Summer is here!
Our 55+ clients are thinking about ways to refresh their homes.
Whether it’s for comfort, safety, or curb appeal, renovations can get pricey and the CHIP reverse mortgage can really help out.
Mortgage Mark Herman, CHIP and Reverse Mortgage specialist, here to help the 55+ home owners.
The CHIP Reverse Mortgage by HomeEquity Bank can help you access the funds you need—tax-free and with no monthly mortgage payments required.
Here are just a few popular spring projects our recent customers have been planning:
- Retrofitting their home to support aging in place
- Resealing windows and doors for better energy efficiency
- Landscaping makeovers to enhance privacy and beauty
- Adding an outdoor kitchen and seating area for entertaining
- Repaving the driveway to boost curb appeal
With the CHIP Reverse Mortgage, you can unlock up to 55% of your home’s equity, giving you the freedom to renovate now and enjoy the results for years to come—all without dipping into your retirement savings.
Looking for tips on how use the CHIP in renovations? Call or email me, I’d be happy to help!
Canadian Mortgage Economic Data, June 4th, 2025
The Bank of Canada announced today that it is keeping its benchmark interest rate at 2.75%, unchanged from April (and March) of 2025.
As noted under “Rationale”, the Bank appears to be in a holding pattern until it gains more information on the direction of US trade policy and its impact on Canada.
Below, is a summary of the Bank’s observations and its outlook.
Summary – the 5-year fixed is the best option for June 2025 and July 2025 so far. ensure you get a rate hold are rates are creeping up.
Mortgage Mark Herman, top Calgary Mortgage Broker for First Time Buyers
Canadian Economic Performance, Housing, Employment and Outlook
- Economic growth in the first quarter came in at 2.2%, slightly stronger than the Bank had forecast, while the composition of GDP growth was largely as expected
- The pull-forward of exports to the United States and inventory accumulation boosted activity, with final domestic demand “roughly flat”
- Strong spending on machinery and equipment held up growth in business investment by more than expected
- Consumption slowed from its very strong fourth-quarter pace, but continued to grow despite “a large drop” in consumer confidence
- Housing activity was down, driven by a sharp contraction in resales; government spending also declined
- The labour market has weakened, particularly in trade-intensive sectors, and unemployment has risen to 6.9%
- The economy is expected to be considerably weaker in the second quarter, with strength in exports and inventories reversing and final domestic demand remaining subdued
Canadian Inflation
- Inflation eased to 1.7% in April, with the elimination of the federal consumer carbon tax shaving 0.6 percentage points off the Consumer Price Index
- Excluding taxes, inflation rose 2.3% in April, slightly stronger than the Bank had expected
- The Bank’s preferred measures of core inflation, as well as other measures of underlying inflation, moved up
- Recent surveys indicate that households continue to expect that tariffs will raise prices and many businesses say they intend to pass on the costs of higher tariffs
- The Bank will be watching all of these indicators closely to gauge how inflationary pressures are evolving
Global Economic Performance
- While the global economy has shown resilience in recent months, this partly reflects a temporary surge in activity to get ahead of tariffs
- In the United States, domestic demand remained relatively strong but higher imports pulled down first-quarter GDP
- US inflation has ticked down but remains above 2%, with the price effects of tariffs still to come
- In Europe, economic growth has been supported by exports, while defence spending is set to increase
- China’s economy has slowed as the effects of past fiscal support fade; more recently, high tariffs have begun to curtail Chinese exports to the US
- Since financial market turmoil in April, risk assets have largely recovered and volatility has diminished, although markets remain sensitive to US policy announcements
- Oil prices have fluctuated but remain close to their levels at the time of the April Monetary Policy Report
Rationale
With uncertainty about US tariffs still high, the Canadian economy softer but not sharply weaker, and some unexpected firmness in recent inflation data, the Bank’s Governing Council decided to hold the policy rate steady “as we gain more information on US trade policy and its impacts.
Looking Ahead: Uncertainty Remains High
The Bank noted that since its April Monetary Policy Report, the US administration has continued to increase and decrease various tariffs. China and the United States have stepped back from extremely high tariffs and bilateral trade negotiations have begun with a number of countries. However, the Bank said the outcomes of these negotiations “are highly uncertain,” tariff rates are well above their levels at the beginning of 2025, and new trade actions are still being threatened. Uncertainty remains high.
