becoming more of a Balanced Market according to Ann-Marie Lune, CREBs Chief Economist. Regional Markets such as Airdrie, Cochrane and Okotoks have not been following Calgary the same way. Airdrie has eased slightly but not enough to offset gains earlier in the year, Cochrane is actually slightly up from last year as inventory is growing as well. Okotoks remained quite stable, including the number of new listings. Source: Calgary Real Estate Board (CREB), BNN Bloomberg

NEWS The Bank of Canada released the results for their Canadian Survey of Consumer Expectations on July 4, 2022. They advised readers that the survey was conducted between April 28 and May 13, 2022 with some follow-up interviews during June, 2022. Result Highlights Consumers expectations for inflation have risen in addition to concerns about prices for food, gas and rent. Consumers short-term expectations are at record high levels and long-term expectations certainly increased, bringing those thoughts back to pre-pandemic levels. Canadians think supply chain issues, the pandemic and higher government spending are driving high inflation. There is more uncertainty among consumers about how inflation will evolve and they are more likely to have opposing views. The majority of polled consumers believe the Bank of Canada can achieve its inflation target but many think their process will be difficult. Canadians plan to cut spending because they are lacking the confidence due to high inflation and rising interest rates. Prior to purchasing, they are taking more time to seek more affordable options. There is a clear relation to inflation concerns by those consumers in lower income brackets versus those in higher ones. The higher the income bracket, the less concerned the respondents are regarding inflation and the rising costs. Consumers are anticipating that wage increase will be modest though employees in the private sector have higher expectations for wage growth. Flexible work arrangements with employers could attract more Canadians into the labour force as it is felt that working from home could offset expenses of higher inflation. During interviews with respondents, many workers close to retirement indicated that high inflation may force them to keep working so they can afford the increase in the cost of living. The Canadian Survey of Consumer Expectations is conducted by the Bank of Canada each quarter and gathers views on inflation, the labour market and household finances. The survey expresses the views of those who respond to this online survey and are not necessarily the views of the Bank of Canada. Canadian Survey of Consumer Expectations Report Details Source: Bank of Canada

NEWS The Office of the Superintendent of Financial Institutions (OSFI) announced changes to mortgage financing as they take action to reduce systemic banking system risk. On June 28, 2022, OSFI explained that they need to ensure that federally regulated financial institutions are well prepared to address persistent risk of outstanding consumer debt. The action they are taking is outlined in their Annual Risk Outlook 2022-2023. The announced changes are focused on Combined Loan Plans (CLP), Shared Equity Mortgages and Reverse Mortgages. Combined Loan Plans, also known as CLP are mortgage products that have a re-advanceable component to the mortgage. An example of this type of mortgage is an amortized mortgage (fixed or variable) that also has a Line of Credit component to it as well, such as a HELOC). These types of mortgages in the market allow credit to be re-advanced via the line of credit portion as the principal declines, even when the balance is over 65%. OSFI has announced that the change will force the principal amount of the payments to be applied to the reduction of the mortgage balance over 65% which will reduce the borrowing limit on the re-advanceable amount of the mortgage. Shared Equity Mortgages are programs that pair home buyers with third parties to help them come up with cash for a down payment, in exchange for an equity stake in the property being purchased. The Canadian Government came out with such a program back in 2019 known as the First-Time Home Buyer Incentive Program and shortly after, several non-profit and community groups have rolled out their versions of the program. OSFIs announcement was simply clarifying that these programs must be legitimate equity stakes and not simply another loan. They must be on equal footing with the buyers equity stake. Reverse Mortgages are programs that enable qualifying home owners to access existing equity in their homes without having to sell and not necessarily having to pay regular mortgage payments though interest is charged so the overall equity can disappear over time. OSFIs announcement pins a new cap on the amount the home owner can take out to 65% of the property value at the date or origin of the mortgage. Quote OSFI is continuously monitoring the economic environment for a range of vulnerabilities that could pose a risk to the health of Canadas financial system. Today, we have asked federally regulated financial institutions to make their innovative mortgage products safer and more sustainable over the long term. We are confident that our actions today will contribute to the continued resilience of Canadas residential mortgage lending industry, and in turn of our financial system. - Peter Routledge, Superintendent These changes are scheduled to take effect in late 2023 as the lenders fiscal year comes to an end. Source: OSFI Media Release, Canadian Mortgage Trends, BNN Bloomberg CBC News

NEWS The majority of renters in Canada doubt they will have the ability to purchase a home in 2022 because of the continued increase in interest rates and high inflation. Although the Canadian housing market is cooling for the most part, across the country, the Bank of Canadas multiple rate hikes are becoming the deal breaker when thinking of buying. The increase in rates are creating higher mortgage payments and post pandemic property taxes are not going down either. Canadians will continue to see homeownership as increasingly challenging, said Paul Orlander, Executive Vice President of Individual Customers at Canada Life. According to a recent survey by Canada Life, about 73% of those respondents who are renters said its a bad time to buy a house while 17% said they would never buy one. The main reasons given for staying away from buying were a lack of money, fear and uncertainty. With inflation reaching 7.7% (May 2022) and an expected rate hike of 75 basis-points by the Bank of Canada on July 13, 2022, their rationale is not surprising. Mr. Orlander has stated that homeownership and the cost of maintaining a house could create an issue for Canadian trying to save for retirement and believes renting is a practical option right now if you wish to maintain flexibility or need to protect cash flow for savings and retirement. Source: The Motley Fool

PROGRAM The Purchase Plus Improvements Program provides mortgage borrowers the opportunity to do improvements in conjunction with the purchase of the home. The purchase and the improvements are combined into one mortgage and a single advance. Transaction Eligibility Purchase, Business For Self (Fully Qualified Alta A), Family Plan, Second Homes New to Canada, Rental Property Program (2 4 units), Owner-Occupied Rentals Flexible Down Payment Program Transaction Information Purchase a home with as little as 5% down payment, 10% for Business For Self Alt A Program Existing requirements related to income, down payment and credit worthiness apply Gifted Down Payment from immediate family can be used Government Grant may be considered if pre-approved by insurer Credit Scores below 680 have lower affordability ratio requirements Lending Value is based on the lesser of the improved property value of the sum of the purchase price plus direct improvement costs Improvements cannot exceed 20% of the initial property value or $40,000.00 Required Down Payment is the percentage of the total purchase price plus cost of the improvements Detailed Quotes for the improvements are required up front, prior to the mortgage application being submitted to a lender Improvements must be completed within 120 days of the purchase closing date, though some lenders may cap this at 90 days An Inspection Report is required to confirm the improvements have been 100% completed prior to funds for the improvements being released by the lender An Inspection Report may be waived in particular circumstances. An example would be improvements under $15,000 and then receipts would be required. Lenders differ on this aspect so ensure these requirements are understood upon receipt of the mortgage commitment. The proposed improvements must add value to the home to qualify Improvement Funds are Single Advance Only Further requirements and/or qualifications may be applicable. Contact Chris Stewart to further discuss this mortgage program regarding your specific circumstances.

