Economic Insights from Dr. Sherry Cooper – April 2023

Mortgage Tips Jag Dhamrait 4 Apr

In March, the global economy was focused on systemic risk in the banking sector.

Following three bank failures in the U.S., markets were roiled again by the forced sale of Credit Suisse to UBS.
Interest rates have plummeted as demand for the haven of government bonds has increased sharply. Consequently, five-year fixed mortgage rates have fallen roughly 30 basis points as the Fed pondered its next move.

Inevitably, failed banks and fears of additional losses have led many financial institutions to tighten their provision of credit. Although interest rates have fallen worldwide, more cautious lending will slow economic activity, particularly in the U.S. and Europe, ground zero for bank failures.

For that reason, many expected the Fed to pause to assess the situation further. The Fed raised its overnight policy rate 25 bps to a range of 4.75% to 5.0%, now above the overnight rate in Canada.

Just over two weeks ago, Fed Chair Jerome Powell testified to Congress that inflation pressures warranted higher-than-expected interest rates. With the bank failures, the Fed suggests that the target level might be only one or two moves away. However, even with that, the U.S. central bank reasserted that interest rates determined by the Fed will not be reduced until next year.

Market-determined yields have fallen sharply, especially at the short end of the yield curve—increasing the inversion in the yield curve. An inverted yield curve portends a more aggressive economic slowdown, reflected in the fall in oil and gas prices.

Canada’s yield curve moved almost as much as in the U.S. Good news on the inflation front affirmed the Bank of Canada’s decision to pause. Consumer price inflation fell last month from 5.9% to 5.2%. The Bank will likely pause again at its next meeting in April.

Canadian bank stocks fell quite a bit, mirroring global trends. Our banks are in no danger of failing. Like the 2008 Financial Crisis, Canadian banks have proven to be very soundly regulated.

Lower mortgage rates are great news for the coming Spring season. While it won’t measure up to the 2021 boom, a rebound in sales and new listings will be great for the industry.

Spring Cleaning Tips

Home Tips Jag Dhamrait 2 Apr

As the sun starts coming back around, it is a great time to scrub those windows and deep clean your home!

Here are some tips for a successful Spring clean:
  1. Create a Playlist: Everything is more fun with a great playlist! Not only is music great therapy but it can make the cleaning process go by quicker and make it more enjoyable.
  2. Clean One Room at a Time: While we all like seeing our homes sparkly and fresh, it can sometimes be an overwhelming process to get to that point. To help minimize the stress, work one room at a time! Start with the smaller rooms, or those that need the least amount of cleaning, and work your way up to the larger, project rooms. Another option is to tackle one or two rooms each weekend for the month and by the time May comes, you’ll be ready!
  3. Declutter as You Go: Spring cleaning isn’t just about shining up the brass on the door and dusting. It is just as important to declutter your space! Before you start cleaning the room, it is a good idea to pinpoint items that can be discarded, such as old magazines and papers, as well as to go through closets and cupboards for anything that you can donate (like that sweater you bought and never wore). This will clear up space for new clothing and items and will make you feel that much more accomplished!
  4. Think Green: Spring cleaning allows us to start the season off on a fresh, clean note. Don’t muddy that up with harsh chemical cleaners. In today’s eco-friendly environment, there are many safe alternatives to regular cleaners. Vinegar is a great substitute in the bathroom or kitchen as well as combining vinegar, baking soda and water as a deep clean alternative. You can also opt for a steam cleaner to manage tile, hardwood floors, appliances and even outdoor areas as they only use hot water and vapor.
  5. Work From Top to Bottom: Starting from the ceiling and working your way down just makes sense! This will force debris downward and save you having to re-clean your space. Dusting first will prevent a headache later too!
  6. Don’t Forget The Fridge & Freezer: The best time to clean out your fridge and freezer is right before you do your grocery shop, so they will be at their most empty. Take everything out and dispose of anything that is past its expiration date and any almost-empty items you won’t use. Before you restock be sure to wipe down the interior of the fridge with disinfectant and a damp cloth. The same can be done for the freezer but you’ll have to defrost it first!
  7. Clean Air Reduces Allergies: Replacing furnace and HVAC filters is one of the most overlooked parts of Spring cleaning. Going as far as replacing your standard filter with a more robust one with a higher rating will help keep you even healthier this year as they catch smaller particles to ensure your home is void of allergen triggers, chemicals and even odors.

