Greener Homes

Canadian’s are Adopting the Greener Homes Grant

The Federal Government’s Greener Homes Grant

Have you been thinking about making improvements to your home? Right now might be the best time to do it. The Greener Homes Grant has been introduced recently and is becoming very popular amongst Canadians and for a good reason. “The federal government’s Canada Greener Homes Grant is proving wildly popular after coming online less than a month ago.” The grant has $2.6 million to work with and is targeting 700,000 homes across the country over the next 7 years. 

It will provide Canadians with up to $5,000 in order to help make energy-efficient retrofits. The retrofits will need to follow the EnerGuide standards. Jordan MacDonald, who is the president of a building performance consulting company in Atlantic Canada, stated “We’ve had a huge uptake since the program started. We have a team of energy advisors in New Brunswick and Nova Scotia. We were providing a similar service before the Greener Homes program, but we’ve seen a tenfold increase since the government launched it and we’re in the midst of increasing our staffing.”

Upgrades That are Covered

When it comes to what’s covered in the upgrades, they are included in a building envelope. This building envelope includes; installation, air sealing, replacing windows and doors with energy-efficient units, and air or ground source hear pumps. This will not only reduce costs but also helps to contribute to combating climate change. 

The grant will also cover renewable energy such as photovoltaic panelling, which will regenerate electricity. In some cases this will even be feb back into the grid. These incentives are put in places to encourage us all to help make our planet a better place and why not start with your home. Making upgrades to your home also helps to add value when you’re ready to sell. 

The Minister of Natural Resources, Seamus O’Regan said in a recent interview that “we worked with Statistics Canada on the model of the program—we think it’s about 110,000 direct and indirect local jobs in their communities. We’re also taking into account the recruitment, training and mentoring of up 2,000 EnerGuide energy advisors.”

Improve Your Home and Increase the Value 

It’s true that making improvements to your home can increase the value. You’re helping to improve the value and in this case also the environment. When we talk about what we can do to help the planet we sometimes wonder how we can do more, this is a great place to start. 

O’Regan also said that “any time you improve your home, one would think it increases the value, but you’re also going to see an increase in the literacy of this. People want to be able to do something to combat climate change, which seems so insurmountable that there is an appetite out there amongst Canadians to do their part. The only way this will work, aside from the fact that we’re talking about 1.5 megatons of greenhouse gas reductions beginning in 2027—that is sizeable—but in order for change to be expandable, I think people need to benefit from it and save money. This is not just about lowering emissions and creating good jobs, it’s also about lowering Canadians’ energy bills and that’s how it will be sustainable.”

There’s never been a better time than right now to make these improvements and then when you’re ready to list. I’m always here if you ever have questions about when it’s a good time to list and how we can work together to get the process started.  

Contact Lori and Team Today 

Have questions? You can contact Lori VanDinther and her team today if you’re interested in buying or selling your home. If you’re interested in learning what your home is worth, try our free home evaluation

Skyline of the financial district

Rate Hikes Are Not The Answer

According to the Polls

In a recent joint Nanos and Bloomberg poll, that took place in May, it was revealed that Canadian’s would welcome rate hikes if it means that it could help cool the housing market. According to the poll, 49% of respondents would support or somewhat support the Bank of Canada to increase the interest rate. This is because they believe that a rate hike would help relieve the very hot housing market. However, in order to soften the activity in the housing market, but this could also torpedo the economy. 

The President of Mortgage Architects, Dustan Woodhouse was interviewed about this potential rate hikes and stated, “who in their right mind would want interest rates to rise? Anyone who’s thinking they want interest rates to rise to slow home prices doesn’t understand how mortgage approval rules work because all mortgage approvals were written to 4.79%, now 5.25%, so what the actual interest rates are don’t actually mean anything as far as home prices have gone, because nobody is qualifying for any extra money over and above what they would if the actual interest rates were 4.79%, and 5.25% (as of June 1),”

Material Slowdown 

When you slow down the amount of money people have to purchase homes, you then need to rise the interest rates to 7.5-8.5%, says Woodhouse. This would cause housing prices to more than just slow down, the entire economy would in fact, grind to a halt. As Woodhouse puts it, “that would be like trying to kill a mosquito with a nuclear bomb.”

Woodhouse also believes that there’s a fundamental misunderstanding of how interest rate policy works. According to Dr. Sherry Cooper, “the problem is that interest rate policy is a blunt instrument and it leads to all sorts of unintended consequences. If you were to raise rates too much, you’d dampen the whole economy, which makes no sense given all the problems we still have in terms of jobs and getting the economy restarted. The Bank of Canada will never do it for that reason. It will raise rates when it thinks the economy is growing rapidly and is close to full employment.”

