Navigating Your Path to Homeownership: A First-Time Homebuyer’s Guide

Embarking on the journey to homeownership is an exciting endeavor, but it can also be complex and overwhelming, especially for first-time buyers. As your trusted mortgage broker, I have crafted a comprehensive timeline to guide you through each step of the process. Let’s turn your dream of owning a home into a reality.

Months 1-3: Preparation

1. Credit Check and Improvement: Kick off your journey by understanding your credit score. Take steps to enhance it for better mortgage terms.

2. Financial Assessment: Evaluate your finances to determine a realistic budget, factoring in income, expenses, and savings.

3. Pre-Approval:Consult with us to get pre-approved for a mortgage, gaining insights into your purchasing power.

Months 4-6: Research and Education

4. Define Priorities: Clearly outline your home-buying priorities, including location, size, and desired features.

5. Explore Neighborhoods: Research potential neighborhoods, considering amenities, schools, and proximity to work.

Months 7-9: Home Search and Offer

6. Real Estate Agent: Choose a reputable real estate agent to assist you in finding your dream home.

7. Home Tours: Begin touring homes within your budget and preferred neighborhoods.

8. Make an Offer:Craft a competitive offer with your real estate agent once you find the perfect home.

Months 10-12: Closing Preparation

9. Home Inspection: Schedule a thorough home inspection to identify potential issues.

10. Secure Mortgage:Finalize your mortgage application and secure a mortgage commitment.

11. Closing Procedures:Collaborate with us and legal professionals to complete necessary paperwork for a smooth closing.

Closing Day and Beyond

12. Closing Day: Attend the closing, review documents, and officially become a homeowner.

13. Move-In: Coordinate your move and start settling into your new home.

14. Post-Move Adjustments: Update your address, set up utilities, and ensure a seamless transition into homeownership.

Congratulations on taking the first steps towards homeownership! This timeline, coupled with our expert guidance, will help you navigate the intricate process with confidence. If you have any questions or need assistance, feel free to reach out at any stage. Happy house hunting!

Canadian Inflation Rises to 3.4% Y/Y In December.

a bumpy road to the inflation target

Canada’s headline inflation number for December ’23 moved up three bps to 3.4%, as expected, as gasoline prices didn’t fall as fast as a year ago. These so-called base effects were also evident in the earlier US inflation data for the same month.

Additional acceleration came from airfares, fuel oil, passenger vehicles and rent. Prices for food purchased from stores rose 4.7% yearly in December, matching the increase in November (+4.7%). Moderating the acceleration in the all-items CPI were lower prices for travel tours.

On a monthly basis, the CPI fell 0.3% in December after a 0.1% gain in November. Lower month-over-month price movements for travel tours (-18.2%) and gasoline (-4.4%) contributed to the monthly decline. The CPI rose 0.3% in December on a seasonally adjusted monthly basis.

Two key yearly inflation measures that are tracked closely by the Bank of Canada and filter out components with more volatile price fluctuations — the so-called trim and median core rates — increased, averaging 3.65%, from an upwardly revised 3.55% a month earlier. That’s faster than the 3.35% pace expected by economists. The trim rate rose due to the movements of rent and passenger vehicle prices.

Another important indicator, a three-month moving average of underlying price pressures, rose to an annualized pace of 3.63% in December from 2.94% in November, according to Bloomberg calculations. The Bank of Canada follows this metric closely because it reveals shorter-term inflation trends. According to Bloomberg News, following the release of today’s CPI data, “the yield on two-year Canadian government bonds rose about four basis points to 3.857%…Traders in overnight swaps pushed back bets on when the Bank of Canada will start cutting rates to July, from as early as April before the release.”

