Stronger-Than-Expected Jobs Report in December

Today’s Labour Force Survey for December was much stronger than expected, as many thought the Canada Post strike would have a larger impact. Employment rose by 90,900 net new jobs last month, and the employment rate—the proportion of the population aged 15 and older who are employed— increased by 0.2 percentage points to 60.8%. The jobless rate declined a tick to 6.7%.

Employment gains in December were led by educational services (+17,000; +1.1%), transportation and warehousing (+17,000; +1.6%), finance, insurance, real estate, rental and leasing (+16,000; +1.1%), and health care and social assistance (+16,000; +0.5%).

In December, employment increased in Alberta (+35,000; +1.4%), Ontario (+23,000; +0.3%), British Columbia (+14,000; +0.5%), Nova Scotia (+7,400; +1.4%), and Saskatchewan (+4,000; +0.7%), while there was a decline in Manitoba (-7,200; -1.0%). Employment changed little in the other provinces.

Total hours worked rose 0.5% in December and were up 2.1% compared with 12 months earlier.

Average hourly wages among employees were up 3.8% (+$1.32 to $35.77) on a year-over-year basis in December, following growth of 4.1% in November (not seasonally adjusted).

Employment rose by 91,000 (+0.4%) in December, mostly in full-time work (+56,000; +0.3%). This follows an increase in November (+51,000) and marks the third employment gain in the past four months.

The year 2024 ended with 413,000 (+2.0%) more people working in December compared with 12 months earlier. This year-over-year growth rate was comparable to the one observed in December 2023 (+2.1%) and to the average growth rate for December over the pre-COVID-19 pandemic period of 2017 to 2019 (+1.9%).

Public sector employment rose by 40,000 (+0.9%) in December, the second consecutive monthly increase. In the 12 months to December, public sector employment rose by 156,000 (+3.7%), driven by gains in the public-sector components of educational services as well as health care and social assistance. Private sector employment was little changed in December (+27,000; +0.2%) and was up 191,000 (+1.4%) on a year-over-year basis. The number of self-employed people rose by 24,000 (+0.9%) in December, the first increase since February. This brought total gains in self-employment for the year to 64,000 (+2.4%).

Wage inflation slowed markedly in November and December, providing welcome news for the Bank of Canada. While the strength of this report has led some to speculate the central bank will ease less aggressively, we agree that jumbo rate cuts are a thing of the past. However, monetary policy is still overly restrictive, especially if the Trump tariff threats come to fruition.

We expect the BoC to take the overnight rate down from 3.25% today to 2.5% by mid-year in quarter-point increments.

Bottom Line

The Canadian Labour Force Survey is notoriously volatile. One robust report does not change the Bank of Canada’s easing plans to return interest rates to neutrality–the level at which monetary policy is neither contractionary nor expansionary. Today’s US employment report was also quite strong, reducing the unemployment rate to 4.1%. While the Fed is unlikely to cut rates when the FOMC meets again on January 29, the Bank of Canada has room to ease further. Canada’s economy is far more interest-sensitive than the US, and interest rates in Canada -though historically low compared to the US- are still overly restrictive.

With inflation and rising prices affecting Canadians nationwide, now is the perfect time to take charge of your finances. One of the most effective ways to do this is by creating a monthly budget. A well-structured budget provides a clear picture of your income, tracks your expenses, and helps you make informed decisions to increase your cash flow or simply reduce financial stress.

Follow these six simple steps to build a budget and set yourself up for financial success in the year ahead:

Step 1: Calculate Your Income

Start by determining your net income (after taxes), not your gross salary. Knowing exactly how much money you have coming in will prevent overspending and set realistic expectations for your budget.

Step 2: Track Your Spending

The next step is to track your spending. Start by reviewing and categorizing your monthly expenses:

• Fixed Expenses: Costs that stay consistent, like rent/mortgage payments, car loans, and insurance premiums.
• Variable Expenses: Costs that can fluctuate, like groceries, gas, and entertainment.

This process helps identify where your money is going and pinpoints areas where you can cut back. Most savings opportunities lie within your variable expenses.

Step 3: Set Realistic Goals

Establishing achievable financial goals is essential for long-term success. The widely used 50/30/20 rule can help guide your budgeting:

• 50% for Needs: Rent/mortgage, utilities, groceries, and transportation.
• 30% for Wants: Shopping, dining out, vacations, and streaming subscriptions.
• 20% for Savings or Debt: Emergency funds, retirement savings, or paying off loans and credit card debt.