Rate Hikes to Rise in 2022

It’s been reported that interest rates are expected to rise by 2022, one year earlier than perviously warned by the Bank of Canada. This is because the economy seems to be healthier than everyone had thought it would be during the COVID-19 pandemic. 

The Bank of Canada also recently sated that it’s anticipating a return to full capacity a month sooner than expected. However, while other things are remaining constant, Dr. Cooper says, “it would reduce buying power. The question is would it lead to a decline in home prices? It would take quite a tightening in monetary policy for that to happen, and tightening is unlikely. Even the housing market isn’t one market nationwide; it’s many, many different markets, so we could see home prices reverse in one area or one sector without seeing it happen in another. To see the overall average home price decline, which means it would have to be a widespread phenomenon outside of both Toronto and Vancouver, it’s not that it can’t happen but it’s unlikely.”

Contacting Lori VanDinther and Team 

Please contact Lori VanDinther and her team today if you’re interested in buying or selling your home. If you’re interested in learning what your home is worth, try our free home evaluation.

Mortgage Stress Test Calculator with wooden house and coins stack and pen on wood table. Property investment and house mortgage financial concept

The Mortgage Stress Test

Looking to Invest in the Housing Market?

If you’ve been looking to start investing in the housing market, there are somethings you’ll need to know first. If you’re just starting out, there’s a chance you’ve probably heard of the Mortgage Stress Test. This test determines how your mortgage and finances might be affected by any sudden change when it comes to your financial situation, such as unemployment. 

Canada’s banking regulators have suggested some new rules for the Mortgage Stress Test, this was due to the ongoing COVID-19 pandemic. Which has resulted in many people finding themselves unemployed, causing the housing market to soar to record highs. However, the new rules will now make it harder for these potential new homebuyers to qualify. 

What is the Mortgage Stress Test? 

According to the Office of the Superintendent of Financial Institutions (OSFI), the Mortgage Stress Test is designed to prepare buyers for the financial stress of becoming a homeowner. The test also determines how the homeowner would be able to handle any sudden change to their financial situation that could affect their mortgage payments. It’s giving them a glimpse at what the high expense of buying a home. 

All buyers in Canada are required to take the Mortgage Stress Test in order to determine if their mortgage loan is even viable for them. It’s also based on their income, property tax and any other debt they might have at the time. Then borrowers can help to complete the evaluations of the potential homebuyers finances, determining what mortgage payment would be right for them. 

How I Pass the Mortgage Stress Test?

The Mortgage Stress Test was revised in April 2021, in order to pass the test now, you’ll need to prove that you qualify at either your contracted mortgage rate plus 2 per cent, or at the Bank of Canada’s five-year benchmark rate of 5.25 per cent – which ever is higher. 

For example, “if you buy a house at the purchase price of $500,000, make a 20 per cent downpayment, and receive a rate of 3.8 per cent, you are required to pay a monthly interest rate of $1,401.63.” In order to complete the Stress Test, you have to be able to prove that you can pay 5.25 per cent or $2,492.15 per month in mortgage rates. The issue is that for some homebuyers, they might default if they aren’t prepared for this sort of payment. 

Homebuyers Are Reconsidering What They Can Afford

This new Stress Test is now causing some potential first-time homebuyers to reconsider what they can afford. It’s been recommended that borrowers should take time to evaluate their finances with their banks, and with the help of a realtor. 

Due to the current housing market, which is is hot, the government regulators have upped the Stress Test. While the interest rates have remained historically low, this has caused the housing market to be flooded with buyers. In order to cool the hot market, the government has decided to institute this new benchmark qualifying rate for uninsured mortgages. 

The Office of the Superintendent of Financial Institutions

The OSFI is now concerned about homebuyers ability to pay their mortgage loans. While banks lenders are now worried that the homebuyers are over reaching in this very highly competitive market. 

“Given elevated levels of household debt and the risks that households may overstretch in the face of rising housing prices, we welcome the recent proposal by the Superintendent of Financial Institutions to introduce a fixed floor to the minimum qualifying rate for uninsured mortgages.” – Tiff Macklem, governor of the Bank of Canada

The test is most likely to have an impact on the housing market. The new Mortgage Stress Test rules will help to ensure that when someone is buying a home at a low-rate, that they can handle a potential increase in their mortgage payments. The 5.25 per cent point Stress Test is going to take effect in June 2021. 

Contact Lori VanDinther 

If you have any questions about the new Mortgage Stress Test, please contact Lori and her team today. They will be happy to help you make the move to becoming a homeowner. 

Please contact Lori VanDinther and her team today if you’re interested in buying or selling your home. If you’re interested in learning what your home is worth, try our free home evaluation.