27 Jan

What’s happened in 2021 so far?


Posted by: Gabriel Da Silva





It has been a newsworthy few weeks to start off the year and for all us wishfully thinking that we would ease into 2021, I think we can admit that we were mistaken. Fortunately, hockey is back and better than ever with an all Canadian division and re-established rivalries. Virtual lines are being drawn in the sand all across the country.

Rates and Curves

As we approach the conclusion of the second trading week of the year, the 5-year GOC and 10-year GOC currently stand at 0.44% and 0.83% respectively. The 5-year is up 7 bps in 2021 and 10-year is up 18 bps in 2021.

The idea of additional fiscal stimulus with the continuation of monetary policy has given this bond market selloff some serious momentum over the last few weeks. Although the outlook for near-term growth is dismal due to renewed lock downs in Ontario and Quebec, investors seem to be overlooking this fact and focusing in on vaccine distributions, economic growth and future inflation above what was previously expected.

Over to the credit curve, the 5-year CMB’s are currently yielding 0.70% and the 10-year is at 1.19%. Interestingly, spreads on the 5-year are down 3 bps from the start of the year over the risk-free Government of Canada bond while the bond yield is up 3 bps. A similar story with 10-year CMB’s as well – the bond us up 11 bps in 2021 while spreads are down 6 bps. This points to the demand and quality of CMB’s while overall yields on Government of Canada bonds continue to increase.

Canada Housing Trust (CHT) Issuance Levels

In 2020, CHT completed a total of $53.0 billion in CMB issuance, their largest annual borrowing ever. This included a reintroduction of the 3-year offering for the first time since March 2009 in addition to $15.0 Billion in the 10-year issuance bucket. For reference, 10-year issuance in 2019 totaled only $8.75 Billion. Moving forward, we hope to see similar large 10-year issuance sizes in order to continue supporting our clients seeking for 10-year mortgages.

During the heat of the first COVID wave, CMB spreads unsurprisingly widened out 25-30 bps however they ended off the year 5 bps tighter on the 5-year and flat on the 10-year which speaks to the excellent credit quality of the bond and covenant. Furthermore, consistent domestic demand and strong demand from US, Asian and Middle Eastern investors continue to help the strong performance of CHT’s bond issuance offerings.

In case you missed it

  • Unemployment is slowly creeping up and now stands at 8.6% vs. 8.5% last month. Relative to the pre-pandemic peak in February 2020, Canada currently has 574K fewer jobs.
  • Two 975 NHA MBS pools launched this week. The first being issued by Merrill Lynch totaling $642MM at a spread of GOC + 33. The second issuance was by Laurentian Bank totaling $341MM at the same spread of GOC +33. Maturities on both pools were December 2025.
  • The Bank of Canada has a rate decision next week on January 20th. It is widely believed that there will be no major change in rate. Should the BoC cut rates next week, this would most likely lead to an additional steepening of the curve. Be sure to stay one step ahead by reading our First National rate announcement commentary published on the same day.


Neil Silverberg, Analyst, Capital Markets

Jan 15, 2021

20 Jan

Bank of Canada Still Expects No Rate Increases Until 2023


Posted by: Gabriel Da Silva

The Bank of Canada, this morning, released its January Monetary Policy Report (MPR), showing they expect to keep overnight interest rates at its “effective lower bound” of 0.25% until 2023 (see chart below). To reinforce this commitment and keep interest rates low across the yield curve, the Bank will continue its Quantitative Easing (QE) program–buying $4 billion of Government of Canada bonds every week until the recovery is well underway. The central bank indicated it could pare purchases once the recovery regains its footing.

According to the Bank’s press release, “The Governing Council will hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In our projection, this does not happen until into 2023.” Officials are apparently optimistic about the economy’s prospects once the vaccine is sufficiently distributed and injected. There is no indication that they are planning additional measures to ease monetary policy.