Step 4: Make a Plan

With your goals in place, create a plan to meet them. Set realistic spending limits for each category or re-prioritize your expenses to free up cash. This step might require some adjustments, but it ensures you’re taking control of your finances.

Step 5: Adjust Your Spending

Once your plan is in place, look for opportunities to adjust your spending to stay within your budget. Evaluate your “wants” and reduce non-essential purchases. You should also review your fixed expenses—such as refinancing your mortgage to a better rate or changing loan payment schedules. Connect with me to explore ways your mortgage can help improve your monthly cash flow!

Step 6: Stay on Track

Review your budget monthly to track your progress and identify any shifts in spending habits. Conduct an annual review to account for wage increases or expense changes that may require you to adjust your financial plan.

Helpful Tools

If you need extra guidance, the Government of Canada offers a free online budget planner tool to help you get started.

Why Budgeting Matters

A healthy budget is the foundation of financial freedom. By taking control of your income and expenses, you can reduce stress, increase your savings, and gain peace of mind—even in uncertain economic times.

If you’d like to explore how your mortgage could help improve your financial position, contact me today for a free consultation. Together, we can set you up for a prosperous year ahead!

Are you thinking about buying your first home? Congratulations! This is a major milestone, and we want to make sure you know about all the fantastic first-time homebuyer benefits available to help you save money and make the home-buying process smoother. Let’s dive into some incredible programs and incentives designed just for you.

1. New or Pre-Construction Homes: 30-Year Amortization

First-time buyers interested in purchasing a new build or pre-construction home can take advantage of a 30-year amortization period. What does this mean for you? A longer amortization period allows you to spread out your mortgage payments over a longer time, resulting in lower monthly payments. This option can make homeownership more affordable, especially when compared to the standard 25-year amortization period.

2. Enhanced Mortgage Default Insurance Coverage

The Canada Mortgage and Housing Corporation (CMHC) has increased its mortgage default insurance coverage, now insuring homes worth up to $1.5 million (up from $1 million). This expanded coverage makes it easier for first-time buyers to qualify for insured mortgages, even in higher-priced markets. This update is a game-changer for many Canadians looking to enter the housing market with less than a 20% down payment.

3. The Home Buyers’ Plan (HBP) – Access Your RRSP for Your Down Payment

Did you know you can use your RRSP savings for your down payment? The Home Buyers’ Plan (HBP) allows first-time homebuyers to withdraw up to $60,000 from their RRSPs (Registered Retirement Savings Plans) to put toward buying a home. Even better, if you’re purchasing with a partner who also qualifies as a first-time buyer, you can access up to $120,000 combined. This program gives you a significant boost in securing your dream home.

4. First Home Savings Account (FHSA) – Tax-Free Savings for Your Down Payment

The First Home Savings Account (FHSA) is a tax-advantaged account designed to help first-time homebuyers save for their down payment. You can contribute up to $8,000 per year, with a lifetime maximum of $40,000. The best part? You won’t pay taxes on the interest earned in this account. It’s an excellent way to build your savings faster while keeping more of your money working for you.

5. First-Time Homebuyer Property Transfer Tax Exemption

Buying your first home can be expensive, but there’s good news: first-time buyers may be eligible for a property transfer tax exemption. This exemption can save you thousands of dollars, depending on the purchase price of your property. Here’s how it breaks down:

• For homes valued at $500,000 or less, you can claim a full exemption, meaning you pay no property transfer tax.
• For homes priced between $500,000 and $835,000, you can claim an exemption amount up to $8,000.
• For homes valued between $835,000 and $860,000, the exemption amount is gradually reduced, potentially saving you up to $15,200.

6. Land Transfer Tax Rebates – More Savings Across Provinces

In certain provinces and cities, first-time homebuyers can benefit from land transfer tax rebates. If you’re purchasing in Ontario, British Columbia, Prince Edward Island, or the City of Toronto, you may qualify for these rebates, which can significantly reduce your upfront costs. Be sure to check the specific requirements in your area, as they can differ.

Get Started on Your Homeownership Journey Today!

