Variable-Rate Mortgages

Variable-Rate Mortgages

Variable-Rate Mortgages Reach Trigger Rate

There was recently an article published in the Financial Post about the fact that variable-rate mortgages are now hitting their trigger rate. The article also talked about how this will effect Canadians financially and what to expect. Before we get into the details let’s learn a bit more about what exactly are variable-rate mortgages and fixed payments. The Bank of Canada explains this very well and what happens when variable-rate mortgages reach their trigger rate.

“In Canada, about three-quarters of variable-rate mortgages have fixed payments. For these specific mortgages, when interest rates move, the amount of the mortgage payment does not change, but the portion going toward interest (rather than principal) is adjusted. But if interest rates increase substantially, these mortgage borrowers may reach a point where their fixed payments cover only interest and not any principal. The interest rate at which this happens is known as the trigger rate. If rates rise above the trigger rate, borrowers may then need to increase their mortgage payment to cover the additional amount of interest. For some households, this payment increase may be unexpected.” — Bank of Canada 

It’s been indicated that higher rates are on their way, so what does that really mean for your mortgage rate? Well, if the rate was raised by say 0.50 per cent then you would see a $24 increase per month on your payment. Does that make sense? Let’s learn more about what the Bank of Canada says will happen since we’re now seeing these variable-rate mortgages reach their trigger rate in the Financial Post article. 

The Bank Of Canada & Variable-Rate Mortgages 

The Bank of Canada Senior Deputy Governor Carolyn Rogers announced that the adjustment to higher interest rates might be difficult for some Canadians with variable-rate mortgages. This was announced at a recent event in Ottawa to a networking group, they indicated that these variable-rate mortgages had an increase since last year. 

According to new research by the Bank of Canada, also included in the article by the Financial Post, variable-rate mortgages are accounting to one-third of the outstanding mortgage debt. This is an increase when we compare it to just a few years ago. 

The Senior Deputy Governor also said that mortgage costs have already gone up for most Canadians and that they’ll most likely see an increase for more Canadians. In the research paper previously mentioned, the Bank of Canada estimated that there will be around 50 per cent of variable-rate, fixed-payment mortgages that have now reached their trigger rate. Meaning that additional payments are going to be required, which is around 13 per cent of all Canadian mortgages.

“For a variable-rate mortgage with variable payments, the size of regular payments fluctuates as the prime interest rate changes—if prime rates go up, the mortgage payment increases to cover the larger interest component.” — Bank of Canada 

The Deputy Governor stated that the risk of Canada’s financial stability is elevated due to the higher levels of household debt, added to it is the rising interest rates. However, the Bank of Canada does expect that the finial system as a whole is going to withstand this time of stress. 

“If interest rates increase beyond the trigger rate, the amount required to cover the interest payment will be more than the mortgage payment. Each borrower with a variable-rate mortgage with fixed payments is subject to an individualized trigger rate, which is specified in their mortgage contract.” — Bank of Canada 

The VanDinther Team

There’s a lot of information to take in and learn when it comes to different types of mortgages and what they mean. It can be overwhelming at times, that’s why we want to keep our clients informed. If you have any questions please reach out to us. 

Contacting the VanDinther Team can be done directly by phone at 905-330-2002, or by email at There’s never a wrong time to list your home, so let’s chat about what you’ve been looking for and how our team can help you make the right moves! 

Canadian Housing Market

Canadian Housing Market – Five Year Outlook

Housing Affordability in the Canadian Housing Market 

It was reported by REMAX Canada that recently there has been a rise in more Canadians moving to urban areas in recent years. The question is, how will this look over the next five years? We can see that the market has changed a lot during the pandemic with rising costs of residential properties. 

In a recent survey by Leger, it was found that about 78 per cent of Canadians were clear that taxation, interest rates, economic recession, climate change, and mixed housing were reasons to not buy a home. The report also found that public transportation was another reason, all of these points caused them to be the most concerned when it came to purchasing a home. 

It was reported that in 2020, the Canadian economy saw a five per cent decline. However, the economy also saw a 4.6 per cent growth in 2021. The Bank of Canada and the central banks have been compelled to rise interest rates as the economy is rebounding from the ongoing COVID-19 pandemic. 

