Understanding Rising Mortgage Interest Rates in Canada in 2023

When it comes to mortgages, understanding the factors that influence interest rates is crucial. Since the financial crisis in the United States back in 2008, interest rates in Canada had remained historically low… until 2020 of course. When the Covid-19 pandemic hit, rates were reduced to record lows to stimulate the economy and encourage economic growth (free money as many referred to it). The plan worked, but quantitative easing was practiced for far too long giving Canadians the opportunity to overleverage to their necks! Now, in the post-pandemic world as we know it, inflation has caused the prices of housing, food, goods, and services to become unaffordable, while incomes have failed to keep up.

It is important to stay informed about the current state of interest rates and how they may impact borrowers. In this updated blog, we will delve into the current landscape of mortgage interest rates in Canada in 2023, and provide relevant insights for borrowers.

The Role of the Bank of Canada:

The Bank of Canada (BOC) plays a vital role in ensuring the stability and growth of the Canadian economy. As the central bank, it sets and controls the key interest rate, which directly affects borrowing rates in the country (mortgages, corporation debt, government debt, etc.). Banks, in turn, base their prime lending rate on the Bank of Canada’s key interest rates. While changes in the key interest rate do influence mortgage rates, the adjustments made by major banks are likely to mirror the exact magnitude of any change made by the BOC.

The Prolonged Low-Interest Rate Environment:

The past decade and a half has seen a prolonged period of historically low-interest rates in Canada. This was primarily done to promote economic growth and maintain stability. However, it’s important to recognize that history will always repeat itself, and as a nation, we should have predicted what is currently happening across the country and the globe (although the exact timing remains a challenge in predictions). A continuous concern in Canada is the high levels of debt Canadians have accumulated due to the prolonged accessibility of low-interest rates (too low for too long!). Many individuals were borrowing to their maximum affordability, which, now in hindsight, posed a huge challenge when rates began to rise. All that borrowing led to spending – money that was pumped into the economy, increasing demand and competition, which directly drove the cost of goods and services. As a result, this excess money and spending have caused the inflationary problem that governments across the world are now fighting to tame. This becomes more evident with each increase and with each month that passes.

The Bank of Canada’s Balancing Act:

The Bank of Canada faces the delicate task of navigating interest rate adjustments to avoid shocking the economy or causing widespread default among borrowers. They must carefully consider the impact of higher rates on heavily indebted Canadians. Striking the right balance between economic stability and responsible lending is crucial, which is why these rate hikes happen slowly, rather than all at once. Between each interest rate hike, they must step back and give sufficient time to analyze the data, consisting of CPI, GDP, Housing, and Unemployment, among many other data points.

Borrowing Responsibly:

As individuals, we also bear the responsibility of making informed borrowing decisions. While interest rates were at all-time lows in 2020 and 2021, it was essential to assess our own repayment capabilities should the inevitable happen (the inevitable being rate increases). This evaluation should always consider personal circumstances such as income, lifestyle, and financial responsibilities. Borrowing to the maximum allowable limit should be approached with caution, as it leaves little room for adjustment when rates increase. It is crucial to consider potential future changes in income and financial stability when deciding on borrowing amounts.


Understanding current mortgage interest rates in 2023-2024 is crucial for borrowers in Canada. While the low-interest rate environment is now over, it is important to be mindful that the potential for further rate hikes is not far from possible. Both the Bank of Canada and borrowers must exercise caution and responsibility to maintain economic stability and individual financial well-being. If you have any questions or would like to discuss current interest rates for your mortgage, please feel free to contact us today at (905) 455-5005.

Investment Mortgage: Maximize Your Real Estate Portfolio in 2023-2024

Investing in properties continues to be a lucrative option for diversifying your portfolio. However, in the ever-evolving landscape of real estate, it’s important to stay up to date with current trends and strategies to make the most of your investment. In this updated guide, we’ll explore the key considerations for obtaining an investment property mortgage and how to align it with your investment goals in 2023 and beyond.