These benefits are designed to make buying your first home more accessible and affordable. From longer amortization options and enhanced insurance coverage to tax-free savings accounts and transfer tax exemptions, there are plenty of ways for first-time buyers to save.

Ready to take the next step? Contact Danny Benjamin today to learn more about these programs and find out how you can maximize your benefits as a first-time homebuyer. Let’s turn your dream of owning a home into a reality!

Phone: (289) 455-8801

Email: dannybenjamin@dominionlending.ca

With recent interest rate cuts by the Bank of Canada, now is a great time to understand how these changes might impact your mortgage. Let’s dive into how these shifts could benefit you — whether you’re a current homeowner, looking to renew, or considering purchasing a home.

### Variable-Rate Mortgages: More Cash Flow in Your Pocket
If you have a variable-rate mortgage, the recent rate cuts mean you’re likely to see a decrease in your monthly payments, freeing up more cash each month. For example, if you have a mortgage balance of $750,000 at a previous rate of 5.95%, your estimated monthly payment was around $4,809. With the new rate of 5.45%, your monthly payment would be closer to $4,583 — saving you about $226 per month ($30 per $100,000 balance). These extra savings can help increase your cash flow and make room in your budget.

*(Example rates based on Prime minus 0.50%, with old prime at 6.45% and new prime at 5.95%.)*

### Fixed-Rate Mortgages and Renewals: New Opportunities on the Horizon
If you’re on a fixed-rate mortgage or have a renewal coming up, the Bank of Canada’s rate cuts can still impact your options. While fixed-rate mortgages don’t automatically adjust to rate changes, this lower interest rate environment could mean more favorable terms when it’s time to renew. For many homeowners, this means greater borrowing power, allowing you to make your money stretch further.

It’s also worth noting that lower rates introduce more variable-rate options into the marketplace, which may offer you flexibility if you’re considering switching from a fixed to a variable-rate mortgage.

### First-Time Buyers: Expanded Borrowing Power
For those entering the housing market, these rate cuts are especially good news. Lower rates mean increased borrowing power, which can open up more opportunities to find your ideal home. A reduced monthly payment makes homeownership more accessible, allowing first-time buyers to allocate more comfortably toward their mortgage.

### Future Rate Predictions: Even More Savings Ahead?
The Bank of Canada has one more rate decision dates this year, in December. Many experts predict further quarter-point cut, potentially bringing the overnight rate down to 4.0% by the end of the year, with possible reductions to as low as 2.75% next year. This trend could provide even more benefits for homeowners, prospective buyers, and those nearing mortgage renewal.

### Remember, Rate Isn’t Everything
While interest rates are a key part of any mortgage, it’s essential to look at the full picture. Factors such as the type of mortgage, down payment amount, payment schedule, and amortization period can all impact affordability and financial stability. Working with an expert can help ensure you’re making the right decision for your unique situation.

### Let’s Chat About Your Options!
If you’re curious about what these changes mean for you specifically, reach out! I’m here to help you understand how rate shifts might impact your mortgage, borrowing power, and overall financial picture.

Ready to explore your options? Contact me today, and let’s discuss how you can make the most of the current mortgage landscape!

Creating a legacy is about more than just leaving behind financial assets—it’s about enriching the lives of your loved ones and making a meaningful impact on your community. For Canadian homeowners, the CHIP Reverse Mortgage offers a unique way to create a “living legacy” by accessing the equity in your home and supporting your family, community, and charitable causes.

If you’re searching for flexible mortgage solutions that allow you to make a difference now, here’s how the CHIP Reverse Mortgage can help you build a living legacy.

Support the Next Generation with a Down Payment

Rising home prices have made it challenging for many young Canadians to enter the housing market. As a homeowner, you can help by providing financial support through the “Bank of Mom and Dad.” By using a portion of your home’s equity with the CHIP Reverse Mortgage, you can assist your children or grandchildren with a down payment on their first home. This not only helps them achieve homeownership but allows you to witness the security and joy that owning a home can bring to their lives.

Create Educational Funds for Your Grandchildren

Investing in education is one of the most impactful ways to ensure a bright future for the next generation. With the CHIP Reverse Mortgage, you can create educational funds for your grandchildren, giving them the financial resources to pursue higher education and career goals. The satisfaction of watching them thrive in their personal and professional journeys becomes part of your lasting legacy.

