22 Apr

Halal mortgages: What you need to know


Posted by: Mike Hattim

The recent federal budget’s mention of exploring measures to increase access to “halal mortgages” has Muslims and Islamic finance providers celebrating despite lacking details on the government’s plan.

While the budget was light on details, the inclusion was enough to satisfy Abdullah Mohiuddin of Edmonton, a current halal mortgage holder.

“It was very happy news for me,” Mohiuddin told CBC News.

Providers like Zuhair Naqvi, CEO of Ontario’s Eqraz, are already seeing traction. He said that even just the government’s mention has started to enhance the credibility of halal mortgages.

“It allows me to go to the banks and the lenders and powers that be and tell them, ‘Look, guys, the government is supporting this, so please don’t be worried or anxious about participating in this,’” Naqvi said, anticipating more firms will participate.

Halal, meaning “permitted” under Islamic law, refers to mortgage products structured without interest charges or “riba”, which are forbidden. The lack of interest does not mean these mortgages are cost-free. They often carry higher costs than conventional mortgages due to the limited number of providers and the inability of some to foreclose, raising financial risks.

Mortgage agent Naveed Malik estimates current halal mortgage costs run around 4% above conventional products. However, wider availability from more providers could spark competition to lower fees.

Furthermore, the absence of established legal definitions for these interest-free mortgages complicates matters, making it difficult for them to be insured and potentially leading to higher expenses.

Islamic finance experts point out that the structure of halal mortgages often differs from conventional ones, sometimes resembling rent-to-own arrangements or involving unique fee setups instead of typical interest payments. Legal challenges also persist, such as issues with land titles and the application of landlord and tenant legislation to certain contracts.

A 2010 government report found halal products shouldn’t face “particular difficulties” under accounting rules, but legal ambiguities remain.

Still, many see the federal acknowledgment as a positive step toward clarifying rules to make halal options more accessible and affordable for Muslim homebuyers.

Source CMP
By Candyd Mendoza

11 Apr

Government to allow longer amortizations for certain first-time buyers


Posted by: Mike Hattim

First-time homebuyers purchasing newly built homes will be allowed 30-year amortization periods on insured mortgages, the federal government has announced.

Finance minister Chrystia Freeland said in Toronto on Thursday that the move would take effect on August 1 – and also announced that the government would increase the amount first-time buyers can withdraw from RRSPs to purchase a home from $35,000 to $60,000.

The latter change will be effective as of April 16, when the government unveils a budget that’s expected to focus heavily on housing measures.

For withdrawals made between January 1, 2022 and December 31, 2025, individuals will be given five years to begin repayment rather than the original two.

With housing affordability shooting increasingly out of reach for many younger Canadians and first-time buyers, the introduction of lengthier amortization periods has often been put forward as a possible solution within the mortgage industry.

“Faced with a shortage of housing options and increasingly high rents and home prices, many younger Canadians feel that the dream of homeownership is just that, a dream,” Freeland said earlier this morning. “Our government is changing that. We want homeownership to be a reality for younger Canadians.”

Announcement is latest in flurry of housing-related proposals by feds

Freeland also reported that over 750,000 First Home Savings Accounts (FHSAs) have been opened across Canada since the measure was announced last year. That account allows Canadians to put away up to $40,000 towards a home downpayment in a tax-free-in, tax-free-out arrangement.

In early March, the government announced it was discontinuing the First Time Home Buyer Incentive, a shared-equity program that aimed to ease the burden of saving up for a downpayment but saw little uptake in the country’s priciest markets.

As the governing Liberals ramp up preparations for next week’s budget announcement, Prime Minister Justin Trudeau also announced the introduction of a new $1.5-billion “Canada Rental Protection Fund” last Thursday in an effort to tackle the affordability crisis facing renters across the country.

Source CMP
By Fergal McAlinden

9 Apr

Spring housing market surge unlikely


Posted by: Mike Hattim

After five straight holds of the Bank of Canada’s key interest rate that followed its hiking cycle of more than a year, economists say a rebound awaits the national housing market — but don’t expect a big surge just yet.

The central bank is expected to again hold its key rate steady when it announces its decision Wednesday, but it’s unclear what direction it will take next.

With modest cuts likely in store later this year — some forecasts call for those to begin as soon as June — it could take months before buyers are confident enough to come crawling back from the sidelines.

