17 Jul



Posted by: Peter Paley


In today’s low interest rate environment, a mid-term mortgage transfer could be an amazing way for you and your family to save thousands of dollars in interest.

Many borrowers don’t think they are able to transfer mid-term, however, it is possible.

To consider this as an options we need to make sure that it is in your best financial interests to pursue it.

When you break your mortgage at your current lender there will be a penalty levied.   The new lender will cover all of the fee associated with the switch but not the penalty.   The new lender will allow you to include up to $3,000.00 into the new mortgage term.  If your current mortgage penalty is greater than $3,000.00 you will need to cover that cost out of pocket.

How much can one save?

Well there are few factors to consider.

  1. What is the remaining balance on your mortgage?
  2. What is your current rate?
  3. How much time is left on your existing mortgage term?
  4. How much is your exiting mortgage penalty?


I want to offer up an example of a mid-term transfer that we just completed for one of our clients.
Clients had about 38 months left on their existing mortgage term.   Their rate was 3.19% with a remaining mortgage balance of $419,438.00.  Their current mortgage payments were $2,026  per month.  Their penalty was $3,675.00 (Please note that penalty amounts can vary widely depending upon your current lender’s policy).

We prepared the following calculation for them.

We were able to secure them a new mortgage rate of 2.09%.  We included $3,000 of their penalty giving them a new mortgage balance of $422,438.00.   The new mortgage is going to save them approximately $21,398 just in interest and they will pay an additional $7,000 in principal.  Please keep in mind this is on a comparison basis over a new 60 month term.  The clients had to pay $675.00 out of their own pockets to make the switch but the financial benefits were substantial.

If you would like to explore your mortgage options and see if a mid-term transfer is right for you, please contact us.

Peter Paley & Associates

15 Jul

Housing Market Continued Its Rebound in June and Early July – Dr. Sherry Cooper


Posted by: Peter Paley


Housing Market Continued Its Rebound in June and Early July


There was more good news today on the housing front. Home sales rebounded by a further 63% in June, returning them to normal levels for the month–150% above where they were in April when the pandemic-induced lockdown paralyzed the economy (see chart below). Data released this morning from the Canadian Real Estate Association (CREA) showed that for Canada’s largest housing markets, activity was strong. Sales rose 83.8% (month-over-month) in the Greater Toronto Area (GTA), 75.1% in Montreal, 60.3% in Greater Vancouver, 99.7% in the Fraser Valley, 54.9% in Calgary, 59% in Edmonton, 22.5% in Winnipeg, 34.8% in Hamilton-Burlington, 67.9% in London and St. Thomas, 55.6% in Ottawa and 43.6% in Quebec City. These m-o-m gains reflect the pent-up demand from what would have been a stellar spring housing season.

On a year-over-year basis, national home sales were up 15.2% in June.

Anecdotal evidence suggests that home sales continued to be robust in the first weeks of July. Daily tracking thus far this month indicates that activity has strengthened further in July.  According to Costa Poulopoulos, Chair of CREA, “realtors across Canada are increasingly seeing business pick back up”.


New Listings

The number of newly listed homes shot up by another 49.5% in June compared to the prior month with gains recorded across the country.

The national sales-to-new listings ratio tightened to 63.7% in June compared to 58.5% posted in May. There were only 3.6 months of inventory on a national basis at the end of June 2020 – a 16-year low for this measure.

Home Prices

The Aggregate Composite MLS® Home Price Index (MLS® HPI) climbed 0.5% in June 2020 compared to May (see Table below). Of the 20 markets currently tracked by the index, 17 posted m-o-m gains.

Generally speaking, prices are re-accelerating east of Manitoba, except Toronto for now. B.C. prices are also picking up except for Vancouver. Home prices are declining in Calgary, while elsewhere on the Prairies, prices are either flat or rising.

As usual, the price movements announced by the local real estate associations (for example, TREB in Toronto) were misleading because they are greatly affected by the types and sizes of housing sold during any month. The MLS® HPI provides a more accurate way to gauge price trends because it corrects for the changes in the mix of sales activity from one month to the next.

The actual (not seasonally adjusted) national average price for homes sold in June 2020 was almost $539,000, up 6.5% from the same month the previous year.

The national average price is heavily influenced by sales in the Greater Vancouver and the GTA, two of Canada’s most active and expensive housing markets. Excluding these two markets from calculations cuts more than $107,000 from the national average price. In the months ahead, the extent to which sales fluctuate in these two markets relative to others could have significant compositional effects on the national average price, both up and down.


Bottom Line

CMHC has recently forecast that national average sales prices will fall 9%-to-18% in 2020 and not return to yearend-2019 levels until as late as 2022. I continue to believe that this forecast is overly pessimistic. Here we are in the second half of 2020, and the national average sales price has risen 6.5% year-over-year.

The good news is that the housing market is contributing to the recovery in economic activity. While the course of the virus is uncertain, Canada’s government has handled the COVID-19 situation very well from both a public health and a fiscal and monetary perspective. You only need to look at the debacle south of the border to see how well we have done. The future course of the economy here will depend on the virus. While no one knows what that will be, suffice it to say that Canada’s economy is en route to a full recovery, but it may well be a long and bumpy one.

The Bank of Canada had its first meeting today with Tiff Macklem at the helm. The Bank of Canada said full recovery from the virus would take two years (more on that in the next email).



Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres


– Dr