Buying real estate now is the best protection against global uncertainty

As the world grapples with ongoing economic and financial instability, many people are wondering how to safeguard their investments and assets. In times of economic uncertainty, it is natural to feel hesitant about investing in real estate. However, buying property in Canada, particularly in Ontario, can be a smart decision, even in a volatile market and a crazy world. Here are a few reasons why.

First, buying real estate when prices are stagnating is a smart and effective way to enter the market. When the market is experiencing a lull, sellers may be more willing to negotiate on price, and buyers can take advantage of this by getting a good deal. In Ontario, for example, we’ve seen a bit of a slowdown in the real estate market in recent months, with some areas experiencing a big drop in home prices. This presents a great opportunity for buyers to enter the market at a more affordable price point. Recall what happened in the 2007-8 crisis. Home prices took a dive and activity started to dry up. Folks that took a risk and entered the market then benefitted from a trifecta of decent buying options, competitive pricing, and an environment that was accommodating in policy and interest rate terms. Folks that renewed their mortgages found themselves enjoying some of the lowest interest rates in Canadian history. Many of these homebuyers now have houses worth many times what they purchased them for.

Second, in times of long-term economic instability, policymakers are often forced to accommodate the real estate market. The government recognizes that a strong real estate market can provide much-needed stability in a shaky economy. As a result, policymakers may implement policies that support the housing market, such as low interest rates and mortgage incentives. This can make it easier for buyers to purchase property and incentivize sellers to put their homes on the market. We are seeing more and more federal, provincial, and municipal policies to support housing construction, stimulating savings for a home purchase, and more infrastructure investment. Support for Canadian banks is ironclad. All of this will confluence into bullish stimulus over the medium to long term that will lift prices.

In Canada, we’ve seen this type of policy accommodation in action. The Bank of Canada has consistently kept interest rates low over the past few years, making it easier for Canadians to purchase homes. It will go back to an accommodating posture as soon as it can and as soon as inflation gets back under control. Additionally, the government has implemented various incentives for first-time homebuyers, such as the First-Time Home Buyer Incentive and the Home Buyers’ Plan. These types of policies help to support the real estate market and encourage investment in property.

Third, Canada is well-positioned to weather the economic storm thanks to its abundant natural resources and commodity production. Even in times of economic uncertainty, there is always a demand for resources such as oil, lumber, and minerals. This means that Canada is able to generate revenue and maintain economic stability even when other sectors are struggling. We’re seeing huge government surpluses in the West. Alberta is back in the black. The higher the oil price goes, the more federal and provincial governments will have in their treasurer. Global uncertainty and high commodity prices favours Canada and hedges us against risk.

Fourth, Canada is projected to continue to experience high levels of immigration for the foreseeable future. This means that there will continue to be strong demand for housing in many parts of the country, particularly in Ontario. Immigration helps to fuel economic growth and drives demand for various goods and services, including housing. Our population is rising at an extremely generous clip, and this will push up demand for housing.

Finally, investing in real estate can provide a reliable source of passive income. By purchasing property and renting it out, investors can generate a steady stream of income that can help to cushion against economic instability. This can be particularly useful in times of economic uncertainty when other investments may be volatile. Buying a home now and renting out the basement in an environment where rental demand is soaring is a great way to recoup some of the high costs of entering the market.

Of course, investing in real estate is not without its risks. It’s important to do your research and understand the market before making any investment decisions. Additionally, the current global economic and financial environment is complex and unpredictable, so it’s impossible to know with certainty how the real estate market will perform in the coming months and years.

However, by keeping these factors in mind and working with a knowledgeable real estate agent, investors can make informed decisions and take advantage of the unique opportunities presented by the current market. In Ontario and across Canada, real estate continues to be a strong investment option even in the face of economic instability.

By taking advantage of stagnant prices, benefiting from policy accommodation, recognizing Canada’s natural resource strengths, acknowledging the benefits of projected immigration, and exploring the passive income potential, investors can successfully navigate the complexities of the real estate market and make informed decisions that will help to secure their financial future.

A snapshot of Federal finances under PM Justin Trudeau

With all the media talk on inflation, a potential recession, the need for the BOC to cut rates again, and the PSAC strike, Tembo thought it would be stimulating to provide an objective overview of the state of the federal government’s present finances. We do not take a partisan view, and are merely outlining the facts. We need to keep in mind that the federal fiscal situation has been heavily shaped by the eyewatering costs of responding to the COVID-19 pandemic. How these federal finances pan out in the coming years, however, will have a big impact on inflation, and on how quickly the BOC can get us back to 2-3% interest rates and the housing boom times we’re all used to!

The deficit

For 2023 it will reach $40 billion, up from the roughly $30 billion that was forecasted in an earlier fiscal update.

