15 Oct

Stronger Than Expected Canadian Jobs Report for September Reduces the Chances of a 50-bp Rate Cut on October 23

General

Posted by: Tim Woolnough

Stronger-Than-Expected September Jobs Report Reduces Prospect Of Larger Rate Cuts
 

Statistics Canada released September employment data today, showing a marked uptick in job growth and the first decline in the unemployment rate this year. Employment rose by 46,700 in September, following four months of little change.

Despite the employment gain, the employment rate—the proportion of the population aged 15 and older who is employed—fell 0.1 percentage points to 60.7% in September. The employment rate has been on a downward trend since reaching a recent peak of 62.4% in January and February 2023, as growth in the population aged 15 and older in the Labour Force Survey (LFS) outpaced employment growth.

Also, good news: The number of private sector employees increased for the second consecutive month, rising by 61,000 (+0.5%) in September and bringing the year-over-year increase in private sector employment to 193,000 (+1.5%). Public sector employment fell by 24,000 (-0.5%) in September but was up 3.0% (+128,000) compared with 12 months earlier. Self-employment changed little in the month and on a year-over-year basis.

Full-time employment rose by 112,000 (+0.7%) in September, the most significant gain since May 2022. The increase was partially offset by a decline in part-time work (-65,000; -1.7 %).
 

The unemployment rate fell for the first time since January—a mere 0.1% decline, but we’ll take it, and now stands at 6.5%. This follows a rise of two ticks in August. The jobless rate is well above the 4.9% cycle low when job vacancies were rampant. Discouraged workers have dropped out of the labour force. The labour force participation rate is down 0.7 percentage points year-over-year.
 

Wage inflation is a big issue for the Bank of Canada, and this time, average hourly wages increased by 4.6%, down from the August rate of 5.0%.  Other measures of wage inflation are now even lower.
 

Bottom Line
Economists are still divided on whether the Bank of Canada will cut by 25 or 50 basis points. Next week’s inflation data, released on Tuesday, October 15, will become all the more critical. The numbers are expected to be good, meaning low. The economy slowed markedly in the third quarter, and monetary policy remains overly restrictive. Stay tuned!
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drsherrycooper@dominionlending.ca
6 Apr

Purchase Plus Home Improvements?

General

Posted by: Tim Woolnough

When it comes to shopping for your perfect home, it can be hard to find the exact one ready to go! In fact, most homes come with flaws of a sort whether it is old paint or flooring, outdated fixtures or perhaps more extensive repairs are needed. While some buyers have no issues dealing with these deficiencies in a home or perhaps do not consider them dealbreakers, other house hunters might.

If you are looking into a home that requires improvements, there is a mortgage product known as Purchase Plus Improvements (PPI). This type of mortgage is available to assist buyers with making simple upgrades, not conduct a major renovation where structural modifications are made. Simple renovations include paint, flooring, windows, hot-water tank, new furnace, kitchen updates, bathroom updates, new roof, basement finishing, and more.

Depending on whether you have a conventional or high-ratio mortgage, if it is insured or uninsurable, and which insurer you use, the Purchase Plus Improvements (PPI) product can allow you to borrow between 10% and 20% of the initial property value for renovations.

The main difference between a regular mortgage and a purchase plus home improvements program is the need for quotes. As part of the verification process, your mortgage professional and the lender will need to see a quote for the work that is planned for the improvements. The quotes will provide us with the cost and plan details required to secure the final approval.

The lender will release the full funds directly to the lawyer with instructions to hold onto the portion for improvement costs until the renovations are completed. You would need to pay the contractor and then, once the renovations are complete, and the lender has approved and waived the holdback, the lender will allow the lawyer to release the additional funds.

To get started with this type of mortgage program, the first step is reaching out to myself to understand how this mortgage product would apply to your application and specific situation, as based on your existing mortgage. Understanding what you qualify for and the types of improvements that can be included in the financing, will help you better understand which potential houses might work great for you and how much financial room you have for improvements.