This is particularly noteworthy for two reasons: 1) some economists had been speculating that the Bank would lower the overnight rate by 10-to-15 basis points to help mitigate the impact of continued and broadening lockdowns; and, 2) others thought the early development of the vaccine would trigger sufficient growth to warrant a rate hike in 2022. In the Bank’s current view, neither is likely to be the case. Why mess with a minute cut in already record-low interest rates when mortgage lending is still strong? The slow rollout of the vaccine and the mounting second wave of cases assure weak economic activity in Canada at least until the second half of this year.

As well, inflation remains surprisingly muted. In a separate release today, Stats Canada revealed that price pressures in Canada unexpectedly slowed in December as the country endured a new wave of lockdowns. After climbing to the highest since the pandemic in November, the latest reading shows price pressures are still well below the Bank of Canada’s 2% target. That’s consistent with the view from policymakers that inflation will remain subdued for some time.

The pandemic’s second wave has hit Canada very hard, and the vaccine rollout has been disappointing (see chart below). Today’s MPR predicts that the economy will contract in the first quarter of this year. Economic weakness could be exacerbated by the Canadian dollar’s strength, which moved to above 79 cents US following today’s BoC announcement. Ten-year yields edged up modestly as well.
Bottom Line

For the year as a whole, economic growth is expected to be around 4% in 2021, compared to a contraction of -5.5% last year. As the inoculated population grows, the Bank forecasts an acceleration in growth to just under 5% in 2022 and a more-normal 2.5% in 2023. According to the January MPR, “The medium-term outlook is stronger than in the October Report because of vaccines’ positive effects, greater fiscal stimulus, stronger foreign demand and higher commodity prices. Meanwhile, potential output has also been revised up, reflecting an improved projection for business investment and less scarring effects on businesses and workers. There is considerable uncertainty around the medium-term outlook for GDP and the path for potential output. Thus, while the output gap is expected to close in 2023, the timing is particularly uncertain.”

Concerning housing activity, the report said, “Demand for housing has continued to show resilience, despite increasing case numbers and tightening restrictions. Housing activity should remain elevated into the start of 2021, supported by low borrowing rates and resilient disposable incomes. Changes in homebuyers’ preferences have also played a role. For example, price growth has been strongest for single-family homes and in areas outside city centres,” shown in the chart below.


Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres


13 Jan



Posted by: Gabriel Da Silva

Bank of Montreal

Q4 net income: $1.58 million (+33% Y/Y)
Earnings per share: $2.41

  • BMO’s residential mortgage portfolio rose to $108.1 billion, up from $102 billion a year earlier.
  • The HELOC portfolio—63% of which is amortizing—rose to $35.9 billion from $33.8 billion a year ago.
  • Mortgage growth through proprietary channels, including amortizing HELOCs, was up 8% year-over-year.
  • 48% of BMO’s residential mortgage portfolio is insured, up from 42% a year ago.
  • The loan-to-value on the uninsured portfolio is 54%, down from 55% a year ago.
  • 80% of the portfolio has an effective remaining amortization of 25 years or less, up from 72% a year ago.
  • Net interest margin (NIM) in the quarter was 2.60%, down from 2.69% in Q4 2019.

Deferrals & Delinquencies

  • The 90-day delinquency rate “remains good” at 19 bps, with the loss rate for the trailing four-quarter period at 1 bp.
  • Gross impaired loans in the residential mortgage sector stood at 0.29% of the portfolio, down from 0.36% in Q3 but up from 0.28% a year ago.
  • The average credit score for clients with deferred balances is 721, and the average loan-to-value is 55%.

Source: BMO Q4 Investor Presentation

Conference Call

  • “The vast majority of what’s left on deferral is mortgages, so I don’t expect those delinquency numbers to actually change a whole lot,” said Pat Cronin, Chief Risk Officer. “I mean, we’ll watch it carefully as we go, but so far we’re seeing pretty good signs.”

Source: BMO Conference Call


Q4 net income: $1.02 billion (-15% Y/Y)
Earnings per share: $2.20

  • CIBC’s residential mortgage portfolio rose to $212 billion in Q4, up from $202 billion in Q4 2019.
  • Of the portfolio, $27 billion is from the Greater Vancouver Area (unchanged a year earlier), and $67 billion is from the Greater Toronto Area (up from $63 billion a year ago).
  • Of the uninsured portfolio, the LTV was 52%, down from 64% a year ago.
  • The bank reported $14 billion in originations in the quarter, up from $10 billion a year ago.
  • The bank’s HELOC portfolio ended the quarter at $19.5 billion, unchanged from the previous quarter and down from $21.2 billion a year ago.
  • Net interest margin in Q4 was 248 bps, down from 256 bps in Q4 2019.