Bottom Line

This is the last major data release before the Bank of Canada meets again on January 24th. I concur with the widely held view that the rate pause will continue at the next meeting despite evidence that the economy is slowing. Governor Tiff Macklem will err on the side of caution before beginning to cut overnight rates. The last reading on wages showed a 5.4% y/y rise, and yesterday’s housing release showed a bump in sales. Macklem and Co. will keep their powder dry until they see an all-clear signal that core inflation is sustainably below 3%.

Written by DLC’s Chief Economist Dr Sherry Cooper

Stronger-Than-Expected Canadian Inflation Will Keep The BoC On The Sidelines For Now.

inflation held steady in november

Today’s inflation report was stronger than expected, unchanged from October’s 3.1% pace. While some had forecast a sub-3% reading, the November CPI data posted a welcome slowdown in food and shelter prices. Increases in recreation and clothing offset this–both are discretionary purchases. Cellular services and fuel oil prices declined on a year-over-year basis.

The CPI rose 0.1% from October to November, the same growth rate as in October. The steady pace of annual inflation resulted from the base effects in the energy sector. Gasoline prices fell to a lesser extent month over month in November (-3.5%) than in October (-6.4%). Base effects will also inflate next month’s year-over-year data as well.

Core prices aligned with the headline figures, as the Bank of Canada’s favourite core measures came in at roughly 3.5%. Even excluding food and energy, the core rose 3.5% y/y. The core data were more favourable at three-month trends, posting at about 2.5%.

Bottom Line

Today’s CPI data show why Governor Tiff Macklem is cautious about rate cuts, but judging from the past three months, core inflation is on a downward trend.

In a speech on Friday, Bank of Canada Governor Tiff Macklem said inflation could get “close” to the bank’s 2% target by late next year, though he also said it was “still too early to consider cutting our policy rate.”

The economy is slowing, labour markets have eased, and price pressures are slowing. The road to 2% inflation will be bumpy, but it remains likely that monetary tightening has peaked, and rate cuts will begin by the middle of next year.

Mortgage Renewal Benefits.

Is your mortgage coming up for renewal? Do you know about all the incredible options renewing your mortgage can afford you? If not, we have all the details here on how to make your mortgage renewal work for you as we start to think about 2024.

Get a Better Rate

Are you aware that when you receive notice that your mortgage is coming up for renewal, this is the best time to shop around for a more favourable interest rate? At renewal time, it is easy to shop around or switch lenders for a preferable interest rate as it doesn’t break your mortgage. With interest rates expected to come down as we move into the New Year, taking some time to reach out to me and shopping the market could help save you money!

Consolidate Debt

Renewal time is also a great time to take a look at your existing debt and determine whether or not you want to consolidate it onto your mortgage. For some, this means consolidating your holiday credit card debt into your mortgage, for others it could be car loans, education, etc. Regardless of the type of debt, consolidating into your mortgage allows for one easy payment instead of juggling multiple loans. Plus, in most cases, the interest rate on your mortgage is less than you would be charged with credit card companies.

Start on that Reno

Do you have projects around the house you’ve been dying to get started on? Renewal time is a great opportunity for you to look at utilizing some of your home equity to help with home renovations so you can finally have that dream kitchen, updated bathroom, OR you can even utilize it to purchase a vacation property!

Change Your Mortgage Product

Are you not happy with your existing mortgage product? Perhaps you’re finding that your variable-rate or adjustable-rate mortgages are fluctuating too much and you want to lock in! Alternatively, maybe you want to switch to variable as interest rates start to level out. You can also utilize your renewal time to take advantage of a different payment or amortization schedule to help pay off your mortgage faster!

Change Your Lender

Not happy with your current lender? Perhaps a different bank has a lower rate or a mortgage product with terms that better suit your needs. A mortgage renewal is a great time to switch to a different bank or credit union to ensure that you are getting the value you want out of your mortgage if you are finding that your needs are not currently being met.