Aligning Your Mortgage Choice with Your Investment Goals: When choosing an investment property mortgage, it’s crucial to ensure it reflects your short-term and long-term investment objectives. Consider factors such as the property type, location, down payment, and mortgage term to align them with your investment vision.

Optimal Down Payment Strategies: In Ontario, the minimum down payment required for an investment property mortgage remains at 20%. While you can leverage the equity in your existing home or use personal savings, it’s important to strike a balance. Avoid putting more than the minimum required, as it may limit access to funds for other potential investment opportunities. Instead, consider an Equity Line of Credit, which provides flexibility and immediate access to additional funds if needed.

Tailoring the Mortgage Term to Your Investment Plan: Carefully evaluate the term of your investment property mortgage. Depending on your goals, a five-year term may not be ideal, as the penalties for breaching the contract might outweigh the investment gains. Conversely, if you plan to hold the property for an extended period, taking advantage of low rates (if/when applicable) by committing to a longer term could be advantageous. This might be less relevant in 2023, while we work through inflationary rate hikes… but is likely to be more relevant later when rates inevitably drop again.

Unveiling the Distinctions of an Investment Property Mortgage: While an investment property mortgage is like any other mortgage, it should be approached with a different perspective. Your considerations regarding interest rates, terms, and conditions may differ from those when acquiring a mortgage for your own home. Recognize the unique nature of this mortgage and tailor it to your investment objectives.

Investment property mortgages remain an excellent avenue for building wealth through real estate investments. By aligning your mortgage choice with your investment goals, optimizing your down payment strategy, tailoring the mortgage term, and recognizing the distinctions of an investment property mortgage, you can position yourself for success in the ever-changing real estate market.

To learn more about investment property mortgages or for personalized guidance, please reach out to us at (905) 455-5005 or email us at [email protected]. Our team is dedicated to helping you navigate the evolving landscape of real estate investments in 2023 and 2024.

Is a Mortgage Loan Consolidation A Good Choice in 2023-2024?

In 2023’s (and likely 2024’s) ever-changing financial landscape, the concept of a mortgage loan consolidation remains highly relevant… possibly more relevant than any other time in the last decade. As we navigate through inflationary territory and various life circumstances, we often find ourselves burdened with multiple debts, each with its own interest rate. This article explores the advantages of mortgage loan consolidation as a means to address these challenges and offers a fresh perspective on the topic.

The Debt Landscape:

Debt comes in various forms, including credit cards (19.99%-29.99%), personal loans (10%+), lines of credit (unsecured) (9%+), and payday loans (30%+). However, many individuals now recognize that carrying these unsecured debts at their current interest rates is increasingly unsustainable, especially during volatile times with high costs of living.

The Power of a Mortgage Loan Consolidation:

The option of loan consolidation through an home equity takeout or mortgage refinance emerges as a viable solution. With mortgage rates currently at historic lows, leveraging the equity in your home to consolidate and clear your debts becomes an appealing choice. This approach not only simplifies your financial obligations but also has numerous benefits worth considering.

Preserving Credit History:

By opting for loan consolidation, you can protect your credit history from further damage. As debts pile up and payments are missed, creditworthiness is often compromised. Leveraging your mortgage to consolidate these debts can help you regain control and prevent further deterioration of your credit score. Ultimately, this paves the way for future financial stability and opportunities that will arise.

Enhanced Cashflow and Financial Flexibility:

Consolidating your debts into a mortgage can significantly increase your available cash flow. When debt reaches its maximum threshold relative to your financial capabilities, missed payments become inevitable. By reallocating your debts into a mortgage, you free up additional funds that can be directed toward savings, investments, or other financial goals. This newfound flexibility empowers you to regain control over your finances and chart a path toward long-term financial prosperity.

