Have Canadian Home Prices Bottomed Out?

October Home Sales Were Up

According to an article published by the Canadian Real Estate Association (CREA) this month, home sales in Canada may be rebounding after falling since March, when the first interest rate hike from the Bank of Canada (BOC) was announced.

Jill Oudil, Chair of CREA said, “In October, sales across the country increased for the first time since before interest rates started to rise last winter.”

Robert Hogue, assistant chief economist with RBC was cautiously optimistic about this development. He wrote, “Canada’s housing market may be entering the latter stages of its cyclical downturn.”

Will Prices Rise Too?

Although Hogue thought the October statistics signalled reason for optimism, he cautioned that prices did fall in October, and this trend may continue. “Rising interest rates and the loss of affordability will keep market activity quiet into early-2023 and prices will bottom around spring,” he predicted.

In an interview with the Financial Post, Chris Alexander, president of Re/Max Canada, corroborated this. When asked if he believed this news signalled the end of the current price correction in the real estate market he said, “I think that it’s still really early to tell,” and noted that the October increase in sales was “marginal.”

Should Home Owners Be Concerned About Falling Prices?

The steadily falling home prices have been met with concern by homeowners, especially those who are thinking of selling their homes in the coming months.

The latest statistics can be alarming. For example, the CREA’s data show that, on average, home sale prices in Canada were 9.9% lower in October of this year than in 2021. However, Alexander explained that the real estate market in 2021 was inflated.  “The market was in runaway territory for almost 18 months,” he said, “And so this reprieve we’ve seen is welcomed.”

And the decline in prices seems to be slowing. Hogue noted, “Property values are still clearly coming down at this stage but last month’s drop was the smallest since May.”

Silver Linings For First-Time Homeowners

While people already in the market may be worried about falling prices, the cooled market could be good news for people looking to get into it for the first time.

Even though interest rates are high, lower prices could make owning a home within reach for some. In Ottawa, for example, the average price of a home was $624,003 in October. This represents a substantial change compared to the peak average price of $757,225 in March.

Also, a cooling market could mean fewer bidding wars, and the time to complete due diligence like home inspections before purchasing a property.

This time of year can also be advantageous. Since many people prefer to move in the spring or summer, buying in the winter can mean better value and less competition.

Thinking Of Buying?

If you are considering purchasing a new home, you probably have many questions. You may find the answers in our videos, blog posts for first-time buyers, or even better, get in touch with us today! Despite high interest rates, owning your own home may be within reach.

The Gap Between Fixed and Variable Rate Mortgages is Narrowing.

Rising Interest Rates Are To Blame

With the Bank of Canada’s prime lending rate currently at 5.95%, the cost of variable-rate mortgages is almost on par with fixed rates for the first time since 2019.

Fixed mortgage rates, which are locked in at the beginning of a term, and stay the same during that term, are typically higher than variable rates since they offer more stability to investors.

Since the Bank of Canada (BOC) has raised its interest rates six times in the past year, the costs of variable mortgages have soared. The rates for variable mortgages are tied to the BOC’s prime lending rate (usually plus or minus some percentage points).

Another rate hike is expected next month, which could push the cost of variable mortgages even higher.

What This Means For Home Owners

Many Canadians continue to prefer variable rates, even in the current climate. Variable rates tend, on average, to be less expensive over time. They also offer more flexibility.

However, if variable rates do begin to exceed fixed rates, this may change.

Homeowners with signed fixed-rate mortgages are likely breathing a sigh of relief since their interest rates were likely relatively low compared to today’s rates.

Those with variable-rate mortgages may feel the strain on their budgets with the recent increases and may wonder if switching to a fixed rate is right for them.

If you are considering buying a home or applying for a mortgage, you may be wondering which option is best for you. The answer is that it depends on your current situation and risk tolerance.

Fixed Rate Pros And Cons

Fixed-rate mortgages offer peace of mind knowing your monthly mortgage payments won’t change over your term. The downside is that if the current rates do go down in the next few months or years, you could be stuck paying a higher rate.