CIBC Capital Markets reported recently that due to the pandemic, 3 million Canadians lost their jobs and 2 million found new work. Some of this new work was with reduced hours, meaning less income. The good news is that the number of Canadians who are employed is now above what it was pre-pandemic. 

During this time some Canadians were able to experience the benefits of a recession, meaning there were extremely low interest rates. This was during the first four waves of the pandemic. What does the future hold for the Canadian economy? New immigrants will help move it forward, benefiting the real estate market. 

Immigration and The Real Estate Market 

There are a lot of incredible benefits to immigration and what it can do to help the economy. Welcoming new Canadians who are ready to work and help move Canada toward a bright future. This benefits all Canadians and the future looks bright for many who will arrive in 2022.

It was reported that Canada is expect to welcome 432,000 immigrants in 2022. This will help the demand for new housing. This demand will be particularly noticed in the Toronto and Vancouver areas. The most recent REMAX Canada survey found that 61 per cent of Canadians believe in long-term investments.

However, this is not expected to change over the next five years. The survey did find that there are still issues that are causing barriers in stopping the purchase of residential properties, such as taxes, rising interest rates and capital gains tax. 

Rising Interest Rates 

According to Benjamin Tal, Capital Markets Deputy Chief, the enemy of the housing market is not high interest rates that is good for the economy in fact. It is the pace at which those rates increase that is a big risk to housing. Rate increases at a reasonable schedule of four times a year would create a stable and more relaxed housing market over the next five years.” 

There is some anticipation that inflation is going to ease up in Q4 in 2022. If it doesn’t ease then the Bank of Canada will most likely raise interest rates, “at a consistent quarterly pace to sustain a stable economy with healthy employment and a less- heated housing market.”

Under the conditions mentioned above, housing across Canada would then remain expensive through to 2027. However, these prices would not be as hot as they have been over the last three years. When it came to Canadians who did get a mortgage in 2020 and 2021, they were able to land low rates are now at risk of higher rates. 

REMAX Canada’s Housing Report

According to the report by REAMX Canada, “while demand for housing is likely to continue to outstrip supply, resulting in high prices, under a scenario like this with a higher interest rate environment, the housing market could be stable and less heated than what Canadians have experienced over the last five years.” 

The housing market is actually more stable then people realize and according to CIBC, one third of Canadians were able to purchase a new home. However, some needed the support of family members, such a parents. CIBC reported that ten per cent were able to buy a new home due to generational wealth transfer, they then used this gift to buy their new home. 

The report by REAMX also stated, according to Tal, “each recession Canada has experienced over the last 50 years has been triggered by central banks overshooting the ideal pace of interest rate hikes. In his assessment, this is the greatest potential threat to the stability of Canada’s housing market in the next five years.” 

Immigration and The Impact on The Housing Market 

It’s true that Canada welcomes immigrants every year, adding to the economy and creating new hope for many individuals. Canada had recently committed to welcome over 400,000 immigrants to the country in 2022. These new Canadians will have higher education and can add to the economy. 

Immigration benefits all of Canada, we see it adding significantly to the economy. Immigration adds to the labour market. In the REAMX report, its noted that the system could improve by selecting immigrants that can help the chronic labour market needs. It’s mentioned that there is need specifically in the skilled trades and construction. 

According to the Conference Board of Canada, higher levels of immigration can help to benefit the Canadian economy with “greater GDP and public revenues.” The CIBC and the Conference Board of Canada have agreed that there needs to be a minimum of 400,000 immigrants annually in order to help sustain the Canadian “economic vibrancy.”

Though this formula can be pretty complicated and often it doesn’t look at individuals who already reside in Canada. Those individuals are often students who are in temporary housing. We still need to take note that these factors will help the economy and the housing market.

According to the REAMX Canada report, it can take ten years for immigrants to have earning that are constant with their work experience and skills. This is in comparison to Canadian born workers, therefore it’s the result of Ottawa’s attention on immigrants who can be of economic benefit and have better support systems. 

Taxation and It’s Impact 

Finally we’ll discuss the impacts of taxation on the real estate market. According to the REAMX Canada report, in order to better manage the ballooning deficits and add to the cooling Canadian housing market. The federal government might remove the capital gains tax exemption, this was for principle residents in the next five years. 