That uncertainty may keep some buyers cautious throughout the spring, said TD Bank economist Rishi Sondhi.

“I think it’s a bit of a muddy backdrop there and maybe that might be restraining some of the activity,” he said.

But Sondhi said Canada’s housing market is “akin to a bit of a coiled spring,” noting sales activity and prices typically jump when there’s a shift “that jolts the market” such as an interest rate cut.

“There’s significant pent-up demand out there, particularly in Ontario and B.C., so it just takes a bit of a spark.”

In its latest report on national home sales and pricing data, the Canadian Real Estate Association hinted that February could mark “the last relatively uneventful month of the year.”

“After two years of mostly quiet resale housing activity, there’s a feeling that things are about to pick up,” CREA chair Larry Cerqua said in a statement last month.

“At this point, it’s hard to know whether buyers are going to wait for a signal from the Bank of Canada or whether they’re just waiting for the spring listings to hit the market.”

Greater Toronto Area-Realtor Dean Artenosi called the current moment a “tipping point where the worst is behind us.” He said the central bank has signalled that interest rates have “levelled out” through its consecutive rate holds, and that has made buyers more optimistic.

“The mood and the mindset, the psyche, is that we’re back to a normal market,” said Artenosi, co-owner of Coldwell Banker The Real Estate Centre Brokerage.

“People have gotten comfortable … and are used to making the payments at these higher rates. Buyers are starting to come back into the marketplace. Obviously there’s talk of the rates starting to come down now and we’re seeing multiple offers again on some properties.”

Out West, activity cooled in March after 2024 got off to a red-hot start, said Tim Hill with Re/Max All Points Realty.

The Vancouver real estate agent said many of his clients now find themselves in a holding pattern while waiting for rates to fall. He said others are weighing the pros and cons of buying before that point in time, which is expected to spur price growth amid lower borrowing costs.

“We can all feel pretty confident that (the central bank is) not making a change yet, as much as people might wish. But maybe we’ll get some more information in their press release of where their heads are at and when we might see that Bank of Canada rate come down,” said Hill.

“For me, I’m feeling now that we’ve seen this kind of lull, I think April is going to be a really tell-tale month for how the rest of the spring goes.”

RBC assistant chief economist Robert Hogue predicted a “gradual” rebound later this year as the central bank’s rate-cutting cycle progresses, rather than a major uptick in activity following its first reduction.

He said there are some exceptions to that forecast, notably the Calgary market, which has remained strong despite elevated rates. Increased demand from interprovincial migration and below-average inventory have kept the market tight in that city, according to the local real estate board.

“That’s a market that continues to be pretty robust and we don’t see that changing,” Hogue said.

Despite pent-up demand, affordability remains a major issue in markets such as Toronto, Vancouver and Montreal.

“I don’t see it as much of an issue of being prudent or cautious, but more in terms of the budget constraint to buyers,” said Hogue.

He said Canada could see a “series of small waves” in some markets within the next few months, where activity picks up as some try to get ahead of interest rate cuts.

“For those mini-waves to be sustained, you need a critical mass of buyers making their way back into the market,” Hogue said.

“For that, our view remains that we need to see a significant drop in mortgage rates, which I think is more of a second half of 2024 story than the spring market.”

Artenosi said he’s urging his clients not to wait. While borrowing conditions could be more favourable in the months to come, he warned of other factors, including Canada’s growing population, that could make it more difficult to buy at an affordable price.

Statistics Canada’s live population tracker showed Canada’s population topped 41 million in late March, less than a year after hitting the 40-million milestone.

“Playing the waiting game is a mistake,” said Artenosi, who added those holding out may increasingly find themselves in bidding wars.

“There’s going to be no perfect scenario.”

This report by The Canadian Press was first published April 8, 2024.

Source CMP
By Sammy Hudes

5 Apr

March’s Weak Jobs Report Sets The Stage For A June Rate Cut


Posted by: Mike Hattim

Today’s StatsCanada Labour Force Survey for March is much weaker than expected. Employment fell by 2,200, and the employment rate declined for the sixth consecutive month to 61.4%.

Total hours worked in March were virtually unchanged but up 0.7% compared with 12 months earlier.