Timing Is Key:

Recognizing your circumstances before they spiral out of control is crucial when considering a mortgage loan consolidation. Acting proactively, before reaching your financial limits and missing payments, is the ideal time to explore this option. However, even if you’ve already missed payments, a mortgage loan consolidation can still provide relief, albeit with some trade-offs. While mortgage rates may be higher than the lowest available rates, the benefits of consolidation remain significant. It is worth noting that your cash flow may not increase as substantially due to slightly higher mortgage payments resulting from the higher interest rate.

Illustrating the Potential:

Let’s consider an example to illustrate the impact of mortgage loan consolidation on your cashflow:

Total Unsecured Debts: $50,000.00

Total monthly minimum payments: $1,200.00 –  $1500.00 if you’re paying more than just interest each month

Loan consolidation to pay off unsecured debts: $50,000.00

Increase in monthly mortgage payment based on 5.50% interest rate: $415.00 – $450.00

(** 5.50% is based on today’s rates, June 29, 2023  – This of course will fluctuate up and down depending on when you explore your options)

Net Cashflow = $1,500/m – $450/m = $1050.00


A mortgage loan consolidation offers a practical and effective way to protect and rebuild credit, pay off debts, and increase available cash flow. It enables you to simplify your financial obligations and regain control over your financial future. If you would like to learn more or discuss your options further, we encourage you to contact us today at (905) 455-5005. Take charge of your financial well-being and embark on a path toward a brighter future. We look forward to working with you.

Down Payment Needed to Buy a Home in Canada

When it comes to making a down payment on a house in Canada in 2023, there are a few important details to consider. The minimum down payment requirement in Canada (for all buyers) currently stands at 5% for the first $500,000 and 10% for any portion above $500,000. For example, on an $800,000 purchase, you would require $55,000 for the minimum down payment ($25,000 for the first $500,000 and $30,000 for the remaining $300,000 in excess of $500,000).

But don’t just rely on the minimum down payment requirement – it’s crucial to take a closer look at the circumstances because credit and purchase price can all have an influence on what your down payment will need to be. In this article, we’ll delve into some key considerations to help you make an informed decision.

Down Payment based on purchase price: The quickest way to determine your minimum down payment requirement is to consider the purchase price. In Canada, if the purchase price is $999,999 or below, you can do the minimum down payment. If the purchase price is $1,000,000 or above, you MUST have 20% down.

Down Payment based on the intended use of the home: In Canada, the minimum down payment rules only apply to owner-occupied residences. If the property is a investment (full rental, where no units are occupied by the purchaser), then 20% down is mandatory!

Down Payment based on monthly payments: There are several advantages to increasing your down payment beyond the minimum requirement. For one, it reduces the size of your mortgage, resulting in lower monthly payments. This can provide you with more financial flexibility and make budgeting more manageable. Additionally, a larger down payment can potentially secure you a better interest rate depending on the bank, saving you a substantial amount over the lifetime of your mortgage. A longer amortization is also an option available with a larger down payment (20% needed) and would also help reduce your monthly mortgage payment.

Down Payment based on default insurance: Another aspect to consider is the type of mortgage you choose. If you opt for a high-ratio mortgage (purchasing a home with less than 20% down), you’ll be required to pay for default insurance. While this insurance safeguards the lender in case of default, it does add a significant cost to your mortgage. Some homebuyers prefer to avoid this extra expense and instead put down a larger down payment to secure a conventional mortgage.

Down Payment based on credit score: It’s worth noting that if you have bad credit (below 600), the minimum down payment requirements increase to 20% of the purchase price, as this is the requirement of all Alternative Banks. This serves as a risk-mitigating measure for lenders since Alternative Banks (‘B Banks’) do not have default insurance.

Down Payment based on liquidity: Consider your short-term and long-term goals as well. If you anticipate needing available cash flow for other expenses or investments, it may be wise to stick with the minimum down payment. This way, you’ll retain more liquidity and have a safety net in the bank for unforeseen circumstances. Perhaps the home you’re buying might require work right away. Putting the minimum down payment will leave you with enough funds to complete the necessary renovations.

