Make Money Count

Home Buyer Incentives & Pre-Construction Prices

Welcome to our episode on Canada's down payment assistance program and current pre-construction home prices! Cannect, Toronto's best mortgage brokerage, are here to provide you with all the information you need to make the best decision for your financial future. Whether you're considering a pre-construction home or looking for assistance with your down payment, we're here to help. With our expertise and knowledge of the Canadian mortgage market, we help you navigate the process and find the best solution for your needs.
On The Show...
Down Payment Assistance
Canada's Down Payment Assistance Program is a government-funded program designed to help Canadians purchase their first home. The program provides a grant of up to 5% of the purchase price of a home, or up to $25,000, whichever is less. The grant is available to first-time home-buyers with a household income of less than $120,000 per year. The grant is intended to help cover the cost of a down payment, closing costs, and other expenses associated with purchasing a home. The program is administered by the Canada Mortgage and Housing Corporation (CMHC). We cover it all in detail in the episode.
Pre-Construction Homes
Further on the show we discuss if it's a good time to buy a pre-construction home. The uncertainty in the real estate market has people questioning. Pre-construction homes are often sold with a lot of assumptions. Therefore, some projections may not be that accurate in the current market. Additionally, the process of buying a pre-construction home can be complex and lengthy. It may be difficult to get financing. Finally, the value of the home may not appreciate as quickly as anticipated, leaving you with a property that is worth less than what you paid for it.
We invite you to listen to the podcast, where we discuss the ins and outs of down payment assistance programs. With the right knowledge, you can make the best decision for your home-buying journey.
Show Notes:
 
Attachments:First Time Home Buyers InformationMake Money Count 053 Transcript
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Renting vs. Buying a Home in Toronto’s Housing Market

The best mortgage brokers in Toronto return! This week Marcus & Justin debate renting vs buying a home in this current market. With how much housing prices have declined and how much rental rates have risen, we have a question. Is it now cheaper to buy a property and build equity rather than paying all-time high rent prices? No matter the market, it is essential to examine these opportunities on a case by case basis. Have a listen to the episode to learn the math to help make the decision easier.
The Math
The team looks at an example in downtown Toronto where the monthly rent is $3000 and the purchase price is listed at $489,000. After putting 5% down as a first time buyer; a 5 year fixed rate of 4.8%; $1,292 in property taxes; and maintenance fees of $329 a month: you arrive at a monthly average cost of $3,192 a month. This is not much more than the $3,000 rent and you build equity at the same time.
We also discuss the over-reactions of the central banks when it came to stimulating the economy during COVID. They are now over correcting it with rapid rate hikes. This is what has put real estate prices in a difficult position. They rose to unattainable levels and now are falling back to earth. This will have tough consequences for those who purchased at all time highs and now are servicing the debt at unaffordable levels. Only once inflation slows down will the central banks pause these rate hikes and then pivot in the other direction.
Whether you're new to the city or you've been here for years, this video is a must-watch! We'll be discussing the latest trends in the Toronto housing market, and giving you advice on how to make the most of your investment.
Make sure to watch to the end to find out which option is best for you!
 
0:00 - Intro1:59 - Buy vs Rent example #1: 20 Joe Shuster Way7:41 - How will the economics impacting the Buy vs Rent debate change in the foreseeable future?14:32 - You have more to look forward to when buying if values are low and rates are high vs values being high and rates being low.17:58 - You need to look at the Buy vs Rent decision on a case by case basis, but there are many attractive buying opportunities.20:41 - Does Marcus own rental properties? The last 20 years has been an incredible bull run.24:32 - Central Banks overshot way too far with stimulus and now they are overshooting way too far with rate hikes.29:05 - Private Equity deals have dropped as well due to the increased cost of capital required to finance the purchases. Will that turn around soon?
 
 
Document: Buying Vs Renting In Toronto - Nov 2022
Transcript: Make Money Count 052 Transcript
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4 Reasons You Should Buy A Home During A Recession

