I S S U E 0 6 - F E B R UA R Y 2 0 2 0 *REVERSE MORTGAGE - Thousands of Canadians are using a reverse mor tgage as a financial solution*
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GREEN MORTGAGE TEAM MONTHLY
INTEREST RATES PLUNGE ON CORONAVIRUS NEWS Canadian 5-year Yield Fell To Lowest Level Since October By Sherr y Cooper
IN THIS ISSUE: INDUSTRY UPDATE 2019: The Star t of Recover y in Vancouver ?
UNIQUE WE ALTH BUILDING IDE AS One of the most interesting concepts that we’ ve always known about
THIS MONTH’S RATE UPDATES Get the latest updates on fixed and variable rates in Canada
Whatever your dream real estate looks like, we will get you there. Whether it’s residential or commercial, we specialize in building real estate portfolios and creating wealth through proper real estate investing. Schedule a complimentary consultation with us today! G R E E N M O R TG A G E T E A M . C A
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IN THIS ISSUE Upcoming Events / Catch the Green Mortgage Team at these events!
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Industry Update / 2019: The Start of Recovery in Vancouver?
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Legend Award / Green Mortgage Team: DLC Top performers
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Kyle Green Owner
Max Jurock General Manager
Ami Arandi Commercial and Private Lending Underwriter
Unique Wealth Building Ideas / By Kyle Green
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Jason Cattermole Residential Underwriter
Interest Rates Plunge on Coronavirus News / By Dr. Sherry Cooper
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Alison Young Documents Manager
This Month’s Rate Updates /
By Kyle Green 14
Jean-Francois Faucher Documents Manager
Reverse Mortgage / By Robert Britton
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Michael Browne Account Manager
The Estate Bond - Growing Your Estate / By Chris Lubell
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Canucks Corner/ By Scott Brennan
Robin MacDonald Account Manager
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Personal Update / By Kyle Green
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Book of the month / By Kyle Green
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UPCOMING EVENTS
CATCH THE GREEN MORTGAGE TEAM AT THESE UPCOMING EVENTS: 2020 MSCI/REALPAC CANADA REAL ESTATE INVESTMENT FORUM 2020 WORLD OUTLOOK FINANCIAL CONFERENCE
FEB 7 & 8
REAL ESTATE ACTION GROUP MONTHLY MEETING
FEB 10
WESTERN CANADIAN PROPERTIES GROUP SUMMIT
FEB 15
REAL ESTATE INVESTMENT NET WORK MEMBER MEETING
FEB 19
CMBA-BC CONFERENCE & TRADE SHOW
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FEB 4
FEB 24 & 25
SOCIAL MEDIA MARKETING WORLD CONFERENCE
MAR 1 - 4
REAL ESTATE ACTION GROUP MONTHLY MEETING
MAR 9
REINVESTORS VICTORIA MEET-UP
MAR 17
‘KEEPING YOUR REAL ESTATE INVESTING GOALS ON TRACK’ GROUP
MAR 31
OZZIE JUROCK’S REAL ESTATE LAND RUSH 2020 CONFERENCE
MAY 23
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INDUSTRY UPDATE 2019: The start of the recovery in Vancouver? The year sure was an interesting one. For once, we actually saw no major changes to underwriting policy as the government took a step back to let thePOW effect of BY the stress test seep into the market. And ER ED oh boy, did it hit. The first two quarters of the year started off slow, but once we hit the summer, the market started to turn and we’re expecting a strong rebound.
BY KYLE GREEN Owner of the Green Mortgage Team
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What’s new for 2020? TEAM Some members of our team are joining our franchise to build their own business. We wish Scott Brennan and Keaton Kirkwood the best in their new ventures! This does mean that we are currently looking for a new fantastic residential underwriter. If you know of anyone who may be a fit for our team please email Max Jurock at Max@GreenMortgageTeam.ca.
