A Coronavirus Related Rate Cut?

News keeps building on the spread of the coronavirus around the world. South Korea has reported a thousand cases of the disease and over 50 deaths, with these numbers rapidly rising. The South Korean Government has responded by emulating the Chinese in quarantining whole cities.

Keep in mind that a little over a week ago South Korea’s coronavirus numbers were negligible. Cases of the virus have been reported across South Korea’s demilitarized border in the notoriously isolated North Korea – despite that country shutting down its borders, and even reportedly executing the infected. But the coronavirus is spreading well beyond East Asia. Iran is reporting a rapidly growing number of cases and deaths despite a negligible presence of the virus not long ago. Iran’s Minister of Health was recently seen delivering a press conference on the virus sweating profusely, coughing, and appearing weak – a sign of the severity of the outbreak, according to international media.

In Italy, the virus is rapidly spreading and prompting reported shortages of goods in stores and growing unease. These are the most high profile country cases of the global outbreak, with fear growing around the world, especially in Hong Kong, Taiwan, Japan, and Singapore. Over the last several days, media attention on the outbreak has become increasingly fearful and the apprehension has already hit international stock markets. U.S. markets are falling precipitously and experts are warning that the virus’ impact on international supply will be severe and widely felt. As we all know, China is the workshop of the world and the planet’s biggest exporter of goods ($2.5 trillion annually). Chinese companies are involved in the production processes of everything from steel to pharmaceuticals to computers to drones,. If Chinese factory output remains negatively affected by worker anxieties over the virus, global supply chains will be damaged.

In response to this intensifying and ongoing issue, financial experts and economists have already begun to call for the Federal Reserve to cut rates. The Wall Street Journal is following and reporting on the outbreak closely and featured an article where the rate cut argument was made. The front page of the paper ran a headline stating that the virus was beginning to take its toll on the global economy. The supply chain pressures experts are warning about have yet to be truly felt. The Federal Reserve is obviously monitoring the situation carefully and has not yet provided detailed comment on the virus outbreak. This goes for the BOC (Bank of Canada) as well. It is likely that if the severity of the virus continues to accelerate and if global markets continue to be negatively affected there could be a comprehensive international response – central banks acting in unison to stimulate the world economy. 

Bank Mortgage VS. Private mortgage

When arranging a mortgage for your home, you are faced with many options that may be confusing to you.

Tembo Financial offers solutions that can help you decide which is the best route to take.

Though there are several differences between a bank mortgage and a private mortgage, one of the biggest differences seen at Tembo Financial, is that the bank has certain qualifications, which you must fit in order to be considered for a loan. A private mortgage gives more flexible options and can suit different needs of clients.

Bank mortgages are offered to clients in which are currently employed, have a strong credit rating, and enough equity in their home.

Private mortgages however, have the ability to lend only based on the equity in the home, meaning it is possible for credit ratings to be lower, or for the borrower to be unemployed.

Tembo Financial is a private lender, that can offer flexible solutions to clients that don’t fit the tight mold of banks. Speak to one of our representatives today to see if a private mortgage is right for you!

Regulators are concerned about the real estate market – again

The activity we’re seeing the real estate market is raising red flags with federal regulators and the Bank of Canada. When the 2016-17′ boom reached its peak governments at all levels rapidly intervened to cool activity.

We all remember the introduction of the foreign buyers tax, tighter mortgage approvals, the mandating of mortgage insurance at certain levels, etc. These government interventions succeeded, eventually precipitating what was effectively a flat-lining of prices and a slowdown in demand. Once the shock subsided and the market adjusted, the recovery kicked in though, rendering the government action a grand delay. We’re now not far off from the 2016-17′ boom peak. The boom is back, and the apprehension is back with it.

Bank of Canada Governor Stephen Poloz summed up his opinion on the present status of the housing market with one word – “froth.” The BOC (Bank of Canada) notes that the rise is unsustainable and expects the market to naturally self-regulate if the rise in prices becomes excessive for prospective buyers. As always, the BOC is standing by to raise rates in the event that inflation and housing price growth becomes excessive. This is a worst-case scenario, and in many ways, softening national economic growth would spur the BOC to cut rates instead. The BOC will definitely monitor real estate stats closely in Q1 & Q2 2020 and will review its options if the housing momentum we’ve discussed intensifies. 

