Bank of Canada Rate Announcement Jun 5th, 2024

Josh Perez • June 5, 2024

Bank of Canada reduces policy rate by 25 basis points.

FOR IMMEDIATE RELEASE

June 5, 2024

The Bank of Canada today reduced its target for the overnight rate to 4¾%, with the Bank Rate at 5% and the deposit rate at 4¾%. The Bank is continuing its policy of balance sheet normalization.

The global economy grew by about 3% in the first quarter of 2024, broadly in line with the Bank’s April Monetary Policy Report (MPR) projection. In the United States, the economy expanded more slowly than was expected, as weakness in exports and inventories weighed on activity. Growth in private domestic demand remained strong but eased. In the euro area, activity picked up in the first quarter of 2024. China’s economy was also stronger in the first quarter, buoyed by exports and industrial production, although domestic demand remained weak. Inflation in most advanced economies continues to ease, although progress towards price stability is bumpy and is proceeding at different speeds across regions. Oil prices have averaged close to the MPR assumptions, and financial conditions are little changed since April.

In Canada, economic growth resumed in the first quarter of 2024 after stalling in the second half of last year. At 1.7%, first-quarter GDP growth was slower than forecast in the MPR. Weaker inventory investment dampened activity. Consumption growth was solid at about 3%, and business investment and housing activity also increased. Labour market data show businesses continue to hire, although employment has been growing at a slower pace than the working-age population. Wage pressures remain but look to be moderating gradually. Overall, recent data suggest the economy is still operating in excess supply.

CPI inflation eased further in April, to 2.7%. The Bank’s preferred measures of core inflation also slowed and three-month measures suggest continued downward momentum. Indicators of the breadth of price increases across components of the CPI have moved down further and are near their historical average. However, shelter price inflation remains high.

With continued evidence that underlying inflation is easing, Governing Council agreed that monetary policy no longer needs to be as restrictive and reduced the policy interest rate by 25 basis points. Recent data has increased our confidence that inflation will continue to move towards the 2% target. Nonetheless, risks to the inflation outlook remain. Governing Council is closely watching the evolution of core inflation and remains particularly focused on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour. The Bank remains resolute in its commitment to restoring price stability for Canadians.

Information note

The next scheduled date for announcing the overnight rate target is July 24, 2024. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR at the same time.

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How To Get A Mortgage After Bankruptcy

By Josh Perez • April 23, 2025

Sometimes life throws you a financial curveball. Bankruptcy and consumer proposals happen. It doesn’t mean your life is over, and it doesn’t mean you won’t ever qualify for a mortgage again. The key to financial success here is getting things under control as quickly as possible. You must demonstrate to the potential lenders that what happened in the past won’t happen again in the future. So if you’re thinking about getting a mortgage post-bankruptcy, lenders will want answers to the following questions: How long have you been discharged? Securing a mortgage will be dependent on how long it has been since you were discharged from your bankruptcy or consumer proposal. Most lenders consider the discharge date on both to be your new ground zero. And while there is no legally defined waiting period for when you can apply for a new mortgage post-bankruptcy, what lenders will assess is how you’re managing your finances after your financial troubles. Have you established new credit? You can show lenders that they can trust you after bankruptcy by establishing new credit and managing that credit flawlessly. So as soon as you’ve been discharged, it’s a good idea to get a secured credit card and start rebuilding your credit score. To be considered completely established, you’ll want to have two years of credit history on two trade lines with a credit limit of $2500 on each trade line. You’ll also want to make sure that you have no late or missed payments. How much do you have available for a downpayment? The more money you have to put towards purchasing a property, or the more equity you have in your property in the case of a refinance, the better your chances of getting a mortgage. The more money you bring to the table, the more comfortable a lender will feel about the risk they take of losing their investment should you run into future financial difficulty. What is your total debt service ratio? Another consideration lenders will look at is how much money you make compared to the cost of making your mortgage payments. So it probably goes without saying that the more money you make compared to the amount you want to borrow, the better. Conventional or insured financing. If you’re looking to get the best mortgage products available, here are some of the things a lender will want to see: You’ve been discharged for at least two years plus a day. You’ve established your credit (as listed above). You have at least 5% down for the first $500k of the purchase and 10% down for anything over $500k. If you don’t have a 20% downpayment, you will be required to secure mortgage insurance through CMHC, Sagen (formerly Genworth), or Canada Guaranty. The cost to service the property and all your debts don’t exceed 44% of your gross income. Alternative lending As independent mortgage professionals, our job is to provide solutions and strategies for our clients. As such, in addition to dealing with many traditional lending institutions, we also have access to lenders who specialize in working with clients whose financial situation isn't all that straightforward. These private lenders offer alternative lending solutions that consider the overall strength of your mortgage application. While you won’t qualify for the best rates and terms on the market by going with an alternative lender, if you’re looking for options, you might find that alternative lending is a very reasonable solution for you. Alternative lending isn’t for everyone, but it’s an excellent solution for some, especially if you’ve gone through a bankruptcy or consumer proposal and need a mortgage before fully establishing your credit. Get in touch anytime. So whether you’re looking for a plan to help you qualify for a mortgage with the most favourable terms or if you need something more immediate. Please connect anytime. It would be a pleasure to outline your options and work on a plan to get you a mortgage.

