The impact of a 1% rate hike

The Bank of Canada’s July 13th full artillery barrage reverberated across the community and in the international financial markets. Expectations of an inflation number of 8.3% to come, not seen since 1981, prompted the massive move by the institution. No-one predicted a 1% increase, with most seeing a 75 basis point increase as likely, and a few assuming a 50 basis point hike. Fiscal and inflation hawks welcomed the increase, seeing it as absolutely necessary given inflation continues to rise. Not since the economic and dot-com boom era of the late 1990s has Canada seen such a massive and sudden increase in the cost of money.

The impact of the hike was immediate for variable rate mortgage holders and borrowers. Prime rates went up in response, and therein so will the cost of servicing other pools of debt. Only fixed rate mortgage holders were spared from the increase. Some examples of mortgage cost increases reflective of the Jul. 13th hike are below:

  • $500,000 mortgage: $16,000 in new costs over 5 years
  • $750,000 mortgage: $24,000 in new costs
  • $1,000,000 mortgage: $32,000

On a modest $400,000 mortgage taken out over 25 years at 3%, monthly costs would come to just under $1,900 a month. But at 4%, these costs increase to over $2,100 a month. That $200 may not be much for a lot of people, but for many who are heavily indebted, feeling the effects of inflation, or stretched for income, it can make a massive difference in how they live. There are more and more stories of Canadians who took on floating rate mortgages now switching to fixed rate mortgages, even if it costs them more in the short term because of the anticipation of more rate increases being on their way. If you’re looking to change your mortgage and you’re self-employed for example, consider the options and flexibility of a private mortgage with Tembo in Ontario.

For years, Tembo has provided second mortgages to self employed clients who need access to their cash ASAP. Many of these clients need loans for debt consolidation, renovations, deposits for the purchase of a new home or something else. Tembo has helped hundreds of clients receive equity advances through private second mortgages often within 48 hours*. This is a great tool if you need your money quickly and don’t want to wait weeks or may not qualify with a bank.

Self-employment has been rising steadily in Canada since 2008, with 2.5 million self-employed Canadians then and almost 3 million recorded by Statscan just before the pandemic hit. Getting additional debt or a mortgage as a self employed Canadian can be complicated. Some banks require the purchase of default insurance ahead of any possible approval of a mortgage worth over 65-90% of equity. They can also require extensive documentation of at least two years of accounts and bank activity for self-employed people. If you’re self-employed and are in need of an equity advance, or any financial solutions through a private second mortgage, please visit and give us a call at 1-844-238-6717!

An ocean of buyers is waiting on the sidelines

Despite rates going up, inflation remaining high, and prices surging, the real estate market in Toronto and much of the GTA is still rock solid. While sales and listings are starting to fall, prices are still going up in the city. A recent Desjardins report warning of price declines of up to 15% in the outer rim of the GTA and in small town Ontario specifically cited that pieces in Toronto and the GTA would plateau or decline by extremely marginal amounts by the end of 2023. The resilience of the regional real estate market is tried and tested. Despite these conditions, there are a huge number of prospective buyers who are waiting for prices to decline so they can buy a home and enter the market. Nation-wide home values have increased by 50% over the past two years, numbers in hot markets like Toronto and Vancouver have been even more impressive. Even a hypothetical small 10% decline in prices in Toronto would be a fraction of what the gains have been recently.

Real estate projections for 2022 all went out of the window once inflation kept rising and rates were raised far too late in response. What was once a sellers market for ages has now started to shift toward buyers. Some are arguing that this is a negative and a harbinger of declining prices and less dynamism, while others are saying that this is a healthy rebalancing after almost a generation of sellers making consistent and ever higher profits. Tembo has repeatedly written about the vast number of prospective buyers who continue to build up their savings, lower their debt, and improve their employment prospects to qualify for healthy mortgages and to prepare for their final buy-in into the real estate market. The market is beginning to healthily shift toward those who can pay higher monthly payments with higher mortgage rates and who have solid jobs. These are people who were aspiring upper middle class members but who didn’t have enough down payments for solid properties in the downtown core given the immediate post-COVID boom in prices.

More and more of those waiting buyers are now apparently planning to wait even more, until September for example, anticipating further cooling or even some marginal price declines for some assets. Economists and realtors across the spectrum are commenting that the impact of rate hikes has been significant, but has sunk in faster than they had anticipated. A Senior Economist from Scotiabank made the following comments on rate hikes in an interview with the Globe and Mail: “The rate hikes were meant to remove some of the exuberance from the market, which they are doing – admittedly, however, they are doing so at a much faster pace than previously anticipated.” At the end of the day, there are little to no projections of big price declines in Toronto, and there is still a tremendous amount of demand waiting for the right moment.

