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This article is written by SPS Member Rebecca Awram, a mortgage advisor for Canadian Mortgage Experts, sharing her opinion from a mortgage perspective.
So many questions coming in from my clients on this topic. Everyone's looking for a simple answer, but it's a complicated question that requires a detailed response. I understand you're all looking for reassurance, but to truly receive comfort, you need to understand what's going on. So brace yourself, there's a lot to unpack here. Read it twice :)
Prime rate is increasing, currently sitting at 3.70%. Pre-covid in late 2019 it was at 3.95%. So nothing too crazy yet. What is crazy, is our rate of inflation. We haven't seen inflation like this since the 70s and 80s, and the concern of many of my clients is that like the 80s, this inflation will lead to a housing crash. The Canadian government was probably a bit too slow in reacting, and now is faced with the difficult task of slowing it down, even if it means putting us in a recession to do so. They have been criticized for not reacting fast enough, created a credibility issue, and hence will probably over react in the short term. Our government, unlike the governments of the 70s, are inflation fighters. They will ultimately do whatever it takes to get us back to target-inflation, with the mindset that the cure is not as bad as the disease. The economy needs to be slowed-down. But killing inflation also kills the economy
What is Causing Inflation? Are We Back To The 70s?
The 70s saw soviet tanks, war, energy shocks, opec pricing power and a massive spending frenzy of a rising middle class. An era of unprecedented technological growth and people that wanted vehicles, appliances and homes to put them in. Nobody was saving, everybody was spending and interest rates went through the roof.
Some of these items should sound familiar. But there are some stark differences. Our spending frenzy is winding down, as people stop buying the goods they wanted in boredom during covid (entertainment, projects, renovations, new hobbies, etc). Our employment rate is very high. We haven't stopped saving either, Canadians currently have $300B more in their bank accounts than we did pre-covid. Prices are continuing to rise, but it's not necessarily because of demand, it's because of constrained SUPPLY. There is an energy crisis evolving, a shortage of access to fuel, as countries around the world pull away from Russian oil. The war itself is pushing upwards on commodity prices. China has pretty much been closed for business all year, with a strict no-covid lockdown policy so their cheap goods and anything that needs a chip aren't making it to global markets. Supply chains around the world have been disrupted and are just starting to amend. All of these things lead to higher prices. Also people and businesses, sensing scarcity, compete to purchase more and hence drive up pricing even further. The system feeds on itself.
Will Increasing Rates Stop Inflation?
Probably not. Because low rates (demand) aren't what's driving it up. It's a supply-side driven inflation. But rising rates and a frightened populace that stops buying and spending, could afford us the time we need for some (not all) of these things to sort themselves out by winter 2022/23.
1. ENERGY SHOCK - always brings inflation. However, this time around, our dependency on oil is lower than it was during the 70s. Because of climate change, but also because of efficiency and usage. We are close to peak inflation, in relation to energy.
2. SUPPLY CHAIN - that's about 60% of inflationary pressures right now. The year 2021 had four years of average-consumption-of-goods crammed into one year. Demand shock with diminished supply. All related to covid, which about a year from now, should be irrelevant. Taking interest rates to the sky won't solve supply chain disruptions.
3. RENT - will continue to rise. It didn't go up as quickly as house prices during the pandemic, but during covid homebuyers got the benefit of a recession without the downside, renters did not. This has never happened before. Rent will continue to rise because of huge demand and lack of supply.
4. LABOUR MARKET - we simply cannot get enough people; wages are rising in low paid occupations, especially among job switchers. New immigrants traditionally took up a lot of the low paying jobs, but we now have highly skilled and more educated immigrants, so there's been a significant change in the structure. Young adults also traditionally fill a lot of low wage / labour positions, but during covid remote-work created more options and a huge chunk have moved to higher paying occupations.
Will Our Housing Market Crash?
The housing market is slowing. THIS IS A GOOD THING. It is a welcome adjustment, we shot way too high in late 2021 and early 2022 and a course correction is needed. Everyone benefits in a balanced market, instead of just one side over another. And it will continue to soften during 2022 because the government is raising rates and frantically trying to slow us all down, so that some of the things that are REALLY causing inflation (mentioned above) have time to correct. The long term trajectory for our market is still high, because the fundamentals remain the same. Immigrants, and demand, are ever-present. Supply is not. Cost of construction is rising (because of inflation on hard costs, but more importantly also the cost of labour) and developers are seeing their margins shrink. Many lower mainland projects are getting shelved right now, as developers want more certainty in expense and would rather start these projects when the inflationary pressures have subsided and costs are more predictable. So when we do wake back up and demand returns, supply will be even lower. Study after study says we have an existing supply problem against a backdrop of an increasing population.