Family Day Ideas

Home Tips Jag Dhamrait 17 Feb

Mother with her daughter and son baking Family Day treats while father looks onFor those who celebrate Family Day, I thought I would highlight some ideas for special things you can do this weekend and on Family Day with your loved ones, and remind them how much you care!

From crafts and cooking to volunteer work or exercise classes, below are a few ways you can celebrate Family Day this year:

  • Cook a Meal Together: From making mini personalized pizzas to cooking up a brand-new recipe or baking something delicious, the kitchen is a great space for family time and making fun memories!
  • Get Crafty: Time to break out the glitter, glue and fun! Set up a craft station at your house this Family Day to entertain younger children – and reawaken your inner child! Don’t be afraid to get messy and create something fabulous.
  • Volunteer: A great way to make an impact (and bond with your family while you’re at it) is to volunteer your time together! Consider reaching out to a local organization or finding an event, such as a park clean-up, to participate in.
  • Try an Exercise Class: Want to enjoy your family and get a little exercise while you’re at it? Try joining a ZUMBA workout or an online exercise class! Not only is this a fun activity you can do with your kids from home, but it is a great way to teach them about health and start setting up healthy habits for life.
  • Record a Message: Sometimes, the entire family isn’t able to get together but recording a message together and sending it to those aunts, uncles and grandparents who live elsewhere is a great way to celebrate your family no matter where they are in the world.

No matter how you spend it, I hope you have a wonderful Family Day and I wish you and yours the best to come.

Understanding Reverse Mortgages

Mortgage Tips Jag Dhamrait 18 Jan

senior couple hugging and laughing at home

Did you know? Reverse mortgages are continuing to gain popularity for older homeowners in Canada! For many Canadians who are looking to retire but currently facing high debt load and ongoing expenses, as well as reduced income, it can be a challenge. This is where the reverse mortgage can help!

This product is also a great option for anyone wanting to assist their elderly parents. Instead of selling the home and moving them to a care home or assisted living, a reverse mortgage is a terrific way to access the equity in the home, month by month, to pay for in-home and ongoing care costs.

The goal of the reverse mortgage is to allow Canadians over 55 years to tap into the equity of their home, which assists in comfortable financial living. With a reverse mortgage, however, borrowers are not required to make regular payments. This allows them a considerable inflow of cash, without having to pay off what they owe! The only time payment will be required is when you sell or move out of your home.

Reverse mortgages are designed to allow you to access up to 55% of your home’s equity, thereby allowing you to convert your home equity into cash. This can be done as either a one-time lump sum payment, or you can choose to structure it to receive monthly payouts.

Beyond being able to cash in on your home’s equity, a reverse mortgage also has:

  • No monthly mortgage payments
  • No income or credit qualifications
  • Very low / little paperwork required
  • Title and ownership of property remain in homeowner’s name
  • Flexible options to break term early if needed
  • Penalty waived in the event of death or care home placement to preserve the estate

If you are struggling financially, or want to have a little extra equity on hand to pay off existing debts, gift money to family, expand your quality of life or simply increase your investment portfolio, contact me today! I would be happy to discuss the possibility of a reverse mortgage in further detail with you and ensure it is the best product to suit your needs.

Post-Holiday Debt Consolidation

Mortgage Tips Jag Dhamrait 10 Jan

Couple sitting in kitchen looking at billsThe holidays are a season of giving and often times, households can often find themselves carrying some extra debt as we enter the New Year.

If you happen to be someone currently struggling with some post-holiday debt, that’s okay! Whether you’ve accumulated multiple points of debt from credit cards or are dealing with other loans (such as car loans, personal loans, etc.), you are likely looking for a way to simplify your payments – and reduce them.