Down Payment based on goals: Short-term and long-term goals, personal affordability, and the type of mortgage you choose all come into play when determining the ideal down payment amount. While meeting the minimum requirements is a good starting point, especially as a first-time home buyer, it’s important to align your goals and financial capacity with your decision.

To sum it up, when it comes to making a down payment on a house, it’s important to look beyond the once standard, 5% rule. Personal factors, such as your credit, goals, affordability, and comfort level with default insurance premiums, should be carefully evaluated. By taking these factors into consideration, you can ensure that owning a home is a comfortable and manageable experience. If you have any further questions or would like more information on making a down payment, please don’t hesitate to contact us today! (905) 455-5005

Rethinking the 5% Down Payment

In 2023, and the ever-evolving real estate market, it’s crucial to address common misconceptions that can impact home buyers’ decisions. While we touched on this topic in a previous blog, recent conversations with our clients have highlighted the need to revisit the “I only need 5% down” attitude. In this updated article, we aim to provide a refreshed understanding of the challenges associated with a minimal down payment and shed light on the industry dynamics that affect mortgage qualifications.

The Down Payment Dilemma: The allure of a 5% down payment option persists among potential home buyers due to its attractiveness and perceived ease of affordability. However, it is crucial to recognize the underlying complications involved in qualifying for a mortgage with a 95% loan-to-value (LTV) ratio, irrespective of the down payment amount (ranging from 5% to 20%).

Understanding Conventional and High-Ratio Mortgages: In Canada, a “conventional mortgage” refers to a loan covering up to 80% of the property’s value, while anything above 80% falls into the category of a “high-ratio mortgage.” According to the Canada Bank Act, all high-ratio mortgage loans require “default insurance” to protect lenders from potential losses in case of borrower default. This is even more important today, given home prices in Canada (May, 2023).

Why Default Insurance? To comprehend the need for default insurance, it’s essential to consider the consequences of mortgage default. If a borrower defaults on their payments, the lender has the authority to initiate a “power of sale” process, whereby they seek to sell the property to recover their investment. To facilitate a swift sale, lenders may list the property below market value, leading to potential losses when combined with additional costs such as real estate commissions and legal fees. Conventional mortgages, with their lower loan-to-value ratios, eliminate the need for insurance as there is sufficient equity to serve as a buffer for the lender.

The Role of Default Insurance: Now that we understand the necessity of default insurance, let’s delve into the process of obtaining it. Just like any insurance company, the Canada Mortgage and Housing Corporation (CMHC) aims to minimize claims. Consequently, the CMHC evaluates the risk associated with individuals applying for a high-ratio mortgage meticulously.

Risk Assessment Factors: When assessing the risk of insuring a mortgage, the CMHC considers factors like those evaluated by lenders during the mortgage application process. Employment history, annual income, debt ratios, and credit reports are just a few examples of the criteria used to assess the likelihood of default. Furthermore, the property itself is also scrutinized as part of the risk assessment process.

The Reality of the 5% Down Payment: By now, it should be evident that the 5% down payment option is not a viable choice for everyone. The stringent guidelines set by the CMHC make it challenging for individuals to qualify for a mortgage with a 95% LTV ratio. It is vital for borrowers to demonstrate low risk to lenders, who, in turn, must prove to the insurer that the chances of a claim are minimal. This dynamic often results in CMHC approval criteria being more rigorous than those of the lenders.

A Smarter Approach: Instead of fixating on the “I only need 5% down” mindset, we encourage our clients to pursue the conventional route with a 20% or higher down payment. This approach ensures that even if they don’t qualify for a high-ratio mortgage, they still have viable alternatives. By having a 20% down payment, individuals retain the flexibility to consider different options during the application process, mitigating the risk of disappointment. Also, with 20% down, banks can introduce a little more leniency to underwriting making it more likely to be given exceptions where needed.

Having said all that, some people will face the challenge of savings 20% down, especially when trying to buy a home in 2023 and onward. Let’s face it… 20% of a $1,000,000 home today is just not easy. And, even if you don’t have 20% down, there are options that we’re happy to explore for you.