Toronto's best mortgage brokerage, Cannect Home Financing, returns with episode 051 of Make Money Count. This week, Marcus and Justin outline four reasons to buy a home during a recession. It may seem scary to take the completely opposite path of everyone else, but it can prove to be a great decision in the long run. Have a listen to this episode to hear these great reasons.
1. The Math
Over the last two years, interest rates have gone up drastically, which has made it much less affordable to buy real estate and service the debt on it. However, if the purchase price drops enough to counter this rate increase, you'll find that the math could balance it out. If you were willing to purchase a property when the 5-year fixed rate was 2.5%, how far does the price have to drop for you to still want to purchase when the 5-year fixed rate goes up to 5.5%?
Well, on a $500K mortgage, this extra 3% of interest is equal to $15K per year. Over the 5-year term, that is $75K, or 15% of the mortgage amount. This means that if you can purchase the property for 15% less than you were willing to pay for it a few years ago, it would negate the cost of the interest rate increase.
2. Long-term success
You make money when you buy something, not when you sell it. If you make a purchase when prices are lower, you are likely to set yourself up well for the future when others buy it from you. Over the long-term, property values trend upwards. So similarly to stock purchases, "buying on the dip" will set you up for success.
3. You have your pick of the litter
During a recession, the supply of housing available tends to exceed the demand. This means you don't have to settle for the wrong house because there aren't enough affordable options available. When supply exceeds demand, it means that there is more to choose from. Conversely, this leads to a lack of bidding wars and gets you much better price. No more buying a house next to the train station because it was the only affordable place you could find with a spacious backyard. During a recession, you'll be able to get that corner house you've always been dreaming of.
4. The process is less stressful
When the housing market is strong, it's actually a tough time to be a buyer. People line up to place offers on home, they sell in the blink of an eye, and they end up going way above asking price. During a recession, the tables turn. Agents are begging prospective buyers to check out an open house. The visits are on your schedule, not theirs. You can also take your time submitting an offer without fearing the home will be sold before you even leave the open house. If you can handle the stress of market uncertainty, the tradeoff will be much less stress in the home buying process.
It won't be easy to buy real estate in a recession, but was it easy to buy before the recession either? Buying a home has to be done when the time is right and a recession should not scare you away.
 
Episode Transcript: Make Money Count 051 Transcript - 4 Reasons To Buy A Home During A Recession
 
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5 Ways To Make Money In A Recession

It's the 50th episode of your favorite podcast Make Money Count! Toronto's best mortgage brokerage, Cannect Home Financing, outlines 5 ways you can make money during a recession. Investing during uncertain times can be scary, but when done properly and with the right research, there are still opportunities to make money. Always make sure you carefully evaluate the options and think about your specific goals and time horizon. Have a listen to the semi-centennial episode to hear them!
1. Buy Good Stocks
A lot of stocks have taken a beating over the last year, but some of these companies are still very profitable and will come out of this recession strong. Even some of the bigger names like Amazon and Meta are down over 50% from their all-time highs. This is one of the most fundamental rules of investing: buy low, sell high!
2. Invest in Property
If you can handle the increased carrying costs facing real estate investors today and have a long term time horizon, similarly to buying good stocks, this is a good time to buy that property you've been eying at a discounted price.
3. Invest in Cannect MIC
Cannect Mortgage Investment Corporation has been preparing for tough times like this since inception. We motivationally align borrowers and investors by lending to good borrowers at a conservative LTV that have a probable and reliable exit strategy from the loan. This has resulted in a consistent return for our investors over the last ten years.
4. Short the Market
Market prices and dividends have historically yielded a positive return, but if you own stocks, real estate, or other market-correlated assets, shorting the market using puts or other investment methods can act as a hedge for your overall market exposure. It is also just a good way to make bets on short-term market downturns.
5. Start a Business
A lot of it comes down to the idea, startup costs, and execution, but starting the foundations of a new business during a recession can allow it to thrive when the economy turns around again.
Marcus also goes into the importance of investing in yourself. Whether it is going to school or starting a business, a recession is a great time to make an investment in yourself. It's one that will always pay dividends.
As stated in the episode, Cannect is not a financial advisory firm and the topics discussed do not constitute financial advice.
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Why Now is a Great Time to Invest in the Cannect MIC

Toronto's best mortgage brokers return for another episode of Make Money Count. They discuss how certain factors like delinquencies and rental rates may assist in stabilizing values with increased interest rates. They then dive into how the Cannect Mortgage Investment Corporation (MIC) has been prepared for economic conditions like these for a while due to conservative loan-to-values and prioritization of exit strategies. Have a listen to learn more about the current state of our mortgage fund.
It's the tough times like these that show how prudently MICs have been lending. Many are currently unable to lend because their funds are tied up into deals with no exit strategy. When the only exit is default, it is very difficult for not only the borrower, but the lender too. When deciding which MIC to invest in, give them a call and ask the tough questions like how often do they stress test for LTVs; how do they arrive at property values for their loans? If these answers don't satisfy you, the cloudy days will be extra cloudy for these funds.
Past performance does not guarantee future results. Prospective investors should rely solely on the Fund’s Offering Memorandum, which outlines the risk factors in making a decision to invest. Cannect MIC shares are sold through our exempt market dealer, Meadowbank Asset Management Inc. Not CDIC insured.
 
Attachments:
Cannect MIC Investment Stats
Make Money Count 049 Transcript
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Bank of Canada Raise Interest Rates, Again!

The best mortgage brokers in Canada, Cannect Home Financing returns with Make Money Count episode 048!
In this episode, we'll discuss the Bank of Canada's decision to raise interest rates again, and what this means for you as a consumer. We'll also discuss how you can make money count in the current economy by using smart financial planning strategies.
As a listener, you may be wondering what this means for the economy as a whole. The Bank of Canada has raised interest rates again, indicating that they are somewhat concerned about the inflation rate in Canada. This may mean higher prices for you as a consumer in the short term, but it also means that you should be aware of financial planning strategies that can help you make money count in the current economy.
 
