Bank of Canada senior official on how soon rate hikes might take place

Ephraim Vecina
other

The Bank of Canada is likely on track to hike interest rates in less than two weeks, according to a senior official.

The central bank has scheduled its next policy rate decision on March 2.

“We will be nimble – and if necessary, forceful – in using our monetary policy tools to address whatever situation arises, as we have done throughout these turbulent times,” said BoC deputy governor Timothy Lane. “We’re going to certainly consider starting that process fairly… We’ll be doing that as soon as we’re starting to raise rates.”

“Quite likely we’ll be saying something about that in a couple weeks’ time when we’re actually at … our next decision point,” Lane told the University of the Calgary earlier this week.

Read more: Desjardins – Can rate hikes truly help curb mounting inflation?

Market observers have pegged as many as seven BoC rate hikes over the next 12 months, owing to the sustained economic impact of mounting inflation.

“While we now expect supply disruptions to ease and inflation to come down quickly in the second half of this year, we are alert to the risk that inflation may again prove more persistent,” Lane explained.

Lane’s statement came in the wake of the latest data from Statistics Canada, which showed that the annual inflation rate reached a three-decade high of 5.1% in January, building on a similarly feverish 4.8% increase in December.

 

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Toronto housing market set for turbulent spring

Ephraim Vecina
other

The “tornado market” is showing no signs of stopping

The Toronto housing sector is slated for a more expensive, more competitive spring market with an unprecedented scarcity of supply, according to industry players speaking with the National Post.

“We’ve been in a tornado market since about late May 2020 and it hasn’t slowed down,” said Lauren Haw, CEO of fintech brokerage Zoocasa. “What we truly need in the GTA, and in Canada, is housing supply. We do not have enough homes and I don’t know where this insatiable demand is going to go.”

Data from the Canadian Real Estate Association showed that the number of new listings nationwide fell by 11% month-over-month in January, with the GTA accounting for more than half of the national decline. On average, the Canadian housing market only had 1.6 months of inventory as of the end of January.

Read more: Canada house sales – CREA reveals latest figures

As a result, Toronto is expected to enter the spring with “crazy pent-up demand,” said Reza Sabour, senior mortgage adviser and former director of the Canadian Mortgage Brokers Association of British Columbia.

“I can’t say I’ve seen anything like this in all the years I’ve been doing mortgages. This is going to be a seller’s market for quite a long time,” Sabour said. “COVID brought rates down to historically and artificially low levels, and that created a gold rush for the mortgage and real estate industry.”

Kevin Crigger, president of the Toronto Regional Real Estate Board, stressed the crucial role that policymakers have to play to ensure better market conditions.

“I think it’s very much time for local governments to take leadership roles in the housing discussion,” Crigger said. “That’s really how we’re going to bring supply to market quickly to start addressing these concerns.”

 

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RBC on how Canadian home sellers are faring

Ephraim Vecina
other

The national market continues to see tight supply and mounting prices

Sellers are currently in a stronger bargaining position in almost all Canadian housing markets, not just the largest ones, according to RBC Economics.

This has been spurred by consistently tight supply and surging home sales prices, influenced by major markets like Toronto and Montreal, RBC said. Data from the Canadian Real Estate Association showed that the national average home price grew by 21% to reach a new high of $748,450 in January.

“Growth has been slower in the Prairie provinces, but even there the majority of markets have sellers in the driver’s seat,” RBC said.

These dynamics are expected to sustain themselves for much of this year, RBC predicted.

“Markets remain exceptionally tight for now and that should keep a floor under prices in the near-term,” RBC said, while stressing that “deteriorating affordability, rising borrowing costs and increasing housing supply will gradually cool demand and restore some balance back to the market.”

Read more: Canada house sales – CREA reveals latest figures

“Plenty of unmet demand remains and will continue to fuel tremendous activity across the country. Still, we expect the Bank of Canada’s rate lift-off to turn down the market’s heat in 2022 as deteriorating affordability sends buyers to the sidelines,” RBC senior economist Robert Hogue said earlier this month. “Higher interest rates and the likelihood of new anti-speculation measures will also prove a tougher proposition for investors.”

 

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Barriere, B.C., 18-pad manufactured home park sells for $1.17 million

Bowman Group Realty Sutton
Western Investor

Park, on just over five acres with two-bedroom house, and potential of adding more pads, sold for $432,000 above the assessed value.

Property type: Manufactured Home Park

Location: 616 Armour Road, Barriere, B.C.

Number of pads: 18

Property size: 45,000 square feet

Land size,in acres: 5 acres (approx.)’