Rolling them into your mortgage could be the perfect solution. In fact, consolidating other forms of debt into your mortgage has multiple benefits, including:

  • Helping you pay off your loans over a longer period of time
  • Allowing for reduced interest rates when compared to a credit card
  • Being easier to track with one single payment per month
  • Reduce your total monthly outlay of debt repayments

If you’re still not sure if this is the right solution for you, here is an example… if you have $30,000 of credit card debt, you are probably paying approximately $600 per month and $500 per month of that is likely going directly to interest. If you let me help you to roll that debt into your home equity and monthly mortgage, your payment for this $30,000 portion would drop down around $175 per month, with interest charges closer to $140 per month. That is huge savings!

While debt consolidation through refinancing will increase your mortgage, the benefits can be well worth it when it comes to interest savings, time and stress. Keep in mind, you’ll need a minimum of 20 percent equity in your home to qualify for this adjustment.

If you are looking for a way to simplify (or get out of) debt, reach out to me today! I would be happy to take a look at your current mortgage and walk you through the debt consolidation process, or help you come up with an alternative option that may help suit your needs.

Time to Check-In with your Mortgage!

General Jag Dhamrait 19 Jan

There has never been a better time for your annual mortgage health check-up! By organizing a quick mortgage review each year, it may yield you some fruitful financial savings.

Your home loan review this year will examine the most common potential monthly savings opportunities, including high-interest credit card debt or fixed loan payments. Reviewing your mortgage terms and options annually could result in having more money left over at the end of each month – and who doesn’t want that?!

For instance, are you exercising your penalty free extra payment privileges? Do you have any? Prepayment privileges allow you the opportunity to pay up to 20% extra per month and a total of up to 20% lump sum per year – without penalty! This means that for a $300,000 mortgage on a 25-year amortization, a 20% monthly payment increase can generate $18,000 worth of savings AND help you to pay off your mortgage 5 years earlier! When you add-on the annual lump sum of $2,500, the savings are increased to just over $25,000 for the year and bumps you up to being mortgage-free 8 years earlier! You can also use My Mortgage Toolbox app to calculate the potential savings from an extra payment.

Increasing Payment 20 per cent

 

When it comes to mortgage payments, another great question for your annual check-up is whether or not you are on the best payment frequency for your cash flow and to best optimize savings! Most lenders offer various payment frequency and an annual mortgage review can help identify the best frequency based on changing needs and cash flow situations. A monthly payment is simply a single large payment, paid once per month; this is the default that sets your amortization. A 25-year mortgage, paid monthly, will take 25 years to pay off but includes the added burden of one larger payment coming from one employment pay period. Alternatively, an accelerated bi-weekly payment pays your mortgage every two weeks. This frequency allows the mortgage payment to be split up into smaller payments vs a single, larger payment per month. This is especially ideal for households who get paid every two weeks as the reduction in cash flow is more on track with incoming income.

These accelerated bi-weekly payments also offer interest savings, as you are actually making an extra payment each calendar year. For instance, a $300,000 mortgage on an accelerated by-weekly payment schedule will pay off your mortgage two and a half years faster and generate approx. $8,000 in savings!

That’s like getting a $10,000 a year raise just by changing your payment frequency! You can use My Mortgage Toolbox app to also calculate these payment differences.

accelerated bi-weekly payments

 

Another area to look at during your mortgage check-up are your penalties. Breaking your mortgage term early, and before the scheduled contract maturity date, will almost always incur a penalty. The amount depends on various factors such as how far you are into the existing term, your current interest and rate type, your existing lender, etc. However, with today’s rates sitting at such a historical low, there can still be savings! Now, if you break your mortgage early and incur a penalty, you can still come out ahead. For instance, it is possible to save $20,000 with a new low rate and incur a $15,000 penalty, which still puts you $5,000 ahead! Having an annual mortgage review can look at these options and determine if it is a benefit for you to chase these historically low rates.