These mortgages are typically recommended for people with little wiggle room in their budgets, and who are starting out with their mortgages, meaning that a higher proportion of their monthly payments go to paying off interest.

Variable Rate Pros And Cons

Variable rate mortgages do tend to be less expensive over time. However, if you decide to go with this option, be sure you have the money in your budget to handle higher costs if the interest rates go up. The current rate of 5.95% may seem high now, but historically rates have gone as high as 21% in Canada.

These mortgages also have greater flexibility. If you would like to pay off your mortgage faster than the allotted time, this could be a good option for you. Variable mortgages are also good choices for those who have been paying off their mortgages for a while, and are paying less interest as a result.

Don’t Do It Alone

Your situation is unique, and having a trusted advisor on your side can make all the difference. If you have any questions about your current mortgage, or are looking for a new one, get in touch with us today. We’re always happy to help!

Rate and BOC – Should You Be Locking In?

Bank of Canada increased the overnight rate from 3.25% to 3.75%

As inflation remains at some of the highest levels, rates are potentially rising again by the end of the year. 50 bps is what October 26th brought and another possible rate hike in December. This will directly impact all HELOCs, unsecured Lines of Credit and variable-rate mortgages.

The big questions for many are should I lock in my mortgage and what happens at my renewal? The most important thing to remember is that the variable is 3 months of interest anytime to get out of and fixed comes with higher penalties if you break mid-term to renegotiate later. The other thing to remember is that if you paid 1.5% – 3.00% over the past couple of years and now the rate is 5.45% to 6.45%, you have paid an average of around 3.5% to 4.75%.

The idea behind a variable, was to pay the mortgage down while interest rates were at historical lows and then use the strategy to either go against inflation by increasing your payments, set your payments as if you were paying a fixed, invest or create cash flow. If you are looking to lock in, everyone has a different discount from prime and will be offered different rates to lock in. The lock-in rate will be a term that is equal to or greater than what you have left on your current term to avoid penalty.

So here are the steps to take if you are considering a lock-in rate. Call the lender and ask the following:

  1. What rate can you offer from 3- 5 year fixed?
  2. What is the current or remaining amortization?
  3. What would my new payments be with these new rates?
  4. What is the balance of the mortgage?
  5. Find out what the payment will look like if it goes up another 1% or more

Then you can email our team with these options, and we can see if there is something better for you available.

To speed things up for our team – make sure you know what your current rate is and put it in the email. Make sure you let us know who your lender/ bank is so we can get you some details

How To Fight Inflation

Here is a list of strategies and options we have put together for you to help you combat inflation:

  1. If you started a business, then make sure to pay off the no-tax deductible debt first like the mortgage
  2. Use savings to pre-pay the mortgage down for now and you can always pull back out later or set aside to pay the difference or pay off outside debt to outside debt
  3. Look at extending the amortization to 30 years if you have 20% equity
  4. Look at locking in and setting the rate to avoid fluctuations
  5. Consolidate debt into the mortgage such as credit cards, LOCS, and large expenses coming your way, pay off vehicles with high payments and put funds in your bank account – remember your equity is still your money
  6. Contact your car company and ask them to extend your car payments
  7. Add a HELOC to your house
  8. Potentially get a co-signor if you do not qualify to increase the mortgage such as a parent or sibling
  9. Turn your mortgage into a tax-deductible mortgage
  10. Add money to the mortgage to create an emergency fund
  11. Do not do accelerated payments for now. Go back to regular payments to increase monthly cash flows
  12. Lock into shorter terms
  13. Co live by house hacking and rent out space
  14. Co-mortgage with someone by inviting a joint partner to your home

The 5-year fixed today is between 4.89% and 5.89%. The rates will vary depending on what your current mortgage was priced at and the fixed lock-in rates with your lender.

So let us know if you have any questions or need any assistance.

Using Readvanceable Mortgages To Your Advantage

Why You Should Consider Getting One

These days it seems as though the housing market has been cooling down, so it doesn't come as a surprise that many Canadians are moving forward with their house-buying plans.

With so many mortgage options, it can be difficult to choose one that's best for you. Be that as it may, readvanceable mortgages are definitely an option to explore, especially in today's economic climate.