Contribute to a Wedding

Weddings are a special milestone, but they can also be a significant financial burden. If your loved ones are planning a wedding, using your home’s equity can ease that burden. With the CHIP Reverse Mortgage, you can contribute to their big day, making it a beautiful and memorable occasion while keeping your own financial security intact.

Give Back with Charitable Donations

Leaving a legacy through charitable giving is a wonderful way to make a lasting impact on your community. Whether you want to donate to causes that are close to your heart or support local initiatives, the CHIP Reverse Mortgage gives you the financial flexibility to make significant contributions while benefiting from potential tax advantages. Your generosity not only benefits others but strengthens your connection to your community.

Build Family Traditions and Memories

Creating a living legacy isn’t just about finances—it’s also about making lasting memories with your family. Whether it’s planning special family vacations, building traditions, or simply spending more quality time with your loved ones, these moments become cherished parts of your legacy. The CHIP Reverse Mortgage can give you the financial freedom to focus on what matters most—building unforgettable experiences with your family.

How the CHIP Reverse Mortgage Helps You Create a Legacy

The CHIP Reverse Mortgage is designed for Canadian homeowners aged 55 and older, allowing you to access up to 55% of your home’s equity without requiring monthly mortgage payments. You can stay in the home you love while using the funds to support your living legacy goals, whether that’s helping your children buy their first home, setting up educational funds, or giving back to your community.

With the CHIP Reverse Mortgage, you have the financial flexibility to create a legacy of love, support, and impact. You can enrich the lives of your loved ones today while maintaining your financial independence for years to come.

Ready to Build Your Legacy?

If you want to learn more about how the CHIP Reverse Mortgage can help you achieve your financial and legacy goals, reach out to me today. Let’s discuss how this innovative solution can help you make a lasting difference for your family and community.

Bank of Canada Cuts Rates Another Quarter Point

Today, the Bank of Canada cut the overnight policy rate by another 25 basis points to 4.25%. This is the third consecutive decrease since June. The Bank’s decision reflects two main developments. First, headline and core inflation have continued to ease as expected. Second, as inflation gets closer to the target, the central bank wants to see economic growth pick up to absorb the slack in the economy so inflation returns sustainably to the 2% target.

Overall, the economy’s weakness continues to pull inflation down. However, price pressures in shelter and some other services are holding inflation up. Since the July Monetary Policy Report, the upward forces from prices for shelter and some other services have eased slightly. At the same time, the downward pressure from excess supply in the economy remains.

Tiff Macklem said today, “If inflation continues to ease broadly in line with the central bank’s July forecast, it is reasonable to expect further cuts in the policy rate. We will continue to assess the opposing forces on inflation and take our monetary policy decisions one at a time.”

The economy grew by 2.1% in the second quarter, led by government spending and business investment. This was slightly stronger than forecast in July. Together with the first quarter’s growth of 1.8%, the economy grew by about 2% over the first half of 2024. That’s a healthy rebound from our near-zero growth in the second half of 2023. The Bank’s July projection has growth strengthening further in the second half of this year. Recent indicators suggest there is some downside risk to this pickup. In particular, preliminary indicators suggest that economic activity was soft through June and July, and employment growth has stalled in recent months.

That makes this Friday’s Labour Force Survey data for August particularly important. We expect economic activity to slow in the third quarter to rough 1.3%, keeping the Bank in an easing posture through next year.

The unemployment rate has risen over the last year to 6.4% in June and July. The rise is concentrated in youth and newcomers to Canada, who find it more challenging to get a job. Business layoffs remain moderate, but hiring has been weak. The slack in the labour market is expected to slow wage growth, which remains elevated relative to productivity.

Turning to price pressures, CPI inflation eased further to 2.5% in July, and the central bank’s preferred measures of core inflation also moved lower. With the share of CPI components growing above 3% around its historical norm, there is little evidence of broad-based price pressures. But shelter price inflation is still too high. Despite some early signs of easing, it remains the most significant contributor to overall inflation. Inflation remains elevated in some other services but has declined sharply in manufacturing and goods prices.

As outlined in the Bank of Canada’s Monetary Policy Report, inflation is expected to ease further in the months ahead. It may bump up later in the year as base-year effects unwind, and there is a risk that the upward forces on inflation could be more potent than expected. At the same time, with inflation getting closer to the target, the central bank must increasingly guard against the risk that the economy is too weak and inflation falls too much. Judging from comments made at today’s press conference, the BoC is at least as concerned about too much disinflation–taking the economy into a deflationary spiral.

