Refinancing may still be an option

To no one’s surprise The Bank of Canada has left its key interest rate unchanged at 0.5%. After reading the latest Monetary Report, it doesn’t sound like it will raise its policy rate any time soon. Inflation is flat, as is wage and export growth, and there is still uncertainty in the US and globally.

Despite record low interest rates, some new home buyers are finding it challenging to qualify for a mortgage due to a new round of rule changes announced late last year. These changes have also affected existing mortgage holders who may want to refinance to get a lower rate.

While low interest rates and robust regional housing, markets continue to be the norm, Canadians are still burdened with record-high debt loads. The ratio of debt to disposable income rose to 167.3% by the end of 2016. That means Canadians owe $1.67 for every dollar of disposable income, up from $1.66 the year prior.

If you’re sitting with equity in your home yet can’t seem to manage your debt payments, refinancing could still be an option. With credit card interest rates often pushing the 20% range and unsecured lines of credit in the 7% and higher range paying off high-interest debts can make sense.

Let’s review a refinance. Specifically, you are increasing the amount of your mortgage to pay off debt. Your actual mortgage payment may or may not increase, depending on a number of factors, and you may incur a penalty to break your existing mortgage if you are refinancing midterm, but your overall monthly payments should decrease. You could be paying off the refinanced debt at a much lower interest rate, which could save you thousands of dollars in interest in the long run.

Here are some reasons to consider a refinance:

Decrease your overall monthly debt payments by using your equity to pay off those high-interest credit cards or unsecured loans, which can help you better manage your budget.
You can refinance to purchase another property. Using the existing equity in your home can be a great way to buy a rental property which, if done right, can also make the interest you pay tax deductible.
You could also take out some of the equity for investment purposes.
Or you may want to refinance to renovate.

As you can see there are many factors to consider before deciding to refinance. Each individual’s financial situation is different. Call me and we can discuss the options available to you.

Guy Ward is a Mortgage Broker in Calgary, Alberta with TMG (The Mortgage Group Alberta) and can be contacted at

How Does the Office Space Market in Canada Compare to the One in the US?

Image Source: Hi-Level Mezzanines

At present, both the United States and Canada share a fairly healthy office market being shaped by broadly similar trends. As large trading partners of similar economies, this is unsurprising. Yet despite sharing many characteristics, there are differences in how they are being shaped by these trends and broader differences as well.

Similarities Between the US and Canadian Markets

Growing Demand for Class A Space

Class A commercial space is in high demand across North America as firms demand greater efficiency and technology while relocating or renting for the first time. JLL reports that Class A rents have increased by 21.5 percent since 2010, which is nearly 2.7 times faster than Class B rent growth. Much of this stock is being created or converted in urban centers.

Companies are flocking to central business districts and areas linked to them via transit hubs for the value offered there. With greater focus on efficiency, many companies are not as concerned with space as they once were and take opportunities for hot-desking and remote work seriously. While rents are surging for Class A properties, this has left Class B property owners with pressure to offer greater incentives in their lease such as lower premiums and larger packages.

Tech and Finance Drive Commercial Rents

The largest driver of rents for both the US and Canada continues to be tech companies. In the United States, 24.2% of leasing volume in Q1 of 2017 was attributed to the tech sector. The creative and finance sectors are also capturing sizeable shares of lease volume. The digital pressures of all are one of the factors pushing the market toward Class A office space.

Cautious but Optimistic

Both the US and Canada have been troubled by the surprise events of 2016. Britain’s unexpected vote to leave the European Union and America’s selection of Donald Trump in the 2016 Presidential Election have created uncertainty in Western economies, sparking fears of a slow down and lower demand for real estate. For the markets in the two countries, construction is expected to slow and softening of the market to occur as new spaces come online. Developers in both countries also complain of too much regulation.