For the purposes of objective comparison, the Trudeau government inherited a $1 billion deficit from the Harper government in 2015, as per their own budget documents from the 2015-16 fiscal year.

A path to balance?

The 2023 budget does not explicitly mention a strategy of when the budget will go back to surplus. It was heavily criticized for this. The government is projecting the deficit to fall to $14 billion by 2027, but says little else on when federal finances will stabilize.

Total annual spending

Has hit $490.5 billion. That’s almost half a trillion dollars that the Federal government spends every year.

Annual federal spending was $298.3 billion in 2015-16, just over 8 years ago. That represents an increase in spending every year of over $192 billion dollars, or 64%.

The government also acknowledged that it overspent its own 2022 budget by $18 billion.

Debt

By the end of 2023, total net federal government debt will be $1.2 trillion. This is an increase of over $600 billion from the total $687 billion in debt the Harper government left behind. Much of this significant increase is a result of the COVID-19 pandemic.

In response to the global financial crisis, the Harper government increased the national debt by over $150 billion from 2008 to 2015 to fund stimulus budgets and accommodative fiscal policy.

Debt as a percentage of economic output (debt to GDP ratio)

The debt to GDP ratio outlines that size of total federal government debt in relation to total annual economic output. The ratio for 2023 will be close to 50%, up from 32% in 2015-16.

Although Canadian federal debt is very competitive and much lower than the debt of other advanced economies, we must keep in mind that these numbers only represent the liabilities of our federal government.

These figures say nothing about provincial and municipal finances. If you combine the total of our federal, provincial, and municipal public debt, Canada would rank as one of the most heavily indebted countries in the world.

Money spent on interest to service the national debt every year

This figure will hit $44 billion this year, and is expected to rise to $50 billion by 2027, up from the $25 billion spent on interest when the Trudeau government came to power 8 years ago. This is more than the government spends on defence, and over twice as much as Ottawa spends on equalization payments to poorer provinces.

In total, provincial and federal spending on interest payments will near $70 billion this year, up from $50 billion pre-COVID.

Revenues

Spending has soared, but so to have the revenues that the federal treasury receives. Revenues totaled $295.5 billion in 2015-16, and have since risen to $456.8 billion.

This represents an increase in spending of over $161 billion, or 54%, in 8 years.

Taxes

The government announced a slew of tax increases, set to come into effect on April 1st. These include:

  • Increasing the carbon tax to 14 cents per litre of gasoline and 12 cents per cubic metre of natural gas;
  • Federal alcohol taxes will also increase by two per cent;
  • A tax on share buybacks;
  • Taxation on dividends received by financial institutions;
  • And higher taxes on top earners and intergenerational business transfers.

A comparison with the U.S.

Compared to our southern neighbour, the Canadian federal government’s finances are peachy. For just the first half of 2023, the U.S. federal budget deficit will hit $1.1 trillion, or $1.49 trillion dollars Canadian. That’s almost 80 times what our federal government is projecting. That marks a $430 billion increase in U.S. annual borrowing from 2022 figures. The sky-high U.S. deficit is one of the main underlying causes of the elevated inflation in the U.S. and will grow even larger if the U.S. faces a recession and a subsequent fall in tax revenues.

A comparison of the world’s most indebted countries

The most heavily indebted countries in the world, when you factor in their debt-to-GDP ratios, are below. Keep in mind that Canada’s debt-to-GDP ratio is 110%, and the U.S.’s is 133%.:

  1. Japan – 257%
  2. Sudan – 210%
  3. Greece – 207%
  4. Eritrea – 175%
  5. Cape Verde – 161%
  6. Italy – 159%
  7. Suriname – 141%
  8. Barbados – 138%
  9. Singapore – 138%
  10. Maldives – 137%

Fears of international bank contagion are (slowly) easing

All eyes are on the European banks, especially Deutsche Bank – but in the U.S., extraordinarily quick moves by the financial authorities have calmed markets and facilitated restructuring. First Citizens, a bank holding company with some $110 billion in assets, recently concluded the purchase of a big chunk of the failed Silicon Valley Bank’s assets. First Citizens picked up some $72 billion in those assets at a massive discount for only $16.5 billion. The company’s shares skyrocketed by over 50% in the last several days. A big portion of the remaining SVB assets will remain in receivership for disposition by federal depositors. The deal was a show of confidence in the ability of the market to straighten out the damage that was done from the failure of SVB’s risk management approach and its recent record of bond purchases.

A key point is that what happened with SVB was not a crisis along the lines of the 2007-2008 subprime mortgage crisis. It was fundamentally a case of rapidly rising interest rates exposing the structural weaknesses of banks that saw the value of their debt securities fall. Weak banks were forced to sell and stomach big losses. Deutsche Bank’s shares have recovered from a 6 month low of 8.54 euros on March 24th to 9.30 euros by March 30th. Deutsche Bank has had a long record of restructuring, leadership challenges, and losses in recent years.