The report stats that, “given the ballooning federal deficit sparked by the pandemic, speculation has increased that Ottawa could remove the capital gains tax exemption on primary residences. If this scenario was to transpire in the next 12 to 24 months, even in a modified or hybrid manner, it would upend the retirement plans of millions of Canadians who plan to cash in on the full gains from the sale of their principal home to fund their retirement.” 

According to Jamie Golombek of CIBC Private Wealth, “the primary homes of Canadians represent the greatest store of value for most homeowners and removing a significant portion of that value by eliminating the exemption could cool the market in profound ways.” 

So what’s next for the Canadian housing market? We will need to wait and see what these policies and with the welcoming of new immigrants in 2022. The next five years we will need to watch see if this current federal government will choose to apply the capital gains tax on primary residents. Resulting in a softening “the blow to the market by making it prorated based on how long the property has been owned or based on the value of the home.” 

Contact Lori VanDinther and Team

Have any questions about the Canadian housing market? Lori and her team are here to make sure that you’re questions are answered, plus they can start the process in looking for your new home. Whether you’re looking to downsize or expand, Lori and her team are ready to make the process an enjoyable one.

Please feel free to contact them anytime either by phone at 905-330-2002 or by email at If you’ve ever wondered what your home might be worth we have the technology to help you figure that out, try our What’s My Home Worth calculator today.

Mortgage Lender

Choosing the Right Mortgage Lender

Finding a Mortgage Lender 

When it comes time to shop for a mortgage lender it can seem daunting and stressful. However, there are multiple companies that are able to help you through the process and interest rates options. The whole process can sometimes feel really overwhelming and that’s why a mortgage lender or specialist can help you make the right decisions. 

There are three different type of mortgage lenders in Canada. The first one is the “Lender A,” which are the traditional lenders, banks and credit unions. Typically this lender is for those who have good credit scores and a steady income. 

Next is the “B Lender,” they’re able to offer a lower barrier for the borrower. The borrower may not have qualified through the bank or credit union. Finally there’s the “Private Lender,” which is for borrowers who have lower qualifications than the A and B lenders. 

“While banks and other major financial institutions are considered to be A lenders, monoline lenders also fall under this category. Unlike banks who offer multiple services like credit cards, investments and bank accounts, monoline lenders specialize primarily in mortgage loans.”

It’s best to start by looking for a mortgage broker, as we mentioned above, they can offer you recommendations on what type of mortgage is right for you. You can then compare all the options and go with the one that suits your life and income situation. This is also possible to do online, you can compare interest rates and terms. 

What to Ask Your Mortgage Broker & Lender 

It’s important to understand the interest rates and terms with your lender. This way there aren’t any surprises. Some questions you should consider asking are about your payments, property taxes and mortgage options. 

This is because each mortgage lender will have their own policies, your broker will be able help you understand their guidelines and terms. Then they’ll be able to help you determine which lender will suite your needs best. 

It might also be helpful to ask your broker what lenders they think would be best for you. It’s also a good idea to ask your broker the difference between a bank and moonline lenders. This will help you figure out payment privileges, which is usually the biggest difference. 

“Borrowers may also want to ask about extra payments on your mortgage and how many you’re entitled to per year, the mortgage renewal process, and if your lender allows property taxes to be collected with your mortgage.”

Another good question to ask would be about any penalties if you choose to pay out your mortgage early. This could impact the length of your mortgage term and the interest rate. Its important to know the interest rate penalties.  

Choosing the Right Lender 

There’s a lot involved when you’re choosing the right lender. It can be more than just about rates and terms. It’s important to make sure they have good customer service and can communicate well. 

With any service or company, you want to make sure that you’re treated well and that issue, of there are any, are resolved. It’s “important for lenders to have a good online customer portal. This is where clients can make payments, gather mortgage statements, and get other detailed information.” 

Contacting Lori VanDinther and Team 

If you need advice about mortgage lenders or brokers, we can help. If you have any questions about the current real estate market my team and I are here to answer them for you. 

We love connecting with our clients, our goal is to help you find the home of your dreams in Burlington, Ontario and surrounding areas. Please contact me either by email at, or by phone at 905-632-2199.