NEWS The Mortgage Qualifying Rate, also known as the Benchmark Rate or Stress Test Rate, is currently causing havoc with the power of mortgage borrowing. The major issue is that the current Qualifying Rate sits at 5.25% where it has been for quite a period of time. The issue is that most 5 Year Fixed Rates are now over 5% so borrowers are now forced to qualify at the contract rate plus 2%. That means if your mortgage lender is charging you a 5-Tear Fixed Rate of 5.26%, you must qualify for the mortgage with a rate of 7.26%. This significantly cuts into what a borrower will be able to afford. To counter-act this calculation, the variable rate is the way to go as currently those rates are coming under the Benchmark Rate of 5.25%. So, if you secure a variable at Prime Minus .75%, your contract rate today would be 2.95%, so the Benchmark of 5.25% could be used for qualifying. That, is a major change than the 7.26% we discussed above. The con to the variable rate is that it is based on Prime so it is subject to change as the Bank of Canada continues to increase their Overnight Rate to battle inflation, so your mortgage rate will rise with the bumps in prime. This is the example of the craziness in Canadian Mortgage Financing at present. Will this change? There is a good bet it will, and relatively soon. On July 13, 2022 the Bank of Canada will make their next Overnight Rate announcement where all seem confident, another rate bump will be supplied. The hope is that this fullish Benchmark Rate rationale will be adjusted to make more sense and put a stop to the lower borrowing power for borrowers have with a fixed rate mortgage. As of today, borrowers will qualify for a larger mortgage if a variable rate is taken or a shorter fixed term. They may also qualify for a larger mortgage through other types of lenders than just their bank. Todays mortgage world in Canada is more complex than ever and the best piece of advise one could be given is to connect with a good Mortgage Professional who is well educated in the field and can work with you to achieve the best mortgage channel to maximize the complexities of mortgage financing that exists. Its not about the lowest rate any longer, its about achieving the best available mortgage, with the lowest possible rate based on your circumstances. Source: Canadian Mortgage Trends

RESOURCE The following checklist outlines the potential documentation required to properly support each applicants Mortgage Application. Please ensure you provide all applicable documentation outlined below based on each applicants current situation, with the completed application. Standard Application Documentation * CML Client Consent Agreement [Included with the CML Application Package] *Government Photo ID [Drivers License is the most common] * Status Card / Residency Permit [Required for applicants who are not a Canadian Citizen] Income Documentation Each applicant will need to provide all applicable income documentation relevant to their employment and/or income circumstances. This is a critical condition for any mortgage so please provide all applicable income documentation upfront prior to us submitting the application to a lender. Salaried, Commissioned Hourly Income * Employment Letter Must be on company letterhead with an authorized signature and include your name, position, tenure, employment status (FT or PT)and income. If you are paid hourly, please have your employeroutline the guaranteed hours you work per week. * Pay Stub Please provide your last two most recent pay stubs showing the payperiod information as well as the year to date income information. * T4 or T4A Statements Please provide your last two years statements if you are salaried and receive any type of additional income such as bonuses, youare paid hourly or receive commissions of any kind. Self-Employed Income * T1 Generals ALL Schedules Notice of Assessments Please provide the last two years of your filed T1 Generals ALL Schedules as well as their corresponding Notice of Assessments (NOA) * Company Financials If your company is incorporated, please provide the last two years of accountant prepared company financials, It must include a Table of Contents and the Notice to Reader. * Articles of Incorporation If the company is incorporated, please provide the companys Articles of Incorporation outlining the ownership of the company. Other Income Sources * Pension or Investment Income If you are receiving any pension or investment income such as CPP, OAS, RIF, Disability or any other type of income not previously mentioned, please provide the applicable statements confirming such income. Applicable statements would include T3, T5, Pension Stubs, etc. If any of this income is received through a direct deposit, please provide your most recent bank statement confirming the deposit. Ensure the bank statement provides the institutions name along with the account owners name and address * Canada Child Benefit If you receive Canada Child Benefits (CCB) from the Government of Canada and wish to use these benefits as qualifying income within your mortgage application, please provide your most recent CCB Statement and the Birth Certificates of all children falling under this benefit. CCB is not considered by all lenders and those that do accept CCB generally have certain parameters in accepting this as income. * Rental Income If you currently own one or more rental properties, please provide the following for each rental property: Lease Agreements; Mortgage Statement; Property Tax Bill; Condo Fee Confirmation [ifapplicable];Last Two Years T1 General Tax Returns, including ALL Schedules that consists of the Statement of Real Estate Rentals NOTE: If you have an income source that is not noted above, such as Alimony/Child Support, EI Benefit for Maternity Leave, please contact your CML Mortgage Professional to further discuss and clarify documentation required. Down Payment Documentation The down payment documentation is another critical condition for lenders due to Canadian Anti-Money Laundering Legislation. Please provide all applicable documentation to support the source(s) of your down payment. * Personal Cash Savings Please provide the last 90 Days of Savings History. The Bank Statements demonstrating savings accumulation must be with a Canadian Financial Institution. The Bank Statements and/or Transaction History provided must also include the Account Owners Name, Account Number and Institution Name. * Personal Investments Please provide the last 90 Day Investment History. The Investment Statements demonstrating investment accumulation must be with a Canadian Financial Institution. Examples of Personal Investments are RRSP, Mutual Funds, Stocks, TFSA. The Bank Statements and/or Transaction History provided must include the Account Owners Name, Account Number and Institution Name. * Gifted Down Payment If any aspect of your down payment is being gifted, please advise who is gifting the down payment and how much. Further documentation requirements will be provided to you once the mortgage has been Conditionally Approved. Gifted down payments are only acceptable from immediate family. Immediate Family is considered as being Parents, Siblings or Grand Parents. * Home Buyers Plan (HBP) If you are a First-Time Home Buyer (FTHB), you are allowed to withdraw up to $35,000 in a calendar year from your Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home. For further information regarding the HBP Program, Click Here * FTHB Incentive Plan If you are a First-Time Home Buyer (FTHB), you may be interested in exploring the First-Time Home Buyer Incentive Program (FTHBIC). If you wish to use this program please advise us up front. For further information regarding this Government Program, Click Here. Subject Property Documentation If you already have an Accepted Purchase Agreement for the property you are buying whether an existing home or a new build, please provide the applicable documentation as outlined below. If you do not have an Accepted Purchase Agreement, the documents below will be required once you do. * MLS Listing Please provide the MLS Listing (Realtors Version) for the property you are purchasing. The MLS Listing also includes a picture of the home as well as all details of the home and property. If the property you are purchasing is being so via a Private Sale or a Rent-to-Own, please advise as there is a manual Feature Sheet that will be required and there will be an appraisal required. Further details will be provided. * Purchase Agreement Please provide the Accepted and fully Executed Purchase Agreement, including ALL applicable schedules and amendments. This is the contract that legally demonstrates that your offer to purchase the property has been accepted by the seller and details the amount of the purchase, the condition date, the closing date as well as other relevant information. A Rent-to-Own purchase would require a copy of the original legal agreement that was completed when the Rent-to-Own first began. * Builder Documents If you are purchasing a new home through a Home Builder, please provide the following: Floor Plans Builder Representative Contact Information. Purchase Agreement ALL Schedules Specs Drawings If you are doing a Self-Build and/or need a Construction Mortgage, please advise us immediately so the proper Construction Mortgage Schedules can be provided to you so they may be completed and returned as quickly as possible. Every Home Purchase is independently different, so the documents mentioned above are the most common and other documentation may be required upfront or requested during the process. Your CML Mortgage Professional will advise you further if this is the case and outline what additional documentation is needed. Thank you for the opportunity to work together in order to secure your mortgage financing requirements.