In January 2014, the bank reported a pre-tax loss of €1.2 billion for the fourth quarter of 2013, despite analysts predicting a profit of nearly €600 million. Revenues also slipped by 16% compared to the previous year. In 2015, Deutsche Bank’s Capital Ratio Tier-1 (CET1) was reported to be only 11.4%, lower than the median CET1 ratio of Europe’s 24 largest publicly traded banks, resulting in no dividends for 2015 and 2016. The bank also announced that 15,000 jobs would be cut.

In June 2015, the co-CEOs at the time, Jürgen Fitschen and Anshu Jain, both offered their resignations to the bank’s supervisory board, which were accepted. John Cryan was announced as the new joint CEO, effective July 2016, and became the sole CEO at the end of Fitschen’s term. In January 2016, Deutsche Bank pre-announced a loss before income taxes of approximately €6.1 billion for 2015, and a net loss of approximately €6.7 billion. Analysts predicted that the bank would need to raise up to €7 billion in capital to address an equity shortfall.

In May 2017, Chinese conglomerate HNA Group became Deutsche Bank’s largest shareholder, owning 9.90% of its shares. However, HNA Group reduced its stake to 0.19% as of March 2019. In November 2018, Deutsche Bank’s Frankfurt offices were raided by police in connection with investigations around the Panama papers and money laundering. The bank released a statement confirming it would cooperate with prosecutors.

In May 2019, CEO Christian Sewing announced that he was expecting a “deluge of criticism” about the bank’s performance and was ready to make “tough cutbacks” after the failure of merger negotiations with Commerzbank AG and weak profitability. In June 2019, the bank announced plans to cut 20,000 jobs, over 20% of its staff, in a restructuring plan.

In February 2021, Deutsche Bank reported a profit of €113 million ($135.6 million) for 2020, its first annual net profit since 2014. In March 2021, the bank sold approximately $4 billion of holdings seized in the implosion of Archegos Capital Management in a private deal, helping it emerge unscathed after Archegos defaulted on margin loans used to build up highly leveraged bets on stocks. Overall, Deutsche Bank’s string of controversies and structural weaknesses leaves it extremely exposed to rising interest rates, a weakening European economy, and international financial instability.

The Bank of Canada has come out indicating that it is ready to step in and defend Canadian banks if the European banking crisis spills into the country. The BOC has said it would offer liquidity to banks and pension funds if necessary to reduce anxiety and shore up financial stability. However, for now, the BOC is confident that the Canadian banking system is in sound shape: “The Canadian banking sector is in a quite different place than the regional banks in the U.S., but just in terms of the current crisis, our current assessment, although we are keeping a close eye, we don’t feel anywhere close to concerned in terms of financial system stress.”

How Silicon Valley Bank’s collapse might change everything

In just a few days, global financial and monetary conditions have dramatically changed. The collapse of the comparatively small Silicon Valley Bank (SVB) in California will likely have big implications for Ontario and GTA real estate – this week’s Tembo Financial blog will explain how. On March 10th, 2023, SVB experienced a bank failure after succumbing to a bank run. Too many of its clients rushed to withdraw their cash from deposits in the bank. SVB reported revenues of some $7.4B U.S. in 2022, a net income of about $1.5B, and some $180B in deposits. In comparison, TD Bank reported revenues of over $42B and made a very substantial $14.3B in net income in 2021 with trillions of assets under management (AUM). SVB was a small but profitable bank by North American standards, largely catering to the U.S. venture capital, tech., and start-up community on the West Coast.

When the pandemic hit, the tech. space saw massive booms in stock valuations and activity. Working from home and shifting to remote work required big investments in technology as companies and organizations rushed to adapt. This boom in economic activity coupled with fiscal and monetary stimulus resulted in huge cash reserves and deposits flowing into SVB. The bank decided to use this influx of deposits to buy large quantities of long-term U.S. bonds. At the time, U.S. bonds were paying pathetically low interest rates (coupons) given the ultra-low interest rate environment. SVB did what most banks do when they have large amounts of cash, they invest in safe assets – and what’s safer than U.S. Treasury bills? However, when the stimulus taps ran dry, and interest rates were increased, the value of all of those bonds fell given that newly issued bonds pay much higher coupon rates.

