Why Letting Your Lender Pay Your Property Taxes May Be Costing You More Than You Realize
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While it may seem convenient to have your mortgage lender handle your property tax payments, the reality is that this arrangement often results in reduced financial efficiency and less control over your own money.

Lenders don’t just collect the exact amount due for taxes—they routinely collect more. Each month, they inflate the payment amount to build a surplus in an internal tax account held in your name, but not in your control. This overpayment sits idle, earning you nothing, and remains unavailable for more productive uses like investing, saving, or managing cash flow.

Why does this happen? Because property taxes typically increase by 3–5% annually. Rather than revisiting your payment schedule each year, lenders preemptively overcharge to ensure they’re covered—regardless of the actual increase. While any excess may be refunded eventually, it remains tied up in the interim, serving institutional convenience rather than your financial strategy.

This issue isn't about convenience—it's about efficiency, autonomy, and liquidity. In today’s economic climate, where every dollar counts, it’s essential to ensure your funds are working for you, not sitting idle in someone else’s system.

Fortunately, there’s a simple solution. You can bypass the lender altogether by setting up a pre-authorized payment plan directly with your municipality. This gives you complete control over your tax payments while keeping your capital where it belongs—with you.

The standard should be clear: No one should collect more than is owed, and no borrower should be kept in the dark about how their money is being managed.

The Greater Toronto Hamilton Area (GTHA) condo market has experienced its first annual drop in rent prices since 2021, a noteworthy shift driven by a surge in condo completions. According to Urbanation Inc., condo rents in the GTHA declined by 1.2% year-over-year in Q2-2024, ending a three-year period of consistent rent increases. This softening in rents, highlighted by Urbanation President Shaun Hildebrand, is attributed to a temporary spike in condo completions, which is expected to taper off due to a significant decrease in new condo sales and construction activity.

Studios saw the steepest decline, with rents falling by 3.9%, averaging $2,047 for a 395 square foot unit. Rents for one-bedroom units decreased by 1.8%, while two-bedroom and three-bedroom units saw declines of 0.9% and 0.6%, respectively. Despite this decline, the condo market remains robust, with lease transactions reaching a record high of 16,169 units in Q2-2024, a 29% increase from the previous year. This was accompanied by a 47% increase in condo listings, driven by an 82% rise in newly registered condos.

The City of Toronto saw a 2.1% decrease in rents, averaging $2,765 for a 674 square foot unit, while rents in the 905 region rose by 2.0% to $2,610 for a 719 square foot unit. Vacancy rates for purpose-built rentals in the GTHA hit an 11-quarter high of 2.7%, with Toronto at 2.8% and the 905 region at 2.6%. Rent growth for these rentals slowed to a 2.2% annual pace, averaging $2,953 for 723 square feet.

Hildebrand noted that although there have been recent improvements in rental construction, the overall level of starts remains insufficient to meet long-term demand. This temporary cooling of the market highlights ongoing challenges in housing supply, which will continue to impact the GTHA rental landscape.

Have a mortgage financing question?
Please feel free to call or write.

Sarah Colucci, Mortgage Agent Level 2
Sherwood Mortgage Group, Broker 12176 
Direct: (647) 773-4849
Email: [email protected] 

Investing in real estate right now is a game-changer. As interest rates drop, the cost of borrowing plummets, making homeownership more accessible than ever. This is your moment to seize opportunities and secure assets that will appreciate over time.'

With Canada's high immigration levels, there's a growing demand for housing. Pair that with falling interest rates, making borrowing cheaper, and you have the perfect storm for a real estate boom. The fundamentals are aligning for a significant rise in property values.

At Mortgages by Sarah Colucci (Sherwood Mortgage Group), we’re here to guide you every step of the way. Let’s make smart investments together.


Sarah Colucci, Senior Mortgage Agent Level 2
Sherwood Mortgage Group, Broker 12176 
Direct: (647) 773-4849
Email: [email protected] 

Predicting property prices is akin to navigating the ever-evolving landscape of technology; it requires a deep understanding of various influencing factors. Recently, Tiff Macklem, Governor of the Bank of Canada, provided some insights that reflect the complex nature of economic management. Let's break down the key elements that can drive property prices up or down and analyze the current economic context, drawing from Macklem's recent statements.

Factors Driving Property Prices Up
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1. Low Interest Rates: When borrowing costs are low, people are more inclined to take out mortgages, increasing demand for homes. This typically drives prices up.
2. Economic Growth: A strong economy, characterized by rising employment and higher incomes, enhances people’s ability to buy homes, pushing property prices higher.
3. Limited Supply: If there aren’t enough homes to meet demand due to regulatory constraints, land availability, or construction costs, prices are likely to rise.
4. Population Growth: An increasing population, especially in urban areas, leads to higher demand for housing, driving up prices.
5. Inflation: When the cost of goods and services goes up, so does the cost of building materials and labour, which can lead to higher property prices.

Factors Leading to Lower Property Prices

1. High Interest Rates: If borrowing becomes more expensive, fewer people can afford mortgages, reducing demand and potentially lowering property prices.
2. Economic Downturn: During recessions or periods of high unemployment, people’s ability to buy homes decreases, which can lead to lower property prices.
3. Increased Supply: If there’s a surge in new home construction or more existing homes come onto the market and demand doesn’t keep pace, prices could fall.
4. Government Policies: Policies like increased property taxes, stricter lending regulations, or initiatives to boost housing supply can impact property prices.
5. Decreased Demand: Factors like population decline, changing buyer preferences, or reduced investment in real estate can lower demand, leading to falling prices.