RESOURCE Here is a list of potential Mortgage Conditions you may have to fulfill quickly along with outlining many particulars and details regarding each condition that can assist you with your document collection. Important Please provide ALL required mortgage documents (Conditions) as soon as possible. The Lender can take up to 5 business days and sometimes even more to accept, review and approve supporting documentation depending on their current volumes. The Lender may also add additional conditions if the documentation provided for review doesnt meet their expectations. If Purchasing a new property, it is critical that documentation is supplied to the Lender quickly so they may review and approve prior to your Condition of Finance [COF] Day as outlined on your Purchase Agreement. We MUST work together to ensure ALL the Financing Conditions are submitted to the Lender quickly. If Refinancing or Switching/Transferring, it is important to have ALL the Conditions approved by the Lender so that the mortgage can be Instructed to the Lawyer / Legal Servicing Company as soon as possible to ensure the file can be completed to meet the scheduled Closing Date. Please provide the Outstanding Mortgage Conditions directly to Your CML Mortgage Professional. Income Documentation Income Documentation is a critical condition for mortgage financing as it can make or break a mortgage. To minimize this from happening, your CML Mortgage Professional collects ALL Income Documentation upfront that they feel is required by the Lender prior to your application submission to the Lender. This generally minimizes these critical documents from having to be collected after a Conditional Approval is in place. Having these documents upfront, better ensures that the best and accepted income can be used for qualifying purposes and that the income is fully supported via accepted documentation. This documentation is still subject to the Lenders review and approval so additional documentation may be required. Down Payment Documentation This is another critical Condition as Lenders must confirm all aspects of the funds being used for the down payment under the Anti-Money Laundering Act [AML]. If the down payment is from saved funds such as savings or investments, the last 90 days of the account transactions must be disclosed to demonstrate the accumulation of funds. If there are any large deposits during that time, they must be explained and proven. You must demonstrate account ownership. If pulling them from web banking, please send a copy of the main profile. If a Gift is being issued for the down payment, the applicable Lender Gift Letter must be completed and signed by all applicable parties and a bank statement or transaction document from the bank must be issued to confirm the deposit into your bank account. If ALL or PART of the down payment is being sourced from selling a property, you must provide the MLS Listing (Realtor Version), Completed Signed Purchase Agreement as well as the Completed Signed Conditions Waiver. This document confirms that ALL Purchase Agreement Conditions have been waived by the buyers and that the sale is considered FIRM. Please be advised that additional documentation may be required by the Lender depending on the source of the down payment and documents provided. Gift Letter If you have indicated that all or part of your down payment is being gifted by an immediate family member (Parents, Grandparents or Siblings), the Lenders Gift Letter has been included in your Conditional Mortgage Approval Package. Please Read, Complete, Date and have it signed by ALL applicable parties. Supporting Bank Account Documentation must also be supplied that confirms the gift has been deposited to the mortgage applicants bank account. The documentation being provided to confirm the Gifts deposit must also confirm that account is owned by the applicable applicant on the mortgage. Occasionally, the Lender may request account history from the individual(s) making the gift. Appraisal Report If an Appraisal Report is required by the Lender, as outlined within the Mortgage Commitment, CML Canadian Mortgage Lender or the Lender will coordinate and order the appraisal to ensure all Lender Appraisal Requirements are fulfilled correctly. As the mortgage clients, you are responsible to pay all the associated costs for the appraisal. The mortgage may need to be revised based on the appraised value of the property and all appraisals must be reviewed and approved by the lender. Further details and costs of the appraisal will be communicated to you as the mortgage condition process is coordinated. Note - Appraisal Reports are the property of the Appraiser and the Lender so a copy of the report may not be available for your viewing. Market / Economic Rent Report If you own a Rental Property or are converting your current Primary Residence to a Rental Property and there is not a Lender Acceptable Lease Agreement available for the rental property, a Market / Economic Rent Report may be required. This report is to be done by a Lender Accepted Appraiser. The report will outline and support a market rent amount for the subject property that will be used in the final affordability ratios for final mortgage qualifying. The Lender or your CML Mortgage Professional will order and coordinate the Market Rent Report and you will be responsible for all associated costs. Further details and costs will be communicated to you once the report has been ordered. Note - Market Rent Reports are the property of the Appraiser and the Lender and a copy of the report may not be available for your viewing. Final Inspection Report If your mortgage is a Purchase Plus Improvements Product, a Final Inspection will generally be required. Once you have closed on your new property and the previously quoted Improvements are completed, a Final Inspection Report will be required. This report confirms the work described in the original quotes has been done and fully completed. This report is done by a Lender Approved Appraiser and upon confirmation by the appraiser to the Lender that the improvements are 100% complete, the Lender will advise your Lawyer that they are clear to release the holdback of funds to you. The Lender or CML Mortgage Professional will order and coordinate the report once you have confirmed the improvements have been completed. All associated costs for this report are your responsibility and further details and costs will be communicated to you once the order has been made. Note - Final Inspection Reports are the property of the Appraiser and the Lender and that a copy of the report may not be available for your viewing. Lawyer If you are purchasing a home, you will require Legal Representation to complete your transaction. Your lawyer will represent you, your best interests along with preparing all the legal mortgage documentation, searches, title insurance and registration as per the Lenders Mortgage Instructions. Your lawyer will then meet with you to review all the documentation and have you sign them and answer any further legal questions you may have at the time. The lawyer and/or their paralegal will advise you on what to bring to their office for your appointment. The common items required are: Remaining Down Payment Legal Fees Home Insurance Policy Government Photo ID VOID Cheque for your mortgage payments. If you do not have a lawyer that does real estate and/or do not know one, your CML Mortgage Professional will be happy to provide a few lawyers you can contact. Legal Costs do vary from lawyer to lawyer so your CML Mortgage Professional is unable to provide any pricing for their services. Note - If you are building a home, most Builders will pay your legal fees if you use their appointed Lawyer. This may sound like a good deal as it wont cost you anything but you should still consider hiring your own Lawyer as they will look out for your best interests not someone elses. Legal Services Company All mortgage financing transactions require legal services but not necessarily a lawyer. If your mortgage is a Refinance or a Switch / Transfer, a Title Insurance Company such as First Canadian Title (FCT), may be available to use. A company like FCT will handle all the legal service requirements a lawyer can provide other than advice. The advantage of using such a company for a Refinance is that they generally offer better pricing than Lawyers as well as home signing via a Remote Signor. If you are having a Switch/Transfer completed, a company like FCT is used by the Lender for efficiency and cost. Note - Legal Servicing Companies may not be available to use if the refinanced mortgage is being funded by a Non-Prime or Private Lender. These Lenders generally require a Lawyer. Title Insurance [Lender] Your Mortgage Lender will request your Lawyer or Legal Service Company to secure Title Insurance for your property. The Title Insurance requirement is generally noted within the mortgage commitment under Solicitor Conditions. This type of Title Insurance helps reduce risk to the lender by protecting them against losses associated with the priority, validity and unenforceability of a residential mortgage. It also helps guard against claims that challenge their interest in the title. This Title Insurance Policy lasts as long as this mortgage remains registered against title. There is a one-time premium charged and you will be charged for the premium in conjunction with your final legal bill. Your Lawyer or Legal Service Provider is who coordinates and secures the Title Insurance Coverage. Please refer to your Lawyer or Legal Services Company for further information and/or pricing. For additional information, please refer to the link below: https://fct.ca/lending-professionals/residential-title-insurance/ Title Insurance [Homeowners] Your Mortgage Lender has requested Title Insurance on your subject property so they are protected but this coverage does not protect you as the homeowner. You should consider getting Property Owner Title Insurance so we recommend you discuss this further with your Lawyer or Legal Services Company and determine the premium cost for the coverage. Property Owner Title Insurance has a one-time premium and protects the homeowner(s) against losses associated with Title Fraud as well as Survey and Title Issues/Defects. For further information, please refer to the following link: https://fct.ca/property-owners/ Property Taxes Property Taxes are municipality taxes that you must pay on your property annually. Property Taxes are calculated by the municipal government through a formula that factors in the propertys Assessed Value, a Council Approved Tax Rate (Mill Rate) and in Alberta, it also generally includes a School Tax Rate. Other Taxation Fees may also be included so check with the municipality that your property is located for a more detailed list of taxes included. When purchasing a new home, your Lawyer will make the Property Tax Adjustments based on how they stand between the municipality and the seller. Your Lawyer will detail the taxes and explain these adjustments. Your CML Mortgage Professional must advise the Lender regarding the method in which the Property Taxes will be paid by you moving forward after closing. Mortgage Lenders quite often have their own policies surrounding Property Tax Payment Methods so be sure you advise your CML Mortgage Professional how you wish to pay them so the method can be approved by the Lender. Most Mortgage Lenders DO NOT allow borrowers to pay property taxes once annually when they are actually due. You generally must either have your Property Taxes added to your mortgage payment so the Lender will manage your Tax Roll with the municipality or you may pay them monthly directly to the municipality. This program is known as the Tax Installment Payment Plan [TIPP]. In order to apply for TIPP, you must contact the municipality and complete their application and provide a VOID Cheque for the account you wish to have them debit. Note - Not ALL Municipalities offer TIPP so check with the municipality to see if they do. Municipalities that offer TIPP generally supply an online sign-up from their website. Homeowner Association [HOA] Fees It is becoming more common that properties are within a community that have Titled Homeowner Association Fees. Known as HOA Fees, these are an amount of money that is generally due annually by the community homeowners and payable to the Community Association. You may need to pay them directly to the Community Association or they may be collected via a Property Management Company hired by the Community Association. These fees vary across communities and are generally based on the services the Community Association provides to their homeowners. When purchasing a home on the MLS Listing, the HOA Fees are disclosed. You may also want to inquire with your Realtor as well. It is recommended you look into where, when and how these fees are collected. Note HOA Fees differ from Condo / Strata Fees as you may have both to pay by owning the subject property. Home Insurance You will be required to secure Home Insurance (Personal Liability Fire) for the property if you are purchasing a new home and if you are refinancing or switching an existing mortgage, you must advise your current Home Insurance Company of the new mortgage details. Your Home Insurance provider will require the mortgage company name, address and other contact information so they can properly list them as the Loss Payee under your policy. If you do not have Home Insurance or are looking to potentially change companies and not sure who to contact, please let your CML Mortgage Professional know as they can provide some Insurance Agents to contact for quotes. Note - Your Home Insurance Policy is required to be provided to your Lawyer or Legal Servicing Company when signing the final legal documents. Conditions Removal / Waiver When Purchasing a property and the Lender has confirmed they have all the required documents (conditions) and they have all been approved, you can contact your Realtor and discuss removing the Financing Condition in your Purchase Agreement. Important - Upon you removing the Financing Conditions, you will be legally committed to purchasing the home. Remember, if you seek and/or secure additional credit between then and your closing date, you may put your mortgage financing in peril. DO NOT or ATTEMPT TO borrow funds until your mortgage has fully been funded and the transaction finalized. Once ALL Mortgage Conditions have been supplied to, reviewed by and approved by the Lender, they will move forward with Instructing your mortgage to the Lawyer or Legal Servicing Company you have chosen.