Zoning: MHP

B.C. Assessment value: $740,000

List price: $1.25 million

Sale price: $1.17 million

Date of sale: February 4, 2022

Brokerage: Bowman Group Realty Sutton, Abbotsford, B.C.

Broker: Travis Bowman

 

© 2022 Western Investor

Breaking into the real estate market without breaking the bank

Robin Brunet
The Vancouver Sun

WiiBid’s digital mortgage marketplace provides fast and convenient access to customized financing solutions at the lowest rates
The majority of first-time homebuyers in B.C. receive help from their parents. GETTY IMAGES
One of the most frustrating financial challenges in today’s competitive housing market affects not only potential homebuyers, but their parents as well.
Namely, the skyrocketing cost of real estate makes it increasing difficult for many millennials to afford a down payment on their first home — and according to a poll of BC Notaries, 90 per cent of them turn to their parents for help. Unfortunately this often puts mom and dad, who have spent their lives saving for their own security, at a certain level of risk.
Fortunately, WiiBid has a solution. WiiBid provides a digital marketplace to borrowers with fast access to the best mortgage rates. It was founded by Amin Eskooch with the goal of using technology to help homebuyers find the best mortgage solutions for their needs. Simply put, the borrower would submit an application then a three-day auction would take place between a plethora of lending institutions on the WiiBid platform, which would provide tailored solutions for each borrower rather than a generic rate quotation. The borrower would then review the resulting bids and select the best offer.
Since then, WiiBid has broadened its client base while maintaining its goal to put the power back into the borrower’s hands. And its latest solution for millennials with down payment problems is to help facilitate reverse mortgages for their parents.

Millennials and their parents are leveraging reverse mortgages for assistance with a down payment. GETTY IMAGES
Mahmood Ladhani, vice president, referred sales at HomeEquity Bank and a lending partner to WiiBid, explains, “Reverse mortgages enable Canadian homeowners 55 and older to access up to 65 per cent of their home’s value and turn it into tax-free cash without having to move or sell.
“Plus, there are no monthly mortgage payments required as long as you live in your home and maintain insurance and the payment of property taxes.”
One payment option under a reverse mortgage is a lump sum, ideal for helping millennials get their foot in the door of the high-priced residential real estate market. “And it’s a great alternative, allowing parents to not only help their children get into housing but also reduce or eliminate their monthly payments,” says Eskooch.
Thanks to the WiiBid platform, it takes less than 10 minutes to apply for a mortgage and the auction ensures transparent and competitive rate shopping from the comfort and privacy of borrowers’ homes. As with all mortgage applications, the process can save borrowers thousands of dollars in rates and fees.
Ladhani adds that in addition to helping their kids get a leg up, homeowners who take out a reverse mortgage can use the money for a variety of purposes. “While an increasing number of clients are giving the money to their kids, many are using it to boost their retirement income, pay for renovations or health-care expenses, or even settle debts,” he says.
Visit WiiBid.com to learn more about its mortgage services, get advice and access a new way to get financing.
This story was created by Content Works, Postmedia’s commercial content division, on behalf of WiiBid.

© 2022 Vancouver Sun

Inflation surges to three-decade high, adding pressure on Bank of Canada to raise rates

Kevin Carmichael
other

Kevin Carmichael: Inflation at this pace guarantees a raise in March and puts half-point hike in play
Food prices at grocery stores rose 6.5 per cent on the year, compared to 5.7 per cent in December. Photo by TOLGA AKMEN/AFP via Getty Images
Canada’s main inflation gauge is glowing an even brighter shade of red.
The consumer price index (CPI) increased 5.1 per cent in January from a year earlier, marking the first time the index has exceeded five per cent since September 1991, Statistics Canada reported on Feb. 16.
Inflation at that pace guarantees the Bank of Canada will raise interest rates at the conclusion of its next round of policy deliberations on March 2, and could stoke debate over whether Governor Tiff Macklem and his deputies will lift borrowing costs by a half point instead of the customary quarter-point increase.
Macklem, who opted against raising the benchmark rate last month, has said repeatedly since December that he’s “uncomfortable” with inflation that has surged well past the central bank’s target of two per cent. The latest reading will rekindle worries that the Bank of Canada made a mistake by passing on an opportunity to raise interest rates in January and will now have to play catchup.
To be sure, the Bank of Canada won’t be surprised by the CPI’s jump to 5.1 per cent from 4.8 per cent in December. The central bank’s latest economic outlook has the price index posting year-over-year increases that average 5.1 per cent over the first quarter.