Beyond your current payments and interest rate, consumer debt outside of the mortgage is another important area for review. Did you know? The average Canadian has $30,000 of credit card debt, at approximately 20% interest?! Reviewing your home equity situation could yield $10,000 savings, per year, by rolling debts into your home equity loan. Contact me today to discuss this further and see if it is an option for you!

consolidating debt saves money

 

Pay more to save more, pursue lower rates even with a penalty, and debt consolidation are just three examples of the financial savings an annual mortgage check-up with your mortgage professional can do! With interest rates at historic lows, now is the time to investigate all your options and perhaps save yourself thousands of dollars per year, especially if your current interest rate is over 3%! Imagine what you could do with the savings – anything from renovating or investing to going on a much-needed vacation or putting money towards your children’s education.

Completing a straightforward annual review will keep your home financing as lean and trim as possible. In other words, you will have a clean bill of mortgage health, which is just what the doctor ordered!

Contact me, your mortgage agent to set up a mortgage check-up today!

Jag Dhamrait
T: 647-883-7790
E: jag@dlccastle.ca

Apply now!

6 Smart Ways to Cut Your Energy Costs

General Jag Dhamrait 3 Apr

In the last decade, climate change and energy efficiency have become top of mind for many Canadians. From wanting to do our part by recycling to making our home as energy efficient as possible, there are so many benefits to being environmentally and energy conscious.

If you are looking to cut costs or simply want to reduce your eco footprint, here are some great ways to cut your energy costs!

Get a Smart Thermostat: A pretty easy installation, a smart thermostat can help you better manage your in-home temperature. Whether you opt to install a basic programmable thermostat or try the Google’s Nest, which learns from you and works to predict which temperatures you prefer and when, getting a read on your in-home temperature can help you better manage your energy usage.

Look for Drafty Spots: When it comes to heating your home, it can quickly become a wasted effort and results in extra costs if you have drafts in your home. In addition to windows and doors, you should also seal any folding attic stairs, add a fireplace plug to seal the damper and install a dryer vent seal to reduce drafts in your laundry room.

Swap to LEDs: Most of us are already using LED bulbs throughout our home. If you aren’t yet, now is the time to make the switch! LED bulbs use 15% less energy than an equivalent incandescent, which can save you a ton of money each month especially in larger homes.

Turn Down Your Water Heater: While sometimes nothing beats a good scalding shower, you don’t want to be burned with a high energy bill. Did you know if you knock down that temperature gauge by just 10 degrees, you can save 3% to 5% on your bills each month!?

Examine Your Appliances: Since 1992, ENERGY STAR® has been backing energy efficient appliances and products, helping consumers make the right choices.

Some of the least green appliances in your home are your dishwasher, washing machine, dryer and refrigerator and, if you don’t currently have Energy Star certified versions of these machines, swapping to them is a sure-fire way to reduce your monthly expenses.

Can’t afford new appliances? Here are some other tips and tricks to help make them more efficient in the meantime:

  • Dishwasher: Use a citric acid-based cleaner in an empty cycle to rid your dishwasher of excess soap and calcium buildup that may be causing your machine to work harder.
  • Washing Machine: Maximize energy by stuffing your machine to the brim whenever possible as washing machines typically use the same amount of energy regardless of load size.
  • Dryer: For starters, ensure you are always cleaning out your lint filter to increase air circulation. In addition, keep an eye on the outside exhaust and clean when needed to reduce drying time and save energy.
  • Refrigerator: While most of us are more concerned with the food inside our fridges than the parts, it is important to check your condenser coils. Over time, dirt, food particles and dust can collect and reduce the efficiency. Another tip is to set your refrigerator to 36- and 38-degrees Fahrenheit.

Close The Blinds: When the temperature starts heating up, it is important to close the blinds and drapes to prevent the sun from beating in and warming up your home. The excessive heat makes your air conditioner work overtime causing your energy bills to skyrocket.

In addition to the cost savings and environmental benefits of improving your energy efficiency, CMHC also has a rebate available! This rebate can provide a 15-25% insurance premium rebate on buying new or performing renovations that meet energy efficiency standards! Click here for more details.

Selling Your Home in the Winter

Mortgage Tips Jag Dhamrait 6 Mar

While you might think selling your home in winter is harder, with the right considerations it doesn’t have to be!