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Recession Outlook: Inflation, Interest Rates, and Unemployment

Toronto's best mortgage brokers, Cannect Home Financing, return for episode 47 of Make Money Count. In this episode we discuss the latest employment numbers in the U.S. and Canada. These strong numbers might be bad for the respective economies. If this sounds like it's backwards to you, don't worry you are not alone. Have a listen to the episode to get the breakdown from the experts.
We examine the historical rises of real residential property prices over time. The typical cause for the periods of strength has been cheap money. While we are definitely not seeing that right now. There are still many other solid macroeconomic trends that could keep the housing market afloat during these high interest rate times. Immigration, lack of supply, and yes, strong employment numbers could try to keep the market from falling further.
Questions from this episode involve seeking capital from alternative lenders and borrowing money to invest in real estate. Pricing from alternative lenders is starting to go up. Lenders are seeing what is going on in the economy right now and they are nervous, even with well-qualified borrowers. These are situations where borrowers should be calling Cannect to make sure, as Justin says, they don't put themselves in the box the banks create for them. When it comes to accessing equity to buy real estate, make sure you think about the type of real estate you are buying and your time horizon. With interest rates this high and still on the rise, this is more important now than ever.
If you're looking for a stable investment to get you through these economic hardships, take a look at the Cannect Mortgage Fund.
 
0:00 - Introduction0:47 - What is the downside of a strong US job market right now?3:22 - The Canadian job market is higher than expected as well. Inflation is still hot.4:21 - The economy needs increased labour participation, and even unemployment, in order to reduce inflation.8:51 - The trends of real residential property prices in Canada: the rises are from cheap money.9:32 - There are still many favourable macroeconomic trends for Canadian real estate.11:27 - Alternative lenders are starting to get stingy with pricing, even for well-qualified borrowers.17:00 - Looking to buy real estate? Consider the type of real estate you are buying and the time horizon.21:36 - No matter how high mortgage rates get, taking equity out of your home to pay down credit card debt will save you money and help your credit rating.
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Inverted Bond Yield Curve & Why the US Dollar is Rising

Toronto's best mortgage brokers, Cannect Home Financing, return with Make Money Count. We explain what an Inverted Bond Yield Curve is, and why the US Dollar is rising as we head into a recession.
Marcus Tzaferis and Justin Turner take the listeners through a few positive economic indicators. According to an article on Barron's, we may be seeing a peak in bond yields and the US dollar index. If this is the case, it could be a precursor to a rally for US markets. Why is this?
Listen to the episode to find out!
This cautious optimism entirely depends on inflation and the direction central bankers take. To show how quickly times have changed, the United Nations advised central banks around the world to pause rate hikes. This isn't unprecedented, but it is very rare. People are already feeling the impact of these rate hikes and for some countries this means hardship. As a result, for developing nations, it means people can't put food on the table.
Your favourite brokers also answer some questions regarding home equity loans during these times of high interest rates. If you are looking to access equity, you need to carefully weigh the market uncertainty. First, weigh the premiums that come with it against the possibility of equity erosion if you wait too long.  Second, borrowing to invest also needs to be done carefully right now. Given how high rates are right now, you need to be very confident.
The value and growth potential of the investment needs to justify the cost of borrowing. Similarly, some equities are at huge discounts right now. However, these opportunities still need to be evaluated carefully.
If you're looking for a stable investment to get you through these economic hardships, take a look at the Cannect Mortgage Fund.
 
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How To Get A Mortgage For Self Employed People

Toronto's best mortgage brokers, Cannect Home Financing, returns with episode 45 of Make Money Count. In this episode, we break down a viewer question, and then explain how to get a mortgage as a self employed home buyer.
Every person has their own unique situation. It's important to find a mortgage broker that can look at exactly how you earn your money, and get you qualified for a mortgage. They will see how you can verify your income. The broker will see how much equity you have in your home. And they find the situation-specific factors which get the best borrowing options for you. In the end, it always comes down to reducing your weighted-average cost of capital (WACC), and lowering the cost of your debts.
Marcus and Justin also answer a listener's question about what the main reasons for Canada's inflation are. Are they carbon tax implementations or record-high imigration? Unlikely. The carbon tax and cancellation of the Keystone XL pipeline were not enough to bring on global inflation on their own. Immigration will contribute in a positive way in Canada because it brings more workers into our economy and that will fight the recession. The reasons for inflation are much more global than they are domestic. Inflation is a global issue, not specific to Canada.
Why do I need a mortgage broker?
If you have gone to different mortgage lenders in the past and they have all said no, you need to speak with a mortgage professional. Someone who has your best interests in mind and knows how to navigate this new high interest rate environment. They will answer questions like: Is the best course of action a refinance? What's the difference between A HELOC from a B-lender, and private 2nd mortgage? And how do I include more income on my application?
We dive into this and more. Have a listen to the episode to find out how to navigate the self-employed mortgage market.Click here to connect the the best mortgage brokers in Canada, Cannect Home Financing.Click here to invest in the Cannect Mortgage Investment Corporation.
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Inflation vs Deflation - Will The Housing Market Crash?

