January 2022

James DeVuyst • January 1, 2022

What can we say about 2021 that hasn’t already been said, we continue to fight with an ongoing pandemic, we were struck with weather disasters that further strangled the supply chains, we’ve seen rapid inflation caused by many of these ongoing issues and to round everything out the housing supply continues to be at some of the lowest levels in history, only to be matched with ferocious demand.
 
Governments at various levels have now shifted the blame from “Foreign Investors” to “Canadian Investors” if we remember only 4 years ago, they put measures in place to curb foreign investment, and now we’re seeing governments getting ready to do the same to Canadians through various new measures. There are rumblings the federal government is looking to increase the down payment requirement from 20% to potentially 25-30% on all non-owner-occupied homes and a potential “no flipping” tax on primary residences that are sold in less than 12 months. All this has amounted to noise over the real issue, supply, supply, supply.
 
Statistics released this week from Canadian Real Estate authorities show that while the country’s stock of available homes for sale sits at record lows, the pace of building new units is also slowing. Canada Mortgage and Housing Corp. said the annual pace of housing starts in December fell 22 percent when compared with November. These are concerning times ahead and unless municipalities get on board with approving permits faster, incentivizing developers, and building outside the box, we will continue 2022 with many of the same problems.


Rates will be on the Rise

 
As we’ve seen during 2020 and 2021, rates have remained at the lowest levels in history. Remember when 2.99% on a 5-year fixed was considered “too low” by the Federal Government?
 
What we can expect for 2022 is rates will rise and the Bank of Canada will make changes to the overnight lending rate to curb the increased inflation we’ve seen at various levels from supply chain issues and increased government spending.
 
We have also seen Canadians take on more mortgage debt than ever before, however despite a record rise in Canadian mortgage debt and home prices in nearly every province, the expected default increase never happened. Total residential mortgage debt in Canada is now $2.14 trillion, according to Statistics Canada, the highest level on record; however, the Canadian Bankers Association report released October 14 revealed that, as of July 31, there were only 9,157 mortgages in arrears out of a total of 4.97 million residential mortgages in Canada. This amounts to a 0.18% default rate – considered low even by the Canadian standard, which traditionally has a default rate in the 0.30% range.
 
Canadians take pride in homeownership that even through a pandemic we managed to take on more mortgage debt and lowered our national default rate.



My Advice to You
 
We have been in this position before, the media, the government, and family and friends have stated to us that we need to “lock in” and be afraid that rates will increase so high that we will go back to the times of 15-20%, this will not happen. It cannot happen. In the last 18 years, rates haven’t increased past 6% (2008), and over the last 10 years, they have been below 3.5%.
 
If we break down the numbers and look at this with logic, we are left with the following. Prior to the pandemic, we saw the overnight lending rate at 1.75%, this translated into lower discounts offered by all major banks, which were in the range of prime (3.95%) -0.50% to -0.75%. We were paying a net rate of around 3.20%-3.45% depending on your discount secured.
 
Now when we look at what happened over the last 2 years going into our 3rd year, we saw banks offer variable discounts at record lows, in the range from prime (2.45%) -1.00 to -1.40%, this has translated to net rates of 1.05-1.45%. When the Bank of Canada starts to increase the overnight lending rate, for example, let’s say they go back to 2019 levels, we would see rates sitting at 2.65% (based on a net rate of 1.30%), remember that 2.99% we talked about?
 
The outlier with locking in your rate once the rumblings start is breaking your mortgage when you lock in, “the mortgage industry estimates the percentage of people who break a mortgage before maturity range from 33 percent to 60 percent. People underestimate how much life circumstances can change in five years.” If the pandemic has taught us anything this would be it. We also need to consider, a little unknown statistic, banks have increased the price of discharging a fixed rate mortgage. In 2019 we saw banks charging anywhere between 3-4% of your outstanding mortgage amount, once the pandemic hit, we saw this quietly increase to between 5-6% of your outstanding mortgage amount. With Canadians on average breaking their mortgage every 38 months, whether it be from refinancing or selling their home, this can be a catastrophic financial hit. So, before we start running to lock in our huge variable rate discounts, remember these points.
 
As always, I’m available for calls to discuss these points and your own personal financial situation. I would encourage everyone to reach out if they’re concerned or if you’re looking to make a purchase or refinance your mortgage in 2022!

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Finance Your Home Renovations

By James De Vuyst • July 3, 2025
If you’re looking to do some home renovations but don’t have all the cash up front to pay for materials and contractors, here are a few ways to use mortgage financing to bring everything together. Existing Home Owners - Mortgage Refinance Probably the most straightforward solution, if you’re an existing homeowner, would be to access home equity through a mortgage refinance. Depending on the terms of your existing mortgage, a mid-term mortgage refinance might make good financial sense; there’s even a chance of lowering your overall cost of borrowing while adding the cost of the renovations to your mortgage. As your financial situation is unique, it never hurts to have the conversation, run the numbers, and look at your options. Let’s talk! If you're not in a huge rush, it might be worth waiting until your existing term is up for renewal. This is a great time to refinance as you won’t incur a penalty to break your existing mortgage. Now, regardless of when you refinance, mid-term or at renewal, you’re able to access up to 80% of the appraised value of your home, assuming you qualify for the increased mortgage amount. Home Equity Line of Credit Instead of talking with a bank about an unsecured line of credit, if you have significant home equity, a home equity line of credit (HELOC) could be a better option for you. An unsecured line of credit usually comes with a pretty high rate. In contrast, a HELOC uses your home as collateral, allowing the lender to give you considerably more favourable terms. There are several different ways to use a HELOC, so if you’d like to talk more about what this could look like for you, connect anytime! Buying a Property - Purchase Plus Improvements If you’re looking to purchase a property that could use some work, some lenders will allow you to add extra money to your mortgage to cover the cost of renovations. This is called a purchase plus improvements. The key thing to keep in mind is that the renovations must increase the value of the property. There is a process to follow and a lot of details to go over, but we can do this together. So if you’d like to discuss using your mortgage to cover the cost of renovating your home, please connect anytime!