They are a lesser-known option but worth considering if you're looking to buy a home or even refinance your mortgage.

Readvanceable Mortgages Explained

For starters, a readvanceable mortgage is comprised of a line of credit which allows for borrowing and a mortgage. Essentially, this type of mortgage combines a home equity line of credit, also known as HELOC, with a traditional mortgage.

Personal finance writer Julia Kagan explains that readvanceable mortgages allow the borrower to "add a line of credit to the loan, permitting the borrower to re-borrow any part of the principal paid down."

Read More: How To Deal With Mortgage Payment Difficulties

So as you make payments towards your mortgage, the amount of credit available to you increases. Although readvanceable mortgages encompass a home equity line of credit, there are still some key differences that make this type of mortgage unique.

How Is A Readvancable Mortgage Different Than A HELOC?

Both HELOCs and readvanceable mortgages have similar features but there are a couple of things setting them apart.

A HELOC is a type of credit that enables access to large reserves to be used for debt repayments or for purchases with a higher price tag. Many opt for HELOCs due to the competitive variable rates at which they are offered. With this line of credit, your home's equity is taken as collateral, explaining the access to a large pot of funds.

Read More: New Rules For Reverse Mortgages and HELOCS by OSFI

A readvanceable mortgage works differently by the borrower accruing access to more funds with each principal payment made on the mortgage.

This is the one of the main differences instead of having access to reserves immediately like a HELOC. Similar although different, HELOCs and readvanceable mortgages are both options to consider given rising interest rates. However, readvanceable mortgages might be a more suitable option if interest rates continue to climb.

Using A Readvancable Mortgage For The Smith Manoeuvre

Borrowers can make their readvanceable mortgage interest payments tax-deductible using the Smith Manoeuvre.

Back in 2002, financial planner Fraser Smith created a debt conversion strategy known as the Smith Manoeuvre. By having a readvanceable mortgage and using the Smith Manoeuvre, borrowers will potentially be able to profit and reap the benefits of tax-deductibles.

Read More: Save Money On Your Taxes Using The Smith Manoeuvre

The Smith Manoeuvre involves taking the line of credit within a mortgage and turning it into an investment loan. By using a readvanceable mortgage with the Smith Manoeuvre you could increase your tax return.  Then you can be apply it onto your mortgage, effectively reducing your debt.

Julia Kagan says that the "borrower entering a readvanceable mortgage will usually need to be an engaged and attentive investor in order to make smart investments with the reborrowed funds and mitigate the impact of the higher interest rates on the line of credit."

The Smith Manoeuvre strategy isn't something that everyone knows about. But it's definitely a strategy that can save you money and even make some. However, it is always important to consult your financial advisor when deciding to take on a new investment practice.

October Rate Hike To Impact Housing Market?

BOC: Condoning More Interest Rate Hikes

Canadians, especially homeowners, have been grappling with the increased interest rates since the Bank of Canada announced the hike just last month. Raising by 75 basis points, the rate sits at 3.25% and has buyers holding off on purchasing homes, despite the re-calibrating housing market.

Read More: NBC's Interest Rate Hike To Bring Mortgage Market Stabilization

Many have wondered if this was Canada's last rate hike. Chief economists from CIBC, Benjamin Tal and Karyne Charbonneau, said CIBC doesn't predict more rate hikes in the next year. However, according to the governor of the Bank of Canada, that might not be the case.

Calls for More Rate Hike--Up to 4 %

Recently, the leadership from the Bank of Canada made a statement on the Bank's stance on interest rates in the wake of inflation:

"In September, we raised our policy interest rate for the fifth consecutive time since March. And we indicated that interest rates will likely need to go higher still to bring inflation down to the 2% target."- said Tiff Macklem, Governor at the Bank of Canada.

Read More: The Inflation Tsunami in Canada

The BOC is expected to review the incoming financial policy decision in the coming weeks. The next overnight rate target is set for October 26th, only then will Canadians have an answer.

Steven Huebl, Canadian Mortgage Trend reporter, says "with the benchmark lending rate currently at 3.25%, there are growing expectations that the Bank of Canada’s terminal rate for this tightening cycle will be 4%, if not higher."