LENDERS We onboarded a few more lenders to help us find more solutions for our clients, and a few lenders came out with new products in 2019. Some of the things we can now fund that were previously difficult or impossible are: •
Finance clients with over ten properties in total
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Lender that uses 100% of the rental income for rental properties
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Net worth program available for 65% - 80% financing, and available for residence AND rental properties (typically these are only for owner occupied and usually max 65% financing)
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For those who are incorporated, some lenders will use the corporate net income of the business as if it was take-home income to help qualify
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Long term rate holds AND firm approvals now for your pre-sale purchases. That’s right, the lender will fully approve you now and does not need to re-approve you later.
CUSTOMER EXPERIENCE Our biggest focus in 2020 is to enhance the customer experience. We are hiring a “Director of WOW” to do more for our clients and are looking for feedback from you on anything you would like to see more of from us. Please email us at info@GreenMortgageTeam.ca with any and all feedback on what you think would be amazing for us to do to make your lives easier!
CONSULTING PROGRAM Kyle will be launching a consulting program, which will be tailored to helping real estate investors grow their portolio and take it to the next level. This should be coming out in late Q1. Stay tuned, it is going to be a game-changer.
INFO@GREENMOR TGAGE TEAM.C A / 604-229-5515
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TOP P ERFO RMERS
Green Mortgage Team Presented with Dominion Lending Centres’ Legend Award The Legend Award recognizes mortgage brokerages among the top 0.4% in the industry nationwide, who fund a minimum of 275 files or $1,000,000 in revenue within one year. We are honoured to receive this award from Dominion Lending Centres (DLC) for 2019! We would like to thank you, our clients, for choosing us for all your residential and commercial financing needs. We look forward to what 2020 has in store!
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UNIQUE WEALTH BUILDING IDEAS
W
e’ve been meeting and speaking with a lot of financial planners lately and the number of incredible products available are eye-opening. One of the most interesting concepts that we have always known about, but often forget, is that investments inside of insurance products are often tax-sheltered and allow you to grow your portfolio without heavy taxation. Some of the richest people in the world are employing these strategies. If you are interested and want to learn more but, are not sure what options are available, you should contact us for an introduction to a planner who can explain the product offerings in more detail. If you answer yes to any of the below questions, reach out to us at info@ GreenMortgageTeam.ca and we will happily do an introduction! •
Do you have a cash float in your business of at least $50,000?
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Are you unhappy with your return in your mutual funds or RSP’s?
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Are you looking for ways to pass assets to your kids in a tax efficient way?
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Do you feel under-insured or over-capitalized?
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Do you just want a 2nd opinion to make sure you’re getting the most out of your financial situation?
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For instance, one insurance product allows you to load up your cash “float” for your business into the product and you can borrow against the policy for 90% - 100% of the value of the cash value. This gives you a tax deduction on the borrowed funds if they are re-invested, and the gains in the insurance product are tax efficient. WRITTEN BY KYLE GREEN
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I N T E R E S T R AT E S P LU N G E O N CO R O N AV I R U S N E W S ; B O C B U YS 10 - Y E A R C M B S ; F T H B I P L A N F LO P S
Canadian 5-year Yield Fell To Lowest Level Since October
G
lobal investors are selling stocks and piling into the safety of bonds in response to fears that the Wuhan coronavirus could disrupt global economic activity. Gold prices, another haven, have also risen. The Government of Canada 5-year bond yield traded
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[this month] at roughly 1.35%, well below its nearly 1.70% level one month ago. The 5-year yield leads fixed mortgage rates, so if this trend persists, we might see widely available fixed-5-year rates in the 2.50% range once again in February.
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BANK OF CANADA NOW BUYING 10-YEAR CMBS The Bank of Canada announced [this month] that effective immediately, the Bank will expand the Canada Mortgage-Backed securities (CMBs, which are government-guaranteed) it can purchase in the primary market to include 10year fixed-rate bond issues. In 2018, The Bank expanded the assets it acquires to 5-year fixed and floating CMBs. The Bank held $517 million of these 5-year CMBs as of November 30, 2019.
BY DR. SHERRY COOPER Chief Economist, Dominion Lending Centres
This move by the BoC should improve liquidity, reducing yields on 10-year CMBs, possibly lowering 10-year fixed rates for mortgage borrowers. Governor Poloz supports efforts to extend the duration of mortgages.