Differences Between the US and Canadian Markets

Stage in the Real Estate Cycle

According to JLL and its Office Clock system, plotting cities on the market cycle into falling, bottoming, rising, and peaking phases, the United States cities are further along the property cycle than their Canadian counterparts. Leading US cities like New York and Los Angeles (with their hitherto hot market increases) are reaching their peak with the office market in San Francisco seemingly already done so. Many smaller, regional hubs across the US like Indianapolis and Phoenix are further behind and set to see market rises.

Canada, as a national market, seems to be one phase behind the US market in the property cycle. Vancouver and Toronto especially, unlike major US cities, seem set for a much longer rise in the office market and escalating rents as both continue to grow at fast pace toward becoming major metropolises on par with New York, London, or Paris.

Regional Irregularities

Other Canadian cities are not seeing such rapid growth however, as studied by pwc and the Urban Land Institute. Montreal is growing but at a lesser rate. Ottawa, after decreases in government spending, now has a vacancy rate of near 25%. And cities in Alberta like Calgary and Edmonton are having to weather the loss of profits from a collapsing oil industry as well as what some consider an over-supply of commercial property from the last decade.

In the United States 10 cities lead the growth of the market, mainly in the eastern seaboard states and the southwest. Gateway markets and some leading metro-areas have actually seen a cool down. Most dramatic is that in the seemingly unstoppable Bay Area where both San Francisco and Silicon Valley have seen negative net absorption and rent declines on a quarterly basis.


The Importance of Aligning Your Goals With Your Clients’

The really great companies have something in common that is often imitated, but very hard to duplicate: a relentless focus on the client.

What does that mean?

For starters, it means the ability to gain insights into their needs and wants. It means the ability to provide products or services that anticipate those needs – often providing these services before clients realize they want them. Perhaps most importantly, it means aligning your capabilities and goals as a business with the client’s for optimal success.

For all the businesses that have successfully used this formula – think Apple, Google, GE or Toyota – the wayside is littered with casualties.

Business failures have typically centered around losing track of what was important or depending too much on technology when clients want live, face-to-face contact; other businesses just didn’t try hard enough to retain their client relationships. An Accenture study found that 52 percent of consumers stopped doing business with companies because of issues like this, and once they’re lost, 68 percent of consumers won’t return.

This is as true in real estate as it is in any other field, and maybe more so. In fact, having the ability to align your goals with your clients’ may be one of the most important determinants of success or failure in a business like ours. That’s because if your goals aren’t matched with your clients’, you may well find yourself working at cross-purposes. There’s no happy ending when that happens.

The reality is that realtors are doing more than just selling properties. We are helping our clients realize a lifestyle, enhance an environment, and find a place to live. What is more important than that? This all involves a process that, when done right, is intensely personal and hands-on. In turn, we grow insights into their motivations and needs and then set out to anticipate them.

This is one of the differentiators around which AISA Real Estate Services has built its business. This focus has allowed us to establish a successful niche with affluent clientele who are particular, discerning, and who appreciate when firms truly take the time to understand their goals as clients and then evaluate how they can best achieve those goals.

This focus on the client and understanding what their real estate needs are enabled us to find the right buyers for 65 luxury residences at The Trump International Hotel & Tower® Vancouver and allowed us to set a record average for a project of this size in Canada, a record which has only recently been topped.

Such achievements are great, of course. But, there are other benefits too. When you support your clients’ goals, they are more likely to support yours. When you’ve created the kind of client experience that matters, they will continue to count on you as a valued resource for future transactions. Further, there is nothing like a referral from someone who is happy with how you held up your end of the bargain.

There’s more to success in real estate than steering clients to properties in the right price range and with the right mix of amenities. The customer experience is of paramount importance. When you establish a meeting of the minds on shared goals and expectations, you’re more than halfway there.

What’s going on with my appraisals

Changes in mortgage rules for home buyers and insurers certainly have had an impact on the housing market, and those changes have impacted property appraisals as well. Conventional mortgages – up to 80% of the value of the property – historically, were required to have a full appraisal. Now, in many areas of the country, an appraisal may also be required on insured mortgages — 80 to 95% loan-to value.