Why Self-Employed Individuals Should Avoid Going Directly to the Bank for Their Mortgage

By Josh Perez • April 22, 2025

As a self-employed business owner, getting approved for a mortgage can feel like an uphill battle. If you’ve been heading straight to the bank for help, it’s time to rethink that approach. There are two main reasons why this could be a bad idea: the people you’re dealing with and the products they offer. Let’s break down why these two factors can cause problems for self-employed individuals seeking a mortgage. The People: Lack of Expertise There’s a growing trend in banks today, one that’s getting worse with every passing year: more and more bank employees are lacking the necessary experience in financial planning, particularly when it comes to understanding business owners. This leads to a crucial misunderstanding of how businesses operate, which can directly impact the approval process for a mortgage. When you go to the bank, the person you’re dealing with may not ask the right questions or dive deep enough into your business’s financial health. They might focus too heavily on what you personally take out of your business, instead of getting a full picture of how your business operates and its potential for growth. The lack of this understanding means your mortgage application could be misjudged, leaving you without the approval or terms you need. The Products: Not Designed for Business Owners The second issue is the products that most banks offer to business owners. Traditional bank products often base their qualification process on the personal income a business owner takes out of their business. For many entrepreneurs, this creates a problem because it’s often in their best interest to leave more money within the business rather than withdrawing it personally. This is especially true when trying to grow a business sustainably. By focusing solely on personal income, banks miss a huge part of the picture. A business owner’s true financial strength is not just in the salary they pay themselves, but in the overall health and future potential of their business. When banks ignore this, they miss opportunities to offer better mortgage products that take into account the business’s long-term financial viability. The Alternative: Working with a Mortgage Broker As a mortgage broker, my role is to work with a wide variety of lenders who take a common-sense approach to self-employed business owners. Instead of just looking at personal income, we dive deep into the overall financial health of the business itself. This involves looking at how the business operates, understanding its financial structure, and making sure that your business’s potential for growth is properly recognized. One of the biggest benefits of being a business owner is the ability to retain earnings within the company. By doing this, you can avoid the highest personal tax rates and use the extra funds to grow your business sustainably. But when you go directly to a bank, they might penalize you for not taking out large amounts personally. A mortgage broker, however, can work with you to ensure that your business’s growth strategy is taken into account, helping you secure a mortgage that fits your long-term goals. In Conclusion If you’re self-employed and you’re planning to get a mortgage, it’s time to stop going directly to the bank. Instead, work with a mortgage broker who understands the unique needs of business owners. A mortgage broker will help you navigate the complexities of self-employment and find mortgage products that are more in line with your business’s health and future potential. Don’t let banks’ limited understanding of your financial situation stand in the way of your homeownership goals. Take the smart route and get the right support to secure a mortgage that works for you and your business.