Sherry is an award-winning authority on finance and economics with over 30 years of bringing economic insights and clarity to Canadians.
FIRST-TIME HOMEBUYERS INCENTIVE PLAN FLOPS Only about 3,000 applicants were approved for the Liberals’ First-Time Home Buyer Incentive (FTHBI) in 2019. That’s just $55 million in funding, a lessthan-stellar start given its $1.25-billion three-
year target. (This information is according to attendees at the TD Securities’ Financial Services Conference where CMHC made comments.)
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T H I S M O N T H ’S R AT E U P D AT E S
FIXED RATES In my last article, I predicted that rates would come down between 2.5% - 2.8% and for a while, I was right. Some lenders had rates as low as 2.29% (mind you, this was a trimmed-down product) and most banks were around 2.79% for 5-year fixed in late 2020. However, bond rates increased for a period of time after strong macro-data came out, and fixed rates went back up. The past two weeks (mid-late January), however, has been a different story. Notice any correlations? What big news came out around mid January? Coronavirus. Who would have thought that this would have an impact on Canadian mortgage rates? Money has been flocking to safety with the news of the threat that the virus puts on human life as well as economic outputs (such as Chinese manufacturing), which has caused bond rates to fall quite drastically. Fixed rates are about 98% correlated with bonds and the connection has pushed rates down. Only two weeks ago they
LOCK-IN METER There is currently downward pressure on fixed rates, so unless you are nervous about a rebound, I would recommend staying put for now.
were about o.4% higher. Lenders have started to react by dropping their fixed rates. Short term, I am expecting some more drops to occur here. Medium term is still an unknown but many are still calling for lower rates in 2020. Expect rates to stay at or below 3% for much of 2020.
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Check back in a few weeks or a few months to see where things are at, as we may bottom out again soon, at which point it may be worth locking in the rate. Also, with downward pressure on the bank of Canada to drop the prime rate, there isn’t any pressure from that end either.
Canada still expects positive growth for 2020, but only 1.6% which is below their 2% target. A few ripples in the waters will cause uncertainty, and with the volatility of the markets it isn’t unrealistic to expect rate drops in 2020. The current forecast is about a 50% drop in the overnight rate by March or April, a number that has shifted considerably in the past 9 months:
VARIABLE RATES On January 22, the Bank of Canada decided to sit still, holding the overnight lending rate steady. However, as I said in late 2019, it seems more apparent that countries and consumers alike are preparing for a weaker 2020 as studies and reports are now showing weaker forecasts. The tariff situation and now the new Coronavirus pandemic are having an impact on the confidence of markets worldwide and it’s starting to worry some economies.
If you are in a variable rate mortgage, there seems to be over a 50% chance of a rate drop at the Bank of Canada announcement. If you can get a good variable rate mortgage around or under 3% it is definitely worth considering if you are willing to pay a slight premium now for the more flexible variable product, with the upside of this rate likely decreasing soon.
WRITTEN BY KYLE GREEN
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R E V E R S E M O R TG AG E Thousands of Canadians are using a reverse mortgage as a financial solution to help them bridge their retirement savings, but did you know just how versatile a reverse mortgage is? Among the many reasons for reverse mortgage funds, HomeEquity Bank lists the most common reported use of funds. Healthcare related: Many HomeEquity Bank clients use reverse mortgage funds for some healthcare expenses, whether for personal support work or to simply pay off debt related to those expenses. In fact, long-term care in Canada can cost anywhere between $2,000 - $16,000 per month. Renovations/Retrofitting: Renovations or home retrofitting are common reasons for clients to apply for a reverse mortgage. Roughly a third of our clients need home renovations/home retrofitting due to wear and tear, leading to their standard of living
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being compromised or simply because of aging and mobility. Income supplement: Did you know that the average annual expenses for Canadians 65+ is $60,000 yet their average income is only $40,000? A quarter of our clients use reverse mortgage funds to supplement their income. Unplanned expenses: Sometimes planned retirement savings do not account for emergencies and that’s where a reverse mortgage can help. Here are the biggest unexpected costs for retirement: •
30% unexpected costs
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30% needed to help family
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24% needed to help finance health issues
Gift: A reverse mortgage is becoming a popular solution to provide an early inheritance for children and grandchildren to help them with a down payment or to help pay for education. By gifting an early inheritance, clients can watch their heirs use the funds as opposed to gifting after they pass.