Deferrals & Delinquencies

  • CIBC reported $2.7 billion worth of mortgage balances in deferral in Q4, down from $33.3 billion reported in Q3.
  • “The late-stage delinquencies of residential mortgages are down as we work with our clients who were not part of the deferral programs to bring their accounts current,” said President and CEO Victor Dodig.
  • Of the bank’s uninsured residential mortgage portfolio, 0.28% are in arrears by 90+ days, unchanged from 0.28% in Q3 and down from 0.29% in Q4 2019.
  • “Provisions were lower this quarter. However, we do expect to see impaired provisions trend higher and peak in the middle of 2021,” Dodig added.

Source: CIBC Q4 Investor Presentation

Conference Call

  • “We also continue to see positive momentum in our mortgage business in the fourth quarter with year-over-year spot balance growth of 5% and sequential growth of 2%,” said Dodig.
  • Asked about the bank’s prospects for growing its mortgage market share, Dodig said this: “You’ll recall that we said a year ago that our goal is to get our mortgage growth…performing consistently, and at the very least in line with market. If you look at our numbers quarter-over-quarter (and) sequentially over the course of the year, we are achieving that target. We expect to keep pace with the housing market as the housing market evolves and we certainly expect to keep pace with our competitors in terms of our investments and our mobile mortgage advisors and our product offering.”
  • Laura Dottori-Attanasio, Senior EVP and Chief Risk Officer, added: “…we’re very focused on the quality of our growth and the anchoring of our new clients. And so that will certainly help us on a go-forward basis…And while I tell you that we haven’t been as successful as I would have liked in terms of retaining some of our past vintage clients when they came up for renewal, I believe we’ve laid the groundwork to ensure that we get not just better retention on a go-forward basis, but better acquisition.”
  • Dottori-Attanasio acknowledged that the bank lost some market share this quarter compared to last, and is currently in sixth place in terms of market share. “What I would expect, and again, there’s movement from quarter-to-quarter, but that you will see a gradual improvement over the course of 2021,” she noted.

Source: CIBC Conference Call

National Bank of Canada

Q4 net income: $492 million (-18% Y/Y)
Earnings per share: $1.36 a share

  • The bank’s residential mortgage and HELOC portfolio rose to $76.3 billion in Q4, up from $70.4 billion a year ago.
  • The bank’s residential mortgage portfolio is 38% insured (71% in Alberta), down from 39% a year ago.
  • The average LTV on the uninsured mortgage portfolio was 58%, while the average LTV on the HELOC portfolio was 55%.
  • Quebec represented 55% of the mortgage book (unchanged from 55% from a year ago), while Ontario made up 27% (up from 26%) and Alberta 7% (down from 8%).
  • Net interest margin was 2.19% in Q4, down from 2.23% a year earlier.

Deferrals & Delinquencies

  • NBC reported $695 million in real estate secured loans (0.9% of loan balances) remaining under deferral as of Oct. 31, down from $3.7 billion in loans (5% of portfolio) as of July 31.
  • Insured mortgages represent 43% of remaining mortgages under deferral.
  • 98% of expired residential mortgage deferrals have restarted regular payments.

