Greg Ero's Newsletter Sept 2025

Gregory Ero - Mortgage Consultant

Dominion Lending Centres

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

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Bank of Canada Lowers Policy Rate to 2.5%

By Dr. Sherry Cooper - Chief Economist, Dominion Lending Centres

The Bank of Canada lowered the overnight policy rate (for Variable Rate mortgages) by 25 bps to 2.5% as was widely expected. Following better-than-expected inflation report, the Bank believes that underlying inflation was 2.5% year-over-year.

Through the recent period of tariff turmoil, the Governing Council has closely monitored the risks and uncertainties facing the Canadian economy. Three developments triggered the Bank's rate cut. Canada's labour market softened further. Upward pressure on underlying inflation has diminished, and there is less upside to risk to future inflation with the removal of most retaliatory tariffs by Canada.

Considerable uncertainty remains. However, with a weaker economy and less upside risk to inflation, the Governing Council deemed that a reduction in the policy rate was appropriate to better balance the risks going forward.

"The Bank will continue to assess the risks, look over a shorter horizon than usual, and be ready to respond to new information."

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Fixed vs. Variable Mortgages: When Certainty Weighs Against Flexibility What’s Changing in the Market?

Tightening deals on both ends: While some of the most competitive fixed mortgage rates—like 5‑year terms edging under 4%—are fading, discounts on variable-rate mortgages are being trimmed too. Lenders such as CIBC and Scotiabank have offset less off their prime rate by about 10–15 basis points.Canada Mortgage News

Why the pullback? Lenders aren’t simply responding to swap or hedging pressures. Increased market volatility has prompted a cautious stance. Banks are trimming variable discounts in anticipation of possible abrupt rate moves, preserving their financial risk buffer.Canada Mortgage News

What’s Still in Your Favor?

Variable rates holding room to fall: Despite diminished discounts, variable mortgage rates could still offer long-term savings, especially if the Bank of Canada reduces the policy rate further.Canada Mortgage News

Bond yields setting pace for fixed rates: Fixed rates closely track bond yields, particularly the 5-year Government of Canada yield, which itself is influenced by U.S. Treasury movement. If global investor sentiment shifts, fixed rates could react quickly.Canada Mortgage News+1

Lending Strategy: Match Your Mortgage Type to Your Personal Profile Borrower TypeSuggested ApproachFlexible – Rate-WatchersVariable Rate: If you can absorb potential fluctuations and benefit from future cuts, variable is likely cheaper over time.Canada Mortgage News+1Cautious – Stability SeekersFixed Rate (3 or 5 years): Offers peace of mind with predictable payments. A 3‑year fixed can be particularly attractive in the current climate.Canada Mortgage News+2Canada Mortgage News+2Balance-OrientedHybrid Mortgage or Split Financing: This lets clients blend stability with optional upside—though some experts argue it may dilute the clarity of your financial bet.Canada Mortgage News Mortgage Penalties: Fix or Variable?

Fixed-rate mortgages usually come with steep penalties upon early break (Interest Rate Differential or IRD), which can bite hard if you refinance mid-term.

Variable-rate mortgages, on the other hand, often have much smaller penalties—typically only three months’ interest—offering much greater flexibility.Canada Mortgage News Reddit

How to Translate This Into Client Education

Explain the Current Market Forces:

Fixed rates are rising with bond yields.

Variable discounts are narrowing, shrinking savings—but not eliminating them.

Clarify the “Why”—and the Downside:

Lenders are guarding against unpredictable shocks.

Variable still holds upside if the Bank of Canada cuts rates further.

Help Clients Align Their Choice with Their Comfort Level:

Risk-tolerant? Show the long-term benefit scenario for variable.

Preference for consistency? Show the predictability fixeds bring.

Open to compromise? Hybrid structures—but with caveats.

Always Factor in Penalties:

Emphasize how variable mortgages can offer flexibility, especially valuable if life circumstances change.