Toronto's best mortgage broker, Cannect Home Financing, returns with Canada's best Mortgage Podcast, Make Money Count. In this episode Marcus and Justin discuss the contrast of inflation vs. deflation. Is this a cycle going on for the last 100 years? How will this effect Canada's housing market?
Marcus and Justin also discuss the type of Government and Central Bank responses are used for different phases of the economic cycle. They examine the idea of the economy just needing a "catalyst" over the last few years, like a pandemic or a war, to bring the economy into troubling times. Have a listen to get the big picture.
1. Investors no longer believe we will have a "soft landing".
First, we were told that with all the money the federal government was handing out, inflation wasn't going to be a problem. Later that changed to it only being a slight problem. A transitory result of global supply chain issues. Then the central bankers said inflation is a real concern, but it can be addressed and corrected without putting the economy into a recession. Today they don't even believe that to be the case, and investors are responding.
Big business leaders like Elon Musk and Cathie Wood have stated that rates should be reduced again in order to prevent the economy going into a recession. It is clear that the longer these rate hikes continue, the worse our recession will be, and deflationary times.
2. The Cannect Mortgage Investment Corporation is in a strong position to lend money.
The health and security of a Mortgage Investment Corporation (MIC) completely depends on the quality of deals it contains. A lot of other MICs are currently in a tough position to lend more now. Cannect did an effective job at lending with caution and on a reduced scale. We were in a good position to lend now with reduced home values and increased interest rates.
Unfortunately, Home values will likely continue to drop and interest rates continue to rise. However, we feel more confident in the deals we fund today knowing that those home values have taken a beating. A lot of other lenders will be unable to lend with cash tied up. This will bring high-quality deals to Cannect's door step.
 
Click here to connect the the best mortgage brokers in Canada, Cannect Home Financing.Click here to invest in the Cannect Mortgage Investment Corporation.
 
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Interest Rates Rise - How Will This Affect Housing Prices?

 
Toronto's best mortgage broker, Cannect Home Financing, returns with another episode of Make Money Count.
Marcus Tzaferis joins Justin Turner from Greece for one last episode before the big announcement. Taking place Sept 7th, the expectation is that the Bank of Canada will increase the overnight rate. An expectation of 75 basis points, and likely another 50 basis points before the end of 2022. What does this mean, and how do Canadians prepare for this?
Episode Takeaways:
Jerome Powell, the Chair of the US Federal Reserve, spoke at the Jackson Hole meeting and his words didn't spark too much optimism of how soon the rate hikes will stop.
On September 2nd, the US August jobs report came out and a lot more was riding on it than people may think. As backwards as this sounds, a bad jobs report likely would have meant a bit of a jump in stock prices because the public perception would be that with this extra sign of economic weakening, the US Federal Reserve would have to slow down the rate hikes.
Right now, inflation, and therefore interest rates, are the overwhelming driving forces of the markets.
Marcus also uses the SPY ETF to discuss his current market sentiment and how investors can use options to enter the broad equities market and invest in the direction they think it is headed. (This does not constitute financial advice).
 
Click here to connect the the best mortgage brokers in Canada, Cannect Home Financing.Click here to invest in the Cannect Mortgage Investment Corporation.
 
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Special: A Conversation With Investment Banker Gene McBurney

We have a special guest on this episode of Make Money Count! Gene McBurney, co-founder of GMP Capital Inc, has been good friends with Marcus for 15 years now. In this special episode, Marcus and Gene discuss important topics such as Russia's invasion of the Ukraine, energy policy around the world, and how those macroeconomic topics impact the entire financial services industry.
This is an intimate and casual conversation where the two men share their love for wine, good conversation, and each other's company.
Marcus Tzaferis founded Cannect to help homeowners borrow for less, and now Cannect Inc. is a top GTA mortgage brokerage. After stepping away from GMP in 2020, Gene McBurney now runs Investment Banking in Latin America & the Caribbean for Canaccord Genuity. Prior to his career in the financial industry, Gene was also a partner at a leading Canadian law firm. The two of them together have almost 50 years of experience in the financial services industry.
 
Click here to connect the the best mortgage brokers in Canada, Cannect Home Financing.Click here to invest in the Cannect Mortgage Investment Corporation.
 