The decision to approve a conventional mortgage, after all other lending criteria have been satisfied, is made on a property’s fair market value. This is defined as the market value of an interest in land at the highest price reasonably expected, when sold by a willing seller to a willing buyer, after an adequate amount of time and exposure to the market.

So who determines the value of that property? One could argue that the market itself determines the value, which is true, but from a lender’s perspective that number must come from an independent third-party – the appraiser. An appraiser, who is specifically trained and has sufficient experience, will be asked to offer an impartial, written opinion of the property’s value.

Realtors normally use a comparative market analysis (CMA) to evaluate a property’s value based on local market data. Agents analyze listing and sales data for comparable properties in the area to recommend a price to list or to offer. However a CMA is not an appraisal. Although appraisers use the CMA approach, they use it in combination with other factors to determine the value of a property.

The major difference is that appraisals are done for a specific client — the lender. Because real estate is the major security for mortgages, the market value estimate needs to be as accurate as possible. Appraisers use ‘sold’ properties information only and compare similar property types, in close proximity, that have sold within a relatively short period of time – usually 90 days.

Not all residential properties are subject to a traditional appraisal. If the property is in an established area with similar properties then sometimes the price can be validated electronically. This model of appraising property, called automated valuation model (AVM), has become quite popular in the last 10 years.

However, given the nature of the housing market these days, mortgage lenders have moved away, in many areas, from AVMs for conventional mortgages, and for some high-ratio mortgages as well, and are asking for live, full on-site appraisals.

At the end of the day, an appraisal must reflect a property’s realistic true market value and needs to be backed up with accurate data.

So why does an appraisal come in lower than expected?

With the introduction of bidding wars, where, in some areas, prices may be artificially inflated, appraisers are still tasked with coming up with a property’s fair market value. Rapidly changing markets can be very challenging for an appraiser to properly evaluate a home’s worth.

Appraisers will try to get to the purchase price when evaluating a property. However, sometimes the sale is a few weeks ahead of the market. If prices are increasing, it may not show up in their analysis yet and the appraisal will reflect a lower value.

At the end of the day, the appraisal has to be a realistic evaluation of a property’s true market value and be backed up with data.

Guy Ward is a Mortgage Broker in Calgary, Alberta with TMG (The Mortgage Group Alberta) and can be contacted at

Building for Now and for the Long Term

It’s hard to miss the real estate boom that continues to characterize the housing market in Toronto and the GTA.  And the trends are for continued growth this year.  The Toronto Real Estate Board (TREB) is estimating 104,500 to 115,500 home sales this year and sales in the first three months are in line with that so far.  Just this week, a Financial Post article commented on new construction hitting its highest levels in almost a decade.

It all makes for an exciting time for real estate developers. But, it’s also not without its challenges.  In my view, inherent in the mindset of developers working in Toronto now – and indeed, those working in any major city that is experiencing rapid, extensive growth – is the question: how do I build for today and for tomorrow?  In other words, we have to grow intelligently and consider not just what is good for Toronto and the GTA today, but what is good for the city and its residents twenty or thirty years from now.  In many ways, that means looking ahead and truly envisioning how our city will look like and, more importantly, what we want our city to look like.

Sometimes that’s not the easiest of tasks.

Instances of buildings that were looked at less than favourably by future generations of city inhabitants certainly exist within the history of urban development.  It’s also suggested that aesthetically displeasing buildings can impact one’s mental health.

There’s a psychology behind buildings and, at their best, buildings should reflect how people want to live and why.  They should also be built with the simple consideration that city residents will be living among the buildings we construct for many years to come and that these buildings will make a significant impact on how they experience their own city. 

For Mizrahi Developments, looking ahead and considering the long-term impact of the residences we build has been key to three of our most important fundamentals as builders: one, always being on the upswing when it comes to incorporating the latest green technology into our buildings; two, making sure that our residential buildings don’t just fit in or complement the neighborhoods we build in, but aesthetically add to these neighborhoods and visually enhance these neighborhoods; and three, offering truly customized upscale condominiums where condo owners can author the personal details of their new condominiums and enjoy their home for years to come. 