RESOURCE Have you received your Conditional Mortgage Approval Package from your CML Mortgage Professional? If so, Congratulations! Here are some details and instructions regarding the execution of the package to ensure it is accepted by you. Important Please provide ALL required mortgage documents (Conditions) as soon as possible. The Lender can take up to 5 business days and sometimes even more to accept, review and approve supporting documentation depending on their current volumes. The Lender may also add additional conditions if the documentation provided for review doesnt meet their expectations. If Purchasing a new property, it is critical that documentation is supplied to the Lender quickly so they may review and approve prior to your Condition of Finance [COF] Day as outlined on your Purchase Agreement. We MUST work together to ensure ALL the Financing Conditions are submitted to the Lender quickly. If Refinancing or Switching/Transferring, it is important to have ALL the Conditions approved by the Lender so that the mortgage can be Instructed to the Lawyer / Legal Servicing Company as soon as possible to ensure the file can be completed to meet the scheduled Closing Date. Please provide the Outstanding Mortgage Conditions directly to Your CML Mortgage Professional. Mortgage Commitment Package The Mortgage Commitment Package issued by the Lender provides the mortgage financing details, administration costs, pre-payment privileges as well as explanations regarding the required conditions that must be provided and approved by the Lender prior to them removing the Conditional aspect to your approval. The commitment must be fully completed, all pages initialed and signed where applicable by ALL applicants prior to it being returned. FTA Statement of Disclosure This provincial Fair Trade Act [FTA] Disclosure is a required document when there are Lender and/or Brokerage Fees being charged. This generally occurs when the Conditionally Approved Mortgage is being done by a Non-Prime and/or Private Mortgage Lender. This Disclosure outlines the particulars of the mortgage (i.e.: Principal, Contract Rate, Annual Percentage Rate [ARP], Payment, Cost of Borrowing as well as the additional fees involved and whether the fees are being deducted from the mortgage proceeds or paid outside the mortgage. Please Read the FTA Statement of Disclosure, initial each page and Sign where applicable. Letter of Direction The Letter of Direction is a document produced when CML Canadian Mortgage Lender is charging a Broker Fee for the mortgage financing. A Broker Fee is charged when the mortgage is being financed within the Non-Prime, Private or Non Broker Mortgage Channels. These channels require additional work to be done and/or they do not necessarily pay the Brokerage for the mortgage. This is how the Brokerage and your Mortgage Professional are paid for their services. This document will be sent to the your Lawyer or Legal Services Company so the listed Broker Fees will be deducted from the mortgage proceeds and directed to CML Canadian Mortgage Lender. Please Read and Sign where applicable. MPP Creditor Insurance CML Canadian Mortgage Lender Mortgage Professionals offer all their clients the opportunity to access Life, Disability and Critical Illness Insurance through their partnership with Mortgage Protection Plan (MPP). MPP Creditor Insurance is underwritten by Manulife Financial, is optional for all clients unless deemed to be ineligible by age. The MPP Insurance Application and Product Information will be provided to you via your Conditional Mortgage Approval Package or Electronically under separate cover. MPP Insurance is mobile so it does not matter who the Lender is or will be. This coverage should not be confused with any coverages offered by the Lender as their coverages are not mobile and will cease if your mortgage is ever switched to a different Lender. You may choose any combination of coverage available across ALL applicants. Please complete the MPP Application via the method it is provided. A detailed MPP Product Information Brochure is provided with every application. If you wish to waive coverage, please initial the manual application at the top as Waived and then sign at the bottom. If you are waiving coverage electronically, please follow the instructions through the link you are provided. Pre-Authorized Debit [PAD] Form The Lenders Pre-Authorized Debit [PAD] Authorization may have been included in your Conditional Mortgage Approval Package if the Lender has requested this information. Some Lenders include the request within their Mortgage Commitment or they do not request it at all. If you have not received this document, please refer to the Mortgage Commitment. If there is not a location to list your Bank Account you wish the Lender to debit for your mortgage payments, then they will have your Lawyer or Legal Services Company collect it. If your CML Mortgage Professional is responsible to collect this information, you will see a listed Condition for a VOID Cheque. If the PAD Authorization is required, please Complete this authorization, Date and Sign it. Clients Broker Authorization Form In many cases, you may be supplied with this form by your CML Mortgage Professional. This Document Authorization has been prepared for ALL mortgage applicants to sign and date. This document grants permission for the Lender to supply your mortgage information to the listed CML Mortgage Professional after the mortgage has been closed. This can be very helpful in the future when you are looking for mortgage information and/or various details as it enables you to contact your CML Mortgage Professional to inquire on what information you are seeking and they will contact the Lender to obtain this information for you. In some cases, your CML Mortgage Professional has back channels with the Lender so information can be obtained quickly. This document is optional but is quite beneficial if signed and returned. The authorization does not grant your CML Mortgage Professional the ability to change anything such as payment frequency, bank account debit set up, etc. Your authorization directly with the Lender would be required for any changes. Property Tax Payment Instructions It is important to discuss and clarify your intended method of paying the Property Taxes for the subject property. The Lender doing your mortgage may dictate the method in which you must pay your property taxes or your preferred method may not be available with the Lender, such as making an annual payment only. Lender Policies can vary and if your requested method is not accepted by the Lender, your CML Mortgage Professional will advise so alternative choices can be made. Note The best and most efficient method to pay property taxes is to sign up for the municipalitys Tax Installment Payment Plan [TIPP]. Visit your municipalitys website for further details and how to sign up.