Tech-centric companies went scrambling for cash as economic activity slowed and interest rates rose, thus increasing debt servicing costs. Note the large number of significant layoffs that have been announced in the tech. space in recent weeks and months. Meta, the parent company of Facebook, recently announced an additional 10,000 layoffs to what was already hammered down. With SVB’s deposits evaporating, the bank was left with no choice but to sell its previously bought bonds at big losses to scoop up liquidity. In the days leading up to its eventual failure, SVB tried to raise money, borrow, and attempt everything possible to accommodate the large scale withdrawals that were continuing. In the end, the bank lost the confidence of the market, and was simply unable to continue. SVB was left with a large number of bad debts that it couldn’t cover. As a result, the bank’s financial situation rapidly deteriorated, and it was ultimately taken over by the Federal Deposit Insurance Corporation (FDIC).

The collapse of SVB had a significant impact on the Silicon Valley community, as many of the bank’s clients were start-ups and small businesses that relied on the bank for funding. The bank’s failure also highlighted the risks associated with the high-risk lending practices that were prevalent in the financial industry. The Federal Reserve and the U.S. Treasury responded to the failure of SVB by guaranteeing all deposits, even those above the insured limit of $250K. They also seized similarly sized Signature Bank in New York, fearing an identical bank failure caused by similar factors. The big worry is that contagion throughout the international financial system will spread and damage the global banking system and economy. Credit Suisse, a massive European bank, has already received a pre-emptive bailout of over $50B from the Swiss Central Bank given rumours that it is close to failing. All of this spells trouble, and no one knows who else is weak, or what comes next.

What does it mean for us?

The key word is contagion. It will remain to be seen if global financial institutions will escape from the contagion that many fear. If big banks start falling, there will be huge international financial implications that no one can predict. What we expect at Tembo is that the Fed’s interest rate hiking cycle will probably be over now. This will mean that the BOC will also look very carefully at protecting the Canadian banking system, enhancing monitoring, and preparing for worst case scenarios. Higher rates are going to be a very tough sell right now. We could begin to see interest rate cuts to take pressure off of banks. This is all hypothetical, but as the adage goes, the Fed hikes until something breaks. SVB was the sound of a bone crunching. There is now a potential that the BOC will cut rates by 25 basis points at its next meeting on April 12. The world we live in is so volatile that everything can change overnight.

Fed traders believe that rate cuts are now on the horizon, as the economy cannot accommodate higher rates anymore and the banking system is under extreme pressure. Expectations are that rates in the U.S. will fall to 3.8% by the end of the year. If central banks start cutting rates, they will be signalling that the fight against inflation will take a backseat to protecting the big banks. Going down that track will be inflationary, will result in higher bullion prices, and will likely be bullish for crypto. The hope is that downward inflationary trends are strong enough and sustainable enough to overcome a fall in interest rates. Time will tell. Lower rates in Canada could make the property price declines banks are predicting milder, and could lessen the chances of a recession. Let’s hope inflation keeps falling.

The BOC finally pauses on rate hikes, for now

The Bank of Canada finally decided to pause interest rate increases at its March 8th decision meeting. Markets did not anticipate a hike, and analysts who were hawkish believed a 25 basis point increase was as far as the BOC would go. The BOC’s decision is an acknowledgment of the positive progress that has been made to decrease inflation since the institution first raised rates in early 2022. There have been seven consecutive months of declining or stagnating inflation in Canada since June of 2022. Canada is in a good position relative to many of its partners, as there are economies that are continuing to wrestle with double digit inflation or rising inflationary pressures that have not been tamed. In contrast, Australia’s central bank just decided to raise rates for a tenth time, albeit to 3.6% vs. the 4.5% at home. Additional rate hikes in Australia are likely, as are more in the UK, the European central bank, and a few other jurisdictions.

In Canada, prices for a wide variety of goods, including food and fuel continue to either increase or remain stubbornly high. Milk, meat, egg, and gasoline prices are picking up or at unsustainable levels. The federal parliament held a committee hearing which saw the heads of Canada’s largest grocery companies held to account for why their firms have raised food prices so much. Grocery executives claimed that the main driver of their high profits was not inflation and price increases, but margins on medication and other goods. They argued that their margins were still low, and that they have resisted higher price pressures from suppliers while offering customers lower-cost brand options. The BOC has also touched upon this issue, saying that it will be forced to respond with higher rates if food prices don’t start to stabilize and fall within a reasonable amount of time. In truth policymakers are limited in how to stimulate a fall in prices. Fiscal policy is under pressure from deficits and high borrowing costs, tax cuts on gasoline would rob governments of revenue, and industry and suppliers are desperate for skilled labour. High immigration intake levels are in place and action on enhancing the skilled trades continues to build, but these efforts will take time to be felt by ordinary Canadians.