Regardless of how you feel about your current mortgage and what changes you may want to make, if your mortgage is coming up for renewal or is ready for renewal, please don’t hesitate to reach out to a DLC Mortgage Expert today! We’d be happy to discuss your situation and review any changes that would be beneficial for you to reach your goals; from shopping for new rates or utilizing that equity! Plus, we can help you find the best option for where you are at in your life now and help you to ensure future financial success.

Written by Jen Lowe’s Marketing Team

Avoid Costly Mistakes When Building a New Home.

Building a new home is a super exciting endeavor as you opt to create the perfect space for you and your family. However, building a home is not without its costs and potential surprises… to mitigate bumps on your homebuilding journey and avoid costly mistakes, consider the following tips:

Set a Realistic Budget

When building your own home, it is vital to be realistic about your budget and what you can afford. Making a list of wants versus needs can be a good way to determine what is required, and where you can spend extra money should your budget allow for it. When constructing your budget, don’t forget to include construction costs from materials to labour, as well as permits, inspections, landscaping and unforeseen contingencies. The contingency fund should be approximately 10-15% of your budget put aside to cover unforeseen issues or changes.

Hire Reputable Individuals

From your architect and your contractor to your landscaper and inspector, it is vital to have the right people in the right positions. This will ensure that you not only get the best advice, but experienced individuals will also help to steer you through the process and mitigate potential issues. Be sure to do your research, ask for references and ensure the individual(s) you hire are licensed and insured.

While you’re researching individuals, it can also be a good idea to get multiple quotes. While you may have a contractor you like, reaching out to other individuals can help ensure you’re getting the best rate.

Review Contracts Carefully

Read and understand all contracts and agreements thoroughly between your contractor and yourself, your designer, your home inspector, etc. Ensure that everything is in writing and that you and your builder are on the same page regarding expectations, timelines, and costs.

Make and Follow Your Plan

Once you have your budget and the right people on the project, it is time to make a plan. You must work with an architect or designer to ensure that your new home aligns with your needs, lifestyle and budget. This should also include future plans – do you want to have children? Plan on adopting a pet or two? Possibly need space for an older family member in a few years? Getting this right from the beginning will help to avoid potential changes to the plan down the line, which will reduce expansions to cost and timelines.

Choose Your Materials Carefully

Choosing to invest in energy-efficient features and materials can help you to reduce long-term utility costs. While initially these installations may be more costly, they will work to save you money in the long run. Whenever possible, make sure these materials are also as durable as possible to ensure longevity and low maintenance requirements.

Secure the Necessary Permits

Ensure that you obtain all required permits and approvals before starting construction. One of the most important reasons to do this is to ensure that the work being done is safe, but having permits and inspections is also vital to ensure you can get insurance on your new build. Non-permitted renovations or build additions, changes, etc. can result in trouble securing insurance, on top of fines and other potentially costly issues.

Invest in Inspections

Having inspections done throughout the process of building your home can save you issues down the line by ensuring that all the installations are done correctly and safely and that your house meets the proper codes for electrical, plumbing, etc.

By taking proper steps and being proactive throughout the home-building process, you can minimize the risk of costly mistakes and ensure that your new home meets your expectations while staying within your budget.

Written by MY DLC Marketing Team

Winterizing Your Home.

We Canadians are no strangers to the chill of the winter season! As we shift into the final few months of 2023, now is a great time to check your home before the cold front hits. Below I have included a few tips that could help you save on bills, prevent future repair costs, and be more comfortable all winter long.

• Inspect Your Fireplace: There is no better time than now to have your fireplace inspected to ensure optimal efficiency and heat output. Whether you have a wood-burning, gas, or electrical fireplace, proper maintenance can go a long way for your heating bill!

• Maintain Your Furnace: While you’re having your fireplace inspected, don’t forget to maintain your furnace! If your furnace is getting up there in age, you may want to also consider replacing it as typically newer furnaces are more efficient than the previous generation, which could help save on energy costs. Either way, ensuring your furnace is in working order will guarantee top output and a cozy winter!