Macklem said, “We are determined to bring inflation down to the 2% target and keep it there. We care as much about inflation being below the target as we do about it being above it. The economy functions well when inflation is around 2%.” With continued easing in broad inflationary pressures, the Governing Council reduced the policy interest rate by 25 basis points. Excess supply in the economy continues to put downward pressure on inflation, while price increases in shelter and some other services are holding inflation up. The Governing Council is carefully assessing these opposing forces on inflation. “Monetary policy decisions will be guided by incoming information and our assessment of their implications for the inflation outlook. The Bank remains resolute in its commitment to restoring price stability for Canadians”.

Bottom Line

Monetary policy remains restrictive, as the chart above shows. While the target overnight rate is now 4.25%, core inflation is only roughly 2.4%. Real interest rates remain too high for the economy to reach its potential growth pace of about 2.5%. Weaker growth implies a continued rise in unemployment and excess supply in other sectors.

In separate news, the US released data showing that US job openings fell to their lowest level since January 2021, consistent with other signs of slowing demand for workers.

US job growth has been slowing, unemployment is rising, and job seekers are having greater difficulty finding work, fueling fears about a potential recession. Federal Reserve policymakers have made it clear they don’t want to see further cooling in the labour market and are widely expected to start lowering interest rates at their next meeting in two weeks.

In other news, consistent with a global economic slowdown, oil prices have plunged to new 2024 lows. Weak oil prices are a harbinger of lower inflation, growth and mortgage rates.

Bonds rallied in the wake of the disappointing US data, taking the 5-year government of Canada bond yield down to a mere 2.89%, well below the 3.4% level posted when the Bank of Canada began cutting interest rates in June. This decline in market-driven interest rates reduces fixed-rate mortgage yields. Moreover, today’s cut in the overnight rate will be followed soon by a 25 basis point reduction in the prime rate to 6.45%, reducing floating rate mortgage yields as well.

The Bank of Canada has two more decision dates this year: October 23 and December 11. At those meetings, the Bank is widely expected to continue its quarter-point rate cuts, taking the overnight rate down to 4.0% at yearend and 2.75% next year.

Embarking on the journey to purchase your first home is one of life’s most thrilling and rewarding milestones!

To ensure a smoother mortgage process, one of the smartest steps you can take is to get pre-approved for your mortgage. While pre-approval doesn’t lock you into a single lender, it does secure the interest rate offered to you for 90 to 120 days, providing a critical buffer if rates rise while you’re still house hunting.

### Why Rate Holds Matter in Mortgages

**Protection Against Rate Increases:** A rate hold guarantees that you will receive a specified interest rate for a set period, typically up to 120 days. This means you’re protected from potential rate hikes during that time. Plus, if rates drop, you can still take advantage of the lower rate!

**Financial Planning:** Knowing your exact interest rate allows for better financial planning and budgeting. You’ll have clarity on your expected monthly mortgage payments, making it easier to target the right price range for your new home and ensuring future financial stability.

**Time for Decision Making:** With a rate hold, you gain peace of mind and the necessary time to shop around for the right home. It allows you to compare different mortgage options without the pressure of rising interest rates. This is especially valuable when you’re considering various lenders or mortgage products.

**Stress Reduction:** Rate holds reduce the stress associated with rate fluctuations and uncertainties in the housing market. After the past few years of market volatility, having a secured mortgage rate can ease the pressure of finding a new home quickly. And if your rate hold expires, you can easily apply for a new one!

**Securing a Competitive Rate:** Even though interest rates are not expected to rise dramatically in the near future, locking in a rate while you shop can save you money in the long term. This ensures you have a favorable interest rate if the market unexpectedly shifts.

### Make the Most of Your Home Purchase with a Rate Hold

Overall, rate holds offer peace of mind, financial security, and the opportunity to make informed decisions when entering into a mortgage agreement. They are particularly valuable in fluctuating interest rate environments or when you anticipate delays in finalizing your mortgage transaction.

Are you planning to purchase a home soon? Want more information on how rate holds can benefit you? Reach out to me today!

Secure your future home with confidence by taking advantage of a rate hold and ensuring your path to homeownership is as smooth and stress-free as possible.