Huebl wasn't the only one to voice predictions of the cycle hitting 4%. The Organization for Economic Co-operation and Development (OECD) recently released the September 2022 Economic Outlook Interim Report. The fall report also predicts that the BOC's benchmark rate will amount to 4.5% in the coming year.

Canada's Correcting Housing Market will Continue Cooling

Now that another interest rate hike is on the table for Canada, homeowners are wondering how this will impact the housing market.

Mortgage professionals, like RBC's Robert Hogue, have been saying that the housing market is more so re-calibrating as opposed to crashing.

As predicted, before the September rate hike announcement, further rate hikes coming before 2023 will lead to mortgage rate increases. Aside from mortgage rate increases, a second rate hike will impact the purchasing habits of buyers. Not to mention sellers might be on the sidelines.

Read More: Rate Hikes Lead To House Price Fall?

Canada Mortgage and Housing Corporation (CMHC) is now calling for a much cooler forecast in the Canadian housing market based on the foreseeable increase in rates and inflation. Economics reporter Craig Lord says that CMHC's most recent report reflects that "national average home price in Canada will fall 14.3 per cent by the second quarter of 2023."

In an interview with Canadian Mortgage Professional, Senior CIBC economist Benjamin Tal said "the market is already slowing. Now you get an extra push, so [it] will continue to slow. I think that will be the story for the fall."

For the time being, no further information has been released about the potential rate hike. Homeowners, buyers, and sellers will need to wait until the next financial policy decision for an answer. The Bank of Canada will make an announcement on October 26th, 2022.

Mapping Out Housing Price Drops across Canada

Some markets cooling off amid NBC's recent interest hike

The idea of buying and owning a house has become increasingly difficult for many Canadians over the past two years.

Remember the beginning of the pandemic, when housing prices dropped drastically and the rate of home ownership shot up to record highs? It won't return to the same level however, with the recent interest hike, Canadians can expect to see housing prices dropping across Canada in the coming months.

Read More: Rate Hikes To Lead To House Price Fall?

Though it would be nice, not all cities will see the same price drops due to the different economic states in the provinces. Director and senior economist at BMO, Robert Kavcic reports that although housing prices are recalibrating across Canada, the speed and volume won't be the same everywhere.

The Average Price

Last week, the Canadian Real Estate Association (CREA) released a revised report, highlighting the national statistics of housing prices. Based on recent figures, last month, the national average home price was $637,673, revealing a 3.9% decrement from August 2021.

Though this might be the national average, it's important to consider the heavy influences of two markets in particular. The Greater Toronto Area (GTA) and Greater Vancouver have some of the steepest sales and prices in the housing market, so their numbers have a significant impact on the average.

Considering the situation in Toronto, the average home price dropped 12.4% to $760,400 in August after prices peaked in March. However, based on predictions some Canadian cities will see a steeper drop than others.

Read More: NBC's Interest Rate Hike Speculated To Bring Mortgage Market Stabilization

In March 2022, a report was released by the Canadian Mortgage and Housing Corporation outline the impacts of incoming interest rate hikes on the housing markets.

In light of the incoming price drops, the report notes that the steepest declines will align with the cities that saw the steepest price increases in 2021.

Taking this into account, the GTA and Greater Vancouver is likely to see steeper declines while cities like Ottawa and Montreal are recalibrating in a moderate fashion.

Suburb vs. Downtown

Although markets are expected to drop across Canada, a recent Bloomberg report points to new data showing that plummeting prices may not be equally distributed throughout cities. When the pandemic hit, we were all confined to our homes, leading to everyone wanting more space.

The best place to find space and big backyards are, of course, the suburbs, hence the increase in purchasing suburban homes during the pandemic. With the shift to remote work, that made sense for many Canadians.

Read More: Home Prices Could Fall More Than 12% By Next Year

But now that businesses and services in cities have reopened and workplaces are shifting to hybrid work, the interest has dropped in suburban homes. As stated in the Bloomberg report, a hybrid work model and the reopening of downtown businesses and offices may impact the housing market once more.