The truth is that there are deep structural imbalances within the Canadian economy that will take time to heal. These are issues which have been developing since well before the pandemic started, but which COVID aggravated. Skilled labour shortages in productive sectors have been a problem for decades, and are now reaching a crescendo. Supply chain dislocation and change continues. Trading partners around the world are facing similar obstacles. Countries are increasingly looking to secure their own supplies and talent at the expense of exports. The cost of capital has gone up. Large private, public, corporate, and household debts that have been built up over many decades are now expensive to service. Investors are increasingly cautious and uncertain of where to park their resources. Labour groups see this period as their chance to secure large gains for their workers in higher wages, greater security, and more benefits. The dynamic is complicated, multi-faceted, and deep. It is for these reasons that inflation, while declining healthily, is going to continue to pose structural problems. Despite the fact the BOC expects inflation to fall to 3% by mid-year if trends continue, we’d advise caution and preparedness for the unexpected. We’re not out of the woods yet, and that is a difficult truth but one that Tembo believes are clients and readers should be mindful of.

The good news is that despite the challenges of inflation and high prices, we’re at a point now where most surveilled economists believe rates will remain in place at 4.5% until the end of the year. The bigger problem that is emerging is the very real and pressing risk that the national economy will soon slide into recession. This would likely be good news for inflation, but would create a whole host of other obvious challenges. As Tembo has previously noted, GDP growth in Q4 of 2022 was 0% – economists had predicted a modest increase of 1.3%. The BOC has acknowledged this, and pointed to household consumption weakening as a driving cause (exactly what the BOC wants). Turning to the U.S., the latest data shows almost 80,000 layoffs announced across the economy in February 2023, a number not seen since January 2009 and the global financial crisis. 180,000 layoffs have been announced in the United States since the start of the year, a concerning number which fuels the recession narrative that is building. Another element of concern is that many high-level layoffs have been announced in sectors that have long been engines of growth (tech and big data). Jobless claims are surging in California and New York, key economic powerhouses.

At home, employment numbers that have been recently released have been extremely promising, despite growth slowing. Nevertheless, trends in the U.S. are critical for the Canadian economy and Tembo keeps a close eye on them. It will be interesting to see if layoffs continue to be reported in the U.S., and if they start to appear in Canada. The structural disparity of serious skilled labour shortages in many productive and goods producing sectors and layoffs in others is an interesting dynamic in today’s economy. Tembo will continue to inform its readers and clients of economic and financial trends and how they will impact rates and the real estate market.

The advantages of a private second mortgage with Tembo Financial

As a homeowner, there may come a time when you need access to extra cash for various reasons, such as home renovations, debt consolidation, or investing in another property. While there are several options available for obtaining the funds you need, one option that is often overlooked is a private second mortgage. Consider a second private mortgage with Tembo Financial, one of the leading private mortgage lenders in the Greater Toronto Area and Ontario.

A second mortgage with Tembo is a loan that is secured by your property and leveraging the equity you have in your home. When it comes to second mortgages, there are two main types: traditional second mortgages and private second mortgages. A traditional second mortgage is typically offered by a bank or credit union and is subject to strict lending criteria, such as credit score and income requirements. Getting approved for the additional capital of a second mortgage in this market is difficult, time consuming, and will require you to have relatively low debt, a high credit score, and stable employment.

Here are some of the advantages of obtaining a private second mortgage:

Home Renovations Can Help Increase Home Value For a More Profitable Sale

One of the primary advantages of obtaining a private second mortgage is that it can help you increase the value of your home for a more profitable sale in the future. By using the funds from the second mortgage to make improvements to your home, such as adding a new bathroom or updating your kitchen, you can increase your home’s value and potentially sell it for a higher price.

Pay Off High-Interest Debt

Another advantage of a second private mortgage is that it can help you pay off high-interest debt, such as credit card debt or personal loans. Since second mortgages typically have lower interest rates than other types of loans, consolidating your debt into a second mortgage can help you save money on interest and pay off your debt faster.

Improve Your Credit Score

Obtaining a private second mortgage can actually help you clear up any bad debt that you might have and can improve your credit score. This is important because your credit score is what lenders use to decide whether to give you a loan or even renew existing mortgages. So, by paying off any high-interest debt or bills that you have using the funds from the second mortgage, you can show lenders that you’re good at managing your money and responsible with your finances. This can make you look more attractive to traditional lenders in the future, which can help you get better terms and interest rates on loans. So, getting a private second mortgage not only gives you the money you need right now but can also help you set yourself up for financial success in the long term.

Buy an Additional Property While There Are Good Deals in the Market

Finally, a second private mortgage can also help you purchase an additional property while there are good deals in the market. This can be a great investment opportunity, especially if you plan to rent out the property or sell it for a profit in the future. A private second mortgage with Tembo allows you to avoid using your savings or line of credit to do this, and gives you added flexibility that is maximized by our fast approvals processes.

