Greg Ero's Newsletter May 2025

Gregory Ero - Mortgage Consultant

Dominion Lending Centres

mortgageprofessor@outlook.com
778-891-4734
http://www.mortgageprofessor.ca/

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Will the Bank of Canada reduce it's overnight rate on June 4th?

The consensus forecast for the Bank of Canada (BOC) rate is a hold at 2.75% for the remainder of 2025, with a potential for further rate cuts in 2026. However, some forecasts suggest two more 0.25% cuts by the end of 2025, bringing the rate down to 2.25%, while others predict three cuts to 2.00%.

Once the headlines go up on June 4th, as always I expect to receive some phone calls asking about "the new mortgage rate of 2.75%" LOL! This is a common misconception because the news outlets assume everyone understands that the BOC "overnight rate" is the rate at which banks borrow money from the govt, and not the rate that the banks charge their customers.

Also the overnight rate only impacts variable rate mortgages. Fixed rates are determined by a different set of dynamics.

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What the 2025 Canadian Election Means for Real Estate: A Bright Outlook Ahead

Canada's recent federal election has ushered in a renewed sense of optimism for the real estate market, signaling a promising future for buyers, sellers, and investors alike.

A Renewed Focus on Housing Affordability

Under the leadership of Prime Minister Mark Carney, the Liberal government has reaffirmed its commitment to addressing Canada's housing challenges. The 2024 federal budget introduced ambitious plans to build 3.87 million new homes by 2031, including repurposing federal office spaces and leveraging Canada Post properties for residential development. Additionally, a $15 billion investment in rental construction aims to create 30,000 new rental units, easing the pressure on the rental market. (The Latest: Canadian Prime Minister Mark Carney's Liberals win election, The 2024 Canadian Federal Budget: Breaking Down the Real Estate Impact)

Support for First-Time Homebuyers

Recognizing the hurdles faced by first-time buyers, the government has implemented several measures to enhance affordability. The maximum mortgage amortization period has been extended from 25 to 30 years, reducing monthly payments. Furthermore, the Home Buyers' Plan RRSP withdrawal limit has increased from $35,000 to $60,000, providing greater financial flexibility. (Canadian Real Estate Market Outlook: 2024-2025 - Blog sur l'immobilier et les prêts hypothécaires- Nordest.ca, The 2024 Canadian Federal Budget: Breaking Down the Real Estate Impact)

Strengthening Renters' Rights

For renters, the introduction of a Canadian Renters' Bill of Rights and a $1.5 billion Rental Protection Fund aims to preserve affordable rental units and safeguard against unfair rent hikes and "renovictions." These initiatives are designed to ensure that renters have stable and secure housing options. (The 2024 Canadian Federal Budget: Breaking Down the Real Estate Impact)

A Positive Market Outlook

The Canadian Real Estate Association reported a 26% year-over-year increase in home sales in November, marking the second consecutive month of significant gains. With anticipated interest rate decreases and supportive federal policies, the housing market is poised for a robust year ahead. (Canada’s housing market to see comeback in 2025)

As we move forward, these developments indicate a more accessible and balanced real estate market, where Canadians can find homes that fit their needs and budgets. The government's proactive approach to housing affordability and support for renters and buyers alike lays a solid foundation for a thriving real estate landscape in 2025 and beyond.

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Explaining Mortgages to a Class of 6 year olds

Parents of Eden' Grade 1 class were invited to make presentations about what they do for a living. I do mortgage presentations often, but this one was by far one of the most challenging. How do you explain to 6 year old kids what a mortgage is? I wondered.

After bouncing ideas off people, I realized that all kids of that age know what piggy banks are. So I made up an exciting storyline supported by animations and props with the following main takeaways:

1. I help people buy houses by giving them piggy banks full of the money needed to buy the house

2. BUT I also give them a 2nd piggy bank with no money in it. They would need to put some money in it every month. That's called a "Mortgage Payment!"

3. One day, they would have to give back the piggy bank once they've saved enough in it to pay back the money that was in the 1st piggy bank

Then I said: "The piggy bank I give that contains money is called a mortgage! Repeat after me! MORTGAGE they all said excitedly.

Every kid went him with a branded piggy bank and a $2 coin inside it. Hopefully that gets them started saving towards their 1st home. :)

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Understanding Mortgage Penalties

Many homeowners—especially those without a mortgage broker—don’t fully understand mortgage penalties. And I get it! Financing a home can be overwhelming. But if you’re considering refinancing, selling, making a lump sum payment, or need a way out, read this first.

Top Home Upgrades to Boost Your Property’s Value

“Spring has a way of bringing everything back to life, even a broken heart—or a dated, messy house.” ~ Willie Nelson (roughly interpreted)

Spring is typically a busy season for the housing market in Canada.

Whether you’re looking to sell or help your home bloom where it’s planted, these value-add ideas will be worth putting on your to-do list. We’ve sorted the chores by cost so you can consider your budget first and foremost.