0:00 - Marcus introduces Gene McBurney
2:54 - Running GMP: the rise and the demise
7:15 - In the finance industry, you need relationships with people who will pay you fees.
12:55 - Discussing Russia’s invasion of Ukraine and the support NATO has provided.
18:53 - Will spending excess money to end this war be the right answer? Putin has already proven he can pivot effectively.
25:31 - How geopolitical tensions are impacting energy policy in the US and worldwide.
36:11 - Can altering energy policy help us avoid a recession?
41:36 - Gene’s preference for business will always be financial services, but admits that it’s tough to compete with the banks.

Bond Yields Dropping: Fixed Rates Still High

Over the last few weeks, we learned that inflation numbers in the US dropped a bit. The market had its rally and bond prices dipped, but are we out of the woods yet? Banks’ fixed rates are still high and we have inverted yield curves. Have a listen to this episode to learn what this means for the short and long-term future of the economy.
3 key takeaways from this episode are:
1.     Through good times or bad, banks keep their shareholders in mind.
This is their obligation, so don’t take it personally. Even though bond yields have declined, banks still have high fixed rates. They can justify it by saying the added amount is to ensure protection against market instability, but it’s still extra profit when those earnings reports come out. People who work at banks also don’t have to have mortgage training. That’s another cost the banks will save because they can. What should consumers do with this information? Don’t do all your business with one bank and use a mortgage broker to get you the best rate. By going to other institutions, you are showing your bank that you are knowledgeable about the other options out there. They want to optimize earnings, but they don’t want to lose you. And by going to a mortgage broker, you are getting a trained professional IN THAT FIELD who will work to get you the best product for you.
2.     The best way to make money in the market is to deploy capital when prices are low and others are fearful.
Investors make money when they buy at good prices. There is no way of knowing when assets are at good buying points, but the economy tends to swing on a pendulum that favours the positive side. If you have a long-term time horizon, you should consider buying assets anytime the economy swings down because in the long run, you’ll make money when the pendulum swings again. This may not apply to all assets and all economic situations, but it is worth considering if you ever had your eye on an asset and you see it discounted due to tough conditions.
3.     The markets may have rallied, but there might be a lower bottom in this cycle.
The news of inflation leveling off in the US is good, but there are way more variables at play for the long-term health of our economy. We currently have inverted yield curves, which means the return on a bond declines as the term gets longer. The implication of this is that once a bond of shorter duration matures, investors are pricing in the idea that proceeds will be reinvested in a time of reduced rates and tougher circumstances, hereby leading to a bond of longer duration from the beginning having a reduced rate today. The last time we saw inverted yield curves was 2008 and they have historically told us that a recession is incoming. Even if inflation does level off, the overnight rate stabilizes or drops, and asset prices start to climb, there is still the fear that if the Bank of Canada drops the rate too quickly that inflation could head back up again. This is something they’d really want to avoid.
Marcus Tzaferis and the Cannect Team
 
Click here to connect the the best mortgage brokers in Canada, Cannect Home Financing.Click here to invest in the Cannect Mortgage Investment Corporation.
 
0:00 - Intro1:10 - It’s a bad time to take fixed rate mortgages with bond yields dropping.6:30 – It is not wise to do all your business with one bank, according to the Bank of Canada.9:29 – Monoline lenders are very helpful for our economy but were hurt when the BoC instituted a rule change impacting their ability to get portfolio insurance.13:18 – You don’t make money when you sell something, you make it when you buy.15:56 – How to make money in the market: Deploy capital with asset values discounted. Monitor market fear and greed. 24:37 – The markets rallied with the expectation of inflation decreasing, but we may not have settled into a bottom just yet.26:13 – We currently have inverted yield curves, which tends to indicate a recession is near.30:51 – A lot of Canada’s wealth is in Real Estate, so drops in values hit the economy hard.34:57 – Where is the economy likely headed over the next year?40:20 – Are other mortgage brokers struggling in this environment?45:35 – Another reason to use a broker? People who work at banks are exempt from having mortgage training.50:24 – Wrapping up the episode.

Mortgage Brokers Break Down Rising Rates & Falling Prices

Inflation is hitting us hard, and interest rates are on a non stop ascent. But what other numbers can we use to examine the current economic landscape? How will these metrics impact the Canadian consumer in the short-term?
This week's episode takes a thorough look at important metrics like bond yields and the sales to listings ratio. Marcus and Justin discuss what these metrics can tell us about the future of our economy.
The first part of the episode outlines how bond prices move. As the Bank of Canada overnight rate continues to see hikes, yields of newly issued bonds go up as well. What does that mean for bonds that have already been issued at a fixed rate and currently trade on the open market? They drop in price because that's the only way investors will buy them instead of the newly issued ones at higher rates. When the stock market faces uncertainty, the bond market is where investors flock, but it is tough to time these purchases in a market where rates are still on the rise.
The episode also compares the average home price in Ontario with the sales to listings ratio. Over the last 4 months, we are seeing fewer homes being sold relative to how many homes are listed for sale. As the inventory available on the market goes up, it puts additional downward pressure on home prices as sellers meet the prices buyers are willing to pay. And this is exactly what we have seen starting in March and April with an increased inventory leading to declines in the average home price. If you are watching the video version of this episode, you can see these exact numbers.
 