A recent article by the Globe and Mail outlined the increasing conservatism of the big 5 banks in issuing new mortgages, highlighting the important role private lenders like Tembo will play to provide folks with options. A recent article reports on the projected slower mortgage growth rates for Canada’s big banks in 2023. According to the report, several factors such as rising interest rates and stricter mortgage rules are contributing to the anticipated slowdown. The article notes that while the big banks have traditionally dominated the Canadian mortgage market, the slower growth rates are expected to provide an opportunity for smaller and alternative lenders to gain market share, particularly in areas such as private lending and non-prime mortgages.

The article points out that the slower growth rates are likely to have a significant impact on the housing market and borrowers, who may have to contend with fewer options and higher interest rates. Additionally, the article notes that the COVID-19 pandemic and its impact on the economy and housing market may further exacerbate the situation.

Despite the slower growth rates, the article emphasizes that the big banks are still expected to maintain strong profitability due to other areas of their businesses. However, the banks may need to adapt to the changing market conditions and consider new strategies to maintain their dominant position in the mortgage market.

Overall, the article provides insights into the projected mortgage growth rates for Canada’s big banks in 2023 and the potential impact on borrowers and the housing market. While the slower growth rates present challenges, they also provide an opportunity for smaller and alternative lenders to gain market share and for borrowers to explore new options for obtaining mortgages.

 

 

Beating the Banks: Why Private Mortgage Lenders Are Your Best Bet?

In today’s economy, getting a mortgage from a traditional big 5 bank can be a challenge. With slow approvals, strict lending criteria, and deep institutional conservatism on who to approve, it’s no wonder that many people are turning to private mortgage lenders to secure financing for their home purchase or refinance. In this blog post, we’ll explore why Tembo Financial is becoming an increasingly popular choice for people in Toronto, Vaughan, Richmond Hill, and across southern Ontario and the GTA looking for alternatives from the big 5 banks.

The Current Economic Context

Interest rates have gone up 8 times in less than a year, with the Bank of Canada expected to continue raising its key interest rate several times over the next year. While some believe that the BOC has maxed out its capacity to raise rates, keep in mind that inflationary pressures remain elevated and persistent. The economy is also running hot and January job numbers came in at 150,000 new jobs – a blockbuster number that is sure to be inflationary. This means that borrowing costs for traditional bank mortgages are likely to continue increasing, making it even harder for many people to secure the financing they need due to much higher qualification rates. For those who are already struggling to meet the strict lending criteria set by the banks, the prospect of higher interest rates can be especially daunting.

This is where private mortgage lenders come in – consider Tembo Financial for your 1st private mortgage instead of a lumbering big 5 bank. Tembo Financial is able to offer flexible and creative solutions that are a refreshing alternative to traditional bank financing, providing a lifeline for those who might otherwise be unable to secure a mortgage. Tembo is all about flexibility, fast approvals, and cash in the clients bank in as little as 48 hours, often with no credit check, and always  providing exceptional, award-winning customer service.

Why Choose a Private 1st Mortgage with Tembo Financial?

If you’re considering a private mortgage, it’s important to choose a lender that is always there for you, that will work with you to accommodate your needs and provide you with flexibility and creative solutions. We won’t take weeks to approve you. In fact, clients get approved in hours, often with no credit checks!.  Tembo Financial is a leading private mortgage lender in Ontario, with a reputation for providing fast approvals, flexible terms, and exceptional customer service. Here are just a few of the reasons why a private 1st mortgage with Tembo Financial could be the best bet for your home financing needs:

Competitive Rates: Tembo Financial is offering rates that are competitive 1st private mortgage rates. As we continue to grow and expand, we will continue to improve on our rate competitiveness and attractiveness. This is especially true for those who are unable to get approved for a 1st mortgage at a bank, as our lending criteria is simple and flexible, enabling you to secure financing if a big 5 bank says no, regardless of your credit rating.

Refinancing with a Bank: One of the key advantages of choosing a private 1st mortgage with Tembo Financial is that it can put you in a position to refinance with a bank later on. By building up equity in a home now, you may be able to qualify for a traditional bank mortgage down the road, giving you even more flexibility and options. If you have multiple sources of high interest debt that are eating up your income in payments and weighing down on your credit, you can use your Tembo private mortgage for a down payment on a home and to wipe out your debt. This option will often help to boost your credit score, simplify and consolidate your debt payments, and put you on the path to home ownership and home equity. It’s a win-win-win.

Speed and Customer Service: Tembo Financial is known for its fast approvals and exceptional customer service. You can call us anytime. We develop close relationships with our clients. We want you to succeed and maximize the use of services for your financial and real estate goals. Unlike traditional banks, which can be slow to respond, and difficult to deal with, private mortgage lenders like Tembo Financial are able to offer a more personal, responsive approach, making the mortgage process as stress-free as possible. We have helped countless customers settle on a mortgage option in the morning, and have money deposited into their accounts often within 48 hours from approving their application.