Current Economic Context (July 2024)In a recent Financial Post article, Tiff Macklem discussed how the Bank of Canada's focus is shifting from controlling high inflation to worrying about inflation falling too low. Here’s a summary of his key points and my take on them:

1. Worrying About Low Inflation: Macklem's concern about inflation falling too low reflects a belief in the need for constant economic intervention. Historically, such attempts can lead to unintended consequences like financial bubbles and resource misallocation. Instead, the central bank should focus on maintaining monetary stability.
2. Interest Rate Adjustments: Macklem mentioned the need for "somewhat restrictive policy" but also hinted at potential rate cuts. The idea that the central bank can precisely control the economy by toggling interest rates is overestimated. High levels of household debt in Canada and declining economic growth indicate that past policies have already distorted the economic landscape. Lowering rates further could exacerbate these issues.
3. Inflation Targets: The worry about not hitting a 2% inflation target overlooks the fact that inflation affects different sectors in varied ways. True economic health can't be judged by a single number; it requires a range of indicators reflecting the real well-being of the populace.
4. Trade Disruptions: Macklem also touched on potential trade issues if Donald Trump becomes President again. While trade policies are crucial, the central bank shouldn't focus on unpredictable political outcomes. Instead, it should provide a stable monetary environment for businesses and consumers to make informed decisions.
5. Central Bank's Role: The central bank should focus on stability rather than experimenting with new tools like quantitative easing, which have long-term consequences that we don't fully understand. Economic freedom and market mechanisms, not central bank interventions, are the true drivers of prosperity.

In conclusion, predicting property prices involves a multifaceted approach, much like anticipating the next breakthrough in technology. By staying informed about interest rates, economic health, and shifts in housing supply and demand, we can better understand the dynamics of property prices.

The insights from Tiff Macklem provide a window into the complex world of central banking, but we must remember that stability and predictability are paramount. Just as in the tech world, where innovation thrives on a stable platform, the economy flourishes best under predictable and sound monetary policies.

By understanding these factors and insights, we can navigate the real estate market more effectively, just as we navigate the complexities of technological advancements. Stay informed, stay prepared, and always be ready for the next change on the horizon.

Sarah Colucci, Senior Mortgage Agent Level 2
Sherwood Mortgage Group, Broker 12176
Direct: (647) 773-4849
Email: [email protected] 

Big news today, folks. The Bank of Canada has made a significant move by cutting interest rates again. They’re taking steps to get the economy back on track, and it’s a decision that has everyone talking. Let’s dive into what this means and why it’s happening.

The Big Move: Another Rate Cut

The Bank of Canada, led by Governor Tiff Macklem, has lowered its policy rate by a quarter of a percentage point, bringing it down to 4.5%. This decision was widely anticipated given the current economic conditions. Inflation has been easing, and the economy isn’t exactly thriving. The concern is that keeping interest rates high might slow things down more than necessary.

Governor Macklem emphasized the need for growth, stating that this was a key factor in their decision to cut the rate. It's a smart move. Growth is essential, and high rates can stifle economic progress.

The Shift in Tone

Douglas Porter, BMO’s chief economist, noted a clear shift in the central bank’s tone. He believes the Bank of Canada is leaning towards more interest rate cuts. The labor market is currently weak, with unemployment rising to 6.4% and job creation not keeping pace with population growth. It’s clear that more jobs are needed to stimulate the economy.

Future Cuts on the Horizon?

Several commercial banks are predicting more rate cuts before the end of the year. Porter thinks another cut could happen soon. While Governor Macklem didn’t provide specific details about future rate decisions, he did mention that the path forward might include some bumps along the way. Inflation is decreasing, but not in a straight line. There’s a push and pull dynamic, especially with shelter and other services keeping prices up.

Macklem expressed confidence that inflation is heading back to the target, but it won’t be a smooth journey. If inflation continues to ease, more rate cuts are likely. The timing will depend on how these opposing forces play out.

Canada vs. U.S.

Canada was the first in the G7 to lower its policy rate, followed by the European Central Bank. The U.S. Federal Reserve is expected to follow suit soon. Macklem acknowledged that there’s a limit to how much Canada’s rates can diverge from those in the U.S., but we’re not close to that limit yet.

Economic Forecast

The Bank of Canada’s new forecast suggests inflation will return to the 2% target next year. While the economy is currently weak, it’s expected to strengthen in the second half of 2024. Real GDP growth is projected to be 1.2% this year, rising to 2.1% in 2025 and 2.4% in 2026.

It’s clear that the Bank of Canada is trying to navigate these challenging economic waters. They’re cutting rates to stimulate growth, and that’s a positive step. We’ll need to monitor how this plays out, but for now, it looks like they’re on the right track.
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Stay tuned for more updates. We’re going to keep winning and making great economic strides. Please feel free to reach out to us with any mortgage questions you have! 

Sarah Colucci, Mortgage Agent Level 2
Sherwood Mortgage Group, Broker 12176 
Direct: (647) 773-4849
Email: [email protected] 
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