Source: National Bank Q4 Investor Presentation

Conference Call

  • “On the outlook, I would say that we’ve been successful at growing our balance sheet, while being disciplined on pricing and we will maintain that,” said Lucie Blanchet, EVP, Personal Banking and Marketing. “We will also continue to evolve our pricing methodology. Like for example, we introduced AI based modelling in the pricing of the mortgages. So we will continue to refine that and evolve that to other products.”
  • “…we had an excellent execution on mortgages in 2020. So, we had originations hit historical levels coming from the performance of our distribution channel and we’ve been able to improve the margins,” Blanchet added. “And at the same time, we absorbed more volume while decreasing our operational costs. So we really start 2021 with that strong momentum.”
  • Looking ahead, Blanchet said this: “We expect we will grow slightly lower than what we’ve achieved in 2020. And I think demand will still continue to be stimulated. However, we expect some slowdown in the resale market due to the slowdown in immigration, but also the concern around the supply potentially across the country.“

Source: NBC Conference Call

Royal Bank of Canada

Q4 net income: $3.24 billion (+1% Y/Y)
Earnings per share: $2.23

  • RBC’s residential mortgage portfolio rose this quarter to $293 billion, up 10.6% from $265 billion a year ago.
  • Mortgage volume was up 11% year-over-year.
  • The bank’s HELOC portfolio fell 5.4% to $78 billion from $81 billion a year ago.
  • 67% of its mortgages are uninsured, up from 65% a year ago. The average LTV on the uninsured portion is 51%, unchanged from 51% a year ago.
  • 90+ day delinquencies in the overall residential mortgage portfolio fell to 0.16% from 0.19% a year ago.
  • The bank’s uninsured mortgage portfolio has an average FICO score of greater than 804, up from 797 in Q4 2019.
  • Net interest margin was 2.56%, down from 2.76% in Q4 2019 “due largely to lower interest rates.”

Mortgage Deferrals & Delinquencies

  • As of Q4, $6.3 billion worth of loans were still being deferred, down from 84% from $39 billion in Q3.
  • RBC said it expected about 76% of its active deferral balances to roll off their payment arrangement by Dec. 31, 2020, “with a majority of the remainder to roll off by March 2021.”
  • “Of (RBC’s) active deferrals, less than 2% of the balances are uninsured with a current LTV greater than 80%. And the majority of those balances are in Alberta, which has seen a decline in home prices over the last few years,” said President and CEO Dave McKay. “While we do anticipate retail delinquencies to rise over the coming quarters as all deferrals roll off, at present delinquencies remain lower than our normal rate.“
  • RBC noted that approximately 2% of its deferrals have become delinquent, although a third were already delinquent prior to the deferral program. “This has resulted in a slight uptick in early stage delinquencies from the Q3 lows, said Graeme Hepworth, RBC’s chief risk officer.

Source: RBC Q4 Investor Presentation

Conference Call

  • “We continue to gain market share through our 750 strong mortgage specialists driving more new originations and an overall focus on client loyalty where we are seeing retention rates at nearly 92%,” said McKay. “While low interest rates will continue to support buyers, we expect mortgage growth to slow going forward as pent-up housing demand begins to cool.“
  • “In terms of specifically the mortgage business…we are pleased with our performance in 2020 despite kind of the extreme slowdown as the pandemic hit, we did really slingshot out of that and compete well, said Neil McLaughlin, Group Head, Personal and Commercial Banking.
  • Asked about the bank’s aggressive growth in recent years and prospects for continued market share growth going forward, McLaughlin said RBC is well-positioned to continue its momentum thanks to two key factors: “One, we have consistently grown our distribution capability. So we are looking for quality mortgage specialists. We set a really high bar. We don’t sort of staff up and then staff down. We are sort of always kind of growing that sales force. And we have over 1,700 mortgage specialists that are out connecting with clients.”
  • He continued: “The second piece in terms of really driving the growth and the market share is…We have really gone through and often felt we have optimized each part of that business. So from lead generation, lead conversion, how we get through adjudication, right through the fulfillment, we feel we started the year really firing on all cylinders and I think we are really well-positioned to come out of the pandemic and compete well. So that, and then I think good representation with our sales capability in the markets that are really growing in Ontario, B.C. and Quebec, where you are seeing the largest growth. So that’s what I really think is the sort of the fundamentals of our success.”

Source: RBC Conference Call


Q4 net income: $1.9 billion (+18% Y/Y)
Earnings per share: $1.45

  • The total portfolio of residential retail mortgages rose to $245 billion in Q4, up from $227 billion in Q4 2019.
  • Mortgage volume was up 6% year-over-year.
  • Net interest margin fell to 2.26%, down 15 bps from Q4 2019.
  • Scotia noted it added 300 sales professionals to Canadian Banking in advisory, mortgage and commercial to “increase customer service and cross-sell.”