Defaults, foreclosures and a housing crash? People rarely lose their homes because of rising rates, they lose their homes because of death, divorce and job loss. The metric you want to watch, if you're concerned about a housing crash, is unemployment. And that is at an all time low. Not a recent low, an ALL TIME RECORD low.
Additionally, people aren't as over-extended as the media would have you believe from their click-bait headlines. All those low rate mortgages taken out during covid had to qualify at 5.25%. And average mortgage sizes did not increase at the same increment as housing prices. What increased at the same pace was down payments. First time buyers were largely sidelined, but existing homebuyers moved up and moved out to secondary properties, with big fat down payments from their sale or refinance.
When Will Rates Stop Going UP?
It is much easier to predict long term outcomes than short term ones. 2022 is definitely a transition year, as we move from a pandemic to an endemic. Things will evolve. The effectiveness of monetary policy remains to be seen, but eventually the war will end, supply chains will improve, fuel costs will lower and china will open back up for business. These things do not have an end-date that we can mark on the calendar quite yet, but they will happen. And when they do, our rates will be too high to stimulate economic growth and will come back down. They won't come down to the artificially extreme low rates that we've had during covid, but I predict they will overshoot in the short term and then come down in 2023 to something that balances inflation with economic growth. It's a cycle that will play-out quite predictably, but when you're in it, it's hard to step back and see it from a distance.
Relax, turn off the news, put your phone down and go for a walk. It's all going to be okay.
On behalf of all of us at the Alzheimer Society of B.C., we hope that all is well and you’re enjoying your spring. A huge thank you to all of you who participated in the IG Wealth Management Walk for Alzheimer's on Sunday! You’re all making a real difference in the lives of people affected by dementia.
If you’re a senior and considering purchasing a new home or refinancing the one you have, the prospect of such an investment might feel overwhelming. However, at Seniors’ Lending Centre, we know the ins and outs of this process, and it’s actually not a difficult one to complete! There are a few requirements and even opportunities to consider, but our dedicated team is happy to help you make a sound decision.
Today, using our knowledge of mortgages for seniors in Canada, let’s walk you through how to buy a home or refinance in retirement.
If you wish to obtain approval for a traditional mortgage through the bank, you can do so. However, going this route means you need to follow the same lending guidelines as with younger, employed individuals, so it may sometimes be more difficult to get a decent pre- amount – usually if your income is insufficient. Despite this, if your pension can cover the costs, you likely won’t be turned down, especially if you have enough savings put aside for a large down-payment. There is no age limit associated with a mortgage pre-approval, and it is illegal for any bank to discriminate against senior borrowers.
Canadian Home Buyers’ Plan (Withdrawing from RRSPs)
Many mortgages for seniors in Canada are approved using funds the borrower withdraws from the RRSPs they have contributed over time – up to $35,000 and completely tax-free. This is a great way to increase your down-payment and drive down the total interest, but you need to repay all the RRSP funds you withdraw before reaching age 71. This is known as the Home Buyers’ Plan (HBP). Learn more about it and how to withdraw these funds.
Refinancing (Borrowing from Home Equity)
Interested in making the most of your retirement? Those dream trips, classic cars and new adventures are calling, and refinancing your home creates some cash flow to make these opportunities happen. As stated by the Canadian Mortgage and Housing Corporation (CMHC), you can borrow against your home equity if you’re over age 55 with no significant debt. You don’t need to sell your property or move to a lower-cost home in order to obtain it. Refinancing in particular is an easy option, allowing you to borrow up to 80% of your home’s total value. Those funds are then made available to you, ideal for enjoying your golden years to the fullest, with manageable monthly installments between 25 and 30 years. Learn more about home equity loans in Canada.
CHIP Reverse Mortgages
An alternative to refinancing is applying through the Canadian Home Income Plan, otherwise known as CHIP. Available exclusively to seniors aged 55 or older, borrowers on this plan don’t have to undergo credit checks or meet minimum income requirements. Along with that, there are no monthly repayments to worry about – you can pay as little or as much as you can afford – so it’s one of the best options when looking at reverse mortgages for seniors in Canada! Note that the amount provided depends on the location of your property, its value and your approximate age, among other factors. See all the important details regarding CHIP, or download our free guide.
This is just the tip of the iceberg when it comes to refinancing and mortgages for seniors in Canada – our team can clarify all the important details and even present alternative options! To get started, reach out to us at Seniors’ Lending Centre today for a free, no-obligation quote.
Written by Rebecca Awram
Mortgage Broker at Seniors' Lending Centre
It’s hard to believe it, but spring is here! While we’re just starting to say goodbye to the frigid temperatures of winter, warmer weather will be here before you know it.