The details were similar to the headline: as full-time jobs dipped, total hours worked fell 0.3%, and only two provinces managed job growth. Among the type of worker, a 29k drop in self-employment was the primary source of weakness, while private sector jobs managed a decent 15k gain. The issue for the Bank of Canada is that wage gains are not softening even with a rising jobless rate. Average hourly wages actually nudged up to a 5.1% y/y pace, now more than two percentage points above headline inflation. With productivity barely moving, these 5% gains will feed into costs and threaten to keep inflation sticky.

The unemployment rate in Canada jumped to 6.1% in March of 2024 from 5.8% in the earlier month, the highest since October of 2021, and sharply above market expectations of 5.9%. The result aligned with the Bank of Canada’s rhetoric that higher interest rates have a more significant impact on the Canadian labour market, strengthening the argument for doves in the BoC’s Governing Council that a rate cut may be due by the second quarter. The unemployed population jumped by 60,000 to 1.260 million, with 65% searching for jobs for over one month. Unemployment rose to an over-seven-year high for the youth (12.6% vs 11.6% in February) and grew at a softer pace for the core-aged population (5.2% vs 5%).In March, fewer people were employed in accommodation and food services (-27,000; -2.4%), wholesale and retail trade (-23,000; -0.8%), and professional, scientific, and technical services (-20,000; -1.0%). Employment increased in four industries, led by health care and social assistance (+40,000; +1.5%).
Average hourly wages among employees rose 5.1% (+$1.69 to $34.81) year over year in March, following growth of 5.0% in February (not seasonally adjusted). This is still too high for the Bank of Canada’s comfort.
Bottom Line

The central bank meets again next Wednesday, and a rate cut is unlikely. I still expect rate cuts to begin at the following meeting in June. The Canadian economy, though resilient, will suffer from rising mortgage costs as many mortgages come under renewal over the next two years. Delinquency rates have already risen. Moreover, the planned reduction in temporary residents will also slow economic activity.

With the US jobs market still booming, it is likely the BoC will begin cutting rates before the Fed.

Dr. Sherry Cooper
4 Apr

Revealed – why Canada’s housing crisis will continue


Posted by: Mike Hattim

Canada doesn’t have enough skilled tradespeople to build its way out of its current housing shortage, threatening long-term damage to the country’s social fabric, according to a top executive at one of the world’s biggest real estate firms.

Housing is becoming the central issue ahead of Canada’s next general election, currently expected in 2025, with a lack of dwellings and rapid population growth driving up prices. The country needs an additional 3.5 million homes, which would involve more than doubling its pace of construction, according to a 2022 study from Canada’s national housing agency.

“The inconvenient truth is that we are not going to hit those targets — we will likely not get anywhere close to those targets,” Paul Morassutti, CBRE Group Inc.’s chairman in Canada, said at the Vancouver Real Estate Forum on Wednesday. “Even if we had approvals across the country to build thousands of units, we cannot physically build them, because we don’t have enough trades.”

Policymakers must “get something done, because this is definitely a crisis,” he said. There’s little sign that home prices will fall as supply-demand imbalances have only gotten worse, and they may even rise once buyers return to the market, Morassutti said.

“The scale of the problem, which has been many years in the making, is massive,” he said.

“Income inequality and housing affordability are very pernicious issues. Left unaddressed, the damage to our social and economic fabric will only worsen.”

Source CMP
By Thomas Seal

3 Apr

Inflation expectations cast shadow on BoC’s rate decision


Posted by: Mike Hattim

New data from the Bank of Canada has economists questioning their earlier predictions for a first interest rate cut.

The central bank’s recent business and consumer outlook surveys reveal that while inflation expectations have improved slightly, they remain elevated.

Stephen Brown, deputy chief economist at Capital Economics, said this could prompt policymakers to delay action.

“[Inflation forecasts] are still too high and raise the risk that the bank will wait to see developments in the next surveys in July before it cuts interest rates,” he said.

If this happens, the next opportunity for a cut would be the Bank’s July 24 meeting, contradicting the current consensus of a June cut.

Surveys show inflation concerns persist

While Canadians perceive inflation has slowed, their near-term expectations “have barely changed”, the central bank said.

Expectations for five-year inflation have also increased. Respondents cite high government spending, housing costs, and rent as lingering drivers of inflation.