Deferrals & Delinquencies

  • Mortgage loans that were 90+ days past due fell to 0.15% from 0.20% a year ago.
  • Scotia reported that just $3 billion in retail loans remains on its deferral balance as of Q1 2021, a decline of 96% from a peak of $74.3 billion in Q2.
  • “Our deferral exposure is skewed towards secured mortgage lending with low LTV,” said Chief Risk Officer Daniel Moore.
  • “We see strong deferral payment trends. We’re adequately provided to absorb net write-offs for the second half of 2021,” Moore added. “And we’re seeing our customers return to current status in line with or better than our expectations.”

Source: Scotiabank Q4 Investor Presentation

Conference Call

  • “The high levels of payment activity we saw in Q3 continued into Q4 as more customer assistance programs expired. 97% of our retail customers remain current in Canada,” said Moore.

Source: Scotiabank Conference Call

TD Bank

Q4 net income: $5.1 billion (+76% Y/Y)
Earnings per share: $1.60

  • TD’s residential mortgage portfolio was $211.7 billion in Q4, up from $200 billion in Q4 2019.
  • The bank’s HELOC portfolio rose to $94.5 billion from $91 billion a year ago.
  • TD’s residential real estate secured lending portfolio is 73% uninsured (up from 69% a year ago) with a 53% LTV for the uninsured portion (down from 54% in Q4 2019).
  • Net interest margin in the bank’s retail portfolio fell to 2.71% in Q4, down 25 bps from a year ago.
  • 52% of the bank’s residential mortgage portfolio is in Ontario (down from 51% a year ago), followed by B.C. at 19%, the Prairies at 17%, Quebec at 9% and just 3% in Atlantic Canada.

Deferrals & Delinquencies

  • Provisions for credit losses in Q4 were $251 million, down from $951 million in Q3 and $1.15 billion in Q2.
  • Gross impaired loans in the residential mortgage portfolio rose to 0.18%, up from 0.14% a year ago.
  • Mortgages under deferral fell by $41 billion from the previous quarter, and TD said “deferral terms have now largely expired.”

Source: TD Bank Q4 Investor Presentation

Conference Call

  • “In terms of deferral related credit impact, the significant majority of clients that have graduated from deferral programs are current with their payments,” said Chief Risk Officer Ajai Bambawale. “And graduated deferral delinquency rates are elevated relative to our broader portfolios, but remain within expectations.”

Source: TD Conference Call

Note: Transcripts are provided by a third party (Seeking Alpha) and their accuracy cannot be 100% assured.


Steve Huebl


7 Jan

How a CHIP Reverse Mortgage Can Help You Cover the Costs of the Holiday Season.


Posted by: Gabriel Da Silva

How a CHIP Reverse Mortgage Can Help You Cover the Costs of the Holiday Season.

As you’re undoubtedly aware, the holiday season can be a very expensive time. Not only are there gifts to buy, but there can be a host of hidden extra expenses – gift wrapping, postage, and more take-out meals than normal for a start.

It’s therefore no surprise that many Canadians find themselves struggling to afford these extra costs; many wind up paying for the holiday season with their credit card. According to a study by lowestrates.ca, 63% of Canadians expect to do this, with just over half of those carrying the balance into the new year.

And since credit cards have some of the highest interest rates around, they can easily lead consumers into a spiral of debt.  Today almost a third  of Canadians have outstanding credit card debt.

how a chip reverse mortgage can help

If you’re worried that you’ll overspend on your credit card this holiday season, the CHIP Reverse Mortgage could be for you. The CHIP Reverse Mortgage is a financial solution for Canadians over the age of 55 that allows you to access up to 55% of your home’s value in tax free cash.

The money can be used for whatever you want. This could include consolidating debt – including credit cards – renovating your home, or increasing cashflow at certain times of year, such as the holiday season.