A reverse mortgage continues to be a great financial solution to help your 55+ clients with their financial needs. Contact me to find out how a reverse mortgage can help your clients with their unique financial WRITTEN BY ROBERT BRITTON
Purchase another property: Many clients also take out a reverse mortgage to make a purchase on a second home, such as a vacation home or to purchase a new car. Travel/Vacations: Retirement is a time to enjoy all of the extra time you will have post-career, so it is inevitable that many clients take out a reverse mortgage to help them afford travel and vacations.
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T H E E S TAT E B O N D G R O W I N G Y O U R E S TAT E WITHOUT UNDUE M A R K E T R I S K A N D TA X E S Often we see older investors shift gears near retirement and beyond. Many become risk-averse and move their assets into fixed income type investments. Unfortunately, this often results in the assets being exposed to higher rates of income tax and lower rates of return – never a good combination. Or maybe the older investor cannot fully enjoy their retirement years for fear of spending their children’s inheritance.
The Estate Bond in action Robert, aged 60, and his wife Sarah, aged 58 are
The Estate Bond financial planning strategy presents a
satisfied that they will have sufficient income during
solution to both of these problems.
their retirement years. They used the Estate Bond
How does it work? • •
concept as a means to guarantee their legacy to their children and grandchildren.
Surplus funds are moved out of the income tax stream and into a tax-exempt life insurance policy.
Investment: $30,000 for 20 years into a Joint
Each year a specified amount is transferred from tax
Second-to-Die Participating Whole Life policy which
exposed savings to the life insurance policy.
is guaranteed to be paid up in 20 years
In essence, we are substituting one investment (the life
Immediate Death Benefit: $848,900
insurance policy) for another (fixed income assets).
The result?
Death Benefit in 30 years: $2,075,800 (at current dividend scale)
The cash value in the life insurance policy grows taxdeferred and may also increase the insurance benefits
Cash Surrender Value in 30 years: $1,589,400 (at
payable at death. Since the death benefit of a life
current dividend scale)*
insurance policy is received tax-free by the beneficiary this strategy results in a permanent tax shelter. In other
* If surrendered, the cash surrender value would be
words, there is an increase in the funds available to heirs
subject to income tax but there are strategies that
and beneficiaries after death and a decrease in the taxes
could be employed to avoid this tax. Assumes using
payable before death.
Participating Whole Life illustrated at current dividend scale. Values shown in 30th year at approximate life expectancy.
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Alternative investment in action
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The use of life insurance with a named beneficiary also results in a totally confidential wealth transfer.
•
Robert and his wife can both enjoy their retirement without affecting their family’s inheritance.
Investment: $30,000 for 20 years in a fixed income investment earning 2.5% AFTER tax Immediate Death Benefit: $30,000 Estate Benefit in 30 years: $1,005,504 It should be noted that obtaining this rate of return in today’s fixed income environment would be challenging.
Additional benefits of the Estate Bond •
The estate value of $2,075,800 in 30 years is not subject to income tax.
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The proceeds at death, if paid to a named beneficiary, are not subject to probate fees.
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If the beneficiary is one of the preferred class (spouse, parent, child or grandchild) the cash value and the death proceeds are protected from claims of creditors or litigants during the insured’s lifetime.
The Estate Bond strategy is designed for affluent individuals who are 45 years of age or older and who are in reasonably good health. For those who meet these criteria and have surplus funds to invest, this concept can provide significant benefits and results. Connect with me if you have any questions about the Estate Bond strategy or would like to determine if it is right for you. As always, please feel free to share this article with anyone you think will find it of interest.
BY CHRIS LUBELL Chris is the President of the Lions Peak Financial Group
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29 TO G0!
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C A N U C K S CO R N E R Well Canucks fans…. We have 29 games
of games to win.
knack for making the impossible saves
66 points This may look lofty,
possible is what makes him a game
find ourselves 5 points behind first in the
but the franchise rookie overall
stealing and elite goaltender. This being
Western conference.
points records is 66 points. That
a contract year for him, the timing could
record
not be better for him (and worse for the
to go (at the time of writing this) and we
•
holder?