Market Forecast for 2023

As the Canadian housing market continues to go through changes and we see prices drop, this has left many wondering what's to come next year. Just over a month ago, Dejardins released an updated report predicting that the decline in housing prices will continue into next year.

At the end of 2023, it is still projected that Canadian property prices will be greater than they were before the pandemic.

Save Money on your Taxes using The Smith Manoeuvre

Get the most out of your mortgage

In Canada, homeowners and residents aren't able to deduct the interest paid on their mortgages from their taxes. Most Canadians wish that instead, they could reap the benefits of a tax-deductible mortgage interest that American homeowners have. However, luckily for Canadian homeowners, there is a loophole that can help, the Smith Manoeuvre.

What is the Smith Manoeuvre and how can you use it?

For starters, the Smith Manoeuvre was developed in 2002 by financial planner Fraser Smith in his book. Broadly, the Smith Manoeuvre is what some call a conversion strategy. Since mortgage interest isn't tax-deductible for Canadian homeowners, this method provides a way to convert mortgage interest into tax-deductible investment loan interest. What this means is any interest paid on a loan used to purchase investments (such as stocks, mutual funds, etc.) is tax-deductible.

The premise of the Smith Manoeuvre is to take the equity out of your home and use it to invest. Many Canadians already take equity out of their homes, for example refinancing. So what makes the Smith Manoeuvre different from refinancing and why is it better?

Well for starters, with refinancing there are many fees that come along with it. Since you're breaking a mortgage agreement, that gets followed up with financial penalties and appraisal fees. That's why the Smith Manoeuvre presents itself as a better option for Canadians since those fees aren't attached. Basically, the Smith Manoeuvre is a home equity line of credit, also known as a HELOC.

Read More: New Rules For Reverse Mortgages And HELOCs By OSFI

To carry out this strategy, Canadian residents will need to get a mortgage that is re-advanceable. This is comparable to a mortgage line of credit, however, with the re-advanceable mortgage, there are two important elements. A mortgage and a line of credit allow you to both pay down and borrow from. As a result, the amount you can borrow from your home equity line of credit grows with each payment you make on a re-advanceable mortgage (HELOC).

Risk vs Reward

When used properly, the Smith Manoeuver can have great benefits and result in a tax refund. But since this method is using a leveraged investment as a way to claim interest through tax deductions, it's important to consider the risk associated with it.

Before starting this process, it is important to sit down with your financial advisor to discuss the pros and cons of the Smith Manoeuvre considering your financial status. For example, if you are someone who likes to play it safe, then this may not be the financing avenue for you.

Read More: Hybrid Mortgages In Canada

With the Smith Manoeuvre and depending on how you approach the method, you probably wouldn't like to see a large fluctuation of value in your portfolio. However, if you're someone who likes taking risks and you have a keen eye for good investments, then Smith Manoeuvre might be a good option for you. Another important point to remember is this method is strictly a conversion strategy. In other words, it doesn't let you reduce your debt.

The Smith Manoeuvre's main goal is to pay off your regular mortgage and then move the debt to a line of credit that can be deducted from your taxes. At the end of the day, it's about evaluating whether this method is for you because like most financial strategies there are both pros and cons.

NBC's Interest Rate Hike Speculated To Bring Mortgage Market Stabilization

Over the past year, Canadians have watched the continued climb of interest rates. This September, the National Bank of Canada is expected to raise the rates once again, however, economists predict that this could be the final hike for a while. This is the fifth rate increase this year as the Bank of Canada continues to grapple with rising inflation. Economists Benjamin Tal and Karyne Charbonneau predict the hike to hit the 75bps mark, amounting to the key target rate of approximately 3.25% as detailed in a recent report.

In a TD report, economist Rishi Sondhi explains that 5-year bond yields are predicted to decrease from 2022 to 2023 as consumption slows due to elevated interest rates. This applies pressure not only on household debt but mortgage debt, which Tal and Charbonneau explain a large quantity was accrued in an environment where the low-interest rate was conducive.