NEWS The average home prices across Canada fell again in May and home sales were down in the majority of all Canadian markets. The average Canadian home price dropped to $711,316 in May according to data released by the Canadian Real Estate Association [CREA]. These results have produced a decrease of 4.6% month-over-month and 13% from this past February, though prices still remain about 3.4% above the average of this time last year. The biggest hits to pricing are in the Greater Toronto Area (-6.8%), Greater Vancouver (-8.3%) and BC has an overall decrease of 13.5% month-over-month. Alberta continues to buck the trend with a province wide increase of 2.4% and its two major cities showing vastly different analytics with Calgary up 4.0% and Edmonton 10.3% Despite the decline in the average national price, TD Banks Rishi Sondhi says its important to remember that theres a regional story playing out underneath the national headline. For example, Sondhi notes sales and prices are down disproportionately in Ontario and B.C. markets, which felt the brunt of affordability challenges during the pandemic. Meanwhile, rent prices continue to climb as they show another average 3.7% increase. The average rents are now almost 13% above those recorded last April during the pandemic. According to data from Rentals.ca, the average rent is $1,888 per month which is up 10.5% tear-over-year. Rental demand is up as more and more would-be buyers stray from buying a home now due to climbing interest rates and expensive properties. Source: Canadian Mortgage Trends, CREA Rentals.ca