The reality is that building booms like the one we’re currently experiencing in Toronto come and go. Responding takes more than just meeting the more immediate needs of buyers. It takes understanding the importance of building structures that honor our past and community’s traditions, while setting the standards for design for the future.

Debt and debt settlement services

The debt-to-income ratio has hit the headlines again. This time the ratio rose to 167.3 % in the fourth quarter of 2016 compared to 166.8% in the third quarter. That means for every dollar of disposable income, consumers owe $1.67. Approximately 63% of that debt is in mortgages.

While this increase worries some policy-makers, studies have shown that consumers have been able to pay their debt relatively easily. Low interest rates have allowed consumers to pay down more of their mortgage principal, with payments split almost evenly between interest and principal in the fourth quarter.

But for some, the debt load is unmanageable and they search for solutions. You are no doubt familiar with advertisements from debt settlement services that promise to settle a consumer’s outstanding debt, for a fee. The caveat is buyer beware. If you’re considering this option, make sure to do your research and find a reputable company to work with. Or, I may be able to refer you.

Before you pay upfront fees or service charges, I may be able to help. Much of what debt settlement services offer can overlap with the services of a licensed mortgage broker.

Here’s how it works. Mortgage brokers can arrange debt consolidation on a mortgage renewal or on a refinance. When arranging a consolidation mortgage loan on a refinance or renewal the amount of the mortgage principal may be increased to pay out the total debt amount. This becomes part of the mortgage commitment and a condition of the mortgage loan. On closing, your lawyer will disburse the funds to your creditors and register the new mortgage.

What you need to know
A refinance alters the terms and conditions of your mortgage; specifically you are increasing the amount of your mortgage to pay off debt. Your mortgage payment may or may not increase, depending on a number of factors, and you may incur a penalty to break your existing mortgage if you are refinancing midterm. Depending on your current mortgage you could be paying off the refinanced debt at a much lower interest rate, which could save you thousands of dollars in interest in the long run.

As with all renewals, it’s always a good idea to review your mortgage with a mortgage broker who can shop the rates for you and get you the best deal, tailored to your particular situation. And, if you decide to switch lenders, there are no penalties at renewal time.

One of these options may be the perfect solution if you’re struggling with debt. Call me today for more information.

Guy Ward is a Mortgage Broker in Calgary, Alberta with TMG (The Mortgage Group Alberta) and can be contacted at

The Four Types of Creditor Insurance

Home is more than a place you live. It’s your family’s haven from the world. But what if something happened to you? What would happen to the home you’ve invested so much in? You wouldn’t think about owning a home without insuring it, yet the odds of your house burning down is more remote compared to the odds of experiencing a life-changing event such as a job lay-off or a disabling accident.

Mortgage payments don’t stop when you’re unable to work so many home owners opt-in for mortgage creditor insurance. This type of mortgage protection insurance preserves ownership of your family’s home by making sure the mortgage keeps getting paid – even during the most difficult times.

Here are four types of mortgage insurance available:

Life Coverage: Mortgage life insurance provides security to both you and your insured co-borrower. If your co-borrower does not qualify for life insurance, you can still apply. Also known as mortgage insurance or creditor insurance, it’s offered by lending institutions and us. It is a life insurance policy that pays the balance of your mortgage to the lending institution if an insured person listed on the mortgage passes away.

Disability Coverage: This insurance is designed to pay a portion or all a homeowner’s mortgage payment if they become disabled — up to 24 months per occurrence. Individuals who opt to take advantage of this type of insurance need to take care to understand the policy completely. Determine the length of time the policy will pay mortgage payments during an episode of short-term or long-term disability. What dollar amount of the mortgage does the policy pay? Is there a waiting period associated with payment from the policy?

