28 Dec

Canadian Home Sales Weakened Further In November


Posted by: Livian Smith


Statistics released today by the Canadian Real Estate Association (CREA) show that national home sales dipped for the third consecutive month, down 2.3% from October to November and down a whopping 12.6% year-over-year. Transactions declined in just over half of all local markets, with lower activity in the Greater Toronto Area (GTA), the Greater Vancouver Area (GVA) and Hamilton-Burlington offsetting increased sales in Edmonton. Sales were down from year-ago levels in three-quarters of all local markets, including the Lower Mainland of British Columbia, Calgary, the GTA and Hamilton-Burlington.

These data suggest a double-digit national sales decline in 2018, falling to its lowest level in five years even though the economy is reaching full employment. Next year’s growth in sales and prices will likely be moderated by recent policy changes from different levels of government, in addition to upward pressure on interest rates.

Many had expected a rebound in sales in British Columbia, but so far it has not materialized. The rebound in sales in Ontario last summer has now run its course and activity in Alberta has edged lower. Housing transactions in Quebec, in contrast, were strong.

New Listings

The number of newly listed homes fell by 3.3% between October and November, with new supply declining in roughly 70% of all local markets.

With new listings having declined by more than sales in November, the national sales-to-new listings ratio tightened slightly to 54.8% compared to 54.2% in October. This measure of market balance has remained close to its long-term average of 53.4% since the beginning of 2018.

Based on a comparison of the sales-to-new listings ratio with the long-term average, about 60% of all local markets were in balanced market territory in November 2018. There were 5.4 months of inventory on a national basis at the end of November 2018. While this remains in line with its long-term average of 5.3 months, the number of months of inventory is well above its long-term average in the Prairie provinces as well as in Newfoundland & Labrador. By contrast, the measure is well below its long-term average in Ontario, New Brunswick and Prince Edward Island. In other provinces, sales and inventory are more balanced.

Home Prices

The Aggregate Composite MLS® Home Price Index (MLS® HPI) was up 2.3% y/y in October 2018, down once again on a month-over-month basis.

Following a well-established pattern, condo apartment units posted the largest year-over-year price gains in November (+6%), followed by townhouse/row units (+4%). By comparison, one-storey single-family homes posted a modest increase (+0.4%) while two-storey single-family home prices held steady (+0.1%).

Trends continue to vary widely among the 17 housing markets tracked by the MLS® HPI. In British Columbia, home price gains have been steadily diminishing on a y/y basis in the Fraser Valley (+4.7%) and Victoria (+7.2%). By contrast, price gains picked up elsewhere on Vancouver Island (+12.6%) and, for the first time in five years, were down (-1.4%) from year-ago levels in the GVA. On a month-over-month basis, prices fell 1.9% in Greater Vancouver in November, the most since 2008, adding to the recent series of price declines in Canada’s most expensive housing market.

Among housing markets tracked by the index in the Greater Golden Horseshoe region, MLS® HPI benchmark home prices were up from year-ago levels in Guelph (+9.3%), the Niagara Region (+7.2%), Hamilton-Burlington (+6.3%), Oakville-Milton (+3.4%) and the GTA (+2.7%). Meanwhile, home prices in Barrie and District remain below year-ago levels (-2.1%).

Across the Prairies, benchmark home prices remained below year-ago levels in Calgary (-2.9%), Edmonton (-1.9%), Regina (-4%) and Saskatoon (-0.3%). Excess supply of listings relative to demand will continue to put downward pressure on prices until economic activity in the region strengthens.

In contrast, home prices rose 6.6% y/y in Ottawa (led by a 7.3% increase in two-storey single-family home prices), 6.2% in Greater Montreal (driven by a 9.4% increase in townhouse/row unit prices) and 4.2% in Greater Moncton (led by an 11.2% increase in townhouse/row unit prices). (Table 1)

The actual (not seasonally adjusted) national average price for homes sold in November 2018 was just over $488,000, down 2.9% from the same month last year.

Sales in Greater Vancouver and the GTA, two of Canada’s most active and expensive markets, bias upward heavily skew the national average price. Excluding these two markets from calculations cuts almost $110,000 from the national average price, trimming it to just over $378,000.