Read More: Canada's Interest Rates Still Not The Highest They've Ever Been

Mortgage Debt & Household Sensitivity

Though current interest rates are considered lower by comparison to historical rates, the pressure of inflation alongside the burden of increased rates will indicate a slow in consumption. Benjamin Tal and Karyne Charbonneau say that "...households’ fundamentals are now generally stronger than seen at the eve of previous hiking cycles." They also state that the "...structure of household debt will shield many borrowers from the full sting of higher rates in the coming year." In Q3, the Bank of Canada reported successful results for portfolios containing home equity lines of credit and mortgages.

Despite progress in the latter, with rising interest rates looming, a slowdown is predicted to follow. Considering this, it is noteworthy that 11% of NBC's mortgage borrowers are investors, and 31% of its mortgages have variable interest rates. Taking into account the percentage of mortgages that utilize variable interest rates alongside inflation, this suggests that households will have a higher sensitivity toward raising rates.

At this time, economists don't predict further rate hikes in 2023, however, there is also no indication that interest rates may be lowered in 2024. In essence, Canadian households will have to burden with the increase in rates and inflation however, the capacity to maintain consumption growth at the current rate should preclude the Bank of Canada from loosening monetary policy in 2023.

Read More: Home Prices Could Fall More Than 12% by Next Year

Housing Market Stabilization

As monetary policy tightens to bring current excessive inflation rates back to targeted levels, mortgage rates are anticipated to increase. In Canada Mortgage and Housing Corporation's Spring 2022 report, it is said that higher rates will have a limited effect on home demand and price growth in 2022. The report also states that "...this will be especially true in centers like Vancouver, Toronto, and Montreal where tight resale market conditions will overwhelm higher mortgage rates initially."

Mortgage volume at the National Bank of Canada increased 8% on a yearly basis, leading economists to predict that the demand for real estate secured financing will continue to stabilize, returning to pre-COVID levels given the rising interest rate environment. At the same time, housing prices are expected to shift, re-stabilizing as an effort to backtrack the soaring 46% accumulation that occurred throughout the pandemic. Most notably, previously where housing prices sky-rocked, namely Ontario and British Colombia, where the steepest declines in price can be found.

Read More: Rate Hikes to Lead to House Price Fall?

Although many Canadians would find lower interest rates more agreeable, in terms of decreasing inflation, consistency is key. Economists believe that to avoid failure in lowering inflation, the maintenance and rigidity of a restrictive monetary policy is needed to balance and ultimately reduce the high level of inflation. Altogether, rarely does the Bank of Canada depart from the monetary policy of the Federal Reserve, which supports predictions of higher rates for a longer period.

Home Prices Could Fall More Than 12% By Next Year

Canada's Housing Market In The Middle of Corrections

High-interest rates could have influenced the correction of the housing market that is currently ongoing in Canada. According to one of the country's largest banks, home prices could decline more than 12 percent, Bloomberg reports.  Robert Hogue, RBC's economist, also predicts that the number of total home sales in the country will decline by 42% by next year.

Read More: Canada's Interest Rates Still Not The Highest They've Ever Been

Ontario and British Columbia will be the main focus of these corrections, which some say are "historic". Sure, the fall in sales will be a bit bigger than what it was in the 1990s, however, the reality is - 2023 will beat that record by only 1%. In Ontario at that time, home sales fell by 41% and housing prices fell by 15%. British Colombia, on the other hand, dealt with prices falling by 27% and sales falling by 62% in the 1980s.

Read More: Ontario Housing Getting Too Expensive

Even though the prices and sales will drop a bit, that doesn't necessarily mean the housing market will collapse, says RBC. Instead, this situation should be looked at from a positive point of view: the cooling of the market will be a bit faster this way.

That of course will lead to new homeowners in the future and the removal of the stigma of home ownership and equity being a luxury - a popular opinion for some millennials.

During COVID, the splurge in home ownership skyrocketed - with historically low-interest rates and sales going up by 47% in December 2020, 48% of millennials got their hands on their own houses. But, most of them relied on their family helping out financially.

Adult Children Were Given $10B To Buy Homes

However, the basic rule of supply and demand led to the rise in prices, which are abnormally high right now. That then led to making the rest of the renting population extremely hesitant to buy their own home, especially with the current interest rates.