But before you pull out the grill and dust off your lawn chairs, take some time to make sure your garden is ready for the coming season. From weeding to pruning and even planting some hardy vegetables, here are a few things you can do to prepare your garden for spring and ensure it’s ready to grow your plants and produce this year.
Give Your Tools Some TLC: Make sure your tools are ready for the tough work ahead by cleaning and repairing any of your tools that need a little love. Sand off any rust using steel wool; use a sharpening stone to restore your pruning tools; take your gas-powered equipment in for a tune up; and wipe down your tools with penetrating oil to keep them in tip-top shape.
Divide Perennials: Right before new growth begins is an ideal time to dig and divide your perennial flowers that are overgrown. Dividing perennials is a budget-friendly way to fill your garden with more plants or share them with your friends to plant in their gardens. Replant the divided clumps immediately and water them well to encourage new growth.
Clean Up Your Flower Beds: Clear away dead leaves and any other debris left by the winter storms. You can also take this time to trim back your annuals, pull weeds, groom your trees, and clear away any winter protection—like raised bed covers—that you added last season.
Inspect Your Trees for Winter Damage: Those snowy winters can be hard on your trees. Take this opportunity, before the leaves grow back, to inspect your trees for damage. Prune off any broken, dead, or storm-damaged branches and trim back your fruit trees before new buds begin to bloom.
Add Fresh Mulch + Fertilizer: One of the easiest ways to make your yard look clean and polished is to add fresh mulch to your garden beds. This can also help the soil retain moisture and can help prevent weeds. While you’re at it, add some fresh fertilizer under the mulch to give your plants some much needed nutrients as the weather warms up.
Start Your Seeds Indoors: If you’re planning to add to your garden this year, now is the time to start your seeds! Although growing season is technically still a few months away, many seeds for annual flowers and edibles can be started indoors earlier in the spring.
Get Ready to Plant Cool-Season Vegetables: Hardy vegetables like artichokes, peas, potatoes, and some types of lettuce germinate best in cool soil—that means early spring is the perfect time to plant them! Once your soil has thawed, plant them in your garden beds to help set them up for harvest by early summer.
Harmony Court Estate in Burnaby offers two large garden courtyards and our Garden Club allows residents to get their hands dirty as they help to spruce up our common walking areas. Our magnolia and cherry blossom trees will be in pink bloom very soon and we encourage you to come by for a tour.
Many of our spacious apartment size suites have balconies overlooking either courtyard with an enhanced view of the mountains on the North side and beautiful sunset views from the South.
For your personalized tour, please call Joel at 604-527-3323 or email him at firstname.lastname@example.org
For a virtual tour visit: www.agecare.ca/tourharmony
Harmony Court Estate
7197 Canada Way
Burnaby, BC V5E 4A6
A Power of Attorney (POA) is a simple and affordable way to plan for your financial future. The power you give can be limited to a single decision or to unlimited powers.
Why is it so important to prepare POA before something happens to you?
As per the Power of Attorney Act, you need to have a mental capacity to do this document, which means if you are in a hospital and can’t communicate, you can’t give power of attorney.
Why is it so important to prepare POA with a legal professional?
We have had many cases when people came to us with a signed power of attorney, and banks did not accept it. There is a legal and practical side to preparing and signing POA. Even though it is allowed by law to sign POA in the presence of 2 witnesses, banks likely won’t accept it if it was signed without a legal professional.
What types of Powers of Attorney exist?
With general POA, your attorney can manage your affairs while you are still capable. You can restrict an Attorney's duties, or limit the time period. Be aware of the fact that these powers of attorney expire.
With an enduring power of attorney, you can plan for any future incapacity. This type is the most popular, as it doesn’t expire. You can always revoke the powers given.
As per law, your attorney must act in your best interests. However, you should understand that there is always a possibility of misusing the trust. So choose wisely.
Most people would ask their family member or close friend to act as their Attorney. Sometimes, it can be a Notary Public, or a lawyer. You need to trust your attorney. Confirm that your attorney is able to act for you. Note that your attorney must be at least 19 years old, and live close to you. You still can choose an Attorney who lives out of province, but think about the practical aspects.
Consider naming more than one attorney in case your main attorney can’t act for you.
It is important to differentiate a power of attorney from will. POA works during your life while your will is used after your death.
What happens if you have not appointed someone as your Attorney and you become mentally incapacitated?
Without appointing someone with an enduring POA, no one has the legal right to act on your behalf (not even your spouse!). Unless your finances are all held jointly with someone else, your finances cannot be used to pay your rent, utilities and other expenses. If you have assets like a home or a vehicle, they cannot be sold even if you no longer live in the home or drive the vehicle. Of particular importance, a home or land held jointly by two or more individuals requires the signatures of all individuals to sell, mortgage or otherwise deal with.
