In Dec 2016, the Provincial Government established a new loan program helping first-time home buyers by contributing to the amount they have already saved for a down payment with a loan that is interest-free and payment-free for the first five years.

Highlights of Home Partnership / Loan Program:

• The B.C. HOME Partnership Program will meet the buyer’s contribution up to 5% of the home’s purchase price, to a maximum purchase price of $750,000

• After five years, buyers can either repay their loan or enter into monthly payments at current interest rates.

• Loans through the program become due after 25 years – the same length as high ratio mortgages.

• The BC HOME partnership loan is for an initial 25 year term, which is interest and payment free for the first five years. 

• The loan will be registered on your property title as a second mortgage.

The B.C. HOME Partnership program will start accepting applications Jan. 16, 2017.

Eligibility Requirements:

To qualify for BC HOME Partnership loan, anyone who appears on the title of the home must meet the following criteria:

• Be a Canadian citizen or permanent resident for the last five years

• Have lived in British Columbia for at least the full 12 months preceding your application

• Be a first-time homebuyer who has not owned an interest in a principal residence anywhere in the world at any time and has never received a first-time homebuyers' exemption or refund

• Purchase a home that is $750,000 or less.

• Be eligible for a high-ratio insured first mortgage for the home

Other criteria are:

• The combined, gross household income of all individuals on the title must not exceed $150,000

• The home being purchased must be used as the principal residence of all individuals on the title for the five years after purchasing.

If you have any questions in regards to this program or any other mortgage related matters please don't hesitate to contact our in-house mortgage broker Sophiya Dewshi at 604-644-5761 or email at myrightmortgage@gmail.com. 

The Bank of Canada once again opted to leave its target for the overnight rate unchanged at 1 per cent.

In the statement accompanying today's announcement, the Bank noted that though inflation is close to its 2 per cent target, the recent pick-up in inflation was largely due to temporary factors as the Bank anticipated.

In spite of stronger global and domestic economic growth last quarter, the Bank still expects excess capacity in the economy to be absorbed over the next 2 years and judges risks to its outlook to be balanced between higher inflation and still elevated household debt. Therefore, the Bank remains neutral with respect to timing and direction of its next change to the policy rate.

As the Bank noted, economic growth exceeded expectations in the second quarter. However, the economy looks far more pedestrian if averaged over the entire first half of 2014. 

Employment growth has been uneven and the Canadian unemployment rate remains stubbornly high. Therefore, the Bank is unlikely to be moved from its current stance after just one strong quarter of economic growth.

We expect that the Bank will continue to take a cautious approach to monetary policy until it sees concrete signs that the economy is growing above trend. That means at least one more quarter of solid GDP growth paired with more steady employment gains, as well as similarly strong data in theUnited States.

While the Bank left the door open to lower interest rates given its "neutral" stance, we still anticipate that the next move for interest rates will be upward, though not until 2015.  

The Bank of Canada announced this morning that it is maintaining its target for the overnight rate at 1 per cent. In its accompanying statement, the Bank noted that the economy is preceding largely on the path the Bank projected in its January Monetary Policy Report.

While inflation and growth were slightly higher than expected in the fourth quarter of 2013, the Bank expects slack in the economy to keep inflation below the Bank's 2 per cent target this year.

The Bank does not view the risks associated with elevated household imbalances as materially changed and judges the current stance of monetary policy, with the overnight rate at 1 per cent, as appropriate.

Speculation of an impending rate cut by the Bank of Canada has receded in recent weeks following a modest acceleration of inflation and stronger than expected economic growth.

The uptick in inflation and growth is in part due to a sharply lower Canadian dollar and, while not explicitly targeting a lower value of the loonie, policymakers at the Bank have welcomed the decline in the dollar. A depreciation in the currency tends to be inflationary and impacts consumer prices in fairly short order while traditional monetary policy, through adjusting the overnight interest rate, impacts inflation only with a significant lag of 12 to 18 months. 

With the lower loonie helping to pull inflation higher, we expect the Bank will likely maintain its target rate at 1 per cent until 2015 when economic conditions may require a gradual increase in the overnight rate.  