Let’s talk through it and figure or what your maximum affordability is under multiple scenarios. Call us today at 905-455-5005

The New First Home Savings Account (FHSA) – What is it?

Recently the government of Canada announces the launch of a First Home savings account which is geared towards first-time home buyers and designed to help them save for their down payments. The best way to understand the function of a FHSA is that it combined certain features of an RRSP with that of a TFSA. For example, it includes an element of a tax deduction based on the eligible contributions made toward the FHSA. It also allows you to make eligible withdrawals without any taxable accountability. As you can see, the former benefit of “tax deductions” mirrors an element of an RRSP, while the latter mirrors a feature of a TFSA (non-taxable withdrawal)

Who’s eligible? – It’s very simple. To be eligible under this program you must be:

  1. A Canadian resident
  2. 18 years of age or older
  3. A first-time home buyer – someone who has at anytime part of the calendar year before the account is opened or at any time in the 4 years prior, not lived in a home you also own. In other words, if you have not owned a home (or your spouse) in the past 5 years, you are considered a 1st-time buyer under this program.

What about contributions and deductions?

  • Currently, the contributions are limited to $8000 per year, to a lifetime contribution limit of $40,000. Remember, contribution doesn’t mean that your account can’t grow from the various investment vehicles (i.e. stocks, bonds, etc.)
  • Individuals can claim income tax deductions for the FHSA when they file their taxes. The tax-deductible credits do carry forward, so you can carry forward any unused credits for future use.
  • A maximum of $8,000 unused contribution room can be carried forward to the following year.

Other notable features:

  • You can transfer funds from your RRSP to your FHSA without any tax consequences. You still need to adhere to the annual and lifetime contribution limits and these transfers are not deductible from your income (you can’t double dip tax deductions by contributing to your RRSP and then Transferring to your FHSA and trying again).
  • Transferring from an RRSP to an FHSA does not restore your RRSP contribution room.
  • The FHSA can be used in conjunction with the Home Buyers Plan (HBP)– which allows you to withdraw up to $35k from your RRSP towards your purchase. Unlike the Home Buyers plan, however, you do not have to pay back any funds that you used from your FHSA for your purchase. (HBP requires you to repay what you used within 15 years).
  • Unlike an RRSP, your FHSA contribution room doesn’t grow based on your annual earnings.

As always, we encourage you to understand your options and if you would like to learn more about this program, feel free to visit the government of Canada on this topic – https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html

Alternatively, If you’d like to learn more about this program in conjunction with your purchase goals, feel free to give us a call – at 905-455-5005

I’m Behind on My Mortgage Payment – What Should I Do?

Although have the best of intentions, sometimes we find ourselves in financial constraints that cause us to fall behind. Most homeowners will tend to make the difficult choice of having non-payments on their other debts while continuing to maintain their mortgage payments, but sometimes hard times can cause one to still skip a beat…Having said that, there are a few things you can do if you find yourself in this situation:

  • The first thing you should do is contact your mortgagee (lender) as soon as possible and explain the circumstance in which you found yourself in this situation and follow up on how you intend to bring your payment into good standing. A common reason for missed payments is due to income payroll schedules not aligning with your scheduled mortgage payment. For example, if you get paid bi-weekly but your mortgage payments are on a monthly schedule, you may find that at least once a year, your income payment doesn’t “come in time”. In a situation like this, it’s best to contact your mortgagee before missing the payments so that you can make the necessary arrangement to maintain a healthy payment. This will show the lender that you took the initiative to recognize a potential payment issue and made advanced arrangements to continue the payment without default.
  • You should review your original mortgage commitment, specifically under the terms and conditions to see what options you must help remedy the situation. Some mortgages offer “skip a payment” or “mortgage vacations” once a year which allows you to miss a payment without consequence. This section would also include any information on “NSF penalties” that may apply to the missed payment.
  • You should re-assess your current financial situation to see if you’ve “bloated” your budget above your income threshold. As time goes on, sometimes we take on small but incremental financial expenses that slowly lower our monthly cash flow. This can be in the form of having multiple subscriptions, eating out a little too frequently, or new purchase commitments (i.e., vehicle leases) …this will help you identify points of interest so that you can resize your budget and get back on track. If however, you find that there’s nowhere to “trim the fat” then you may need to consider refinancing your mortgage to get a more “right-sized” solution to your financial needs. This could be in the form of lowering your payments by extending your amortization, or simply by consolidating your debts into a lower-interest payment obligation (ultimately increasing cash flow).
  • You could consider taking out a 2nd mortgage on a short-term basis, to help you buffer any financial disruptions you may be facing. This option is often helpful if you expect to bounce back from a temporary income disruption such as unpaid leave (medical or otherwise). If you have an exit strategy for the short-term loan, then this option can serve to be useful in your time of need.

It is not an uncommon thing for homeowners to occasionally miss their mortgage payments, but the important thing is to take immediate action in working towards a remedy. The worst thing you can do is to sit back and do nothing. Mortgage lenders/banks will not hesitate to act on their end, which often includes tacking on fees and penalties for default, making it very difficult to bounce back into good standing.

If you find yourself in this type of situation, don’t hesitate to give us a call because we’ve helped many homeowners navigate their way back – 905-455-5005

Rent vs Owning your Home – Which One is Right for You?

Renting and buying a home are two options to consider when deciding to move or plant roots. Both options have their benefits and the one that is right for you will depend on a variety of factors. We will focus on and highlight the benefits of each while you also take notice of the differences between them…Let’s compare the two:


Renting a home:

  • Offers flexibility, in that, it allows you to easily (relatively speaking) relocate without having the burden of having to sell your existing property, penalties for breaking your mortgage, and other considerations that can make it a challenge.
  • Lowers the initial costs of getting into your home because unlike with purchasing a home, you typically only need to provide a 1st and last month’s rent + a security deposit.
  • Can be more affordable, especially in the short term to acquire a home that meets your needs without having to take on the financial responsibilities that come with owning the same home. These include financial commitments like mortgages, property taxes, and general maintenance costs that are the responsibility of the landlord.


Buying a home:

  • Can build equity and is often considered to be an investment. When you purchase a home, you have the potential benefit of seeing the equity build over time as you both pay off your mortgage and the home appreciates with time. This appreciation is often attributed to general developments of the community, infrastructure, and population…
  • Offers stability and security as you have complete (to an extent) control over your home and can live there for as long as you would like to. You are in essence your landlord and would never “evict yourself”. Of course, you need to keep up with your financial obligations such as mortgage and property tax payments.
  • Gives you the freedom to customize your home by renovating it to meet your needs. This can be as simple as changing light fixtures, to remodelling your kitchen cabinets, and everything in between. You do not need permission from the landlord because once again, that would be you.
  • Can serve as a financial parachute in times of difficulty or future need for capital. Most homeowners would tell you that the ability to refinance their mortgage to pay for renovations, their children’s education, weddings, etc. has been a significant tool in helping them achieve those respective goals. After all, borrowing money via real estate (mortgage) offers the lowest costs to borrow when compared to the unsecured alternatives that exist. It makes it easier to get a lender to give you $100k with collateral vs $100k without collateral (unsecured and considered high risk).

As mentioned above and like most things, there are pros and cons to each of these options, but some of those items may not have a material impact on your decision-making process. For example, you notice that owning a home allows you to “customize your home” whereas renting your home may not afford you the same level of customization. However, this may not be important to you. Thus, it is inconsequential to your decision making and you would focus on the other elements that you feel are more applicable to your needs.

If you’re on the fence about purchasing or renting your home and just need to talk it out…that’s no problem, we’d be happy to talk you through each scenario and help you determine what fits your lifestyle. Give us a ring!  905-455-5005

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