Mandatory energy audits before home point of sale? Yes says Trudeau

High prices, bidding wars, and bank scrutiny for mortgage approvals all make buying a home a massive enterprise. Yet another hurdle will soon be added to the mix. The federal government is working on a potential energy-efficiency rating requirement for houses going on the market. Officials in the Dept. of Natural Resources are reportedly working on this proposal, which would see a mandatory energy performance audit of a home before the point of sale. Provincial governments would have to join in on and approve the program, as they have jurisdiction over real estate sales and housing development. The audit would likely include the posting of a property’s energy-efficiency rating on the house listing. A potential plus to this prospective green tape is the possibility that a high rating would increase the sale price and add equity to a home on appraisal.

The Liberal Party mentioned this initiative in their 2021′ campaign manifesto, under the name of energy-performance labelling. The Prime Minister is making this a personal priority, and has pushed the Minister of Natural Resources to include mandatory efficiency labelling under the national EnerGuide ratings system. The federal argument is that this measure is needed given that the ‘buildings’ sector accounts for 13% of national emissions. Developer stakeholder groups have called this proposal a bad idea that would increase costs in an unprecedentedly expensive market. In a housing market where costs are rising and red and green tape can slow down a sale or purchase, Tembo Financial can help accommodate refinances or purchase financing.

If you’re looking to draw on your equity to facilitate a purchase, pay out existing mortgages, or take advantage of a potentially lower interest rate, Tembo can help approve and cash out financing quickly. Tembo is faster than waiting for a bank to run through the motions, and we can help fund you if the bank or a B lender says no. We can approve your application quickly and can release funds within 48 hours – and we offer same day commitments – please visit and give us a call at 1-844-238-6717!

Toronto seizes the “Most Expensive” crown from Vancouver

It’s official: Toronto is now Canada’s most expensive jurisdiction for real estate. A recent RBC real estate report shows that the latest data has Ontario’s capital city as edging Vancouver out in the average price of a home. Toronto is at $1.260M to Vancouver’s $1.255M figure (as of Jan. 2022′). Average prices in Toronto rose by over $43K in January of 2022 alone – a 4.3% increase – a figure that in most real estate markets takes a year to materialize (on a good year). Detached homes are what buyers want most and prices for these commodities are soaring in the suburbs (30-40% increases are common). The same RBC report cites all of these fundamentals as cause for continued price growth for the foreseeable future.


One of the responses by Toronto City Officials to the housing mania has been the recent legalization of ‘garden suites’ on city lots. The City defines a garden suite as a “housing unit, usually located in the backyard of an existing house, but separate and detached from the main house. Garden suites, like laneway suites, are generally smaller than the main house on the lot. Garden Suites are often a way to create homes for family members – parents, grandparents or adult children – or can be used as rental housing units.”


The process for getting started: “With this amendment, people submitting a building permit application to build a Garden Suite will be required to post a public notice on the property. This move also facilitates the collection of data and monitoring of garden suites by the Toronto Building and City Planning divisions, similar to laneway suite construction.” Other moves by the city include:

  • permitting new types of accessory housing such as  coach houses
  • allowing more residential units in forms compatible with existing houses, such as duplexes and triplexes, where they are currently not permitted
  • and zoning to allow more low-rise housing options on major streets

More information on garden suites can be found here:

The official City ‘Garden Suites report’ is here:

Self-employed and need some cash? Tembo can help

Given economic and financial realities these days, Banks can be hesitant to provide second mortgages or additional debt to self employed people. For years, Tembo has provided second mortgages to self employed clients who need access to their home equity ASAP. Many of these clients need loans for a deposit for the purchase of a new home, to do home renovations or even pay debts from their business. Tembo has helped hundreds of clients receive equity advances through private second mortgages within 48 hours for years. The process is fast and simple and is a great tool if you need your money quickly and cannot access funds through a bank.


Another benefit of a private second mortgage is that it can massively boost your home value if  the funds are used for home renovations. Tembo has helped many clients accommodate renovations that have helped them net thousands more on the sale of their properties. This is an incredible tool in a housing market that has never been so short of supply and with such high demand for beautiful homes. Realtors and market experts are consistent in outlining that a remodeled kitchen and finished basement can add tens of thousands of dollars to the value of a home. Don’t lose out on the added equity Tembo can unlock for you in as little as two days*!