Marcus Tzaferis and Cannect Team
 
0:00 - Intro1:10 - Central Banks are taking action to ensure inflation doesn’t become entrenched in our economy.4:09 - How the bond market works.7:27 - The role of inflation in the bond market.12:34 - Have 5-year fixed rates hit their peak?14:22 - Examining the decline in home prices and comparing home sales to home listings.18:04 - We can expect more downward pressure and declines in transactions for the rest of 2022.21:20 - What else will these rate hikes and value declines lead to?28:06 - What is a global economic reset?33:26 - Ways to approach a recession: monitor spending, buy assets at good value.37:57 - Costs of services affected by the shutdown in particular have skyrocketed.42:31 - There is nothing on the current horizon to turn around the economy.
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Bank of Canada Raises Interest Rates 1%

It’s the 40th episode of a little mortgage podcast called Make Money Count. Boy is it a big one!
Inflation has been ridiculously high. It was reported yesterday that the US annual inflation rate hit 9.1%. It isn’t too far behind that in Canada. This rate hike is an extreme measure. It’s the Bank of Canada’s way of showing that fighting inflation is the #1 priority. Have a listen to this informative episode to learn about how we got here and what this means for Canadians going forward!
Looking back on the last 2 and half years, it has been a murky timeline. The next two years may prove to be more of the same.
The past 2 years: We prioritized short-term stimulus over long-term economic health.
When COVID hit, Canada, the US, and many other countries decided that the best measure was to give everyone a ton of money to stimulate the economy. Was this the right move? Well, for the politicians focusing on getting re-elected, it definitely was. Now with all of this money pumped into the economy, we are seeing costs skyrocket and a recession looming. COVID may have been an emergency, never-before-seen situation. However, it is now very clear that a more strategic and conservative approach to aiding the economy at the time should have been taken.
The next 2 years: High interest rates likely leading to a drop in real estate prices.
Hopefully inflation has hit a peak, but it will likely take a few more half-point hikes to actually turn it around. Even with these actions, it is clear Government officials are taking it a step further. Over the last several years, Canada and the US have really wanted to emphasize the transition to renewable energy sources. Now Joe Biden travelled to Saudi Arabia to meet with the PM. Increasing oil production is expected to be a topic of discussion. 18 months ago, taking this trip was unlikely to be on his radar.
 
A lot of our clients that are renewing are considering a 2-year term for their next mortgage with the hope that rates start to come back down in the back half of 2023. With the appropriate rate hikes, we could absolutely see this happening. Meanwhile if you are in a position where you need access to home equity, this could very well be the last chance to maximize the value of your property on a refinance. Whether it is through a full refinance or a home equity loan, the staff at Cannect are ready to help you.
 
Marcus Tzaferis and the Cannect Team
 
Click here to connect the the best mortgage brokers in Canada, Cannect Home Financing.Click here to invest in the Cannect Mortgage Investment Corporation.
0:00 - Intro 0:33 - The Bank of Canada increases the overnight lending rate by 1%. It now sits at 2.5%.4:31 - Are markets losing confidence in the Central Banks?8:50 - To get re-elected, Government officials may prioritize short-term economic stimulus over long-term economic health.13:38 - Still taking variable rate over fixed? What term length?18:18 - When the prime rate increases, the variable rate mortgage payment stays constant, but more of the payment goes towards interest vs principal.22:32 - The US is finding they need to increase oil output, despite wanting to emphasize renewable energy for the last several years.27:00 - These interest rate hikes will shock the market, when do they come back down?30:22 - Are we underestimating the impact of a massive drop in the housing market?32:05 - Greece would handle recessions by giving jobs to everyone. This had consequences.34:44 - Is a 2-year term a good option in this economic landscape?

Mortgage Lender’s Response to Inflation and Interest Hike

In this episode, Marcus hits the air remotely from Greece. The guys discuss how inflation and the interest rate environment are going to impact mortgage lenders and their lending policies towards Canadian borrowers. Last week we all heard that inflation in Canada hit 7.7%. It’s impact on the economy is everywhere; at the pump, the grocery store, and at restaurants. How is it impacting Canadian Lenders and how will it impact your next mortgage? What changes might we see going forward and what can you do to prepare?
Some key takeaways include:
First, lenders are concerned just like the rest of us.
After the 2008 crisis, the maximum Loan to Value Canadians can borrrow against their property was dropped from 95% to 80%. When the economy struggles or faces uncertainty, changes are usually made. We have not seen anything drastic yet, but if we continue down this current path, changes can't be ruled out. A & B lenders tightening their HELOC requirements would not come as a huge surprise. We are already seeing some 2nd mortgage lenders not offer renewals to existing clients, which means that either they are not receiving payouts at their usual rate or they are now reconsidering a former qualified borrower's credentials for this economic environment. Neither of these are great signs.
Second, are we sure the BoC and Federal Reserve are completely independent of their respective Governments?
When Trump was in Power, he told Jerome Powell not to increase interest rates; Powell listened. The chair of the Federal Reserve is appointed by the President and the Governor of the Bank of Canada is appointed by the Prime Minister. Why would they bite the hands that feed them? Our Country leaders have the same agendas too; to stay in power.
Trump wanted to keep the economy as strong as it could be leading up to his next election. As a result of these actions, a recession that was already looming pre-pandemic has just been delayed and maybe made worse. It's tough to have a Central Bank that is closely tied to its Country's Government that is always thinking about re-election.
 