Bottom Line

We are likely in store for a prolonged period of modest housing gains in the Greater Golden Horseshoe, stability or softening in British Columbia and further weakening in the Prairies, Alberta, and Newfoundland & Labrador.

The Canadian housing market has slowed considerably since mid-2017 and is ending the year on a quiet note. Two offsetting forces are impacting housing—strong population growth and rising rates. Sluggish sales and modestly rising prices nationally are likely in store for 2019. While there will still be some significant regional divergences, there is no need for further policy actions to affect demand.

Dr. Sherry Cooper


Chief Economist, Dominion Lending Centres

11 Dec

Mortgage Prepayment(s)- The Perfect Holiday Gift!


Posted by: Livian Smith


Do you know what kind of prepayment privileges you currently have with your mortgage? Does your current lender allow you to make a 10% prepayment or a 20% prepayment on your principle amount? Can you double your monthly payment? Or can you even increase the amount you are paying monthly?

This is important information, and the following break down is going to show you why making a prepayment on your mortgage may just be the best holiday gift you can get yourself this season!

Mortgage Structure

Mortgage Amount: $400,000

Term: 60 months (5 years)

Interest rate: 3.19%

Payment: $1,932.19/month


After 5 years of monthly payments…


Interest paid: $59,068.97

Principal paid: $56,862.43

Balance outstanding: $343,137.57

Amortization remaining: 20 years


After 5 years of monthly payments with double-up payments twice yearly…


Interest paid: $57,621.44

Principal paid: $77,631.86

Balance outstanding: 322,368.14

Amortization remaining: 20 years

Effective amortization: 15 years 1 month

Interest saved over term: $1,447.53


Let us break this down. If you double your monthly payment of $1,932.19 twice a year, for the term of your mortgage (5 years in this case), you will save $1,447.53 in interest over those 5 years. Not too bad. But there is more…

If you did these double-ups twice a year for 5 years, and refinanced your mortgage after the 5 years but continued paying the higher payment of $1,932.19 instead of what the new monthly payments would be ($1,557.19), that extra $375 a month goes directly to the principal amount owing and takes 4 years and 11 months off of your amortization…

If that doesn’t excite you and you decided instead to continue making double-up payments for the remainder of the amortization, you would save $38,550.70 in interest…

So this holiday season, when you get your year-end bonus or are deciding how much to spend on loved ones, maybe first consider allowing yourself a mortgage prepayment or two because it could save you years of payments and potentially thousands of dollars in interest! If you have any questions, contact a Dominion Lending Centres mortgage professional near you.

Ryan Oake


Dominion Lending Centres – Accredited Mortgage Professional
Ryan is part of DLC Producers West Financial based in Langley, BC.

11 Dec

Canadian Jobless Rate Fell To A 42-Year Low In November


Posted by: Livian Smith


With so much bad news coming out about the economy, Statistics Canada this morning posted a blockbuster jobs report, mitigating worries about the health of the economy.

Employment increased by a whopping 94,100 in November, led mostly by full-time jobs that were broadly based across industries. This was the largest monthly jobs gain in records dating back to 1976. The unemployment rate fell to 5.6%, also the lowest in the data, from 5.8% in October.

The strength in employment was unexpected as economists forecast a gain of only 10,000. Just this week, the Bank of Canada painted a picture of an economy facing substantial headwinds, warning of turmoil in the oil sector, government ordered oil production cuts in Alberta and a potential U.S.-China trade war. Since Wednesday’s central bank decision to hold rates steady announced in a decidedly pessimistic press release, markets had been pricing in only one rate hike in 2019.

Some analysts pondered whether the rate-hiking cycle is already over after five increases since the middle of 2017. “My bet is the BoC is done, period,” David Rosenberg, chief economist and strategist at Gluskin Sheff + Associates Inc., told clients in a report this week.

In a speech on Thursday, Governor Poloz reiterated his view that the Bank will eventually need to bring the current 1.75% policy rate back into “neutral range” of somewhere between 2.5% and 3.5%–noting the environment of low unemployment, inflation close to target and an economy close to full capacity utilization.

The strong November labour force report certainly keeps a January rate hike on the table for now, but only if it is confirmed by strengthening incoming economic indicators and no reversal in the December jobs report.