Danny Benjamin

T: 289-455-8801

E: dannybenjamin@dominionlending.ca

Weaker-Than-Expected July Jobs Report Keeps BoC Rate Cuts In-Play

Canadian employment data, released today by Statistics Canada, showed a continued slowdown, which historically would have been a harbinger of recession. This cycle, immigration has augmented the growth of the labour force and consumer spending, forestalling a significant economic downturn.

Employment declined again in July, down 2.8K. The employment rate—the proportion of the population aged 15 and older who are working—fell 0.2 percentage points to 60.9% in July. The employment rate has followed a downward trend since reaching a high of 62.4% in January and February 2023 and has fallen in nine of the last ten months.

In July 2024, an increase in full-time work (+62,000; +0.4%) was offset by a decline in part-time work (-64,000; -1.7%). Despite these changes, part-time employment (+3.4%; +122,000) has grown faster than full-time employment (+1.4%; +224,000) on a year-over-year basis.

Public sector employment rose by 41,000 (+0.9%) in July and was up by 205,000 (+4.8%) compared with 12 months earlier. Public sector employment gains over the last year have been led by increases in health care and social assistance (+87,000; +6.9%), public administration (+57,000; +4.8%) and educational services (+33,000; +3.3%) (not seasonally adjusted).

Self-employment changed little in July and was up by 55,000 (+2.1%) year-over-year.

The unemployment rate was unchanged at 6.4% in July, following two consecutive monthly increases in May (+0.1 percentage points) and June (+0.2 percentage points). On a year-over-year basis, the unemployment rate was up by 0.9 percentage points in July.

The jobless rate rose more for recent immigrants, especially youth than those born in Canada.

The unemployment rate for this group was 22.8% in July, up 8.6 percentage points from one year earlier. For recent immigrants in the core working age group, the unemployment rate rose by 2.0 percentage points to 10.4% over the same period. In comparison, the unemployment rate for people born in Canada was up 0.5 percentage points to 5.6% on a year-over-year basis in July, while the rate for more established immigrants (who had landed in Canada more than five years earlier) was up 1.2 percentage points to 6.3%.

In July, employment in wholesale and retail trade decreased by 44,000 (-1.5%), reflecting a continuing downward trend since August 2023. On a year-over-year basis, employment in the industry was down by 127,000 (-4.2%) in July 2024.

Employment in finance, insurance, real estate, rental, and leasing declined by 15,000 (-1.0%) in July, marking the first decline since November 2023. On a year-over-year basis, employment in this industry showed little change in July 2024.

Public administration saw a rise in employment by 20,000 (+1.6%) in July, following a decline in June (-8,800; -0.7%). Employment in transportation and warehousing also increased in July by 15,000 (+1.4%), partially offsetting declines in May (-21,000; -1.9%) and June (-12,000; -1.1%).

British Columbia experienced the highest job losses, while Ontario and Saskatchewan were the only provinces to add employment.

Adjusted to US standards, the unemployment rate in Canada for July was 5.4%, which was 1.1 percentage points higher than in the United States (4.3%). Compared with 12 months earlier, the unemployment rate increased by 0.8 percentage points in both Canada and the United States. The employment rate has decreased in both countries over the past 12 months, with a larger decline in Canada. From July 2023 to July 2024, the employment rate (adjusted to US concepts) fell by 1.0 percentage points to 61.5% in Canada, while it declined by 0.4 percentage points to 60.0% in the United States.  Compared with 12 months earlier, the unemployment rate increased by 0.8 percentage points in Canada and the United States.

Bottom Line

This is the only jobs report before the Bank of Canada meets again on September 4. Traders expect further rate cuts at the three remaining meetings this year.

Last week, weaker employment data in the US contributed to a selloff in global equities, as bonds rallied amid increased bets that the Federal Reserve will be forced to cut borrowing costs more deeply and quickly than previously expected.

The interconnectedness of the economies of the United States and Canada implies that any further weakening in the former is likely to permeate into the latter. This scenario affords Macklem the latitude to normalize borrowing costs without the concern of outpacing the Federal Reserve to a degree that could jeopardize the Canadian dollar.

Buying a home is an exciting milestone! To ensure a smooth process, it’s crucial to have a comprehensive budget that includes all potential expenses, not just the purchase price of the home. One key area to consider is closing costs, which can significantly impact your financial planning. Understanding these costs will help you stay within your budget and maintain financial stability.