Canadian consumers surveyed perceived inflation at 5.3%, well above the official 2.8% reading. About 60% cited food costs as a major factor in this elevated expectation.

Brown suggests that easing food prices could lower expectations in the next survey, although this might be countered by rising rental and gas costs.

“At the margin at least, the quarterly surveys may persuade the bank that there is no rush to loosen policy,” said Brown.

Economists see potential for delay

On the business side, the share expecting the CPI above 3% over the next year fell to 40% from 54%, but remained above pre-pandemic levels.

“The improving trends will be welcomed by policymakers, but aren’t enough to prompt rate cuts just yet,” Bank of Montreal strategist Benjamin Reitzes told the Financial Post. He believes a June easing remains possible but will depend on further signs of slowing inflation.

Recent strong economic growth figures further complicate the picture.  Canada’s economy expanded faster than expected in early 2024, exceeding Bank of Canada forecasts. TD Bank economist Marc Ercolao calls this a “difficult challenge” for the central bank.

While Capital Economics still expects a June move, Brown acknowledged “the risks are tilted toward a slightly later cut.”

Two crucial data releases this week – international trade and the jobs report – could offer further insights, but economists anticipate no significant downturn signals in either.

Source CMP
By Candyd Mendoza

2 Apr

Economic Insights from Dr. Sherry Cooper


Posted by: Mike Hattim

The Bank of Canada’s Governing Council was split on the timing of rate cuts this year when they deliberated before the March press release. But the February inflation data signaled that rate cuts should be coming soon. After all, inflation has slowed markedly along with the economy.

While the unprecedented influx of new immigrants has boosted economic activity, the overall outlook for consumer spending will be dampened by the large volume of mortgage renewals in the next two years. Many will suffer a double-digit monthly payment increase, undoubtedly dampening discretionary spending. High food prices already burden consumers. Even though food inflation has diminished, prices have not fallen.

A June rate cut is coming, and there is even a possibility of an easing in monetary policy at the April 10 meeting. The spring housing season will be buoyant. Home prices already began to rise in February. And while home sales have been weak, the sunshine might entice the pent-up supply of existing homes to the market. For every move-up and downsizing buyer, there is a new listing on the other side.

First-time homebuyers may also start to take the plunge for fear that prices will rise further. They can lock in a two- or three-year fixed-rate mortgage if they are nervous. Many have been saving their money since 2022.

The Alt-A market is also poised for a pick-up as many more alternative lenders have strong balance sheets and well-diversified portfolios and talk about creating a demand for Alt-A mortgage-backed bonds. These would be relatively high-yielding bonds with reasonable credit ratings owing to the diversity of mortgages from every province in Canada.

There will be challenges and intense competition with new digital lenders increasing for the first time in Canada—much delayed from the US market innovation. Mortgage brokers need to be experts in a much more comprehensive array of products and solutions, many of them new.

2 Apr

Small Home Improvements That Make a BIG Impact


Posted by: Mike Hattim

Whether you’re looking to sell your home this year, or just want to make some updates, I have put together six small home improvements that can make a BIG impact on your space! From improving saleability to refreshing your home, here are some simple and affordable ideas to help get you started:

  • Painting: One of the easiest ways to spruce up your home for a refreshed vibe or sale is to add a new coat of paint! While it is a relatively simple task for a new homeowner to take on, you might be surprised at how many people will pass on a house because they are not a fan of the paint colors or the flooring. A fresh coat of paint – especially more neutral colors such as beige, cream, light grays, and soft blues or greens – can do wonders to make a home feel appealing.
  • Light Fixtures: I don’t know about you, but I haven’t taken a good look at my light fixtures in a while. However, potential buyers will! Light fixtures are another low-cost and relatively easy improvement you can make to your home. Upgrading to newer styles and ensuring they are clean, with fresh LED bulbs, will help add an extra sparkle to your home!
  • Update Your Hardware: Another overlooked aspect of a home are light switches and door handles. If your home is 20 years old, most likely your white light switch covers are not so “white” and your door handles are a little worn down. These are a cheap and easy replacement that will go a long way to boost your interior!
  • Swap Out Your Window Coverings: Just like with a fresh coat of paint or new hardware, swapping out your window coverings is a small change that can make a big impact. Change your stale, white plastic blinds for wooden slats, or update your curtains to something fresh and vibrant!
  • Refinish Your Cabinets: The kitchen is known to be a central space in most homes, but did you know roughly 80% of homebuyers feel that it is the most important space to consider when deciding on a new home? While a full kitchen renovation may be out of the question and all-new kitchen cabinets can cost thousands, there is a third option. Refinishing or repainting your cabinets is a great alternative for breathing new life into your kitchen!
  • Curb Appeal: They say don’t judge a book by its cover but, when it comes to selling your home, first impressions matter. This is where curb appeal comes in! If a potential buyer pulls up to see overgrown weeds, clogged gutters, or cracked concrete, they are already going to have a negative impression of the home and it will be harder to impress them once they are inside. Attending to landscaping and any outside maintenance needs will go a long way in making your home more appealing. A pressure wash and a new coat of exterior paint can also do wonders to give your home a facelift!