Self-employment has been rising steadily in Canada since 2008, with 2.5 million self-employed Canadians then and almost 3 million recorded by Statscan just before the pandemic hit. Getting additional debt or a mortgage as a self employed Canadian can be complicated. Some banks require the purchase of default insurance ahead of any possible approval of a mortgage worth over 65-90% of equity. They can also require extensive documentation of at least two years of accounts and bank activity for self-employed people. If you’re self-employed and are in need of a deposit advance, equity advance, or financial solutions through a private second mortgage, please visit and give us a call at 1-844-238-6717!

*Subject to qualification

How Bridge Financing Can Help Ontarians

What is bridge financing

Bridge financing is a short-term lending option that helps homebuyers bridge the gap between their old and new homes when their closing dates aren’t aligned. It is also an excellent short-term solution for buyers to arrange the mortgage financing for their new purchase.

Advantage to bridge financing

The advantages of bridge financing are that you can get the funds you need to close on your new purchase before your existing home sells. The bridge may also give you some money to do touch-ups or renovations to your home before listing the existing property for sale, or perhaps a deposit on your new home.

How does it work?

At Tembo Financial bridge loans are offered to clients without a lengthy list of criteria. We are able to assist clients with the funds that they need to bridge the gap between their purchase and their sale. Bridge financing works by putting a mortgage on your current or existing property, which then gets repaid once your property has sold and closed! With flexible payment structures available, you may not have to make any monthly payments!

Example of bridge financing

You are currently a homeowner at 123 Tembo Drive which is currently on the market for sale.  You accept an unconditional offer from a buyer for your current property, which has a closing date of September 18th for $750,000.00. Your existing home has no mortgage on it therefore you own it free and clear.

In the meantime, you’ve already placed an offer on a new property at 32 Two-way Crescent for $500,000.00, which is accepted with a closing date of August 4th, 45 days before the closing date of your existing home.

In order to close on your new purchase, you’ll need $500,000.00 on your closing date (August 4th), however you won’t receive the proceeds from your sale until September 18th. What do you do?

This is where bridge financing would be used, as you would take out a short term $500,000.00 loan for the 45 interim days between your purchase closing (August 4th) and your sale closing (September 20th). When your existing home sells on September 20th Tembo would get repaid from the sale of your home and therefore you would then own your new home free and clear.

This situation is quite common, as exact closing dates aren’t always possible. Bridge Financing is often difficult to obtain from a bank, especially if the gap is greater than 30 days.

Need an alternate, short term loan option? Tembo Financial can help!  Tembo offers this unique service to homeowners across Ontario and the GTA.  You could receive your money in as little as 48 hours with no credit check and no appraisal* for expenses that matter to you.  Don’t wait, start today!

*All bridge financing in Ontario is subject to credit and underwriting approval. Loan amounts and interest rates change based on each borrower’s situation. There are no guarantees that the outcomes from a bridge loan will be the same for all clients.

Higher Inflation or Higher Rates?

Two interesting and conflicting headlines on inflation and rate hikes came out recently. One suggests that the BOC will wait on rate hikes until later than expected to stimulate recovery, while another says that the BOC will hike earlier than anticipated to head off persistent inflation. Let’s dig in.

Millan Mulraine of the OTPP (Ontario Teachers’ Pension Plan) was quoted in Bloomberg espousing the former views. David Wold, a portfolio manager for Fidelity Investments was quoted in the Financial Post expressing the latter view. Mulraine sees hikes coming not in 2022, but in 2023, thus ensuring a “full economic recovery” that is “self-sustaining”. Mulraine sees inflation, and a good amount of it – more so than expected. Other economists at TD and National Bank see rate hikes at the end of 2022, slightly sooner than Mulraine’s trajectory. All of their analysis revolved around the timing of when the economy recovers the output that was lost from COVID – and thus when rates no longer need to be ultra-low.

Wold, on the other hand, is more anxious about inflation and supply chain issues. He sees these problems persisting for some time longer than the BOC expects, and thus views a rate hike in 2022 as a must. Wold believes the BOC’s models do not sufficiently take into account the structural changes in the economy COVID has created (serious labour distortions and very challenging supply chain problems). Wold also argues that “spare capacity” and potential increased consumption the BOC is counting on is being soaked up by higher prices. Wold is counting on hikes coming earlier than expected. The disagreement between these two analysts is an interesting example of a growing lack of consensus on the BOC’s inflation and rate predictions from experts.

How is Canada’s Economy Doing?