Click here to connect the the best mortgage brokers in Canada, Cannect Home Financing.Click here to invest in the Cannect Mortgage Investment Corporation.
 
0:00 - Intro1:15 - What does inflation of 7.7% mean to the average consumer?5:37 - Inflation is currently scarier than a recession.9:39 - A recession would create an opportunity for first time home buyers to enter the market, but will make it trickier to access home equity.17:23 - Through the economic uncertainty, Cannect MIC returns have remained steady.18:37 - This is a tough time to lock in to a 5-year fixed rate.20:51 - Email question about accessing home equity without breaking the first mortgage.25:17 - How banks might alter their lending amid this economic uncertainty.30:48 - Cannect MIC has always been ready for real estate prices drops.32:13 - 2nd mortgage lenders may not all be able to offer renewals now.35:31 - Marcus’ laundry tips from Greece.38:12 - Email question about banks changing lending policies.44:49 - Are the Bank of Canada and Federal Reserve maybe too influenced by their respective federal Governments?49:58 - The economy was already not looking great pre-pandemic.
#Inflation #InterestRates #Economics

Looking for a Good Spot to Wait Out the Current Economic Storm?

How’s the current economic outlook? Pretty bleak. Interest rates are rising, inflation is still sky-high, and asset prices have taken a nose-dive. We may be approaching the peak of economic uncertainty, or maybe that’s just the optimism from summer beginning! Have a listen to the episode to get a more in-depth view from the Mortgage Broker Team at Cannect Home Financing.
A few key takeaways:
The rapid rise in interest rates is changing the way qualified Canadians borrow money.
We discussed in the previous episode how and why there could be a take off in the home equity loan market with interest rates rising. Therefore, we look at how will this impact private lenders though. Even with the potential for a drop in real estate prices, this could prove to be a tailwind for the risk level of private home equity loans. Cannect prides itself in helping home owners with ample home equity repair their covanent and get to lower cost capital. But if more loans are given to borrowers that have no covenant to repair, then the overall risk profile of these loans will drop. The real estate market may look uncertain, but this could be a very strong silver lining.
Cannect isn’t a small company, it’s just “folksy”
You’ll have to listen to get a better breakdown, but the essence of this statement is that Cannect is not a large institution like a bank. We are a company of regular people that are just like our borrowers. We’ve grown slowly, we take pride in being direct-to-borrower and direct-to-investor. We love being able to regularly communicate with our borrowers and investors like we are doing right now. The fact that we are this way is just one of the reasons why we feel very confident going into difficult economic times.
Marcus Tzaferis and the Cannect Team
 
Click here to connect the the best mortgage brokers in Canada, Cannect Home Financing.Click here to invest in the Cannect Mortgage Investment Corporation.
0:00 - Intro0:45 - The market is responding to the cost of money increasing.3:15 - Have living costs hit their peak?6:05 - If Marcus could travel back in time, what would he do?8:50 - Marcus thinks we could see a pause in the rapid interest rate hikes if they continue to take place this quickly.11:06 - This interest rate environment creates an attractive opportunity for mortgage funds like Cannect.15:13 - Email question from a borrower looking to access home equity.20:33 - The Cannect BBQ recap.22:03 - Email question from a borrower wondering if now is the right time to lock in to a fixed rate.26:28 - More BBQ highlights.29:24 - No matter the size of Cannect, staying direct to the borrow and direct to the investor continues to be the priority.35:00 - Cannect’s slow growth is why we feel as confident as we do going through economic uncertainty.