RESOURCE Mortgage Financing and its process can be complex at times and generally are time consuming and full of acronyms and terms that are not always understood. Here is a list of some with an explanation to assist in better understanding mortgage terminology. Adjustable Rate Mortgage (ARM) This type of mortgage has a floating interest rate that may increase or decrease during the mortgage term. This floating rate is generally linked directly to the Canadian Prime Rate. The rate used may be set up as Prime Minus a Percentage or Prime Plus a Percentage. The mortgage payment may periodically be adjusted due to the moving prime rate. Appraisal This is the process where a properly licensed professional appraiser conducts a thorough inspection of a property to assess its true market value. The appraiser will compile all of their findings into a professionally structured report. The Appraisal Report will list the propertys As is value and at times, will also list its Improved value. Amortization The timeframe used to calculate the applicable regular payments for a mortgage. Each time a payment is made, a portion of the payment is applied to interest and the remaining portion to the principal. The most common amortization used in Canada when purchasing a home is 25 years, though there are situations where 30 years could be used. Bridge Financing This type of financing is also known as Bridge Loan or Interim Financing and is a type of second mortgage that is immediately paid out following the closing of the clients home being sold. Bridge Financing is generally used when a buyer id closing on their new home prior to the home they have sold is scheduled to close and funds from the sale are needed for the home being purchased. Mortgage Lenders have maximum timeframes for Bridge Financing along with capped amounts along with applicable interest rates and administrative costs. Closed Mortgage A type of mortgage that, for a specified period of time, locks the borrower into paying the required mortgage payments and not have the ability to alter the terms of the mortgage unless a penalty is paid as outlined in the signed mortgage documents. Penalties can be significant, though most closed mortgages do grant specific pre-payment privileges. Closing Costs These are the various costs associated with completing the mortgage transaction. Some examples of closing costs are: Legal Services, Title Insurance, Home Insurance, Property Tax Adjustments and Tax (GST, PST or HST). Some closing costs, such as charged taxes, are provincially managed so some provinces charge tax on mortgage default insurance premiums. The Mortgage Lender generally requires the borrower to confirm they have sufficient available monies to pay the closing costs. In Alberta, the normal default closing cost amount used by the Lender is 1.5% of the purchase price. Collateral Mortgage A type of mortgage offered by a Mortgage Lender that has a re-advanceable portion to the mortgage. It means that the Mortgage Lender can advance additional funds against the property when its value has increased without having to refinance the mortgage. This can be a benefit for a borrower but it can hinder the movement of the mortgage in the future to another lender with a better rate and it can decrease the available equity for a second mortgage at a later date. Conventional Mortgage A type of mortgage that has at least 20% equity of the propertys purchase price or appraised value, whichever is greater. In Canada, a conventional mortgage does not require mortgage default insurance. Equity Take-Out Mortgage (ETO) A mortgage that pulls equity from a property to generate monies that could be used for various reasons. Fixed Mortgage A mortgage type where the mortgages interest rate is fixed for the full term of the mortgage. The rate will not change, despite what rates are doing in the market place. Gross Debt Servicing (GDS) This is an affordability ratio used by Mortgage Lenders that is required to cover mortgage principal interest payments (PI), property tax payments (T), condo fee payments (CF), and property heating payments (H) against the total accepted borrowers gross income (GI). There are capped ratios based on the borrowers credit worthiness (FICO Score). The actual equation used for this calculation is: GDS = (PI + T + CF + H) / GI High - Ratio Mortgage A type of mortgage that has less than 20% equity of the propertys purchase price or appraised value, whichever is greater. In Canada, a high - ratio mortgage MUST have mortgage default insurance. Loan-To-Value (LTV) A ratio used by Mortgage Lenders to assess risk and determine if a mortgage is a Conventional or High Ratio Mortgage. A LTV is the ratio of monies being borrowed vs. the value of the property. If the LTV is above 80%, the mortgage is deemed a High Ratio and therefore, must have default mortgage insurance. LTV (%) = Mortgage Amount ($) / Accepted Property Value ($) x 100 Mortgage Default Insurance Insurance that is required for all High-Ratio Mortgages in Canada. It protects the Mortgage Lender in the event that the borrower defaults on the mortgage. The Insurance Premium charged is a percentage based on the total amount being borrowed against the property value being used. The insurance premium charged can be paid upfront as a closing cost by the borrower or it can be added to the mortgage financing and would become part of the mortgage principal being charged interest. There are currently three companies that underwrite Mortgage Default Insurance in Canada. The Canadian Mortgage Housing Corporation (CMHC), Sagen and Canada Guaranty. Open Mortgage A type of mortgage that enables the borrower to pay out the mortgage at any time without any penalties being charged. Open Mortgages generally have higher interest rates than Closed Mortgages. Overnight Rate / Policy Interest Rate The starting point set by the countrys central bank, known as the Bank of Canada, for setting many of the interest rates in the economy (lending investing) that matter to Canadians. This rate is also used as a tool to control inflation. The overnight rate is announced by the central banks Governor on predetermined days throughout the year. Please refer to the Bank of Canada for their Annual Overnight Rate Announcement Dates. Portable Mortgage A mortgage feature that permits the borrower to transfer their mortgage balance to a new property, keeping the same lender and not encountering any penalties. Prime Rate This is the base interest rate used by the majority of Canadian Financial Institutions to price all their lending products, such as mortgages. Each financial institution sets their own prime rate but they generally all follow a spread based on the Bank of Canadas Overnight Rate (aka Policy Interest Rate) Re-Advanceable Mortgage This is a type of mortgage or a feature within a mortgage that enables the borrower to pull additional monies from the mortgage without doing a refinance and incurring additional penalties and costs. The best example of a re-advanceable mortgage is a Home-Equity Line of Credit (HELOC). Refinance A mortgage that is created to payout an existing mortgage and generates additional mortgage proceeds from the propertys available equity for numerous reasons. In Canada, a refinanced mortgage is capped at 80% of the propertys appraised value. Refinancing an existing mortgage will also reset all the mortgage particulars such as rate, term, amortization, etc and may also generate payout penalties from the mortgage being refinanced. Mortgage Lenders could also be changed at this time. Renewal This is when the current mortgage has come to the end of its term and must be extended with the current Mortgage Lender under new terms to continue. Reverse Mortgage A type of mortgage in Canada that is designed for homeowners 55 years of age and older whereby they can obtain a mortgage no more than 55% of the propertys appraised value and are not obligated to make monthly payments. There are designed calculators that provide the maximum amount that could be borrowed within this type of mortgage as the age of the borrowers is a major component of the calculation. Term The length of time that the applicable interest rate is applied to a mortgage. When this timeframe (term) has been completed, the mortgage then matures and a new term must be determined (chosen by the client) which then generally ties into the available interest rate from the mortgage financing institution. The most common terms offered by Canadian Mortgage Institutions are 1, 2, 3, 4, 5, 7 and 10 years. Title The Legal Ownership of the property Title Insurance This is a type of insurance the both a Mortgage Lender and a Homeowner can obtain that offers several types of protection regarding the property and its title. Coverage for Mortgage Lenders is separate from Homeowners so each party must obtain their own if coverage is wanted or required. A company in Canada that offer this service and it can be arranged by the borrowers lawyer at time of purchase or direct at any other time is First Canadian Title (FCT). Total Debt Service (TDS) This is an affordability ratio used by Mortgage Lenders that is required to cover mortgage principal interest payments (PI), property tax payments (T), condo fee payments (CF), and property heating payments (H) plus all other monthly payments (MP) such as loans, credit cards, etc against the total accepted borrowers gross income (GI). There are capped ratios based on the borrowers credit worthiness (FICO Score). The actual equation used for this calculation is: TDS = (PI + T + CF + H + MP) / GI Underwriting / Underwriter The process of deciding whether the Mortgage Lender will or will not provide the requested mortgage financing for the borrower. The process includes the confirmation and analysis of the borrowers employment, income, credit worthiness and history, property equity, risk exposure among many other factors. The underwriter is the trained individual who works for the Mortgage Lender and conducts this process. Variable Rate Mortgage (VRM) This type of mortgage generally has a fixed payment but the principal portion of the payment fluctuates based on the floating interest rate for this type of mortgage. The interest rate may increase or decrease during the mortgage term. This floating rate is generally linked directly to the Canadian Prime Rate. The rate used may be set up as Prime Minus a Percentage or Prime Plus a Percentage.