The Canadian dollar rallied on the news–having dropped appreciably in the previous three days–and market interest rates edged upward for the first time in a week and a half. The five-year government bond yield, an important indicator of five-year fixed mortgage rates edged up three basis points, offsetting a bit of the monthly decline.

Even the oil-producing hub of Alberta showed strength, adding 23,700 jobs on the month and pushing down the unemployment rate by a full percentage point to 6.3%, near its lowest since 2015 (see chart and table below).

Employment rose in six provinces, led by Quebec, Ontario and Alberta, and was little changed in the four Atlantic provinces. In Ontario, employment increased by 20,000 compared with October, the result of gains in full-time work. The number of unemployed was little changed and the unemployment rate held steady at 5.6%. The number of employed people in British Columbia grew by 16,000 in November. The unemployment rate rose 0.3 percentage points to 4.4%. There were 5,500 more employed people in Saskatchewan. The unemployment rate declined by 0.7 percentage points to 5.5%, the second decrease in three months. In November, there were 2,600 more Manitobans employed. The unemployment rate fell 0.4 percentage points to 5.7%, as fewer people searched for work.

The private sector dominated the employment gains last month as more people worked in professional, scientific and technical services; health care and social assistance; construction; business, building and other support services; transportation and warehousing; and agriculture. At the same time, fewer people worked in information, culture and recreation. Employment in construction increased by 15,000, led by gains in British Columbia and tempered by a decline in Newfoundland and Labrador. Year over year, employment was little changed in the industry.

Employment increased for both core-aged women and men (aged 25 to 54), as well as for older people (aged 55 and over)—driven by men.

Jobs in the Cannabis Industry

For the first time, Stats Canada reported cannabis-related jobs. Non-medicinal cannabis became legal in Canada on October 17, 2018. The number of people employed in these jobs in November was 10,400, an increase of 7,500 (+266%) from 12 months earlier. The majority (58%) of cannabis-related employment in November was in the agriculture sector, where workers performed duties such as bud trimming. The rest of the hiring was spread across a number of other industries such as educational services, health care, and retail trade.

More men than women worked in these jobs (79% compared with 21%). The median age was 35 years, younger than the median for workers in non-cannabis-related jobs (40 years). Virtually all of the employees were working full time and had permanent positions. The highest level of cannabis-related employment was in Ontario, an estimated 5,700, representing more than half of the national total. Ontario is the province with the largest concentration of licensed producers.

Wages Weakened

The one negative component of the November labour report was the slowdown in the growth of wages. Annual gains decelerated sharply to 1.7% in November– the slowest growth since July 2017–compared to a 2.2% clip the prior month. Wage gains for permanent workers were 1.5%, also the slowest in more than a year. This compares to 3.1% year-over-year wage growth in the U.S.

The U.S. Posted Weaker Than Expected Jobs and Wages in November

U.S. jobs and wages rose by less than forecast in November while the unemployment rate held at the lowest in almost five decades, indicating some moderation in a still-healthy labour market.

Nonfarm payrolls increased by 155,000 after a downwardly revised 237,000 gain in the prior month, a Labor Department report showed Friday. The median estimate in a Bloomberg survey called for an increase of 198,000. Average hourly earnings rose 0.2% from the prior month, compared with forecasts for 0.3%, though wages matched projections on an annual basis, up 3.1% for a second month.

Tariffs began to bite as employment gains at primary and fabricated metals manufacturers edged upward, but people who use those metals like auto and auto parts manufacturers saw job cutbacks.

Christmas hiring did not match last year’s pace as retail jobs rose by 18,000 roughly 10,000 fewer than this time last year, mostly at department stores. These gains were offset in part by job declines at furniture stores, clothing and accessories stores, electronics and appliance stores, and bookstores. This might have had something to do with online shopping uptrends as couriers and messenger jobs increased significantly.

The broader measure of unemployment known are U-6, or the underemployment rate rose to 7.6% from 7.4%. This measure includes part-time workers who want a full-time job and people who are less active in seeking work.

Dr. Sherry Cooper


Chief Economist, Dominion Lending Centres
Sherry is an award-winning authority on finance and economics with over 30 years of bringing economic insights and clarity to Canadians.

