Divorce & Mortgage Buy-Out Details, Canada, May 2024

Important data for separating / divorcing  partners, this may help with “Buying the ex-spouse out” of a divorce, when some debts need to be rolled in.


The way most lawyers and Big-6 banks do it:

as a refinance, max loan is 80% of the appraised value of the home,

and you get refi rates – the highest – today:

  • 3 year fixed 5.76%, 5 year fixed 5.59%

and usually NO debts can be rolled into the mortgage past that 80% of the home value.


with OUR WAY/ Broker way…

we do it as “a purchase after marital breakdown” which allows

max loan of 95% LTV (of the home value) – which usually makes ALL THE DIFFERENCE in a buyout situation.

  • BEST RATES again: 3 year fixed 5.39%, 5 year fixed 4.99%

and usually Most/ All/ some debts can be rolled into the mortgage – at no extra cost, depending on your lending ratios.



Data from a similar file –

As long as the deal IS insurable (meaning it conforms to CMHC rules and guidelines) to get that lower rate – actually 0.6% LOWER as of today – then we need an offer to purchase too. Most lawyers do not want also write an “offer to purchase,”

If the Big-6 bank is doing it as a conventional refinance then an offer to purchase is not needed.

Banks don’t have substantially different rates for insurable and conventional like we do. (o.4 to o.9% rate difference makes a huge difference.)


So yes, we can get a separation done without an Offer to Purchase as long as at least 20% of the value stays in the home and we use refinance rates at 0.6% higher than broker best rates today.

Considering customers will leave us for 0.05% and this is 0.6% – that is >10x multiple of what customers consider “worth leaving us for” this is an important way to get divorce deals to work better for everyone.

Mortgage Mark Herman, top/ best Calgary Alberta Mortgage Broker

Canadian Residential Mortgage Market: Inflation & Interest Rates: the Lead Characters for 2023


  1. The Bank of Canada (BOC) increased interest rates 7 times in 2022. Exactly as expected 16 months ago.
  2. Inflation is at least 5.7%; and it needs to get down to 3%
  3. The BoC would rather over-tighten than under-tighten
  4. Normally it takes 18 to 24 months for interest rate increases to work their way into the economy and we are only about 10 months into this tightening cycle

These 4 painful data points mean Prime will increase from 6.45% to 6.70% on Jan 25th.

We now expect there to be at least 1 or 2 more o.25% increases to Prime before it is expected to hold for the rest of 2023, and then begin to decrease in 2024.

Mortgage Mark Herman, Top Calgary Alberta Mortgage Broker


A lot of the recent talk in financial and real estate circles has been centering on the possibility of a pause in the Bank of Canada’s aggressive interest rate increases.  Some speculate that could happen at the next rate setting, later this month, on January 25th.

The Bank raised rates 7 times last year in an effort to rein-in galloping inflation.  It does seem to be working, but there are some stubborn sticking points.

Headline inflation, known as the Consumer Price Index (CPI), has dropped.  It was 8.1% in July and drifted down to 6.8% in November.  However, the drop from October to November was a mere one-tenth of one percentage point and the Bank’s target rate remains significantly below that, at 2.0%.

As well, the BoC’s preferred inflation measure, Core Inflation (which strips out volatile components like food and fuel), actually increased.  A simple averaging of the three components that the Bank uses to measure Core Inflation came in at nearly 5.7% in November, up from 5.3% in October.

Other factors that figure into the Bank’s plans include Gross Domestic Product and unemployment.  Canada’s GDP continues to grow, albeit modestly, despite rising interest rates.  It increased by 0.1%, month-over-month in November.  Unemployment dipped 0.1% to 5.0% in December.  Both of these tend to fuel higher wages which are a key driver of inflation.

The Bank of Canada, itself, remains firmly dedicated to battling back inflation.  Governor Tiff Macklem has said he would rather over-tighten than under-tighten and run the risk of having high inflation linger and become entrenched.