As a result, the Bank says it is proceeding carefully, with particular attention to the risks and uncertainties facing the Canadian economy. These include: the extent to which higher US tariffs reduce demand for Canadian exports; how much this spills over into business investment, employment and household spending; how much and how quickly cost increases are passed on to consumer prices; and how inflation expectations evolve.
Final comments
Today’s announcement ended with the following statement from the Bank’s Governing Council: “We are focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. We will support economic growth while ensuring inflation remains well controlled.”
Next scheduled BoC rate announcement
The Bank is scheduled to make its fifth policy interest rate decision of 2025 on July 9th.
GST Rebate for 1st Time Home Buyers
We have had lots of questions about this proram.
The legislation has been tabled, but is not done yet. As of today, and it is for contracts written May 27, 2025 or later.
Updates as they come in.
We have a 4-plex buyer who is purchasing a newly constructed 4-plex in Calgary at $1,250,000. His rebate is about 60k – now that is now pretty substantial!
Mortgage Mark Herman, 1st time buyer and move up mortgage specialist in Calgary Alberta.
Bank of Canada Lowers Consumer Prime to 4.95%
The Bank of Canada lowers its benchmark interest rate to 2.75%
In the face of significant geopolitical tensions, the Bank of Canada announced today that it has lowered its policy interest rate by 25 basis points. This marks the seventh reduction since June of 2024.
Below, we summarize the Bank’s commentary.
Canadian Economic Performance and Housing
- Canada’s economy grew by 2.6% in the fourth quarter of 2024 following upwardly revised growth of 2.2% in the third quarter
- This “growth path” is stronger than was expected when the Bank last reported in January 2025
- Past cuts to interest rates have boosted economic activity, particularly consumption and housing
- However, economic growth in the first quarter of 2025 will likely slow as the intensifying trade conflict weighs on sentiment and activity
- Recent surveys suggest a sharp drop in consumer confidence and a slowdown in business spending as companies postpone or cancel investments
- The negative impact of slowing domestic demand has been partially offset by a surge in exports in advance of tariffs being imposed
- The Canadian dollar is broadly unchanged against the US dollar but weaker against other currencies
Canadian Inflation and Outlook
- Inflation remains close to the Bank’s 2% target
- The temporary suspension of the GST/HST lowered some consumer prices, but January’s Consumer Price Index was “slightly firmer” than expected at 1.9%
- Inflation is expected to increase to about 2.5% in March with the end of the tax break
- The Bank’s preferred measures of core inflation remain above 2%, mainly because of the persistence of shelter price inflation
- Short-term inflation expectations have risen in light of fears about the impact of tariffs on prices
Canadian Labour Market
- Employment growth strengthened in November through January and the unemployment rate declined to 6.6%
- In February, job growth stalled
- While past interest rate cuts have boosted demand for labour in recent months, there are warning signs that heightened trade tensions could disrupt the recovery in the jobs market
- Meanwhile, wage growth has shown signs of moderation
Global Economic Performance, Bond Yields and the Canadian Dollar
- After a period of solid growth, the US economy looks to have slowed in recent months, but US inflation remains slightly above target
- Economic growth in the euro zone was modest in late 2024
- China’s economy has posted strong gains, supported by government policies
- Equity prices have fallen and bond yields have eased on market expectations of weaker North American growth
- Oil prices have been volatile and are trading below the assumptions in the Bank’s January Monetary Policy Report
Rationale for a rate cut
While the Bank offered that economic growth came in stronger than it expected, the pervasive uncertainty created by continuously changing US tariff threats is restraining consumers’ spending intentions and businesses’ plans to hire and invest. Against this background, and with inflation close to the 2% target, the Bank decided to reduce its policy rate by 25 basis points.
Outlook
The Bank notes that the Canadian economy entered 2025 “in a solid position,” with inflation close to its 2% target and “robust” GDP growth. However, heightened trade tensions and tariffs imposed by the United States will likely slow the pace of economic activity and increase inflationary pressures in Canada. The economic outlook continues to be subject to more-than-usual uncertainty because of the rapidly evolving policy landscape.