The Bank of Canada announced this morning that it is maintaining its target for the overnight rate at 1 per cent. In its accompanying statement, the Bank highlighted that an uncertain global economy is delaying an expected rotation of growth in Canada toward exports and investment.

This means that the burden of economic growth will remain on households at a time when most households are de-leveraging and looking to slow consumption. All of this adds up to a Canadian economy that will grow below trend in 2013, likely at a rate of around 1.5 per cent.

Below trend growth will translate to continued subdued inflation, which the Bank anticipates will return slowly to its 2 per cent target in 2014. As for the Bank's tightening bias, language around the withdrawal of monetary stimulus has been significantly moderated.

The Bank anticipates a gradual normalization of policy interest rates as conditions for inflation, growth and household debt normalize.
Rising long-term Canadian interest rates, along with somewhat soft economic growth through the first half of 2013, have taken some urgency out of future monetary policy tightening.

In particular, higher long-term rates will further slow growth in household debt via higher mortgage and other key lending rates which will allow the Bank to push increases in its overnight out to late 2014 or early 2015.

Popular Home Buyer Plan can get first-timers into a home faster, but there are some caveats.

The federal Home Buyer's Plan (HBP), which allows the penalty-free withdrawal of cash from an Registered Retirement Savings Plan to be used towards a home purchase, is being used by more than 100,000 buyers a year. Since HBP started in 1992, more than 2.5 million buyers have used it, withdrawing approximately $27 Billion.

A home buyer can withdraw up yo $25,000 from the RRSP without penalty. A married or common-law couple can each withdraw the same amount each. An applicant does not have to be a first-time buyer, but cannot have owned a home within the previous 5 years.

A key advantage of the HBP is that it allows you to buy with a downpayment of 20% or more, you will not need to purchase the mortgage insurance required for high-ratio loans which will save some money.

The RRSP must be active. You can't simply put money into the RRSP and then withdraw it for a downpayment.
Your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the HBP, or they will not be deductible.

There are some other rules, according to Canada revenue agency:

• 1. You have to enter a written agreement to buy a home. Obtaining a pre-approved mortgage is not enough.
• 2. You have to be buying a home as a principal residence, not an investment property or a vacation home, for example.
• 3. The RRSP withdrawal has to be repaid within 15 years. For example, if the buyer withdraws $25,000 it requires every payment off $1667 each year for 15 years, or $138 per month. Any missed payments are included in taxable income for that year. According to CRA, about a third of HBP applicants fail to make the full repayment.
• 4. You cannot participate in the HBP in subsequent years unless the first withdrawal is repaid.

The first payment on the RRSP withdrawal is not required until the second year following the year of the withdrawal. For example if you used the HBP to buy this summer, you wouldn't need to make your first payment until 2014 tax year.

Take a close look at the HBP if you are first-time buyer, It can be an effective way to get into today's housing market.

October 23, 2012

The Bank of Canada once again opted to hold its target for the overnight rate at 1 per cent this morning. Interest rates have been held constant for over two years, the longest such period since the 1950s.

The Bank somewhat tempered its bias for higher future interest rates, including a softer statement regarding the appropriateness of a gradual withdrawal of monetary stimulus as excess supply in the economy is absorbed.

In a bit of a surprise, the Bank actually raised its forecast for the growth in the Canadian economy this year to 2.2 per cent, but kept its 2013 forecast at 2.3 per cent growth. The Bank judges that at that pace of growth, the Canadian economy will return to full capacity by the end of 2013.

It is our view that monetary policy at the Bank of Canada will continue to be constrained by external events in the global economy and household debt growth at home. While the Bank's preference for tighter policy is clear, it is difficult to make a case for higher interest rates when core inflation is below the Bank's 2 per cent target and already slow economic growth is threatened by global uncertainty. Therefore, we are forecasting that the Bank of Canada will hold its target overnight rate at 1 per cent until mid-to-late 2013 when, conditioned on an improved global economic outlook, it may test the water with a 25 basis point rate increase.