The U.S. central bank has made it clear it plans more rate hikes.  Given the integration of the Canadian and American economies, the Bank of Canada does have to pay attention to what its American counterpart does.

The BoC will have new economic data by the time it makes its January 25th announcement.  The December numbers will provide a fresh look at how well the inflation fight is going.

Normally it takes 18 to 24 months for interest rate increases to work their way into the economy and we are only about 10 months into this tightening cycle.  It is reasonable to expect another 25 basis-point increase on the 25th.  Given the Bank’s apparent success so far it also seems reasonable to expect a pause sometime after that.

Looking ahead to a year from now some forecasters say we might start to hear talk of interest rate cuts, which would be welcome news.  Cuts would allow the BoC to move toward its, long stated, goal of normalizing rates back into the neutral range of 2.5% to 3.5%.  The Bank of Canada, and central banks around the world, have been trying to do that for more than a decade – since the ’08 – ’09 financial collapse.

CIBC mortgage penalties: “UNFAIR”

We always focus on the Terms and Conditions of the mortgage. Most people have no idea what the bank is talking about when they sign the mortgage. We DO as we do this every day.

Here is a link from a Canadian Law website about a CLASS ACTION LAW SUIT against CIBC for calculating their payout penalties incorrectly: https://canliiconnects.org/en/commentaries/66074

My favorite part of the article is here:

“difficulty of enforcing fairness to consumers … there is a serious imbalance of bargaining power between the oligopolistic banks and individual borrowers. Legislative action to provide better consumer protection would be desirable.”


And here is a link to a guy that was almost our customer but stayed at his bank because they matched our broker rate. And now he is paying a $35,000.00 payout penalty because of it.


July 2017, when Canadian interest rates are expected to increase

This is just in from TD Economics, a .75% Prime rate increase is expected to be phased in – probably in 1/4% increases – starting in July 2017 and being fully in by December.

The rates they show below are for corporate rates, consumer rates are a bit higher.

Consumer prime is at 2.7% today so that would be the same increase of .75% taking it from 2.70 to 3.45% by the end of 2017.

• Our current forecast is for the Bank of Canada to begin raising interest rates in July of 2017, increasing the policy rate to 1.25% (from its current level of 0.5%) by the end of 2017. It is possible that with additional infrastructure-led growth the Bank may choose to begin hiking rates earlier and perhaps more aggressively.

All this and more from Calgary, Alberta top mortgage broker, Mark Herman.

Numbers on why this recession is not that bad

All recessions are tough – but the sky is not falling. Below is one of the better articles we have seen on why this one will not be that bad.

Mortgage Mark Herman,

Calgary Alberta mortgage broker for home purchase and mortgage renewal.

Only two recessions in Calgary since 1987 and both more severe than 2015 forecast


How the US may start to raise interest rates

This bite of an article is as interesting and as funny as US interest rate increase articles can be.

See why it is better to have your mortgage broker follow this stuff for you then to read it yourself!

Mark Herman, Top Calgary Alberta mortgage broker for home purchases and mortgage renewals

Bill Gross, the former Pimco “bond king” … believes the Federal Reserve could – and should – raise interest rates in September and then hold off on another rate hike for at least six months, a strategy he calls “one and done.”

The strategy adheres in principle if not specifics to numerous messages conveyed recently by influential Fed policy makers, including Fed Chair Janet Yellen, who have said rates will rise “gradually” after the initial rate hike is announced.

“The Fed … seems intent on raising (short-term interest rates) if only to prove that they can begin the journey to ‘normalization,’” Gross wrote in his September Investment Outlook. “They should, but their September meeting language must be so careful, that ‘one and done’ represents an increasing possibility – at least for the next six months.”

Gross, who has been calling for higher interest rates for months, suggested the Fed may have missed its opportunity to raise rates earlier this year when markets were rising steadily and the U.S. economy seemed to be humming along nicely.

In recent weeks, global turmoil has rocked U.S. markets, leading to volatility that pushed all three U.S. stock markets into correction territory last week. A strong bounce-back this week has raised optimism that the downturn was temporary but also led to concerns that markets could be in for a volatile run.