Final comments
The Bank noted that monetary policy “cannot offset the impacts of a trade war.” What monetary policy “can and must do” is ensure that higher prices do not lead to ongoing inflation.
The Bank said it will carefully assess: i) the timing and strength of both the downward pressures on inflation from a weaker economy and ii) the upward pressures on inflation from higher costs. It will also closely monitor inflation expectations.
It ended its statement by saying it is committed to maintaining price stability for Canadians.
More scheduled BoC news
The Bank is scheduled to make its third policy interest rate decision of 2025 on April 16th.
Summary of Mortgage Rule Changes
Key Mortgage Rule Updates
30-year amortization for insured mortgages
Starting December 15, 2024, 30-year amortizations will be available for insured mortgages. This option is open to first-time homebuyers and those purchasing newly built homes, including condos.
Higher insured mortgage limits
Applications for insured mortgages will now be accepted for properties valued under $1.5 million, giving more buyers access to high-value homes with lower down payment requirements.
Stress test simplification
In line with OSFI’s guidance, current stress test requirements will continue for insurable, uninsurable, and uninsured applications. Eligible insured transfers and switches will remain qualified at the contract rate.
How these changes benefit you
✔️ Reduced monthly payments
Extending amortizations to 30 years will lower monthly payments, helping clients manage affordability amidst rising living costs and fluctuating interest rates.
It usually works out to reduce your payment by 9% or lets yo buy 9% more home (increases the mortgage amount but about 9%.)
✔️ Expanded opportunities for buyers
Higher insured mortgage limits make it possible for more Canadians to purchase homes in competitive urban markets like Toronto and Vancouver for up to $1,500,000 with 5% down on the 1st 500k and 10% down payment on the balance.
This set of mortgage rule changes should make it easier for buyers to get into a home now.
More importantly, it lets buyers purchase up to $1.5M with $125k down, where before they would have topped out at $1m with $75k down payment.
- Mortgage Mark Herman, top best Calgary mortgage broker,
- 403,681-4376
GIFTed down Payment now possible for New-to-Canada home buyers!!
For New to Canada buyers – Expanded “GIFT-ing” is now possible for close family members!
That’s right! As of now, May 23, 2024, buyers who are New to Canada – in Canada for less than 2 years – ARE now allowed to use /receive GIFTS for down payment from “close family members.”
This is a big deal because it now includes; aunts, uncles, nephews, and cousins; all were not allowed to provide a “GIFT for down payment” before.
The standard used to be only: mother, father, brother, sister, grandparent and legal guardian; and that was it.
From our data that we have on on our own customers, this will help about 20% of our New to Canada files to buy a home, where they would have been shut out before.
Mortgage Mark Herman, top best fantastic Calgary Alberta mortgage broker, specializing in First Time Buyers.
We view that the Expanded Gift-er Options ARE needed due to the average new home price being 500k+, it is super tough for newcomers to save enough to buy a home. GIFTS are relied on all the time by 1st time home buyers.
Acceptable Sources of Down Payment for a home Canada, 2024
This seems to be the topic of this week … what can I use for down payment on my home?
All banks DO ACCEPT these approved methods to gather down payment for a home.
Acceptable Sources of Down Payment:
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Ineligible Sources of Down Payment
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The new Tax-Free First Home Savings Account (FHSA) and the
FTHBI – First Time Home Buyer Incentive were the government matches your down payment up to 5% ARE both great ideas!
Mortgage Mark Herman, top Calgary Alberta Mortgage Broker since 2004!
Using Business Income / Corporate Income to Qualify for a Mortgage in Canada, 2024
Are you self- employed and thinking about, or hopping to use your own business income or corporate income to help you qualify for a mortgage?
It is possible, but not very common, as it usually does not help as much as we hope it would.
Mortgage Mark Herman, best Calgary Alberta mortgage broker for self-employed buyers
For RESIDENTIAL Purposes:
Very few lenders (like 3 out of 40+) will consider using business income that is not on personal taxes.