As for the provincial government in Queen’s Park, it is unlikely to interfere in the housing market in any way other than stimulating the growth in supply (cutting developmental approvals). The federal government is also limited in its capacity to address a hot market as it must balance affordability with controlling demand. A federal election is also soon on the horizon, which will see activity designed to increase supply and facilitate easier buying of housing, not the opposite. At the end of the day, if regulators and bureaucrats feel that the housing market is getting out of control they will move rapidly in concert with the BOC to add new measures, despite any political pressures. 

Galleria Mall is in the dustbin of history

The corner of Dufferin and Dupont is a working class, generally blue collar area not far from the mid-Toronto rail track. The area has always been busy, heavily transited, and Dufferin St. has continuously grown as a major north-south thoroughfare of the city.

The Dufferin bus route is one of the busiest in Toronto and use continues to grow. Two decades ago, houses in the area were extremely affordable and the neighbourhood was a major magnet for new immigrants while also being home to more established Italian, Portuguese, and Anglophone communities. Dufferin-Dupont was served locally by Galleria Mall, a 5 acre patch of retail and shopping locales. Galleria was built in the early 70s, and while regarded with affection by many locals, had a reputation as being run-down and outdated. The mall was a shadow of Dufferin Mall’s scale and shape just south of Bloor. Dufferin-Dupont’s close proximity to the Bloor subway line and the downtown and midtown cores and the Annex have benefited it greatly, and equity in homes in the area has soared, especially in the last 10-12 years. The gentrification of the area has been ongoing for some time, and young professional families have been moving in. But all of that is now intensifying.

Galleria Mall was bought in 2015 by Freed Developments and ELAD Canada, by September, ELAD took over total control of the site. The new owners spent years consulting the community and trudging through the regulatory, zoning, and approvals processes to have an ambitious and bold plan prepared. The derelict mall with considerable parking space will be transformed into a network of eight residential buildings with 3,400 housing units, 150 of which will be ‘affordable’,  considerable retail space and a redesigned and enlarged park space and community recreation centre. The new project will see 3.3 million square feet of space, up from the present 227K square feet. While the already significant congestion in the neighbourhood will only worsen, the project will likely spur further densification and gentrification in the area and will see many jobs and investment poured in. Galleria’s poor reputation and derelict condition at the time of the sale likely netted ELAD and Freed a good sale price. The area was once an aircraft manufacturing plant that was transformed into a car plant and then eventually retail and parking space. Construction of the project will take a decade to complete.


Buttonville Airport is going for sale!

Buttonville Airport is a privately owned, public airport just north of Markham. It covers over 170 acres of the primest of prime suburban 905 real estate. The airport is a half hour drive from downtown Toronto and is just east of Highway 404, Buttonville’s strategic proximity to the rapidly growing GTA and the massive growth in air traffic over the last several decades helped transform the site from a ‘grassy strip’ to the largest, most dynamic privately owned airport in the nation. 2018 saw the airport achieve just over 44K aircraft movements, down from over 80K in 2014. In comparison, the large publicly owned Billy Bishop Airport in downtown Toronto has aircraft movements over 125K. In 2009, the family who then owned the airport announced that they wanted to initiate a broad redevelopment of the site into a mixed use commercial, retail, and residential development. This was highlighted as a golden opportunity to unlock tremendous value for a huge tract of strategic real estate. The family sold in 2009, forming a ‘partnership’ with Cadillac, and the price has not been disclosed, but the value of the undeveloped acreage was believed to be worth between $100-150 million at the time.

Cadillac’s plan would have created 10 million square feet of overall multi-use space worth billions. In comparison, the total size of the Yorkdale Mall is just under 1.9 million square feet of retail space. 6-7K new residents would have been accommodated, generating tremendous property tax revenue for the City of Markham. At least a dozen mid and high rise towers were to be constructed. In all likelihood, the ambitious scale of Cadillac’s strategy would have made the airport family billionaires. However, the immense rezoning work required to approve the project was never completed. The deal was shifted off to the Ontario Municipal Board, but negotiations involved too many stakeholders and too much work. Delays kept pushing back the project. The uncertainty and complexity of the project proved too cumbersome for Cadillac and it appears the partnership have now agreed to wash their hands of the property and to put up the holdings for sale.