Any mention now by the Fed of returning interest rates to a more normal level of say 2% “cannot be approached without spooking markets further and creating self-inflicted ‘financial instability,’” Gross wrote.

from Fox Business – I know it’s Fox but it’s true: http://www.foxbusiness.com/economy-policy/2015/09/03/bill-gross-fed-likely-eyeing-one-and-done-hike-strategy/

How the new math on LOC’s is calculated.

Below are how the banks now have to take your debts into account for doing the qualifying math for your purchase. A bit complicated and not intuitive at all!

Mark Herman, Top Calgary, Alberta mortgage broker for renewals.

Secured LOC – Calculate the monthly payment on the balance amortized over 25 years using the contract rate. **Must have the statement showing the contract rate otherwise the current BoC rate will be used.

Unsecured LOC – or a Personal Line of Credit = 3% of the outstanding balance a month for the payment – so 20,000 owing @ 3% ends up as a $600 a monthy payment. YES, it is unfair.

Student Loans –

  1. If it’s a true student loan it should be reporting as an installment with CDA. If there is no payment, the bank will use 1%.
  2. If the debt is reporting to the bureau as a revolving LOC, and the client is paying interest only payments, the bank must use 3%;
  3. if we can  provide proof that the LOC has a fixed payment and the loc has been re-written as a loan and is no longer revolving the bank can use this payment vs. 3%. In some cases, this may already be the case but it still reporting to the bureau as revolving.

Data on why oil prices collapsed

Below is the entire Forbes article and link it.

Summary is there was too much oil and the prices came down. Prices should slowly go back to about $70 a barrel – which is just fine. This is great news!

Mark Herman, Top Calgary Alberta mortgage broker for mortgage renewals

The Facts Behind Oil’s Price Collapse


The dramatic drop we have seen in oil prices over the last few months has many economic forecasters worried about future growth. The problem with declining oil prices is that too much of a good thing can turn frightening. Someone who goes on a modest diet and loses five pounds over the course of a month might be elated. Someone who loses 75 pounds under those same circumstances would worry they have a serious illness. Conceivably, the precipitous fall in oil prices could mean that the global economy’s health has started to fail. While that would account for the drop in oil prices, most leading indicators do not confirm that economic diagnosis.

Tight monetary policy typically plays a major role in economic downturns, and global policy is still incredibly supportive for the economy. Economic weakness in Europe and Japan have certainly contributed to the falling price of oil and have underscored fears about global growth. Yet a profound economic downturn seems very unlikely, even in those areas. World economic growth certainly has been, and remains, historically sluggish. Even so, the current and prospective levels of global economic growth do not seem to warrant the drastic change in the price of oil we have witnessed.

If change in the demand for oil does not account for the decline, dropping prices must reflect increased supply. It is often difficult to have a clear understanding of the total supply of oil, since many of the world’s large suppliers are not transparent about what they produce. Some question whether increasing supplies of oil from Libya or Iran may have contributed to the slide in oil prices. But few world producers have enough spare capacity to significantly alter the balance of supply and demand. While pivotal global producers have likely played a part in the price drop, the dramatic revolution in the technology of oil production provides a better explanation for the change in oil prices.

The technology of hydraulic fracturing, or “fracking,” and other technologies that allow us to access previously inaccessible energy reserves has enabled the development of significant new supplies in North America. According to the U.S. Energy Information Administration (EIA), U.S. production has risen roughly 45% over the last four years, while Canada now produces approximately 25% more than it did four years ago. Together, Canada and the United States produce some five million more barrels of oil each day than they did in 2010. In a market where a shift of one million barrels of oil per day is thought to have a significant effect on the price of oil, the productive capacity added in North America has been staggering. Total world demand has grown about 4% since 2010, which works out to about 4 million barrels of additional demand each day. North American oil production has therefore grown about 38% faster than total global demand. With that sort of dramatic shift in the supply and demand for oil, it is not surprising that oil prices have come under pressure. The energy revolution has also had a major effect on the production of natural gas, which means that the pressure on oil prices is even greater than the figures for oil alone suggest.