First-Time Homebuyer? A New GST Rebate Could Put Thousands Back in Your Pocket

By James De Vuyst • June 20, 2025
If you’re a first-time homebuyer eyeing a new build or major renovation, there's encouraging news that could make homeownership significantly more affordable. The federal government has proposed a new GST rebate aimed at easing the financial burden for Canadians entering the housing market. While still awaiting parliamentary approval, the proposed legislation offers the potential for thousands in savings —and could be a game-changer for buyers trying to break into today’s high-cost housing landscape. What’s Being Proposed? Under the new legislation, eligible first-time homebuyers would receive: A full GST rebate on homes priced up to $1 million A partial GST rebate on homes between $1 million and $1.5 million This could mean up to $50,000 in tax savings on a qualifying home—a major boost for anyone working hard to save for a down payment or meet mortgage qualification requirements. Why This Matters With interest rates still elevated and home prices holding steady in many regions, affordability remains a challenge. This rebate could offer meaningful relief in several ways: Lower Upfront Costs: Removing GST from the purchase price reduces the total amount of money buyers need to save before closing. Smaller Monthly Payments: A lower purchase price leads to a smaller mortgage, which translates to more manageable monthly payments. Improved Mortgage Qualification: With a reduced purchase amount, buyers may find it easier to meet lender criteria. According to recent estimates, a homebuyer purchasing a $1 million new home could see monthly mortgage payments drop by around $240 —money that could go toward savings, home improvements, or simply everyday expenses. Helping Families Help Each Other This proposal also offers a win for parents who are supporting their children in buying a first home. Whether through gifted down payments or co-signing, a lower purchase price and more affordable monthly costs mean that family support can go further—and set first-time buyers up for long-term success. Is This the Right Time to Buy? If you’re thinking about buying a new or substantially renovated home, this proposed rebate could dramatically improve your financial position. Now is the perfect time to explore your options and make sure your mortgage strategy is aligned with potential policy changes. 📞 Let’s connect for a free mortgage review or pre-approval. Whether you’re buying your first home or helping someone else take that first step, I’m here to help you make informed, confident decisions.

Deciphering the Latest Housing Affordability Initiatives in Canada

By James De Vuyst • June 19, 2025
In recent years, housing affordability has become a significant concern for many Canadians, particularly for first-time homebuyers facing soaring prices and strict mortgage qualification criteria. To address these challenges, the Canadian government has introduced several housing affordability measures. In this blog post, we'll examine these measures and their potential implications for homebuyers. Increased Home Buyer's Plan (HBP) Withdrawal Limit Effective April 16, the Home Buyer's Plan (HBP) withdrawal limit will be raised from $35,000 to $60,000. The HBP allows first-time homebuyers to withdraw funds from their Registered Retirement Savings Plan (RRSP) to use towards a down payment on a home. By increasing the withdrawal limit, the government aims to provide young Canadians with more flexibility in saving for their down payments, recognizing the growing challenges of entering the housing market. Extended Repayment Period for HBP Withdrawals In addition to increasing the withdrawal limit, the government has extended the repayment period for HBP withdrawals. Individuals who made withdrawals between January 1, 2022, and December 31, 2025, will now have five years instead of two to begin repayment. This extension provides borrowers with more time to manage their finances and repay the withdrawn amounts, alleviating some of the immediate financial pressures associated with using RRSP funds for a down payment. 30-Year Mortgage Amortizations for Newly Built Homes Starting August 1, 2024, first-time homebuyers purchasing newly built homes will be eligible for 30-year mortgage amortizations. This change extends the maximum mortgage repayment period from 25 years to 30 years, resulting in lower monthly mortgage payments. By offering longer amortization periods, the government aims to increase affordability and assist homebuyers in managing their housing expenses more effectively. Changes to the Canadian Mortgage Charter The government has also introduced changes to the Canadian Mortgage Charter to provide relief to homeowners facing financial challenges. These changes include early mortgage renewal notifications and permanent amortization relief for eligible homeowners. By implementing these measures, the government seeks to support homeowners in maintaining affordable mortgage payments and mitigating the risk of default during times of financial hardship. The recent housing affordability measures announced by the Canadian government are aimed at addressing the challenges faced by homebuyers in today's market. These measures include increasing withdrawal limits, extending repayment periods, and offering longer mortgage amortizations. The goal is to make homeownership more accessible and affordable for Canadians across the country. As these measures come into effect, it's crucial for homebuyers to stay informed about the changes and their implications. Consulting with a mortgage professional can help individuals explore their options and make informed decisions about their housing finances. If you're interested in learning more about these changes and how they may affect you, please don't hesitate to connect with us. We're here to walk you through the process and help you consider all your options and find the one that makes the most sense for you.