The Mortgage Minute: Issue #2

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Really!? Again? Yup, you better believe it. Make room in your inbox, and time in your schedule, to read my second update email! With #2 under my belt, I’m practically on a roll.

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It hasn’t been an optimistic few weeks with all the doom and gloom headlines surrounding interest rate hikes and the Bank of Canada’s never ending battle with inflation. In an attempt to not bury the lead, there is no quick fix for what we’re going through – so it’s extremely important we all buckle up and get ready to weather the storm ahead.

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Let’s dive into it!

The anti-flipping tax is going to be introduced on January 1st, 2023. No, it’s not what you’re thinking. It’s not a tax for people who flip the bird in Toronto traffic (although one could argue how we need that much more). The new anti-flip tax is designed to deter people from purchasing homes and selling them in less than a year to turn a profit. It’s a practice that fuelled the meteoric rise of the housing market in 2021 and the government is putting a stop to it. Starting Jan 1, to avoid the tax, you’ll need to have owned the home for at least 365 consecutive dates. If anything, this will serve as a future-proof method from ensuring steep price hikes don’t occur again (although it seems Mr. Macklem and his war on inflation are handling that risk just fine by simply destroying the economy).

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If you haven’t already noticed, there’s an elephant in the room and it’s the Bank of Canada. As if we haven’t been hit with enough, there are two Bank of Canada interest rate announcements remaining for 2022. The next announcement is slated for October 26th, and economists like CIBC’s Benjamin Tal are expecting at least a 0.50% increase to the overnight lending rate. What does that mean? If you’re in an adjustable rate mortgage (where your payments fluctuate with your rate), expect your monthly payments to go up by approximately $30 for every $100,000 of your outstanding mortgage balance. For the average $500,000 mortgage, that means your monthly payments could increase by as much as $150/month. Combine that with the heightened cost of essentials like grocery, and you quickly realize we’re in the perfect storm.

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If you’re worried about being able to sustain your mortgage, don’t hesitate to reach out – we can chat through it together. That’s exactly what I’m here for. Happy to help advise on and navigate the uncertainty we’re all faced with that is the real estate market.

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Alberta is seeing its biggest population boom in years. Like many of you, I’ve been a victim of social media ads persuading me to move to Alberta. Who doesn’t want an enormous home sitting on a huge chunk of land for next to nothing (relative to Toronto). Well, it seems like the rest of Canada wants it. Alberta is home to the largest interprovincial migration according to last quarter’s net migration data, which saw a 3000%+ year-over-year increase in migration to the province. Time to saddle up cowboy, or is it?

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