Flexibility: Tembo Financial offers more flexible terms and conditions than traditional banks. This means that you may be able to tailor your mortgage to your specific needs, whether you’re looking to pay off your mortgage faster, reduce your monthly payments, or make other changes to your financing structure. We’ll work closely with you on providing the best amount, loan period, and mortgage terms we can.

Ontario and Toronto Expertise: As a leading private mortgage lender in Ontario, Tembo Financial has a deep understanding of the local housing market and economic conditions. This means that we can offer tailored advice and support to our clients, helping them to make the most informed decisions about their home financing needs. We have clients who have retired and bought cottages in Peterborough use our private mortgages to avoid drawing on savings or credit for a down payment. We have helped countless customers renovate properties and sell them for a boosted profit. We’ve worked with real estate professionals and realtors on financing deals – all across Ontario. Whatever your situation is, we’ll be able to support you with our expertise and experience. Call us today! 416 238 6717

 

prive mortgage lender

Start off 2023 with a big credit score boost: consider Tembo’s debt consolidation loans

As a private mortgage lender in Toronto, we understand the financial strain that the holiday season can leave on our clients. After the festivities and expenses of the season, many people find themselves struggling with a significant increase in debt, which can be difficult to manage when combined with the rising costs of living in a stubbornly inflationary environment. This is especially concerning in the current economic climate where the possibility of a job loss due to a recession is a concern for many people. Having multiple forms of debt (at today’s high interest rates) in an unpredictable economic climate isn’t ideal. Tembo believes that private mortgages can be a valuable solution for those looking to consolidate debt and improve their financial stability. By consolidating multiple high-interest debt payments into one convenient, flexible loan, you can simplify your financial life and reduce the amount of interest you pay each month. This, in turn, will free up more of your money to pay off the principal of your debt, reducing the amount of outstanding debt you have and likely to help improve your credit score.

One of the biggest benefits of using a private mortgage for debt consolidation is the rapid improvement it can bring to your credit score. When you consolidate your debt into a single loan, you’re effectively reducing the amount of interest you pay each month. This will help you pay off the principal of your debt faster, which in turn will reduce the amount of outstanding debt you have. A lower amount of outstanding debt, combined with timely payments, will have a positive impact on your credit score, making it easier for you to get approved for loans from big banks in the future, including refinancing your mortgage. We have helped many clients who have reported tremendous and rapid improvements in the credit score after clearing their debt products with a private Tembo debt consolidation loan. Furthermore, improving your credit score through debt consolidation can help you take advantage of lower interest rates or access additional equity in your home. For many people, refinancing their mortgage can be a valuable way to free up cash, reduce their monthly payments, or even pay off their debt faster. By consolidating your debt and improving your credit score through a private mortgage, you can make refinancing a more viable option for your financial future. Nothing makes a prospective lender more attractive to a big bank than the quick clearing of multiple high interest debt products.

Our team of experienced mortgage professionals is here to help you find the right solution for your financial needs. We understand that every client is unique, and we’ll work with you to provide personalized advice and guidance to help you make an informed decision about your financial future. Whether you’re struggling with holiday debt or just looking for a way to improve your financial stability, we’re here to help. We are creative, flexible, and fast! Tembo’s speed and excellent customer service continues to serve our clients well and win us awards and recognition. In conclusion, if you’re struggling with debt after the holiday season, don’t hesitate to explore the benefits of a private mortgage for debt consolidation. By consolidating your debt into one manageable payment, you can simplify your financial life, reduce the amount of interest you pay each month, and can help to improve your credit score. Contact us today to learn more about how a private mortgage can benefit you. Whether you’re looking to refinance your mortgage or simply improve your financial stability, we’re here to help you make the best decisions for your future.

 

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Inflation is losing steam

In this week’s blog post, we’re going to focus on some solid and positive news. From June 2022 to December 2022, Canada has seen inflation decline, with just one month of inflation staying flat (October). The inflation rate is now at 6.3%, down from its June 2022 peak of 8.1%. Canadian inflation is now lower than the U.S., Singapore, Australia, Germany, and the U.K. Inflation in Argentina, Turkey, and Italy is at 95%, 64%, and 11.6% respectively; a snapshot of how bad the situation is in some industrialized countries. We’ve still got a long way to go, as inflation was at 5.1% in January of last year, but the December figure was very positive news. The BOC will want to see inflation return to its 1-3% range as soon as possible. Whether or not this decline is healthy enough, long enough, and sustainable enough remains to be seen – but the BOC should see the progress that’s been made as promising. Economists called the decline an “encouraging sign.” The big anchor that pulled inflation down in December was the fall in gas prices, which declined some 13% from November’s figures. The pace of food price increases has also thankfully begun to slow, very good news.

