December update
December Update – 2022
Good afternoon,
I am sure many of you heard the latest update from the BOC in relation to the overnight rate hike by an additional 50bps (0.50%) bringing the rate to 4.25% and the corresponding prime rates should move in the days ahead to 6.45% with many lenders and 6.60% with TD.
The Bank of Canada – made this decision as consumer spending & inflation continues to hold steady even with the aggressive approach by the BOC this year.
What does this mean as we look ahead?
• Company lay offs are growing (which means profits must be on the decline as well)
• Credit Card Debt Balances grew exponentially (meaning peoples access to debt is further reducing & the cost of borrowing is rising)
• Real Estate across the country is continuing to soften and provide a landscape which includes conditions, time to reflect before going firm, further due diligence and price negotiation.
• Fixed Rates are falling – with this many of you in a variable rate product or with HELOC’s may be considering locking in – if so, let’s setup a time to discuss the pros and cons and best alternatives to suit your needs
• Cost of Borrowing is soaring upwards for individuals in floating products – and for the first time historically the Bank of Canada has lost a significant amount of capital in their latest report last month.
Why are these important to consider:
1. The Bank of Canada will continue to use monetary policy & tightening methods until inflation starts to fall
2. As debts are rising, payments are becoming less manageable, and unemployment and job loss starts to impact a larger population – this SHOULD reflect in inflation coming down and not just stabilizing but there could be further hikes ahead
3. Many are considering buying at this time for several reasons – as fixed rates fall and prices have fallen there are more opportunities for individuals to qualify, barriers to entry are reduced and investors begin to edge back to the forefront of the home buying market.
4. Variable rates now will exceed fixed rates by anywhere from 0.50% to a full percent depending on your product, lender, and rate.
Considering your options:
Variable Rate Clients & HELOC clients:
• Riding out the variable environment – with uncertainty being certain in the year ahead – it is worth us considering your options, managing expectations, and ensuring you are comfortable if the payments rise further
• Locking In with your existing lender – we can walk through these options
(short-, mid- or long-term rates)
• Looking at alternative lender solutions
• Considering a longer amortization period to manage cashflow
• Consolidating Debts – to better manage cash flow in uncertain times
New Home Buyers & Investors:
• Re-assessing your qualifications and alternatives in a changing rate environment
• Discussing with your agent in terms of properties and areas to watch
• Upcoming Recission Period in BC (more to come on this on our website in the days ahead) January 1st, 2023
• BC Strata Changes in terms of rentals, age restrictions and bylaw changes January 1st, 2023
• Foreign Buyer Ban – coming into effect on January 1st, 2023
I promise to be here every step of the way and guide you through the process. If there is a time that best suits you to connect, and to discuss the impact on your individual situation, adjusting your payments, structure or homeownership plan know we are always here.
Sincerely,
Catherine Ellis
CEO|Award Winning Mortgage Professional
Cultivate + Evolve Financial | The Collective Mortgage Group
778-835-4565 | info@cefinancial.ca
www.cultivateevolvefinancial.com
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