- When they will allow the business income added in, they only use between 40-60% of the net business income after dividends paid.
- They wouldn’t allow the operating company to actually be on mortgage/title;
- it would be in personal name or
- Hold Co name (with full personal guarantee, for the full mortgage amount – with full recourse. Meaning they can/ do/ will sue you into bankruptcy if they need to foreclose.)
Docs Needed
They do need to review more data than usual if trying to use business financials. I addition to the regular documents needed (2 years of T1 Generals, and NOAs and T4’s if there is T4 income), add in these docs:
For the Business:
- 2 years of professional accountant prepared financial statements
- including a signed ‘Notice to Reader’ and
- Need a compilation of all billing engagements for the fiscal periods
Catch – there are always a few:
If the property in question has a large shop – it is usually not allowed in determining the value so a higher mortgage amount is usually required.
They also have a hard time if there is any income to be derived from the property.
Acreage Details
Max land is limited to 4, 8, or 10 acres – depending on lender
- Only the home, de/attached garage and 4 acres are used for valuation by lender.
- NO value is attributed to: out-buildings, sheds, riding rings, stables, storage, nor fences
- Many of which could be valued at 200k+, like fences and buildings.
Updated: Using Disability Income to Qualify for a Canadian Mortgage: 2024
NOTE: this post has been updated in August 2024.
CAN DISABILITY INCOME BE USED TO QUALIFY FOR A CANADIAN MORTGAGE?
YES, it is possible to use disability income to qualify for a pre-approval or a full mortgage approval.
IMPORTANT:
We are ONLY able to use disability income AS A “TOP UP” WHEN YOU ARE BUYING WITH ANOTHER PERSON
- who has standard/ T4 employment income OR qualifies as SELF-EMPLOYED
- AND your file needs more income to “top-up” the qualification amount to get to your target mortgage amount.
Unfortunately, we are not able to use:
- Disability income where it is more than 50% of the income needed to qualify for the mortgage.
- AISH income – the lenders deem provincial supplements as to “risky” and only use “federal programs.”
- If either of these are your situation, we recommend going to an ATB Branch, not online but a BRANCH.
Below are a few clarifications on the typical disability incomes that the banks can use.
- Not all banks accept all types of disability income so we use a few different lenders to ensure we have all your bases covered.
NEXT STEP
Call or send me an email with your contact data so we can have a chat on the phone if you are needing to use a “TOP-UP” via disability income for your purchase.
- I answer from 9-9 x 363, am in the office from 10 – 6:30 most days, best time to call is between 11 am – 3 pm.
- No need to pre-book, just call!
- (How different is that?)
Long-term & Short-term Disability Pension/Insurance
If the borrower has a non-taxable income, the Bank, CMHC and Sagen allow the income to be grossed-up.
- Less than $30,000, this income may be increased by 25%
- At least $30,000, this income may be increased by 35%
Long-term disability: 100% of long-term disability income can be used.
Provide one of the following:
- Letter from the organization or from QPP confirming long-term or permanent disability. If the letter is outdated (over 120 days), current bank statements confirming the deposits are being made to the borrower’s account are also needed
- T4A(P) confirming disability income.
Short-term disability: 100% of the employment income can be used for short-term disability.
Provide the following:
- A letter from the employer confirming the borrower’s return date, position and salary with a verbal confirmation from the employer to ensure the date on the letter is correct. If the return date cannot be confirmed, the disability income can be used for qualifications.
Pension & Retirement Income/Life Annuity
Retirement pensions are fixed incomes, CPP (Canada Pension Plan), OAS (Old Age Security), GIS (Guaranteed Income Supplement), provincial pension plans and private/corporate pensions and must be Canadian pension and evident on Canadian tax return.
IF you are Splitting Retirement Income: In the case where the pension income is shared for tax purposes, the transferring spouse/common-law partner must be on file and only the amount that has not been transferred/split is admissible.
Provide the most recent two documents of the following depending on the source of the declared retirement income:
- Most recent NOA supported by T1 General
- RL-2 Slip
- T4A, T4A(P)
- Letter from the initiating party confirming the yearly pension amount
- Letter from the organization confirming income and permanency of income
- Copy of current bank statement showing the automatic deposit
- Copy of current monthly cheque stub
For CPP, OAS, QPP and GIS, only one relevant document for each source is required from the list above.
