Bond yields play a crucial role in determining fixed mortgage rates. Recently concerns over a potential US - Canada trade war have pushed bond yields lower, prompting lendings to cut mortgage rates. However, experts warn that this trend may not last.

Based on a recent news article by The Canadian Press on January 29 2025. Mortgage rate analyst Dave larock points out that while tariffs and trade tensions are driving bond yields down in the short term, they could fuel inflation in the long run. “Tariffs are fundamentally inflationary,” he explains, meaning that if higher prices persist, we could see bond yields and fixed mortgage rise again. 

What Does This Mean for Borrowers?

For those in the market for a mortgage, this rate drop presents a potential window of opportunity. However the landscape remains competitive. The expectation is that the banks will be aggressive in the spring real estate market, with lenders fiercely competing on renewals and high-ratio mortgages. 

Meanwhile, variable mortgage rates - thanks to six consecutive Bank of Canada rate cuts - are nearly on par with fixed rates.

Key Takeaways:

• Fixed mortgage rates are dropping, but experts warn they may not stay low for long.

• Trade war concerns are pushing bond yields lower, but inflation risks could reverse the trend.

• The spring market is expected to be highly competitive, with banks vying for borrowers.

• Fixed and vairable rates are now nearly equal, making mortgage decisions more difficult.

If you are considering a new mortgage or renewing your existing mortgage, talk to a mortgage specialist. Now might be the time to lock into a rate before any potential increases. If you are thinking of making a move or you have a real estate question reach out to me anytime. We can chat about your goals and see if it is the right time for you!

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If you own residential property in British Columbia, you may be required to declare for the Speculation and Vacancy Tax (SVT). This tax aims to reduce real estate speculation and increase housing availability by discouraging property owners from leaving homes vacant.

What Is the Speculation and Vacancy Tax?

The SVT applies to homes that are vacant or underutilized in designated regions of BC. Introduced in 2018, the tax targets property owners who are not full-time BC residents or those who leave their properties empty for most of the year. The goal is to encourage property owners to either rent out their homes or contribute additional tax revenue toward affordable housing initiatives.

The tax applies in specific regions, including:

• Metro Vancouver

• Greater Victoria

• Kelowna and West Kelowna

• Nanaimo

• Chilliwack, Abbotsford, Mission, and Langford

Who Needs to Declare?

Every residential property owner in affected areas must complete a declaration each year, even if they are exempt. Most BC residents will qualify for an exemption, such as:

• Using the property as their primary residence

• Renting it out for at least six months of the year (in increments of at least 30 days)

• Certain special circumstances (e.g., medical reasons, death of an owner, recent property purchase)

If you do not qualify for an exemption, you may need to pay:

• 0.5% of the property’s assessed value (for Canadian citizens and permanent residents)

• 2.0% of the property’s assessed value (for foreign owners and satellite families)

When Is the Deadline?

• The annual declaration deadline is March 31.

• If the tax applies to you, payment is due by July 2.

How to Declare

Property owners will receive a declaration letter in the mail with instructions and a unique code. You can declare:

• Online: gov.bc.ca/spectax

• By Phone: Call the SVT hotline (contact details will be in your letter)

Make sure to declare by March 31 to avoid penalties.

Final Thoughts

Even if you do not owe any tax, you must still declare. Failing to do so may result in penalties or being charged the tax. If you have multiple properties, a declaration is required for each one.

If you have questions or need assistance with your declaration, visit the BC government website or speak with a tax professional.