The sale will create opportunities but also challenges. Significant corporate jet traffic uses the airport and will have little room to transition to as Billy Bishop is limited in its traffic and Pearson is bursting at the seams. The sale will likely up pressure on the federal government and federal transportation regulators to finally and definitively approve construction of Pickering Airport. The GTA is growing to the extent that a second international airport will be necessary, barring that, Pearson will have to be rapidly expanded. Pickering Airport’s construction will intensify development in Durham Region, create many jobs, and spur additional construction, rezoning, and densification. The recently elected Mayor was strongly supportive of airport construction and won election with over 60% of the vote on a pro-build campaign.


Rents are roaring!

The latest data by Rentals.ca and Bullpen Research and Consulting shows that the average rent for a one-bedroom apartment in Toronto has hit $2,300, with a two bedroom going for just under $3,000.

Nationally, average rents shot up by 4.3% over the last month, twice the right of inflation. 2019 was a blockbuster month for rent increases, with Toronto hitting 9%, Montreal at 25%, and Vancouver at 11% rent growth. Montreal’s strong economy, Quebec’s strong public finances, and significantly lower prices than Toronto and Vancouver are all powerful factors transforming Montreal real estate. The average rent in Montreal is now $1,350, which would be considered a miracle bargain in Toronto, and in Vancouver, average rents are $1,940, still much cheaper than Toronto.

Toronto’s two-bedroom monthly rent average is now greater than the monthly mortgage payment for a $550,000 TD fixed rate 3.2% mortgage amortized over 25 years ($2,833). 550K can buy you a small condo in Toronto if you can snag it (likely not in the downtown core though). An analysis of average rents nationally shows some interesting numbers. Rents across southern Ontario are exceedingly high. Oakville is at $2,100 a month, Richmond Hill and parts of Northern Toronto are at $1,800-$1,900 a month, and Hamilton is at $1,500. These are all figures for one-bedroom units. The cheapest one bedroom rent in southern Ontario is in Kitchener and London, with $1,100 being the rough average. The cheapest rents in the country are in St. John’s, Newfoundland at $885.

The projection for this year isn’t rosy for renters. Rents are expected to rise by 3% overall in the country and 7% in Toronto. One area where there has been a fair increase in supply in Toronto has been midtown but rents there are high and most of the supply stock is new condo development. Cheaper, more traditional rental buildings have availability in short supply and getting approved is especially difficult for prospective renters with low credit, weak employment opportunities, or poor connections. The supply and demand picture is not expected to shift dramatically to change these trends, and rents will continue to surge.     

What’s in the deal Trump signed with China

As the bombastic rhetoric turned to tough actions, the criticism, surprise, and even fear started to set in. Candidate Donald Trump was laughed at for his tirades against the Chinese winning at the expense of Americans, at the strong intent for the imposition of tariffs, and for his claims that he would ‘punish’ China. But as Candidate Trump got the keys to the White House on the backs of millions of middle class and blue collar Americans who saw little improvement to their respective bottom lines under President Obama, so came power and the opportunity to act. And act he did.

For the last two years, China and the USA have been embroiled in an economic and commercial trade war. Few predicted that the President would be as aggressive and consistent in the decisions he took to both initiate, and escalate the trade war. He went as far as firing senior economic advisers who disagreed with him, and has even taken criticism from the U.S. Chamber of Commerce – a body that is generally pro-Republican, Globalist, and keen on deep and profitable Sino-U.S. ties.

But after two years of tit-for-tat back and forth actions, we now have what appears to be a ceasefire and deal to ease tensions and begin to resolve the underlying conflict between the two countries. What’s really in this deal? What does it mean? And who are the real winners? Let’s take a look.

  • The stock market and the President will benefit from the deal. Stock market euphoria will continue and the President will appear to be serious, assertive, and successful in winning ‘concessions’. Investors will applaud the erosion of tension, return of stability, and the reduction in the risk of increased escalation.  