The Rocky Road Ahead for Your Mortgage

This episode examines the current economic outlook, and it is not too pretty. High inflation is the problem the Bank of Canada is prioritizing, which is why interest rates are rising, which is why stock prices are falling and home ownership is more expensive. What is the next domino to fall? Maybe housing prices? Have a listen to learn more!
Some key takeaways to consider:
1. Refinance your unsecured debt while home prices are high.
If real estate values fall, this will reduce the amount you can borrow against it and reduce the amount of unsecured credit you can wipe off your bureau. So act soon if you are in this position.
2. What might this lead to? A take off in the home equity loan market!
A lot of people took advantage of rock bottom interest rates two years ago and refinanced their debt. If qualified borrowers need more money now, they may find it is in their best interest to just take a second mortgage at a higher interest rate than refinance the whole mortgage to access more equity at today's 5-year fixed or variable rate. If you are a qualified borrower and need to access more funds, speak to a Cannect agent to see whether a second mortgage or a complete refinance is your best path to long-term savings.
3. "Don't fight the Fed"
With the Bank of Canada's priority being to bring down inflation, rates should continue to rise and asset prices should continue to fall. If they fall so much that the BoC has to shift their priorities, their actions will reflect this change. Interest rates may drop back down again and, subsequently, asset prices would rise back up. The BoC has fires to put out, and the way they decide to do it will shape the economy for the foreseeable future.
 
Click here to connect the the best mortgage brokers in Canada, Cannect Home Financing.Click here to invest in the Cannect Mortgage Investment Corporation.
 
Marcus Tzaferis and the Cannect Team
#Inflation #MortgageBroker #MakeMoneyCount

Mortgage Brokers Tell You What To Do About Rising Interest Rates

This week's episode takes a deeper dive into the Russia/Ukraine crisis and what it might lead to in this current economy. As we discussed last week, there are a lot of macroeconomic trends taking effect right now even without this crisis including inflation, increasing interest rates, surging oil prices, and more. If this crisis continues, how will it impact these current trends we are seeing? Have a listen to the episode to find out.
The Bank of Canada is meeting next on April 13th. Not only will any rate changes resulting from that meeting be important, but so will the way it gets communicated to us. We will see who wins the $50 bet. Matt says no change, Marcus says 25 bps, and Justin says 50 bps.
 
Click here to connect the the best mortgage brokers in Canada, Cannect Home Financing.Click here to invest in the Cannect Mortgage Investment Corporation.
 
0:00 - Intro2:00 - Ukraine and Russia and Economic Strategies6:15 - Accommodating central banking policies7:00 - Ground level effects & What the average consumer is worried about8:00 - The math behind taking a variable rate mortgage10:00 - Interest rate hikes & Monetary policy11:40 - Inflation & Volatility in the market15:30 - What to expect with your variable rate17:50 - The housing market & Canada's economy20:15 - What Cannect customers want to know25:45 - Re-stabilizing the economy32:55 - Where do we go when the nukes fall? 36:00 - Do policies against Russian Oligarchs have any effect?40:00 - Energy Policy affecting our Asset Security

How The Economy Maintains Order & Balance

This week's episode is all about how the economy maintains good order and balance. On Wednesday, the Bank of Canada increased the overnight rate from 0.25% to 0.50%, the first rate increase since 2018. How does this impact inflation? How does it impact the Canadian people? Have a listen to the episode to find out!
Here is what you can take away from this episode:
1. Will this rate hike solve our inflation problems? Probably not.
When interest rates increase, the impact that has on an economy isn't realized for 12 - 18 months. Consumers were so tight for cash during COVID though, and many of them still are, that this was not a possibility last year. The Bank of Canada will spend the next few years hiking interest rates at a steady clip to see where the proper balance is of fighting inflation fears vs. those of a bear market.
2. Energy policy has a huge effect on foreign policy.
Energy is a valuable resource. Every country has a vested interest in it's cost and accessibility. Some countries are mass producers of energy, while others rely on importing it to keep their economy afloat. When inflation leads to a skyrocketing cost of energy, countries pay attention.
3. We STILL love the variable rate.
The fixed rate has been pumped up by talks of 6, maybe even 8 interest rate hikes in 2022, so if the year continues and we find we aren't on pace to reach those marks, the fixed rate should come back down a bit. The variable rate is still at such a huge discount to prime, so we feel that if you are okay with taking a bit of risk, the variable rate looks really good. 
 
Click here to connect the the best mortgage brokers in Canada, Cannect Home Financing.Click here to invest in the Cannect Mortgage Investment Corporation.
 
0:00 - Intro1:18 - Marcus’ shirt4:03 - Bank of Canada increased interest rates this week by 25 bps, the Federal Reserve in the US may do so shortly.6:02 - Is inflation a result of shipping companies increasing costs during Covid?8:23 - Increasing the overnight rate won’t help fight our rapidly increasing costs, only takes more out of people’s wallets.10:37 - Energy policy affects foreign policy and how countries behave.13:28 - Relying heavily on the wrong countries for resources can lead to instability in the world.15:45 - A caller asks whether the prime rate hike will help to slow down inflation.17:45 - Interest rate hikes will have a psychological impact on inflation and it gives the Bank of Canada ammunition if we enter a bear market.20:22 - Housing prices are still being heavily impacted by the lack of supply available.22:28 - The variable rate is still attractive. There may be downward pressure for fixed rates in the future as well.24:29 - Justin has another interest rate metaphor for Marcus’ shirt.