NEWS As of today (June 14, 2022) at 11:28 AM EDT the Canada 10 Year Government Bond Rate was at 3.564%. That is a current uptick of 0.046 from this morning. The 10 Year Bond has been on the rise for quite sometime and its rise is getting steeper. Up 20 Bps since last Friday. The Bond Rates relate to Fixed Mortgage Rates so with this continued increase, we are already getting notification that Fixed Mortgage rates will increase by midnight Wednesday. The next round of increases will push the fixed rates with most lenders above 5% which would be almost double from the start of the year. In other related news, the US Fed is expected to increase their rates by 75 Bps later this week. Their inflation rate is currently 8.6%, the highest in 40 years. Source: Canadian Mortgage Trends TD Economics

NEWS Many Canadian cities have both current homeowners and prospective buyers wondering how low property valuations could go based on the continually rising interest rates and the post-pandemic market really begins to emerge. According to a recent report, Canadian Residential Real Estate Outlook from Desjardins Economic Studies, it depends on where in the country you are living. The study suggests that the more growth a city had during the pandemic, the further that city has to fall. The report predicts that national home prices peaked in February, 2022 and the average sale price in Canada will drop 15% to the end of 2023. The average home price in Nova Scotia and New Brunswick is expected to fall 20% throughout that timeframe. Ontario and Prince Edward Island could experience an 18% drop and British Columbia dropping 15%. Provinces such as Alberta, Saskatchewan and Newfoundland Labrador saw less dramatic increases during the pandemic and are expected to generate less decrease in prices. According to Karen Yolevski, COO for Royal LePage, Canadas housing market is really made up of individual micro-markets and each follows its own path. The impact of each market will be based on the big unknown at this time How High Will Rates Go? Source: Global News

NEWS During a speech on Thursday, June 9th, 2022, Bank of Canada Governor Tiff Macklem said rising rates arent expected to derail the nations economy and may even produce a Healthy slowdown in the housing market. Macklem was speaking after the Bank of Canadas Annual Report on Financial Stability was released. He explained that the national economy can handle Higher Interest Rates and that Moderation in housing would be healthy. If the economy slowed sharply and unemployment rose considerably, the combination of more highly indebted Canadians and high house prices could amplify the downturn, Macklem told reporters, adding it could have broad implications for the economy and financial system. A concern of the central bank is that they estimated the share of new mortgages this past year are going to highly indebted households. Those carrying loan to income ratios above 450 percent has surpassed pre-pandemic levels to hit new records. According to the report, many Canadians would be left more exposed in the event of a correction as many of these households stretched themselves financially to get into the housing market. Source: BNN Bloomberg

PROGRAM The New To Canada Program provides mortgage borrowers who have recently immigrated to Canada the opportunity to purchase a home. Borrower Eligibility Must have a valid work permit or permanent residency Minimum 3 months full-time employment in Canada Immigrated to Canada within the last 5 years Transaction Information Purchase a home with as little as 5% down payment For Properties valued at $500,000 or less, minimum 5% down payment For properties valued over $500,000 Less than $1M, minimum of 5% down for the first $500,000 and an additional 10% for the portion over $500,000 First Mortgage Only Maximum 2 units, where 1 unit is owner-occupied New Construction covered by a Lender Approved New Home Warranty Program Existing Resale Properties Readily marketable residential dwellings, located in markets with demonstrated ongoing resale demand Estimating remaining economic life of the property should be a minimum of 25 years Property Value must be less than $1,000,000.00 Fixed, Standard Variable, Capped Variable and Adjustable Rate Mortgages permitted Current Qualifying Interest Rate is used Maximum Amortization is 25 years Standard income and employment verifications required Minimum of 3 months full-time employment in Canada (Borrowers being transferred under a corporate relocation program are exempt) International Credit Report demonstrating a strong credit profile may be required Two alternative sources demonstrating timely payments (no arrears) for the past 12 months. (Examples Rental Payment, Hydro, Utility, Telephone, Cable, etc) Letter of Reference from a recognized financial institution or six months bank statements from a primary account All debts held outside Canada must be included in debt servicing Rental Income outside Canada is not acceptable for debt servicing Foreign Diplomats or other individuals not paying income tax in Canada are ineligible Clergy assigned to specific church requires only a visitor record Progress Advance Mortgage and Purchase Plus Improvement Mortgage acceptable Guarantors not permitted Further requirements and/or qualifications may be applicable. Contact Chris Stewart to further discuss this mortgage program regarding your specific circumstances.