• Clean The Gutters: The last thing you want is your gutters to be clogged when the snow hits! Cleaning your gutters from Fall leaves and other debris will help ensure proper drainage for melting snow. For those who want to go the extra step, consider gutter guards which can help keep out unwanted objects from your gutters.

• Examine Your Roof: While you’re prepping your gutters for the winter, it is a good idea to also examine your roof. A few things to look for include broken or missing shingles, damaged flashing, staining from water leakage, and ventilation.

• Consider a Programmable Thermostat: According to experts, a degree drop in your home temperature can measure up to 1% on your heating bill. For those of us who don’t like to have cold feet all season, smart thermostats are a great way to keep warm and optimize your energy savings! Ideally, you want to set your thermostat to turn on in the morning, off when you go to work, and back on in the evening to ensure a toasty welcome.

• Insulate Windows: Always be sure to check your windows for any gaps or water leakage and get them resealed as soon as possible. If you live in a particularly cold location, consider swapping out your windows to double-paned glass for an added layer of insulation. Another tip to keep the cold from seeping in through your windows is swapping out your curtains for a heavier, thermal-lined set which can do wonders!

• Check Your Pipes: Checking pipe joints for leaks that could cause rot and damage will save you trouble in the future. Repair any cracks you find, especially those around electrical outlets and alarm system lines. You can also consider foam pipe insulation, which is fairly easy to install and could help prevent energy loss and potential water damage from frozen pipes.

• Stock Up on Supplies: There are a few things you might want to consider stocking up on ahead of time for the winter season, such as flashlights and batteries, ice melt, extra pet food and canned goods, and an emergency storm kit that includes an extra flashlight, candles, portable radio, water, and snacks.

With a little preparation, you can keep your home in good shape without needing to feel the cold bite of winter!

Written by MY DLC Marketing Team

Bank of Canada Holds The Overnight Policy Rate Steady at 5% For the Third Consecutive Meeting.

It was widely expected that the Bank of Canada would maintain its key policy rate at 5% for the third consecutive time. It will continue to sell government securities (quantitative tightening) to normalize its balance sheet. Market participants weighed and measured each word of the BoC press release and assessed that the Bank took a less hawkish stance.

This time, the release said, “Higher interest rates are clearly restraining spending: consumption growth in the last two quarters was close to zero, and business investment has been volatile but essentially flat over the past year. Exports and inventory adjustment subtracted from GDP growth in the third quarter, while government spending and new home construction provided a boost. The labour market continues to ease: job creation has been slower than labour force growth, job vacancies have declined further, and the unemployment rate has risen modestly. Even so, wages are still rising by 4-5%. Overall, these data and indicators for the fourth quarter suggest the economy is no longer in excess demand.”

At the prior meeting in late October, the Bank said that the labour market remained “on the tight side” but acknowledged today that it was loosening. Indeed, the October Monetary Policy Report suggested that the inflation rate would not hit its 2% target level until late 2025.

Today, the tone was much more optimistic, suggesting that policymakers are increasingly confident interest rates are restrictive enough to bring inflation back to the 2% target. Still, Bank officials want to see more progress on core inflation before it begins to ease. It said, “The Bank’s preferred measures of core inflation have been around 3½-4%, with the October data coming in towards the lower end of this range.”

The central bank focuses on “the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour” and remains resolute in restoring price stability.

Bottom Line

Bond yields peaked in early October and have fallen by nearly 100 basis points. This has led to reductions in fixed mortgage rates; however, those cuts have been far less than historical experience would have suggested, given the rally in 5-year government bonds.

Cuts in variable mortgage rates await a reduction in the overnight policy rate, which triggers a commensurate decline in the prime rate, which is currently stuck at 7.2%. I expect the BoC to begin cutting the policy rate by the middle of next year, taking it down a full percentage point to 4% by yearend.

Written by DLC Chief Economist Dr. Sherry Cooper