Critical Illness Coverage: What if it happens to you? When you survive a critical illness, you may not be able to return to work and your expenses could increase dramatically. If you are diagnosed with one of the 15 covered critical illnesses, based on our service provider’s criteria, which includes certain types of cancer, your mortgage payments are covered for 24 months, whether you return to work or not. Key questions to ask: What critical Illnesses are covered? What happens if I have an acute heart attack, recover in a few weeks or months, and return to work? Does my disability insurance cover me for living benefits? What cancers are covered? Do I need to take a medical examination? Mortgage Critical Illness Insurance is a benefit you enjoy while you are alive. It builds on your Mortgage Life Insurance to complete your protection.

Accidental Job Loss Coverage: If you are injured or are unable to work or become involuntarily unemployed, your monthly mortgage payments will be covered up to six months per occurrence.

If you don’t have any of these coverages now on your mortgage, we may be able to add them on.

Call me for more information.

Guy Ward is a Mortgage Broker in Calgary, Alberta with TMG (The Mortgage Group Alberta) and can be contacted at

Toronto Real Estate Shows No Signs of Slowing

It’s no secret that Toronto is arguably Canada’s hottest real estate market, and there appears to be few signs that the city’s market is going to soften anytime soon.

Spurred on by population growth and an influx of residents into the city’s downtown core and adjacent area, Toronto’s housing market has continued to make gains, even as similar markets across the country, most notably Vancouver, have begun to settle.

In the last year alone, the average cost of a home increased by 22 percent, according to the Toronto Real Estate Board’s (TREB) benchmark index. As of January 2017, the average selling price of a home in the GTA was roughly $770,745, an increase of approximately $140,552 from 2016.

In addition to the home sector experiencing double digit gains, low-rise housing (detached, semi-detached and townhomes) experienced large gains as well, with the year-over-year price growing by 26 to 28 percent between 2016 and 2017. 

The current and long standing sellers’ market and the high demand for housing in the GTA has also sparked heated bidding wars. Of the 17,862 homes sold in Toronto in 2016, 37 percent or 6,583 sold over asking.

In the last few weeks, there have been multiple stories in the local media of homes selling for hundreds of thousands above listing price; there was even a home in the Don Mills and Lawrence area that sold for a million over the asking price.

“It just gets back to the fact that while we’ve seen sellers’ market conditions over the last two or three years, they only grew stronger this year,” says Jason Mercer, director of market analysis for TREB. “And if we don’t see any sort of change on the supply side we should continue to see upward pressure on home prices.”

Ironically, as Mercer notes, there is a lack of available housing options, which is in part fueling price increases in the real estate market.  However, according to Statistics Canada there are roughly 99,000 unoccupied homes and units in the GTA.

While many speculate that the great number of empty homes is a result of foreign buyers purchasing Toronto real estate as a long-term investment, data from the most recent census proves otherwise.

Yes, foreign buyers do account for a small amount of the unhabituated units; however a large majority of the vacant homes are owned by  Canadians who have purchased a second home or condo as an investment property. These second homes are most often used for temporary or short term rentals like Airbnb.

Whether it is foreign buyers or local residents, Toronto city council is looking into imposing an empty home tax similar to the one that was established in Vancouver in the late 2016. The tax, which would be imposed on homes that remain empty over a long period of time, is meant to inspire those holding on to properties in hopes of maximizing their selling dollars to sell the surplus homes or find permanent tenants.

Whether city council will impose the new tax remains to be seen, however there is no disputing that Toronto’s real estate market is moving into another year of record prices.

3 Financial Tips To Remember When Searching For A New Home

If you’re considering jumping into the real estate market in search of your next home, be prepared for the ride of your life. Not only do you have to be able to find the perfect home for yourself or your family, but you also have to secure financing, prepare for your move, and finally settle into your new space and new routines. While some of these things will happen naturally and easily, the financial aspects of this endeavor likely won’t. For this reason, it’s good to be aware of ways in which you can make this adventure easier on yourself. To show you how, here are three financial tips to remember when searching for a new home.