NEWS According to the regional real estate boards across Canada, home sales and their prices have decreased month over month, except in Calgary, Alberta. For the third consecutive month, the average price in the Greater Toronto Area (GTA) fell $122,000 from their February 2022 peak. Real Estate in the GTA started strong in 2022 but has fallen since as many potential home buyers have put their plans on hold due to the rate tightening that has been occurring. It appears the same has been happening in both Vancouver and Montreal. However; in Calgary, has continued to see their average prices increase, though the pace of growth has slowed. Month-over-month, Calgary prices have increased 3.7%. According to Ben Rabidoux of Edge Realty Analytics, I think were still in the early innings of Alberta outperforming the rest of the country. Regional Home Price Data Greater Toronto Area (GTA) Sales: 11,903 -38.8% (YoY) -48.6% (MoM) MLS Price Index Average Price (All Types) $1,212,806.00 +9.4% (YoY) -3.3% (MoM) Greater Vancouver Area (GVA) Sales: 2,918 -31.6% (YoY) -9.7% (MoM) MLS Price Index Average Price (All Types) $1,261,100.00 +14.7% (YoY) -0.3% (MoM) Calgary Sales: 3,071 +3.0% (YoY) -9.7% (MoM) MLS Price Index Average Price (All Types) $546,000.00 +14.5% (YoY) +3.7% (MoM) * Data Information from TRREB, REBGV, CREB CMT

NEWS The Federal Governments First-Time Home Buyers Incentive Program (FTHBIP) was first launched September 2, 2019 and was designed to lower a qualifying buyers monthly mortgage payments by increasing the available down payment through a shared benefit between the buyer and the government. The government would then participate in the share of the appreciation or the depreciation of the property. As announced by the Government of Canada in its Budget 2022 Plan, the government would introduce appreciation and depreciation limits within the program. On June 1, 2022 it did exactly that. An appreciation and depreciation cap is now in effect. The 8% Cap is now in effect and this cap limits its share in either the appreciation or the depreciation of a home at the time of FTHBIP repayment. The Canadian Mortgage and Housing Corporation (CMHC) has explained that the share limit (Cap) will be up to a maximum of 8% of the home value gain or loss from the time of the advance to the time of repayment and it will not be compounded. If there is an appreciation, then the 8% will be retroactive to the implementation date of the program (September 2, 2019) but in the case of depreciation, the incentive repayment is calculated on or after the June 1, 2022 effective date. If you purchased your home under this program, it is highly recommended that you read further and understand these changes and how they may affect you moving forward. For further information and explanations, please refer to the link below: First-Time Home Buyer Incentive Program Updates

NEWS On Wednesday, June 1, 2022 the Bank of Canada, as expected, raised the Benchmark Interest Rate another 50 Bps to make it 1.50%. Canadas central bank also signalled that this rate increase is not the end. The Bank of Canada continues to deliver these increases in order to fight, what some economists are saying, out of control inflation. Inflation hit 6.8% in April which is twice the level the central bank likes to see. What does this mean for Canadian Consumers? Simple, it makes borrowing money more expensive as it pushes the consumer lending rates up further, including mortgage rates. It will trigger variable rate lending products, such as mortgages, to increase. Variable Rate Lending Products are generally based on Prime so when Bank Prime Rates increase, so will your variable lending products. Is it time to convert your Variable Mortgage to a Fixed Mortgage?

ANNOUNCEMENT This is just not a Blog, it is an area where you can reference important and impactful information pertaining to the Mortgage Financing Industry. Information that will help you make educated mortgage financing decisions based on your current and expected future circumstances. If you wish to discuss things further, I look forward to discussing them with you. Reach out to me and lets discuss your home financing goals and explore the best options.

As most of us know, Banks, Credit Unions, Trust Companies and even Insurance Companies offer great discounted mortgage rates and wonderful products but only IF you can actually qualify for them. What does it take to qualify for this type of Discounted Mortgage, also known as an A or Prime Mortgage? You must be able to afford the mortgage based on the Bank of Canadas Qualifying Rate, also referred to as the Benchmark Qualifying Rate. Todays Qualifying Benchmark Rate is 5.19%. What does this mean? It means that despite your contractual discounted rate your bank, credit union, trust company or insurance company is giving you, you MUST qualify within the affordability calculations using the 5.19% rate for a High-Ratio Mortgage or the greater of the Qualifying Benchmark Rate or your Contract Rate Plus 2% if you are seeking a conventional mortgage. A conventional mortgage is when you are financing 80% or less of the propertys approved value. It is becoming more and more difficult for Canadians to qualify for a Prime Mortgage and this is why the Mortgage and Real Estate Industries are continuing to petition the Federal Government to change the Mortgage Qualifying requirements. Canadians may qualify for their mortgage when using the actual mortgage contract rate but are turned away once the Qualifying Benchmark Rate is used. When the Banks tell you NO; What do you do then? There is a crack in the Banks, Credit Unions, Trust and Insurance Companies so Canadians need to be aware of what other options are out there when they decline your mortgage request. Most of these lenders do not offer the ability to seek alternative types of financing but Licensed Mortgage Professions most certainly do. A Licensed Mortgage Professional has access to numerous other lenders who make up the Alternative Mortgage Market, also known as B Lending. These lenders offer much more flexibility with their clients and the qualifying requirements to get Canadians into their Dream Home, Buy that rental property or use their existing equity to consolidate debt, do a renovation among other things where a mortgage is needed. Alternative Mortgage Lending offers numerous benefits to Canadians so they can secure their desired financing. Such examples are: Expanded Debt Service Ratios Willingness to accommodate damaged credit history and lower credit scores Ability to accommodate a wider variety of income forms (BFS, Tips, Commission, etc) Naturally, these alternative type of lenders are working with higher risk type of financing so they quite often charge a fee for the mortgage. This also exists with the broker you are working with. Alternative Lending can involve more work to complete the mortgage, a different skill set is required from the broker and there are usually more requirements needed by the lender such as an appraisal. Though the rates are not discounted, Alternative Lenders tend to charge interest that is based around their posted interest rates and their assessment of the risk the mortgage may bring. Many of these aspects can be discussed prior to your broker submitting your mortgage application and is always disclosed upfront with the Conditional Mortgage Approval your broker receives from the lender. There are times when Alternative Lenders cannot fill the void left by the Prime Lenders saying No and a mortgage broker, once again, can access the Private Mortgage Markets to find a different type of lender who will fulfill the mortgage request. The key to maximizing the efficiency of your time, money and energy, is to connect with a Licensed Mortgage Professional right out of the gate so that they can properly assess your financial position and provide the correct feedback on what lender market you will fit in and explain the applicable expectations and overview of that market. Taking this step is the best one for any Canadian as the mortgage professional is the expert in the field with access to ALL three mortgage markets that the banks, credit unions, trust companies and insurance companies rarely have the ability to offer. Now, not all Licensed Mortgage Professionals offer or are properly versed in the Alternative and Private Mortgage Markets so ensure you connect with one that is as it can certainly save you time and money. It continues to be tough out there to secure mortgage financing in the Prime Market so make sure you have a Plan B in place or know where to explore it if you need one. There are numerous options still available if Prime Lenders have said NO to your mortgage financing.