Overall, we’re holding fast. August saw 90,000 jobs created across the country (when lockdowns are lifted, jobs come back, when they’re imposed – we lose employment). Our unemployment rate is at the overall historic average, more or less, at about 7.5%. If one were to broaden the definition of unemployment to include those who are ‘underemployed’ – or want to work more hours but can’t – the real rate of ‘labour underutilization’ is at around 15%. This underscores the impact of COVID. The CBC recently reported on ‘labour underutilization’, a rarity for mainstream media.

Some parts of the economy are still slowly recovering from COVID – retail, restaurants, small business, and hospitality. Others are going ahead at full steam (tech., services, fintech.). Amazon Canada recently announced it was raising the average wage of its frontline workers to just under $22 an hour, and that it was in the process of recruiting 15,000 new workers across Canada. The company is also going to pay for up to 95% of the tuition of many of its workers in Canada, as it is increasingly doing so in the U.S., as part of its Career Choice program.

The really big news though, is that there are over 800,000 job vacancies in Canada. This is staggering considering the levels of unemployment and underemployment in the country. Labour shortages are being felt across all regions of the country and in a wide range of economic sectors, from restaurants, to hospitality, to primary industries, the list goes on. Job vacancies increased 22% from May to June, and will likely continue to do so. The business lobby complains that COVID related government benefits and supports are the cause, as people are making more money collecting these benefits than working – especially working part-time.

On The Bank of Canada’s Latest Thoughts (on the economy and interest rates) Part II

Inflation took up a lot of the statement, as was expected. Let’s summarize what the BOC said. First, they acknowledged that the inflation rate exceeds their band. It’s not at a level they’re comfortable with. They then point out that the big driver was gasoline prices, which collapsed at the onset of COVID, and have now returned to their more historic norm – this had a very big impact on the CPI. The BOC continues this point, arguing that many other prices which fell from a drying up of demand when COVID hit rebounded, taking another hit to the CPI metric. And finally, they then point to the international supply chain situation (bottlenecks, shortages, logistical issues, border closures, lack of raw materials, pullbacks in production, etc.). They point out that the overall supply chain complication had a big and fast impact on prices.

Overall the Bank’s logic and argument is strong and well thought out. They humbly admit that “we expect the factors pushing up inflation to be temporary, but their persistence and magnitude are uncertain, and we will be watching them closely.” This is an important sentence. The key point the Bank is making is that high gas prices, price rebounds, and supply chain concerns will all more or less go away by the second half of 2022, when they expect inflation to return to 2%. This is the big question. Finally, the BOC says that their bond purchasing program, or QE, will continue until the economy goes back to more normal growth and inflation subdues.

We can’t underscore how important this statement is, and how important the BOC’s next steps will be. If their analysis holds, we’ll have low rates continue, growth and inflation normalize, and a very comfortable landing from the difficulties of COVID. If their analysis and decision making is off, and if the boat is rocked, we may be in for some ongoing and longer term financial and economic difficulties. Fingers crossed.

On The Bank of Canada’s Latest Thoughts (on the economy and interest rates) Part I

In this blog, Tembo will dig into the BOC’s latest major statement to the media and the public from mid July, to try to understand the Bank’s analysis of the macro-economic situation Canada finds itself in. What the Bank does in the coming months and years will be crucial to how our economy and society fares at this point of our history.

First and foremost, the BOC is very optimistic and confident of medium to long term economic recovery. The Bank sees the worst of COVID behind us. It cites the overall resilience of the economy and the high efficacy of vaccines as key pillars of stability and strength. Despite these positive forces, the BOC still expresses some uncertainty over how ‘smooth’ the recovery will be, the course of the virus, and how international economic, virus, and financial conditions change. They have no crystal ball, and they don’t pretend that they do. The BOC does point to strong U.S. economic growth and stimulus, along with oil prices recovering as key forces which will benefit Canada and uplift economic growth here.

The BOC sees consumption as being the key domestic driver of recovery: “Some of the sectors hit by lockdowns, including retail, restaurant, and other hard-to-distance sectors, are already seeing a rebound, while others, like business and international travel, may take longer to recover.” The BOC makes the important point that there’s still half a million jobs that must be regained for us to return to pre-COVID levels, but also says that many businesses have optimistic plans to return to full capacity soon. The expectation is that we’ll recover those jobs as people continue to engage economic sectors most hit by COVID (restaurants, retail, bars, services, etc.)

The BOC remains confident that the rest of this year and all of 2022 will see strong, consistent, and sustained economic growth. If the BOC is correct, GDP will go up 6% this year, 4.5% next year, and just over 3% in 2023 – marking a healthy period of recovery ahead. Let’s hope they’re correct, we continue with Part II.