10 Dec

The #1 Misconception About Mortgage Financing!


Posted by: Livian Smith


It is a reoccurring but common misconception that you will qualify for a mortgage in the future because you have qualified for a mortgage in the past.

This is not accurate!

Do. Not. Assume. Anything.

Even if your financial situation has remained the same or has improved, securing mortgage financing is more difficult now than it has in recent years.
The latest changes to mortgage qualification by the federal government has left Canadians qualifying 20-25% less. On top of that, guidelines that lenders would use in determining your suitability have been replaced with non-negotiable rules and declarations.

As mortgage professionals, we keep up to date with the latest trends going on in the mortgage world by understanding lender products and staying attentive to evolving changes.

From experience, we can tell you that having a plan is crucial to a successful mortgage application. Making assumptions about your qualification or just “winging it” is a recipe for disaster. Here are a few points on why a mortgage broker is a must for the first time home-buyer.

1. They have access to over 40 different lenders, not just one
2. They work for you, not for the lender
3. They will guide you through the application process
4. They save you valuable time by shopping for you
5. They pull your credit once — if you go to multiple banks, you will have multiple credit pulls

If you are thinking about buying a property, please feel free to contact a Dominion Lending Centres mortgage professional where we can help you devise a full-proof plan!

Chris Cabel


Dominion Lending Centres – Accredited Mortgage Professional
Chris is part of DLC HomeHow Mortgage based in Calgary, AB.

10 Dec

Why Reverse Mortgages are Bucking the Downward Trend


Posted by: Livian Smith


The reverse mortgage market in Canada has been increasing at a phenomenal rate over the last few years.

In fact, for HomeEquity Bank, the provider of the CHIP Reverse Mortgage, growth was well over 40% in August, bringing Canada’s outstanding reverse mortgage balance to $3.03 billion.

Compare this to the latest growth in lending for new and renewal mortgages at just 4.1% – this is the lowest since May 2001. Much of this slow-down in mortgage growth is a result of the introduction of the new mortgage stress test, which has made it harder for borrowers to qualify for the mortgage they need, as well as a significant jump in mortgage interest rates.

So, how is it that reverse mortgages are growing so much faster than conventional mortgages? And who is driving this growth?

The reverse mortgage solution and why it matters to you

The CHIP Reverse Mortgages allows you to tap into the equity of your home is available to Canadians aged 55 and over. The key difference from a regular mortgage is that borrowers don’t have to make any regular repayments. This means they can have a considerable injection of cash without having to pay off what they owe until they sell or move out of their home.

The number of Canadians over 65 has jumped by 20% since 2011, so the potential market for reverse mortgages has grown enormously in just a few years.

Life expectancy is now at almost 83 and more people are living into their 90s and beyond 100 than ever before. Retirement can now easily last 20 years or more, which can put a big strain on retirement savings. Many retirees are therefore having to look at ways to supplement their retirement income.

There are many reasons for taking out a reverse mortgage. These include paying off high interest debt, maintaining a good standard of living, improving or retrofitting their home and helping family out financially.

Canadians prefer to stay in their homes during retirement

A recent Ipsos/HomeEquity Bank survey revealed that a staggering 93% of Canadians aged 65+ are determined to stay in their homes during retirement, rather than downsize or move in with relatives or into a care home.

Almost 70% said that maintaining their independence was the most important reason for staying at home. Others also want to stay close to their family, friends and community.

Downsizing is an increasingly unpopular option

While downsizing has often been seen as a key strategy for accessing some home equity, its popularity is declining. Another Ipsos survey revealed that 48% of homeowners don’t plan on downsizing and that 39% are skeptical that downsizing would actually save them any money. People who regretted downsizing said the key reasons were missing their old neighbourhood, family and friends, which can play a big role in emotional well-being in your later years.

Nevertheless, 31% of retirees say they need to cash in on their home’s equity to live comfortably in retirement. So, if they don’t want to downsize, what are their options?

How the reverse mortgage helps out retirees

The introduction of the mortgage stress test has made it even harder for retirees to qualify for the kind of mortgage they need to effectively improve their finances.