Once an individual has become incapacitated he/she can no longer appoint an Attorney. In this instance the Public Guardian and Trustee will administer his/her affairs. If a family member or friend would like to take control of a loved one's affairs he/she must hire a lawyer and apply to the courts for legal appointment called Committee. This is a costly and lengthy process as opposed to giving a POA. Furthermore, the person named as Committee will have to report to the Public Guardian and Trustee as to what decisions they have made and how money has been spent. Most people find the obligations of a Committee onerous and intrusive.
If you have any questions or would like to discuss further, please contact Uptown Notaries for assistance.
Guest Blog by Natalya Hanna, Notary Public
This Article can not be considered legal advice.
More than 75,000 people in Canada filed fraud complaints in 2021, many of them in the senior population. As an SRES® designee, it is important to be aware of current scams targeting the 55+ community so you can help advocate for them if a need arises. Here are some tips that can help you identify a scam before falling victim.
1. Verify the OrganizationCall them back: Scammers want to build trust fast—preferably in a matter of seconds. They will often pretend to be from a government service agency, like Service Canada or Canada Revenue Agency, or other well known organizations such as Apple, Amazon, or local utilities companies. These imposter scammers often have specific, personal details that make them seem legitimate. Be sure to never give out your credit card or social security details over the phone unless you are the one who initiated the call.
SCAM SAFETY TIP: If someone contacts you from an organization you trust, remind them to verify that they are who they claim to be. They can hang up or stop replying, then contact them using information on the organization’s website.
2. Be Skeptical of Urgent Problems or Sudden PrizesIf you receive a call about a sudden problem (a missed bill, back tax, family health emergency) that until now, you hadn’t known about, be alert. Seniors should be reminded to be skeptical of any unexpected prizes like sweepstakes or all-inclusive vacations. Oftentimes, scammers will use these scenarios and ask for a “small fee” to claim winnings.
SCAM SAFETY TIP: Be aware of people who present you with a problem or a prize. Never give out personal details or credit card info over email or over the phone during an unexpected, incoming call.
3. Avoid Oversharing Personal Details OnlineScammers are experts at extracting info. Sometimes they will research their targets beforehand. They might call and know your and family members’ names, hometowns, or home purchase prices. This kind of information is available online and is easy for them to access. Having this information also makes it easy for them to win your trust and get more details from you. After purchasing a home, your personal details may be more readily available online. Be alert and avoid sharing personal details.
SCAM SAFETY TIP: Keep social media accounts private. Never give someone who contacts you remote access to your computer or device.
4. Always Take the Time to Double CheckIf someone is pressuring you to make an immediate payment, be very suspicious. Scammers expect victims to act fast, before anyone can realize they are illegitimate, so they threaten with losses. If you feel nervous, time-pressured, or afraid of losing benefits during a phone call, it may be a scam.
SCAM SAFETY TIP: Even if something is urgent, there is always time for you to verify details online.
5. Pay with Credit CardPay with Credit Card: Scammers often request specific forms of payment. Anytime someone asks to be paid quickly via wire transfer, gift card, or mailed cash, be wary. Most legitimate organizations offer a variety of safe, traceable payment options and let you decide the best form of payment.
SCAM SAFETY TIP: Only use protected, traceable methods of payment. Using a credit card means you can dispute payments “after the fact” if a product is not delivered as advertised.
BONUS TIPTo opt-out of marketing calls and easily recognize scams, consider registering your number with the National Do Not Call Registry at https://lnnte-dncl.gc.ca/en. Within a month of submission, all legitimate businesses should stop calling you. Scammers will still use your number, but you will know that the calls you receive are not legitimate.
For more information on scams and frauds, visit: https://www.canada.ca/en/revenue-agency/campaigns/fraud-scams.html
March 25-27, 2022 – Poirier Sports Complex, 633 Poirier Rd, Coquitlam BC
The Tri-City Home Show is back at the Poirier Sports & Leisure Complex! The Tri-City’s ultimate one-stop shop for home improvement and building products, services, and advice in one convenient location! The show features 3 big days of demo’s, free samples and expert seminars to inspire.
The show is sponsored by the Design Alley Makeover Showcase presented by Hiar Homes
Design Alley’s award-winning designer, Ronnie Hough will speaking and inspiring you all weekend on the Show Stage! Seminar Theatre Schedule
Friday March 25 – 1:00pm – 8:00pm
Saturday March 26 – 9:30am – 5:30pm
Sunday March 27 – 10:00am – 4:00pm
As always, show admission and parking are FREE to the public.
For more details and to see the full Exhibitor List, CLICK HERE to visit our website.