Closing costs are one-time fees that come with the purchase of a home, separate from the mortgage insurance and down payment. These costs typically range from 1.5-4% of the purchase price, depending on your location. For example, for an $800,000 home, you should budget around $22,000 on average for closing costs.

Here are some common closing costs to consider:

**Land Transfer Tax:** Calculated as a percentage of the purchase price, this tax varies by province and, in some cases, by city. For example, Toronto has a municipal land transfer tax in addition to the provincial tax.

**Legal Fees and Disbursements:** Expect to pay at least $500 (plus GST/HST) for legal fees associated with the preparation and recording of official documents for your purchase.

**Title Insurance:** Required by most lenders to protect against losses from property ownership disputes, title insurance is typically purchased through your lawyer or notary and costs around $300 or more.

**PST on CMHC Insurance:** Although CMHC insurance is included in your mortgage, the PST on this insurance must be paid separately, usually through your lawyer and sometimes deducted from your advance.

**Home Inspection Fee:** A home inspection is highly recommended to avoid future surprises. This can cost around $500.

**Appraisal Fee:** An appraisal, which confirms the home’s resale value for the lender, typically costs between $400 and $600 and is often covered by the lender.

**Property Insurance:** Property insurance, which covers the replacement cost of your home and its contents, must be in place on closing day and is paid in monthly or annual premiums.

**Prepaid Utility Bills:** You may need to reimburse the previous owner for prepaid property taxes, utilities, and other costs.

**Property Taxes:** Calculated as a percentage of your home’s value and varying by municipality, property taxes are due annually. You might also need to reimburse the previous owner if they have already paid for the year.

Knowledge is power. Understanding these hidden costs will help you create a realistic budget and ensure you stay within your financial means. If you have any questions about your home purchase or need assistance, contact me at (289)455-8801. We’re here to help you navigate the process, whether you’re buying now or planning for the future!

canadian inflation rose in may, surprising markets

Inflation unexpectedly rose in May, disappointing the Bank of Canada as it deliberates the possibility of another rate cut next month.

The Consumer Price Index (CPI) rose 2.9% in May from a year ago, up from a 2.7% reading in April. This increase primarily reflects higher prices for services and, to a lesser extent, food. According to a Bloomberg survey, economists had expected 2.6% inflation last month.

Cellular services, travel tours, rent, and air transportation boosted service prices by 4.6% year-over-year (y/y) in May, up sharply from the 4.2% rise in April. Price growth for goods remained at 1%, although grocery prices rose more rapidly.

Monthly, the CPI index climbed 0.6% compared to expectations for a 0.3% gain and up from 0.5% in April. On a seasonally adjusted basis,  inflation rose 0.3%.

The Bank of Canada’s preferred measures of core inflation, the trim and median core rates, exclude the more volatile price movements to assess the level of underlying inflation. The CPI trim accelerated to 2.9% in May, following a downwardly revised 2.8% rise the previous month. The CPI median rose two ticks to 2.8%. Both measures of core inflation surprised economists on the high side.

Shelter costs have been a massive component of inflation this cycle. In May, rent rose a whopping 0.9%, lifting the yearly rise to 8.9% y/y, the second largest contributor to annual inflation. The single most significant inflation driver–mortgage interest costs–ticked down a bit to 0.8% m/m, reducing the yearly pace to 23.3%. It peaked above 30% last year. Excluding shelter, inflation is rising 1.5% y/y, up from 1.2% last month.

Bottom Line

Today’s inflation reading was undoubtedly a disappointment for the Bank of Canada, and it reduces the chances of another rate cut when they meet again on July 24. However, the June inflation data will be released on July 16. Barring a significant drop in June inflation, the next interest rate cut will likely be at the September meeting. That’s not good for the housing market, which has slowed to a crawl in recent months. The decline in mortgage rates proceeds as market forces drive down bond yields. Canada’s labour market is slowing as the jobless rate ticks up. Tiff Macklem said yesterday that he did not expect the unemployment rate to rise significantly further this cycle.

Interest rate cuts will be more gradual because rapid population growth has boosted economic activity, forestalling a recession and adding to inflationary pressure. The central bank’s overnight policy rate, now at 4.75%, will gradually move to 3.0% by the end of next year.