By putting the effort into completing a few small changes around your home, you can reap big rewards when it comes time to sell – and increase your comfort in the interim!

2 Apr

2024 Spring Market Expectations


Posted by: Mike Hattim

The spring housing market is just around the corner! Whether you’re looking to sell, buy, or want to ensure your mortgage is in order, knowing what to expect can help.

Here is the low down on what we are anticipating for various factors affecting the housing market this season:

  • Interest Rates: While the Bank of Canada held the overnight rate steady at 5% for the past five meetings, it is expected that they will make the first interest rate cut in June or July this year, followed by additional reductions in the overnight rate to a more manageable level as the year continues. Experts are predicting that The Bank of Canada rate could drop to 3.75% by the end of 2024.
  • Housing Prices: With interest rates expected to start coming down mid-year, that means more affordability and buyers in the market. As a result, it is expected that home prices will increase this year.
  • Market Inventory: According to the Canadian Real Estate Association, the number of new properties listed has edged up 1.5% month-over-month in January, with this expected to rise as the interest rates drop.?

Looking to buy? For those of you who may be looking to purchase a home this Spring, here are some things that can help you be prepared:


  • Get your finances ready by paying off as much of your debt as possible to improve your debt-to-income ratio and ensure you qualify for the best rate possible.
  • Obtain a mortgage pre-approval before starting your search. This helps you understand your budget and makes your offer more appealing to sellers.
  • Clearly define your priorities and preferences for a home. This will help streamline your search and make decisions more efficiently, especially as the market becomes more competitive.

First-time homeowner? Take advantage of first-time home buyer assistance if you have not been a homeowner in the past. You can find out more on the Government of Canada website here.

Looking to sell? If you want to sell your home this Spring, you will want to be ready to take advantage of the market! Some things you can do include:


  • The first step is to find a reliable real estate agent who can help you with pricing and listing your home for sale. Not sure who to call? I can provide some references!
  • Allow for open houses during evenings and weekends whenever possible to ensure you’re maximizing potential buyer foot traffic.
  • I have even more tips on decluttering and getting your home ready to sell below!

Want to renew or refinance? If you’re not looking to sell or buy this Spring, you may still be looking for mortgage advice or assistance with your home and finances. Now is a great time to make sure your mortgage is working for YOU! With so many renewals coming up this year, keep in mind there are several benefits to taking time to review your renewal before you sign:

  • Get a Better Rate: With interest rates expected to come down, taking time to reach out to me and shopping the market could help save you money!
  • Consolidate Debt: Renewal is a great time to take a look at your existing debt and determine whether or not you want to consolidate it onto your mortgage. In most cases, the interest rate on your mortgage is less than you would be charged with credit card companies or other forms of financing you may have.
  • Start on that Reno: Do you have projects around the house you’ve been dying to get started on? Renewal time is a great opportunity for you to look at utilizing some of your home equity to help with home renovations so you can finally have that dream kitchen and updated bathroom, or even utilize it to purchase a vacation property!
  • Change Your Mortgage Product: Are you not happy with your existing mortgage product? Perhaps you’re finding that your variable-rate or adjustable-rate mortgages are fluctuating too much and you want to lock in! Alternatively, you may want to switch to a variable as interest rates level out. You can also utilize your renewal time to take advantage of a different payment or amortization schedule to help pay off your mortgage faster!