When selling your home during warmer months, the focus is typically on curb appeal and gardening, as well as having bright colours and patterns to draw out different rooms. While curb appeal should not be forgotten in winter months, the focus should be centered on creating a warm, comfortable and welcoming space. Below are some tips on how to do this:

  • Curb Appeal: If you live in an area that receives high amounts of snow, be diligent about keeping your sidewalk and driveways clear for visitors, and to keep your home looking clean for the viewing. Always make sure to sweep any fallen leaves or debris.
  • Keep it Cozy: Ensuring your home is sufficiently heated during showings will also go a long way to making it feel more comfortable; a steady 68 to 70 degrees Fahrenheit during showings is ideal.
  • Light and Inviting: With days being shorter and darker during winter, ensuring your home is well-lit and inviting can make a big difference. In some cases, you may consider repainting the walls before listing your property.
  • Declutter: When selling, it is important to declutter your home so that it looks its best and gives room for people to imagine their own belongings in your space.
  • Define Property Boundaries: If you are showing your home in the middle of snow season, be sure to mark the four corners of your property so that potential buyers can see exactly what they are getting.

While there is some extra work with selling your home in the winter due to the weather conditions, it can pay off! Buyers tend to be highly motivated and often there is less competition for sales during this time giving more focus to your home.

New Year Home Maintenance Plan

Home Tips Jag Dhamrait 20 Jan

Keep your home in comfy, cozy and working order all year long with this easy maintenance schedule highlighting important areas to check – and when!

  1. January: Safety check! Start your year off on the right foot by ensuring your home is in proper working order. Test your smoke and carbon monoxide detectors and replace batteries as necessary.
  2. February: The colder months are a great time to tackle indoor maintenance. Take the time to inspect your shower, tub and toilet for any leaks and recalk as needed to save you on costly repairs later in the year.
  3. March: Inspect your windows and doors for cracks as any gaps will cause heat (and air conditioning!) to escape from your home. Add weather stripping as needed to ensure they are sealed.
  4. April: As we get closer to spring, this is a great time to focus on the exterior of your home. A power-wash and deep clean of your siding and windows will help your home look its best.
  5. May: With summer just around the corner, this is a good time to check your A/C unit and ensure it is up to the challenge. Contact a professional HVAC company to service your unit and ensure it is up to optimal efficiency and output.
  6. June: As we move outside in the warmer months, this is the perfect opportunity to spruce up your deck and outdoor space. Pressure washing and resealing your deck will help keep it functional and gorgeous, all year long!
  7. July: Insects run wild in the warmer weather. To prevent damage, it is a good idea to consider a pest control plan especially if you live in a highly active area.
  8. August: As the end of the summer approaches and we get closer to the rainy season, you will want to ensure your roof is in good working order. Check the areas around your eaves and gutters for any water damage and ensure there are no leaks or loose shingles that could cause issues down the road.
  9. September: To create that warm and cozy fall atmosphere, you will want to ensure your fireplace is doing its job. This is the perfect time for a thorough inspection of your fireplace – whether wood or gas – to ensure everything is working well.
  10. October: With the gorgeous colors of fall in full swing, October is a great month to touch up the exterior of your home’s paint and boost your curb appeal. While you’re at it, make sure to check your foundations for any damage that could worsen in the colder months.
  11. November: As the leaves start to fall, it could spell a mess for your home. In November, focus on leaf and gutter cleanup. Regularly rake your yard to keep your grass green and collect any debris that may have collected in your gutters or your roof from high winds.
  12. December: You made it! Another year of home maintenance is almost done as we move into December. Get yourself snow ready by prepping your pipes and considering added insulation to keep them from freezing.

Happy New Year!

General Jag Dhamrait 1 Jan

We’re past the half way point in January! 2020 was a year full of surprises and change. 2021 gives us the opportunity for a fresh start, to renew or create new goals, and learn from past mistakes.

Resolutions are not for everyone. If you made resolutions or goals, take them day-by-day and don’t be hard on yourself if you have setbacks. Don’t dwell on them, make a commitment to yourself and move forward with a positive mindset. Small steps lead to incremental changes that will add up over the course of the year.

If you need help with goal setting or resolutions, visit ParctipACTION’s Take goal setting to the next level – make it SMART.

So, bring on the rest of 2021! Wishing you a great New Year ahead!

123