The ongoing corrections should cool off all of that and take the weight off the homeowners' shoulders in the future when the drops in prices and sales cause interest rates to stop rising and go back to what we're used to, hopefully.

Read More: Three Tips For Homeowners Struggling With Paying Off The Mortgage

The housing market correction and the post-pandemic recovery might also influence the 'return to normal' of housing prices in specific areas as well. According to a recent research by the Bank of Canada, COVID-19 greatly influenced the rise of house prices in the suburbs, causing centrally located homes' prices to drop - which is not how things usually work.

Typically, home prices downtown are higher than in the suburbs, because of various factors: the land is scarce downtown, shorter commutes to work, more restaurants and bars, easy access to public services or transport, etc.

During COVID, we didn't need any of that and would rather spend time in our backyard or somewhere not hectic. Many lockdowns and closures of restaurants and bars kept us hanging out within our four walls, so it was better to be somewhere further away from downtown, more calm and private.

That led to a higher demand for suburban housing and therefore higher house prices in the suburbs. The whole thing resulted in a 10% price gap between centrally located houses and houses 50km away from the city core. In 2019, the price difference was about 26%.

A lot of questions remain unanswered when it comes to housing in Canada and it will be interesting to see how things unfurl. The Wilson Team will, as always, maintain focus on the market and update the site as we learn more.

The Benefits of A Good Credit Score

How to maintain the high numbers

Even though the conversation about a good credit score is pretty common and happens almost daily for some, paying attention to maintaining a good one has not been a priority for others. Mistake number one. Surviving with bad credit is doable, but expensive and makes life harder than it should be.

Taking care of your credit score is crucial if you want to avoid missing out on big opportunities. Not only that, but you will also end you paying more than you should - after all, having a good credit score means lower interest rates, among other things! Here are the biggest benefits of having a good credit score.

Six Benefits Of Having A Good Credit Score

1. Lower Interest Rates

When applying for a loan, whether it's a mortgage or a credit card, a lender will check your credit score. Based on the number, they will determine your interest rates. With a good credit score, you almost always qualify for low-interest rates. The lower the interest rate, the sooner you'll pay off your debt, and the more assets you'll have for spending on other things.

2. Higher Mortgage Amounts And Limits

After proving to the banks that you can handle your money and demonstrating to them how responsible you are, they will let you take on more responsibility. Since you've proven that you pay back what you owe on time, they will let you borrow more money, giving you greater buying power which is very important in today's real estate market for example.

3. Easier Approval On Rentals and Jobs

More and more landlords want to check your credit score as a part of their tenant screening process. A bad credit score can definitely affect your chances of getting the apartment you want.  Even some jobs need security clearance and proof you know how to handle your finances. They need to make sure you won't take bribes, for example, or steal from the company because of your financial issues.

4. Lower Insurance Rates

You need insurance for so many things: tenant's insurance, home insurance, car insurance, life insurance, etc. Having a good credit score will lower your premium and avoid paying more. Insurance companies use your credit score to design the insurance risk score. If you have a low credit score, you could end up paying 100% more than what you would pay with a good credit score.

5. Negotiating Power

With a good credit score comes leverage to negotiate for anything you're borrowing for.

You can negotiate your way to a lower interest rate on a new loan or a credit card. With a low credit score, banks and lenders will not let you win this one and the fees on loan terms will remain as high as possible.

6. Build Assets

All the way to wealth. The possibilities are endless - you can get RRSPS loans, rental properties, leverage your mortgage to invest, become an accredited investor, buy abroad, etc.  With low credit, you lose out on major opportunities!

How To Have a Good Credit Score?

By avoiding these common mistakes:

  • Don't get added to someone's credit card - have your own.
  • Don't close all your accounts, even if you don't use them. The creditors like seeing two accounts. Use them
  • Have two types of loans - a static loan and a revolving loan. For example, a car loan (static) and credit card (revolving).
  • Don't exceed 65% of your limit.
  • Pay your bills on time. Set up automatic payments to help you with this.