Educate Yourself About The Market

The housing market has the great ability to change based on the city or even neighborhood in which you’re looking for a home. Prices can fluctuate drastically even for similar homes, making it difficult for buyers to know if they’re getting a good value or being ripped off. To help you feel confident in your ability to find a good potential home, Christine Ryan Jyoti, a contributor to LearnVest and Forbes, recommends for buyers to gain as much knowledge as they can about the exact market they’re shopping in so as to be informed about good prices, areas, rates and more. While this can be done by searching online, you can also get invaluable information from speaking with a real estate agent working in your specific area.

Be A Tough Customer

Once you think you’ve found a home you want, it’s time to make sure you’re not blinded by its beauty before you drop a huge amount of money on this purchase. To do this, Suze Orman tells that you should always do your own check of the home before you even consider making an offer. While you should also get a professional home inspection, the inspection you do personally should consist of things like checking for leaks or water damage, running the heater and air conditioner, checking all kitchen appliances, feeling the water pressure, scoping out the neighborhood, and making sure your cars will fit in the garage. After you buy the house, you’re stuck with it, so many sure there’s nothing bad hiding around to ruin your investment.

Come Bearing A Pre-Approval

When you’re in a seller’s market, it’s not unlikely to find yourself in a bidding war over a great property. However, this is often a nightmare situation for buyers. One thing you can do that may help you nail down the home you want and also avoid financing problems is to come to the open house or walk through with a bank pre-approval in hand. Ann Carrns, a contributor to the New York Times, reminds us that a pre-approval is much different than a pre-qualification because a pre-approval means that the bank is already ready to give you the loan, which can speed up the process of closing on the house. This can be a great way to avoid headaches for you and headaches for the seller when it comes to financing the home.

To ensure you’ve covered your bases financially when out on the hunt for your new home, consider using some of the tips mentioned above.

The Ongoing Value of Toronto’s Condo Market

Does Toronto’s condominium market still offer investment value, despite some speculation that last year’s strong run in appreciation values may point to a “pricing bubble set to burst”?

I personally believe that the idea of a bubble is unfounded, particularly in relation to the mid- to upper-condo segments.

One issue which has spurred uncertainty regarding future investment appreciation within the condo market has been the furor generated in the media about how foreign investors are pushing purchase values beyond the means of domestic buyers and investors. In August of last year, the B.C. government introduced a special 15 percent tax on residential purchases by foreigners – supposedly based on the premise that these investors had created an “artificial surge” in prices.

The question has been asked, is Toronto next?

But, like any ‘witch hunt”, perception seldom matches the real facts. A recent report  suggests that foreign investor influence on pricing within the condo market is negligible. According to the Urbanation data, foreign investors only accounted for 5 percent of the sales of new condo units in Toronto last year. Similarly, a report issued by the Canada Mortgage and Housing Corp. (CMHC) estimates that only 3.3 percent of condos in Toronto are owned by foreign investors, while the number in Vancouver is about 3.5 percent.

I would like to point out that the same Urbanation report indicates domestic condo investors (those not planning to live in the unit acquired) accounted for 52 percent of new sales last year. Urbanation VP Shaun Hildebrand notes in an article last year, “I don’t think that in either case [domestic or foreign investors] we are seeing speculative activity…” So, like any sizable investment, the data supports the fact that many condo investors are most likely in the market for the long-term.

Stepping away from the topic of foreign buyers, let’s look at other fundamental drivers that are likely to maintain investment growth in the Toronto condo market.

Firstly, both Urbanation and the Toronto Real Estate Board (TREB) concur that market statistics continue to show greater condo buyer demand than the development of new inventory.

TREB notes: “Gone are the days when we were concerned about a potential glut in inventory in the condominium apartment market…First-time buyers represent an important component of home ownership demand. Many households looking to purchase their first home will consider a condominium apartment.”

I believe this trend – particularly in the luxury end segment – will continue well through this year into 2018.

A second significant factor motivating demand in the luxury segment is a rapidly changing demographic of condo buyers.  Canada’s aging population is seeing more and more owners of high-end single-detached homes looking to sell as their family commitments decline. In turn, they are looking for downtown convenience without compromising the luxury of their lifestyles. I am confident that the mid to upper-end condo market segments will continue to attract buyer demand and present long-term investment value.