Yet the development of new reserves would not be expected to drive the price of oil down as quickly as prices have fallen over the last six months. Oil prices should have deteriorated more gradually, as new projects slowly came to full production. While the long-term supply-demand balance has shifted significantly as a result of new technologies, the long-term dynamics do not fully account for the speed of the price drop. Many believe that the politics of oil production account for the sharp decline of prices over the last year.

While world demand has grown 4% since 2010, the EIA shows that OPEC’s share of world supply has risen only 2% and the crude oil they supply is up only modestly. In the past, Saudi Arabia has helped maintain higher oil prices by reducing their own output when global excesses developed. In recent months, however, the Saudis have refused to reduce their production. Part of their strategy may be to force Russia and other large producers to share the cost of limiting production. But Saudi Arabia also faces a long-term problem. As North America and other parts of the world develop new sources of supply, the Saudis will have less influence over the oil markets. Saudi Arabia may therefore be willing to sell their oil at a lower price in order to slow the development of new energy resources.

Much of the new oil coming online is more expensive to develop. At the current price of oil, many of those projects no longer make economic sense. Projects are typically not cancelled immediately, but if prices remain low for an extended period of time, many higher-cost projects will be shelved. Supposedly, too, many recent projects have depended on heavy debt financing. Lenders are less likely to lend aggressively if prices remain low. Lower prices hurt all producers over the short term. But the Saudis may think they will have a much stronger long-term position if lower prices slow the development of new projects. That gives the Saudi Arabia significant incentive to allow, if not engineer, a large drop in oil prices.

If the strategy of lower oil prices is to limit new production, oil prices probably do not need to remain this low to accomplish the goal. Many think the industry will begin shelving projects if prices remain low for six months or more. After that happens, oil prices can probably rise modestly without bringing a host of higher-cost projects off the shelf. Energy analysts think the overall supply and demand for oil will allow for stable prices at around $70 a barrel. At that level, energy costs will remain below their highs of the last few years, but above where they are now. The economic impact of $70 oil will be substantial, but not as great as the effect the price of oil will have around the current level.

Economists and other analysts often compare falling oil prices to a cut in taxes because it leaves consumers more discretionary money to spend. Lower energy prices clearly leave consumers more to spend, but they also hurt other parts of the economy. It is the balance between the winners and losers within an economy that determine whether the net effect is positive or negative for the economy as a whole. While some global economies will clearly benefit from lower oil prices, the net effect in the United States will likely be less positive.

To weigh pros and cons, we first need to determine net oil usage for the economy. Although the United States now produces far more of the oil it uses, we still import about 7,200 barrels of oil per day, according to the U.S. Energy Information Administration. If the long-run price of oil falls to $70 per barrel, that means the United States would save approximately $108 billion over the course of a year relative to the $110 per barrel oil cost of oil that prevailed over the last two years. The U.S. Department of Commerce estimated that the domestic economy produced $17.4 trillion of goods and services in 2014. Based on that estimate, a $108 billion reduction of imports should add about 0.7% of potential domestic growth.

There is a risk, however, that what people save on imported oil may not translate directly to spending in other areas. Some of the money saved on energy may go to reduce debt or increase savings and so would not produce the additional consumer spending that some are assuming. That may have been part of the reason that December retail spending showed a significant decline in spending on gasoline without a corresponding increase in other areas. At minimum, spending may not increase in other areas as quickly as energy spending declines. According to a recent report by the Ned Davis Research Group, earnings for companies outside the energy complex have historically accelerated about one quarter after oil prices trough. Perhaps consumers simply wait until the savings on energy provide enough funds to make larger purchases in other areas. Even if consumers do eventually spend energy savings, however, it may not drive faster U.S. growth. Many consumer goods are imported, so some consumer spending would not add to domestic growth.