But Macklem won’t like some of the details in Statistics Canada’s latest checks on the hundreds of goods and services it monitors to get a reading of overall price pressures. Excluding gasoline, the CPI increased 4.3 per cent from January 2020, the biggest gain since Statistics Canada introduced the measure in 1999 to get a cleaner read on underlying cost pressures because oil prices are so volatile. The new report shows inflationary pressures that began with commodity prices is now spreading throughout the economy.
The CPI surged 0.9 per cent from December, the largest one-month increase since January 2017.
All the groups that Statistics Canada uses to arrange the items in its price basket posted significant gains. The agency’s measure of shelter costs increased 6.2 per cent from January 2021, the fastest since February 1990.

Real-estate prices aren’t included in the CPI because Statistics Canada classifies homes as assets, since they aren’t something consumers purchase on a regular basis. However, housing prices influence other costs related to owning or renting a dwelling, including estimates of how much it would cost homeowners to replace their current living arrangements. Replacement costs surged 13.5 per cent from a year earlier, outweighing the disinflationary effect of lower mortgage costs, which were 6.8 per cent lower.
Food prices at grocery stores rose 6.5 per cent on the year, compared to 5.7 per cent in December, as reduced supply after a period of tough growing conditions around the world continued to fall well short of demand. Higher shipping costs from various disruptions in supply systems are also putting upward pressure on food prices, Statistics Canada said.

Gasoline remained a key driver of overall inflation. Prices increased more than 30 per cent from January 2021 as oil prices jumped amid worries that Russia was on the verge of invading Ukraine, aggravating the most intense period of geopolitics since the end of the Cold War.
“Simply put, this is far too hot for comfort for the Bank of Canada, so expect a steady series of rate hikes in the coming meetings,” Douglas Porter, chief economist at BMO Capital Markets, said in a note to his clients. “We look for four in a row to start, and it may well require much more than that to bring inflation to heel.”

© 2022 Financial Post

Inflation hits milestone high in Canada

Fergal McAlinden
other

StatCan revealed that the pace of inflation has shattered a 30-year record

 The annual inflation in Canada rate hit 5.1% in January – the first time it has surpassed the 5% mark for over 30 years, according to Statistics Canada.

That increase, which followed a 4.8% rise in December, marked the highest rate of inflation since September 1991, the national statistics agency said this morning.

StatCan noted that housing was one of the sectors most significantly affected by rising prices for goods and services, with Canadians also feeling the squeeze on food and gasoline costs.

Shelter costs – the average monthly total of expenses paid by households that own or rent their dwelling – were up 6.2% over last year, setting the quickest pace for 32 years.

“Higher prices for new homes contribute to higher costs associated with the upkeep of a property, or the homeowners’ replacement cost,” the body said. “Higher home prices also tend to raise other owned accommodation expenses.”

The owned accommodation index, measuring the continuing costs of home ownership, had seen a 6.1% increase over January 2020.

Read next: Canada housing crash – how likely is it?

The price of gasoline, meanwhile, increased by nearly 32% in January compared with the same month last year, StatCan said. The annual rate of inflation would have totalled 4.3% if gasoline prices were excluded.

Ongoing supply chain snarls across the world contributed to higher shipping costs, in turn ramping up the cost of food. Grocery prices had increased by 6.5% over January 2020, representing the largest year-over-year increase for nearly 13 years.

The news arrives two weeks to the day before the Bank of Canada is scheduled to make its second policy rate announcement of the year, with a hike to that benchmark rate widely anticipated.

In its last statement on January 26, the Bank acknowledged that core measures of inflation had edged up since October and consumer price index (CPI) inflation was “well above” its target range – but opted against introducing a rate increase.

The Bank said that it expected inflation to “decline reasonably quickly” to about 3% by the end of 2022, indicating that it would use its monetary policy tools to “ensure that higher near-term inflation expectations do not become imbedded in ongoing inflation.”

 

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DLC announces major deal

Fergal McAlinden
other

CEO “immensely proud” of what has been achieved

 Dominion Lending Centres (DLC) has announced an agreement to purchase the remaining 30% of Newton Connectivity Systems, the company responsible for its Velocity mortgage operating platform.

The network giant said it had reached a deal with Next4 Holdings to acquire the percentage of Newton that it did not already own, with the aggregate purchase price totalling $24 million.

That amount is to be made up of a cash payment of nearly $16.9 million, with just over 1.8 million class “A” DLC common shares – valued at $3.85 per share – also to be issued as part of the deal.