Lower Interest Rates:

The CHIP Reverse Mortgage has a number of benefits over regular credit cards, with the first being lower interest rates. While credit cards can have interest rates between 12 and 23%, the CHIP Reverse Mortgage has rates of 4-7%.  If you are using a credit card and don’t pay it off in full, the holidays could cost you less if you used the funds from a reverse mortgage instead.

No Monthly Repayments:

Another advantage the CHIP Reverse Mortgage has over credit cards is that it doesn’t require monthly repayments. When you take out a Reverse Mortgage, you don’t have to pay anything until you leave your home.* Without the need for monthly debt repayments,  your monthly cashflow will increase, helping you avoid starting the new year with holiday debts to pay.

Cover the Cost of the Holidays for Years to Come!

The CHIP Reverse Mortgage doesn’t have to support your cashflow only this holiday season, but funds can be drawn on time and again when needed.

For example, say you initially took out the CHIP Reverse Mortgage for $25,000, then later down the road you wanted to enjoy some more of the cash in your home. Provided there’s enough equity left, you can take a subsequent advance of a minimum of $5,000 – all without repaying the initial amount first.  As with the initial lump sum, this money can be spent on whatever you want, whether that’s covering the costs of future holiday seasons, completing long wished-for home renovations, or supporting adult children with the down payment for their own home.

The holidays can be a stressful time, especially if you feel you have to use your credit card to cover the costs – costs which are often carried into the new year. With the CHIP Reverse Mortgage, however, you can pay for the holidays this year and for years to come, relaxed in the knowledge that you’re enjoying lower interest rates and don’t have to pay back what you borrow until you leave your home.

For further details and to see how the CHIP Reverse Mortgage can help you, please contact your DLC Mortgage Professional.

*You must continue to pay your property taxes and insurance and maintain your home in good condition.

Written By: Agostino Tuzi
Post Sponsored by HomeEquity Bank

7 Jan

Ultimate Checklist for Selling Your Home


Posted by: Gabriel Da Silva

Ultimate Checklist for Selling Your Home.

Selling your home can be an extremely stressful experience. Between thinking about moving logistics and financials, it’s easy to miss the small details in between the process.

With that in mind, we’ve built this checklist for selling your home to help you keep track of the things that will get a potential buyer interested. Turns out, it’s not as simple as just fluffing pillows or doing a light dusting. “Put your buyer’s hat on and walk through your home like it is the first time,” Marilou Young, an Accredited Staging Professional and an Associate Broker with Virtual Properties Realty in the metropolitan Atlanta area, told Forbes.

Below is the ultimate checklist for selling your home.


For home sellers interested in the history of the house, make sure you’ve got all the information handy; this can include paperwork on renovations, property tax receipts, deeds and transferable warranties.


According to HGTV, it can be helpful to do some market research on what homes in your area are selling for- then shave 15 to 20 percent off that. This way, you attract multiple buyers who can end up outbidding each other and bringing up the price. While that can seem like a risky move, it could work in the competitive markets of big Canadian cities.


You want potential buyers to see themselves in the space, which is hard to do if you have family photos on the wall or personal items around. This would be a good time to start putting items in storage or try to keep your personal items out of sight. At the same time, you’re also ensuring that you’re keeping your house tidy—a must if you want to make your home sellable. Check around the house for dirt, stains or small cracks you might be able to fix. And if you have pets, make sure their litter boxes and play areas are also clean and odour-free.


Realtors can be helpful to take some of the processes off your plate, including marketing your home and arranging open houses. If you do go this route, none of this list will matter if you decide to work with a realtor that doesn’t know the market inside out. You can search their name on the Real Estate Institute of Canada to ensure that they’re qualified, and meet with them to see if you mesh and understand how they price your unit. At Proptalk, we also have this handy guide for more details.


While presenting an unconditional offer may win you the home of your dreams, it can also end up costing you more than you expected. If you’re mortgaged to the max, you can’t afford surprises like repairs or replacements that you haven’t already budgeted for. Consider a Home Protection Plan that includes an 18-month warranty and up to $20,000 in warranty coverage for major household features such as foundation, roof, heating and cooling.


Published by FCT