Even those that do qualify often struggle to make the monthly payments required from a conventional mortgage or line of credit. A reverse mortgage provides them with tax-free cash that enable retirees to live the retirement they want, with no negative impact on their monthly income. For many retirees, a reverse mortgage is the only option available to them that provides them with the finances they need without regular required payments.

If you would like to find out more about the CHIP Reverse Mortgage and how it could help improve your retirement finances, contact your Dominion Lending Centre mortgage professional.

Rebecca Burgum


HomeEquity Bank – Director, Referred and Product Marketing

10 Dec

The bond market is now sending a clear signal: Go with a variable-rate mortgage


Posted by: Livian Smith

Many people started out Wednesday morning expecting three or more rate hikes in the next 18 months.

Now, they’re wondering if we’ll see more than one.

That’s how much rate expectations have changed since the Bank of Canada’s latest rate statement.

If you’re shopping for a mortgage and believe what the bond market is telling us, it implies your odds of success with a fixed rate may have just changed.


The Bank of Canada still maintains that its key bank rate is headed toward its estimated “neutral range,” which means 75 to 175 basis points higher than today’s 1.75 per cent (75 basis points equals three-quarters of a percentage point).

But the bond market, which bakes in virtually all available information, is losing faith in the bank’s words. The market is focused on the facts: economic growth stalled this quarter, Canadians’ savings rate is near all-time lows, the economically critical oil sector is near crisis mode, trade war threats persist, the all-important housing sector is slowing, consumer spending is dropping, business investment is falling, the stock market is diving, and now even the U.S. Federal Reserve is chirping dovish.

That’s why Canada’s five-year bond yield, which guides five-year fixed mortgage rates, has fallen out of bed – dropping all the way down to its one-year midpoint.

All of this is inconsistent with a “rising rates” narrative.


First off, variable rates are going nowhere fast. Now, the market is not expecting the next rate hike until spring. There is almost more risk of lenders reducing variable-rate discounts due to credit, risk or margin concerns than due to Bank of Canada rate hikes. (If any of that happened, it would directly impact new variable-rate borrowers, not existing ones.)

As for five-year fixed rates, banks are doing what banks do: maintaining elevated profit margins for as long as they can. In a typical market, with bond yields down 40 basis points (bps) in less than a month, five-year fixed rates would’ve dropped by now, but they haven’t.

Previous rate hikes and tighter mortgage rules have shrunk the prime mortgage market. Intense competition for this smaller pie has led to skimpier mortgage revenue all year. Now the banks want their profit margins back.

If you want to get technical, consider mortgage “spreads,” the difference between banks’ going rates and the government’s five-year bond yield. Many big lenders have been settling for just 130-140 bps for most of this year. Normally they like to make 150-plus bps.

On top of this, if we really are nearing the end of the economic cycle, as the yield curve suggests, banks will want to price in a little extra margin for market risk and credit risk. And, let’s not forget, banks are facing stricter capital rules and higher deposit rates, which also affect their funding costs.

As we approach the winter doldrums, the slowest time of year for mortgages, banks figure that slashing rates now would barely move the needle on their mortgage market share, so why give up margin for no reason?


After today, more people are going to like their chances with floating rates (variable- and adjustable-rate mortgages). The best variable mortgage rates for well-qualified borrowers are currently:

  • 2.80 per cent or less, if the mortgage is default insured
  • 3.04 per cent if you’re refinancing

A rate near or under 3 per cent gives you at least a three-rate-hike head start over conventional five-year fixed rates. In the weeks to come, expect fewer borrowers to bet on the “over” (four-plus hikes), so variable-rate popularity will rise.

By the way, last quarter saw the highest percentage of insured borrowers going variable since Canada Mortgage and Housing Corp. started regularly publishing such stats. So, it has already started. People are becoming more educated every day about the risk/reward of variables and their other benefits, such as penalties that are drastically lower than those on big bank five-year fixed mortgages.

In short, floating-rate mortgages (which you can get with a fixed payment for peace of mind) are once again the value du jour for financially stable, risk-tolerant borrowers, despite Bank of Canada rate-speak.

Robert McLister is a mortgage planner at intelliMortgage and founder of RateSpy.com. You can follow him on Twitter at @RateSpy.