The agreement, which is expected to be finalized around the end of February, arrives over five years since DLC acquired Newton with Next4 in December 2016. Newton president Geoff Willis and vice-president Kevin Dear are set to remain on board to continue their “excellent leadership” at the company, according to DLC executive chairman and chief executive officer Gary Mauris.

Read next: DLC announces record $78bn funded in 2021

In comments accompanying the announcement, Mauris expressed DLC’s pride at its progress with Newton since that 2016 deal.

“Newton has become one of the leading connectivity platforms for mortgage professionals and lenders in Canada and has become an integral part of DLC’s franchise system,” he said.

“With Newton able to send deals direct to lenders on its own connectivity bridges effective July 1, 2022, and with more than 50% of the DLC Group’s funded volumes now being submitted through Velocity, we felt this was the perfect time to acquire the outstanding 30% of Newton that we did not already own.”

Earlier this month, DLC announced that the company had funded $78.5 billion in annual mortgage volume in 2021, with the company having also recently received final approval to list class “A” common shares on the Toronto Stock Exchange (TSX).

Founded by Mauris and Chris Kayat in 2006, DLC is headquartered in British Columbia with its network consisting of approximately 7,000 mortgage professionals across Canada.

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Want to see what a $16.9 million condo looks like?

Brendan Kergin
Western Investor

The condo is a penthouse in downtown Vancouver.
What kind of condo could cost $16.9 million?
In this case, it’s a penthouse at the top of West Pender Place, the 36 story tower at 1499 West Pender St., just a block away from the Coal Harbour marina.
With three bedrooms and four bathrooms, it’s more like a standalone house on the top of a very tall pedestal. The 3,646 square foot interior and 3,200 square foot outdoor area mean lots of living space as the entire top floor is part of the condo. It’s actually more like two floors as much of the outdoor area is on the roof above the main living space.
That also means 360-degree views, which are perhaps the biggest highlight. From that height Lions Gate Bridge, Stanley Park and the Burrard Inlet are laid out below.
The outdoor area includes a hot tub with views over the city’s west end out to the Salish Sea.
The interior has a bright, open layout (at that height there aren’t any neighbours glancing in by accident) with lots of glass and windows.
The building also has some added luxuries, like a concierge, fitness area and pool.

 

© 2022 Western Investor

B.C. home price $685,000 higher than average in Prairie provinces

Western Investor Staff
Western Investor

At $1,042,169, the typical B.C. home is at least half-a-million dollars more expensive than anywhere else in Canada but Ontario

This 1,374-square-foot, one-bath house on East 60th, Vancouver, was listed February 2022: asking $1.98 million. | REW.CA

At $1,042,169, the typical B.C. home is at least half-a-million dollars more expensive than anywhere else in Canada but Ontario

The average home price in British Columbia has increased 23.5 per cent in the past year to top $1 million for the first time according to the B.C. Real Estate Association (BCREA) despite total sales in January falling nearly 15 per cent from a year earlier.

To put this in perspective, the average B.C. composite home price is more than $685,000 higher than the average in the other three western provinces, and at least $500,000 more costly than in Quebec, the third-most expensive market in the country.

Only Ontario, with an average home price of $998,000 comes close to B.C., according to the Canadian Real Estate Association’s national price map, released February 15.

The BCREA reports that a total of 6,138 residential unit sales were recorded by the provincial Multiple Listing Service in January 2022, a decrease of 14.7 per cent from January 2021.

The average residential price in BC was $1,042,169, up from the $843,918 recorded in January 2021. Total sales dollar volume was $6.4 billion, up 5.3 per cent from the same time last year.

“Sales activity is down compared to record levels at the start of last year,” said BCREA chief economist Brendon Ogmundson. “However, the level of sales activity remains strong compared to the long-term average and inventory is still incredibly low. As a result, it will take quite some time to get back to healthy balance in the B.C. market.”

Total active listings remain near all-time lows with just 13,000 total homes listed for sale in the province. For context, a healthy level of re-sale listings in B.C, is closer to 40,000 listings.

“As a result of this listings drought, markets all over the province are seeing significant upward pressure on price,” according to the BCREA.

B.C. lowest average home price are in South Peace River, at $295,000 and Northern B.C. at $378,242. Highest average prices are in Greater Vancouver and the Fraser Valley, both north of $1.2 million, and Greater Victoria at an average composite hone price of $995,055 in January.

In the B.C. Interior, where prices have increased 24.1 per cent over the past 12 months, the average home sells for $785,134, slightly above Canada’s national average price of $748,349.

© 2022 Western Investor