The U.S. economy has also benefited over the last few years from enormous capital spending on new energy resources. Any reduction in capital spending caused by lower oil prices would be an offset to other increases in domestic spending. The American Petroleum Institute (API) reported in 2012 that the oil and natural gas industry invested $292 billion in new energy projects, improvements to existing projects, and enhancements of refinery and other downstream operations. In that same report, the API also noted an IHS Global Insight study that estimated $87 billion in U.S. capital spending on unconventional energy resources that same year. That spending would certainly not grind to a halt if energy prices remain low, but recent developments in North America have tended to focus on reserves that are harder to access. Sustained lower prices, therefore, may prompt U.S. developers to shelve more costly projects. . With that much capital spending exposure, it would not take a large loss of capital spending to offset a significant share of the $108 billion in estimated savings on imported oil.

A similar analytic framework would also apply to other economies around the world. Large net consumers of oil, such as Europe and Japan, should benefit. Europe imports roughly twice what the United States imports, according to the U.S. Energy Information Administration, while Japan and China import about the same amount as the United States but have smaller economies. Many of these economies have struggled to grow faster, in part because they were heavily pressured by the escalating costs of energy. Lower oil prices in the short run, and the potential for slower price increases in oil prices over the next few years, should improve economic growth for countries that consume more oil than they produce.

Countries that produce a lot of oil, however, such as Russia, many Middle Eastern countries and some countries in Latin America, will almost certainly suffer. Longer term those countries may benefit if lower prices discourage development in the United States and Canada, but reduced prices have obviously cut the economic growth that energy production provided those economies. Most other countries have not spent as heavily on energy exploration and development as the United States and Canada, but any reductions would cut growth even further.

For the world as a whole, as in the United States, confident estimates of large economic effects due to the falling price of oil seem overstated. Instead, the reduced costs of oil for consuming nations should be offset by lost oil revenue and capital spending in other countries. For that reason, the net effect of falling oil prices on total global economy should be relatively modest.

Investors are therefore probably best served to worry less about the impact of lower oil prices on overall growth and focus more on who will benefit and who will suffer. Many countries that spend heavily on imported oil have struggled economically in recent years. Europe and Japan have both posted very low rates of economic growth but have imported large amounts of oil. Lower oil prices could have a meaningful positive impact on those economies.

Some emerging economies would also benefit. China, India and other large emerging economies stand to benefit from lower oil prices. A number of important emerging markets, however, sell large amounts of oil. Russia’s economy is heavily dependent upon energy sales, and many of the Latin American economies are also leveraged to oil prices. In terms of overall proportions, energy production plays a larger role in the total economic picture within the emerging markets than in the developed international markets.

What the B of C says about housing prices …

The Bank of Canada (BoC) and the Economist say that Canadian housing is over valued 10% – 20%

Just days after the BoC’s highly qualified pronouncements Moody’s Analytics – an organization that some people find less than credible than the BoC – said maybe current prices can be justified by ‘structural changes’ in the market.

Here’s the constant:

  1. The central bank continues to caution that high household debt to income ratios are the biggest domestic threat to the Canadian economy.
  2. The Bank also says that the danger of that risk becoming reality, due to a jump in interest rates or a sharp downturn in the economy, is low!

That is good news says Mark Herman, Calgary Alberta mortgage broker.

Tricky changes to the mortge rules

Here is one of the changes of the mortgage rules that is now in effect – called the B21 Rules.

It will be sure to cause surprise for some customers that have large Line of Credits – LOCs

How the banks are now calculating monthly payments for secured lines of credit:

  • The outstanding balance (not the limit) will now be amortized over 25 years using the Bank of Canada 5-year benchmark rate to determine the monthly payment

What that means …

For the calculation of your QUALFYING INCOME – as in, the way the government says your mortgage math is done – your total balance on your LOC is now treated:

  • as a mortgage
  • with a 25 year amortization and
  • the rate used to calculate the monthly payment is the government’s “benchmark rate” which is about 5%.

This number is now used as your payment, not what the payment actually is.