RRIF
Income from a RRIF is admissible if there is proof that the portfolio generates a sustainable income amount for the length of the term.
This is a tough one to nail down as the portfolio has to be sustainable and not “drained” over the term of the loan, as in, there will still be a substantial balance in 5 years, if the mortgage is a 5-year term.
Provide the following:
- The most recent NOA supported by T1 General
- Recent RRIF statement to show that the borrower has sufficient assets to support the indicated income for the length of the term
First Nations
This is a non-taxable income. The income can be grossed-up as follows:
- Less than $30,000, this income may be increased by 25%
- At least $30,000, this income may be increased by 35%
Provide the following:
- Copy of the status card needed.
“We use disability income all the time in our practice to top-up mortgage amounts and have access to the banks and lenders that allow it’s use.
Mortgage Mark Herman, top Calgary Alberta and BC mortgage broker, for 21 years.
Underlying Economic data on BoC holding Prime rate the same, December 5, 2023
Bank of Canada holds its policy interest rate steady, updates its outlook
Against the backdrop of a decelerating economy and growing calls for less restrictive monetary policy, the Bank of Canada made its final scheduled interest rate decision of the year today.
That decision – to keep its overnight policy interest rate at 5.00% – was broadly expected. What was not entirely expected (or welcome) was the Bank’s statement that it is “still concerned” about risks to the outlook for inflation and “remains prepared to raise” its policy rate “further” if needed.
The Bank’s observations are captured in the summary below.
Since August, we have been saying the VARIABLE RATE mortgage is the way to go, and this proves we were right on the money.
Mortgage Mark Herman, top Calgary Alberta and Victoria BC mortgage broker
Inflation facts and housing market commentary
- A slowdown in the Canadian economy is reducing inflationary pressures in a “broadening range” of goods and services prices
- Combined with a drop in gasoline prices, this contributed to easing of CPI inflation to 3.1% in October
- However, “shelter price inflation” picked up, reflecting faster growth in rent and other housing costs along with the continued contribution from elevated mortgage interest costs
- In recent months, the Bank’s preferred measures of core inflation have been around 3.5-4%, with the October data coming in towards the lower end of this range
- Wages are still rising by 4-5%
Canadian economic performance
- Economic growth “stalled through the middle quarters of 2023 with real GDP contracting at a rate of 1.1% in the third quarter, following growth of 1.4% in the second quarter
- 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
- Overall, these data and indicators for the fourth quarter suggest the economy is “no longer in excess demand”
Global economic performance and outlook
- The global economy continues to slow and inflation has eased further
- In the United States, growth has been stronger than expected, led by robust consumer spending, but is “likely to weaken in the months ahead” as past policy rate increases work their way through the economy
- Growth in the euro area has weakened and, combined with lower energy prices, has reduced inflationary pressures
- Oil prices are about $10-per-barrel lower than was assumed in the Bank’s October Monetary Policy Report
- Financial conditions have also eased, with long-term interest rates “unwinding” some of the sharp increases seen earlier in the autumn. The US dollar has weakened against most currencies, including Canada’s
Summary and Outlook
Despite (or in the Bank’s view because of) further signs that monetary policy is moderating spending and relieving price pressures, it decided to hold its policy rate at 5% and to continue to normalize its balance sheet.
The Bank also noted that it remains “concerned” about risks to the outlook for inflation and remains prepared to raise its policy rate further if needed. The Bank’s Governing Council also indicated it wants to see further and sustained easing in core inflation, and continues to focus on the balance between demand and supply in the economy, inflation expectations, wage growth, and “corporate pricing behaviour.”
Once again, the Bank repeated its mantra that it “remains resolute in its commitment to restoring price stability for Canadians.” As a result, we will have to wait until next year for any sign of rate relief.
What’s next?
The Bank’s next interest rate announcement lands on January 24, 2024.
In the meantime, please feel free to call me and discuss financing options that will empower you in this economic cycle, and the ones ahead.