In Summary for Clients:

Fixed mortgages offer stability—but often come at a higher cost and stricter exit penalties.

Variable mortgages, though seeing eroding discounts, still pose a cost-saving opportunity—especially if interest rates decline.

Selecting the best path depends on individual financial goals, risk appetite, and personal life plans.

Let me know if you'd like to tailor this messaging for different borrower profiles or include real-world examples to enhance clarity!

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Mom's 80th Birthday Celebration

We gathered together to mark my mom's 80th birthday. This was strictly a family affair, but we had extended family from across the world converge on Vancouver for the occasion. It turned out to be a very colorful and joyous event.

Very few people I know have had as profound a positive impact on the lives of people they meet as my mom. As a result, many in the community see her as their mother figure. Personally, her status has helped make my path smoother in everything from immigrating to Canada, to courting my wife to getting the first clients in my mortgage business.

With a strong combination of love, wisdom, elegance, multilingual education, community work and performing arts she managed to touch so many lives and attract numerous awards. There is no way I can ever pay her back let alone reach even a tenth of her achievements, but I pledge to use any opportunity I get to perpetuate her legacy in the ways I am able. So help me God. :)

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Passport Control

If a trip out of the country is coming your way, make sure you follow these two passport tips.

First, be aware of when your passport expires. Travel can be restricted if there is less than six months left on your passport. Renewing your passport can take longer than it should and there are options to obtain an emergency passport but best be prepared.

For international travel, passports generally need at least one blank page, but some countries may require two to four blank pages. The specific number can vary depending on the destination country's visa requirements. It's advisable to check the specific requirements of your destination country before traveling. Here's a more detailed breakdown:

One page: This is the minimum requirement for many countries, as it's needed for visa and entry/exit stamps according to Canada.ca.

Two or more pages: Some countries require more than one blank page. For example, countries that issue full-page visas or have strict entry/exit stamp requirements may need more blank space according to Travel Stack Exchange.

Checking with your airline: Some airlines may have their own policies regarding blank pages and may not allow boarding if you don't meet their requirements.

Checking with the embassy: According to Travel Stack Exchange, while some embassies don't specify exact numbers, it's always a good idea to check with the specific embassy of your destination country for their requirements.

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How to Prepare Your Home for Winter

Winter is a season that brings along chilly temperatures, snow, and icy conditions. While it is a beautiful time of year, it is crucial to take certain precautions and make necessary preparations to ensure that your home remains warm and cozy during this period. As you take the time to prepare your home for winter, you can not only protect your property from potential damage but also create a comfortable and inviting space to retreat to during the coldest months of the year.

Essential Tips in Preparing Your Home for Winter Heating System Maintenance

Schedule a professional inspection to ensure that your furnace or heat pump is in good working condition. Clean or replace air filters regularly to improve air quality and maximize efficiency. Consider installing a programmable thermostat to regulate temperature and save energy during winter. Additionally, ensure to stock up on sufficient fuel or arrange regular deliveries to avoid running out during the colder months.

Protect Plumbing and Pipe

Drain and disconnect outdoor hoses and shut off exterior water sources. Insulate exposed pipes to prevent them from freezing and bursting. In cold weather, allow faucets to drip slowly to prevent freezing. It is also advisable to know the location of your main water shut-off valve in case of emergencies. You may also insulate your water pipes if you’re planning to take a vacation during winter.

Check Your Roof and Gutter

Clean out gutters and downspouts to ensure proper drainage. Consider installing heating cables along the roof edges to melt ice and prevent the formation of ice dams. Inspect your roof for any damage or leaks and repair them promptly. Additionally, ensure the downspout is away from your home to prevent flooding and water damage. Installing gutter guards is a valuable investment as they can effectively keep debris out.

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My address is: Gregory Ero Dominion Lending Centres 20434 64th Avenue, Langley, BC V2Y 1N4 Langley and Edmonton, V4N 0Y3 Canada	Powered By HippoContact