The BOC’s decision to hike rates by a further 25 basis points should add downward momentum to inflation. Some believe that the 25 basis point increase was necessary to help consolidate the reduction in inflation that we’ve seen. Economists are pointing to huge labour shortages pushing up wages as one of many factors which continue to contribute to the slower than desired pace of inflation falling. There are a good deal of experts who see this last rate hike as the final extent to which the BOC is willing to cool the economy and raise the price of capital. How the Bank of Canada makes its next moves will be important in judging how the real estate market will fare in Q2 and beyond. The Canadian economy is in mixed shape, and the latest rate hike isn’t going to help. with economists  warning that this could put hundreds of thousands of jobs at risk. The rate hike will likely lead to an increase in borrowing costs for businesses and consumers, which could slow down economic growth and lead to job losses. The rate has already been raised seven times since 2017, and each increase has made it more difficult for businesses and consumers to borrow money.

The rate hike could also lead to a decline in the housing market, as higher interest rates make mortgages more expensive. This could lead to a drop in home prices, which could hurt homeowners and the construction industry. The rate hike could also lead to a decline in the stock market, as investors are likely to pull money out of equities and move it into bonds, which are considered safer investments when interest rates are rising. The Bank of Canada’s rate hike could also have a negative impact on the Canadian dollar, as higher interest rates generally make a country’s currency more attractive to investors. This could lead to an appreciation of the Canadian dollar, which would make Canadian exports more expensive and less competitive on the global market. Overall, economists are warning that the Bank of Canada’s decision to raise interest rates could have a significant impact on the economy and job market. They are urging the bank to be cautious and consider the potential consequences before making a decision.

Don’t discount our strong real estate fundamentals

Yes, the market has turned to become more difficult for sellers, and inflationary pressures continue to put upward pressure on interest rates; but the underlying fundamentals to our real estate market are strong. Over the long term, price growth should return. That being said, the Bank of Canada has set an inflation target of 2% per year, and has historically been successful in keeping inflation within this range. The Canadian real estate market has experienced significant growth in recent years, and many experts are predicting that this trend will continue in 2023. According to the Canadian Real Estate Association, the national average home price is expected to increase by 3.6% in 2023, with the strongest growth occurring in the western provinces. However, it is important to note that the real estate market can vary significantly from region to region, and it is always a good idea to research local market conditions before making any investment decisions. One reason for the expected growth in the Canadian real estate market is the relatively low interest rates that have been maintained by the Bank of Canada in recent years. Low interest rates make borrowing more affordable, which can drive demand for housing. However, it is important to note that interest rates are expected to start increasing in the coming years, which could impact the housing market. It is always a good idea to consider the potential impact of interest rate changes on your mortgage and overall financial plan.

Another factor contributing to the strength of the Canadian real estate market is the country’s strong economic fundamentals. Canada has a stable political and legal system, and a diverse and resilient economy. These factors make it an attractive place to invest in real estate. The country’s GDP has been growing consistently in recent years, and unemployment rates remain low. These indicators suggest that the economy is in good shape, which can provide a foundation for a healthy real estate market. Demographic trends are also driving demand for housing in Canada. The country’s population is growing, and the number of households is expected to increase by over 1 million by 2023. This increase in households will drive demand for both rental and ownership housing. The rental market in particular is expected to see strong demand in the coming years, as more Canadians opt to rent rather than buy a home. As of January 2023, the state of housing starts in Canada is strong. According to the Canada Mortgage and Housing Corporation (CMHC), the annual rate of housing starts in Canada has been steadily increasing since the beginning of 2021, and is expected to continue to rise in the coming months. This trend is being driven by strong demand for housing, as well as a robust economy. The CMHC also reports that the demand for new housing units is being driven by sustained continued population growth and household formation, as well as a need for rental housing. The rental market in particular is expected to see strong demand in the coming years, as more Canadians opt to rent rather than buy a home.

There are also a number of government initiatives in place to support the housing market in Canada. For example, the First-Time Home Buyer Incentive program provides financial assistance to eligible first-time home buyers, which can help to make homeownership more accessible. Additionally, the government has implemented measures to help stabilize the housing market, such as tightening mortgage lending rules to ensure that buyers are able to afford their homes. It is important to note that there are also potential challenges on the horizon for the Canadian real estate market. For example, some experts are predicting that the market may cool off in the coming years due to rising interest rates and other economic factors. Additionally, there are concerns about housing affordability in some parts of the country, particularly in larger cities where demand for housing is high. Overall, the prospects for the Canadian real estate market in 2023 are positive, with strong economic and demographic fundamentals driving demand for housing. While there are potential challenges on the horizon, such as rising interest rates, the market is expected to continue to grow in the coming years. As with any investment, it is important to carefully consider your own financial situation and risk tolerance before making any decisions about buying or investing in real estate.