Elias
Pettersson.
In the last edition of the Green Mortgage Team Monthly, we had said that the
Canucks pocketbook). He is exactly the •
Most games with 3+ assists as a
kind of athlete that can do some serious
Canucks would sneak into the play-offs.
defensemen Quinn has three thus
damage in the playoffs if he goes on a
We could not have predicted how far they
far, four is the record held by Ray
burner.
have come this season. It is in our humble
Bourque. Ray Bourque. Jonathan Tanner Miller
opinion that this is largely due to four players: Hughes, Pettersson, Miller and
Also, if we are going to brag a little more
Also known as JT, for short. Previously we
Marky.
about Quinn, he would be the leading
were very open about our disdain for the
scorer on nine other NHL teams: Anaheim,
Canucks giving a first round pick to the
It is in my humble opinion that this is
Arizona,
Detroit,
Tampa Bay Lightening for JT. We could not
largely due to four players. Hughes,
Minnesota, Jersey, Ottawa and Sane Jose.
have been more wrong. He has been an
Columbus,
Dallas,
Pettersson, Miller and Marky.
instant fit with this team. Leadership, grit, Pettersson
has
death
stared
the
skill. He is the total package.
Lets start with Hughes
sophomore slump dead in the eyes and
What it truly remarkable is that for the
triumphed. Elias went to his 2nd All Star
Currently sitting at second for team points.
third year in a row, the Canucks have sent
Game and unleashed a slap shot of 102.4
Just two behind Petey - with the Canucks
a Rookie to the All-Star Game. This year’s
mph. Petterson is barely 180lbs and is
doing so well - the first round selection
Calder Candidate (Rookie of the Year) is
able to keep pace with the big blue liners
will likely be much deeper than it’s been in
none other than Vancouver’s own #43
that typically shine in a contest like this.
past years. Getting the immediate impact
Quinn Hughes, also known as Huggy
Where many struggle in their second year,
with a guy like Miller is worth it.
Bear. Right now, Quinn is sitting seventh
Elias has just gotten better. He is stronger
in points among all defensemen Here is
and faster than his rookie campaign.
We’re looking forward to the rest of the
a look at the franchise records he could
Currently he is sitting at 15th spot in
season!
break, and keep in mind: this is his first
league wide scoring. Only six points back
season.
from cracking the Top 10. Not bad for a second act.
•
63 points by a Canucks defensemen That’s the record set by Doug Lidster
What can we say about Markstrom that
in 86-87. Quick is on pace for 61 points.
hasn’t been said yet? The Goalie who loves his Audi’s is 8th in wins, and around
•
55 assists by a Canucks defensemen
the middle of the pack in regards to Goals
Dennis Kearns set this in the late 70s.
Against Average and Save %, but that is
Quinn is sitting at 31assists with a lot
not what is getting all the attention. His
WRITTEN BY SCOTT BRENNAN
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P E R S O N A L U P D AT E My partner, Khristina, and I recently adopted a puppy! We named her DJ. She is now a 4-month old Pomsky (also known as a Pomeranian Husky cross). She is the per fect addition for two busy entrepreneurs who enjoy hiking on the weekends. If anyone is looking for a doggy date, let me know! To celebrate the addition to our family, the Green Mortgage Team will be giving away a $200 gift card to a restaurant of your choice. To enter, send us the funniest photo of your pet that you can find to Info@ GreenMortgageTeam.ca. We’ll announce the winner in our next newsletter this Spring. We can’t wait to see your photos! Stay tuned for more information on the Pets in the Park fundraiser this summer! Follow us on social media, we will announce more information about this fun event in the coming months.
BOOK OF THE MONTH I just finished reading Traction by Gino Wickman and highly recommend it to anyone looking to take their business to the next level. It breaks down the key components to any successful business into easy to manage bites and has helped me focus on our company vision, values, systems and processes. It definitely does seem to be a bit more geared to mid-large size companies but the information is excellent regardless. - Kyle Green
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