  • U.S. consumers remain losers, as many tariffs that they are paying for in the form of higher costs for Chinese products and services will remain in place. U.S. farmers have seen a record increase in bankruptcies as they have been cut off from one of their biggest customers. A $28 billion bailout has been paid out to them given the costs of the trade war. There is extreme skepticism on the Chinese honouring the $200 billion in increased buying for products and goods that is in this deal.
  • The big winners in the deal are U.S. financial corporations. They will gain new access to parts of the Chinese market that they haven’t had previously. U.S. firm will now have the capacity to sell products and financial services to the 1.4 billion market of Chinese. This is a huge win for Wall Street. It remains to be seen if the opening up is as smooth and comprehensive as the deal suggests. US firms have long complained that while they have access to China, they are treated unequally and at times unfairly by China’s legal system and some regulators. 


Overall, the big winners with this deal are the President and his Wall Street counterparts. The Chinese win a reprieve in the trade war and a reduction in tariffs. 

Can you be denied a mortgage renewal?

Worried about being denied a mortgage renewal? Read this article to learn about reasons why your mortgage renewal could be denied & what to do about it.

Being denied a mortgage renewal is possible and there are many reasons why this may happen. If you have been late to make a payment, or are not in good standing with your lender, it is possible that they will not want to renew.

Many banks will often auto renew your mortgage if you are in good standing and have made all required payments on time. Even private lenders will often auto renew your mortgage. Private lenders will often charge a renewal fee, but this is up to the discretion of the lender.

If you are worried that your lender isn’t going to renew your mortgage, contact a representative at Tembo Financial. This may be a fast and easy solution to finding a lender to renew your mortgage!

Power of Sale: What is it and how to stop it

Power of sale can make it seem like you’re not in control of selling your home. Read this article to learn what it is & how to stop power of sale.

Power of sale allows your lender to sell the subject property and be repaid from the proceeds of the sale. This often happens when clients miss payments, are late on payments, or their mortgage has matured and is not getting renewed. It is up to the discretion of the lender to take action for power of sale. Many lenders that are not repaid on time are forced to use these measures. What many people don’t know, is that this process is able to be stopped in its tracks, before it’s taken too far.

Having your home sold under power of sale comes with a stigma. Often times people think that they can take advantage, and offer lower prices because of the way power of sale is structured. Instead of going through the process of power of sale, Tembo Financial can repay your mortgagee that is putting you through this, and have you sell your home as you normally would.

The benefits of this are that you are in control. Rather than putting something as important as your home in the hands of someone that you may not trust, you are given control to sell your home.

Don’t let your lender decide what your house sells for. Taking a mortgage with Tembo Financial will give you the time you need to sell your property and pay out your current lender.

Employment in Toronto

Toronto’s economy supports 1,569 million jobs. 1,178 million are full time and 390K are part time. The average wage of a full time worker in Toronto is just over $60,000. Job growth in Toronto has been healthy and consistent for over two decades.

Throughout the mid to late 1980s, Toronto saw impressive economic growth, real estate appreciation, and strong performances by financial firms and pension funds. Employment reached a peak of 1.4 million in 1989 and then fell to under 1.2 million by 1997 as the real estate bubble burst and the early 90s recession kicked in and ran its course. A recovery followed, buoyed by the dot-com bubble. Since 2010, however, the rate of employment growth has been rapid and consistent year-on-year.

The institutional sector is seeing significant job growth. Universities, Colleges, private education employers, and hospitals have collectively added 17,000 jobs in the City in the last two years. Growth is at three times the rate of inflation in the institutional sector. Office jobs went up by 23,000 in the last two years, while the rate of growth over the last five years was 16.7% in that space. This impressive job growth underpins the ambitious construction of commercial office projects throughout the City that Tembo has outlined in numerous blog posts. It is driving a very low commercial vacancy rate which has been falling for many years and which sends a clear signal to developers on opportunities in the market.

Manufacturing, retail, community and entertainment, and the service sector all saw gains but these were mode modest than the office and institutional sectors. There are over 77,000 businesses in Toronto, up from a decade ago but lower than its absolute peak of just under 85,000 in 1990 at the height of the late 80s boom. 48% of Toronto jobs are office jobs, with the institutional sector coming in at number 2. Health care and financial service jobs are seeing the biggest gains in the last five years. Obviously, most of the jobs are in the downtown core.