How are things?

Hope this update finds you well.   First, let’s make sure you are okay.  We will get through this.  I guarantee it!  I’ve been through the 2008-09 US subprime mortgage crisis, the SARS 2002 crisis, and the 1990 real estate collapse.  We recovered from all of those terrible times and we will recover from this. I am here to help you in any way possible.  Don’t hesitate to call on me for assistance.

The government has been announcing new programs to provide financial assistance almost daily.   And there have been just as many amendments to those programs as they work to fine tune the programs. 

I want to make sure you are informed with accurate info.  There’s been so much junk articles posted in the mainstream and social media outlets.  Let’s block out that junk and focus on reality.

Here are some truths, facts and my opinions.

NO – Deferring your mortgage payment will NOT harm your credit score.  This myth has been overstated and it’s just a bunch of bull. Let’s get this one straight once and for all.

YES – If you have a change to your income, then you should call your mortgage lender and ask to defer the next payment, or the next two, three, or four payments. You can ask to defer up to 6 monthly payments. These payments are not forgiven, you do have to pay them at some time. And yes, interest will accrue and be charged. There’s no free lunch on this one. But that’s okay, this is about buying yourself some time and not having to worry about a mortgage payment.

MAYBE – Should you refinance your mortgage now? Yes in many cases you should refinance now. At the very least, you should contact me to explore your own situation and see what’s the best strategy for you today.

MAYBE – Is it a good time to sell? The answer will depend on your circumstances. One of my clients called me three weeks ago and asked if they should sell their second home as they were planning to put it up for sale later in the year. I advised her to do what I would have done at that time. List it now, is what I said. If it didn’t sell, she would lose nothing. She could list it later.  Well, she listed and she sold it for above asking. It was the right move. For others, this may not be the right strategy.  Call me if you want to discuss your situation.

YES – Is it a good time to buy? I think this is a great time to be looking at buying real estate. As much as the media would love to write about a housing bubble or falling real estate prices, it hasn’t really happened yet. We haven’t seen a flood of homes come on the market for sale. Historically, house prices fall during the summer months. I think we’re going to see a pent-up demand and we could still see a healthy real estate market come this fall. I’m not sure house prices will collapse. I think we’ll see some decreases but not a collapse.

TRUE but BIZARRE – Bank of Canada lowered the rate by 1.50% but fixed rates went up by 0.50%.  This is true.  The simple way to explain is that investors panicked when they saw the bank stocks drop by 30% and 40%.  They demanded and expected a premium be charged for fixed rates and that is what we got. I think this will correct itself in a matter of months as things get back to normal. We’ve already seen bank stocks make a partial recovery.  

MORE BIZARRE but IT MAKES SENSE – Variable rate mortgages.  Prior to covid-19, I had warned about a pending Bank of Canada rate drop.  It was imminent given Canada was the only G7 country to not lower their rates.  We were able to get a variable rate priced at Prime less 1.00% leading up to February. I warned that this pricing would not be so lucrative as Prime fell, and sure enough, that is what’s happened.   Albeit at an accelerated pace due to Covid-19. Instead of Prime less 1.00% or less 0.50% (which is more the norm) we are now seeing Prime plus 0.10%.  yes, PLUS.  This will also revert to better pricing but that won’t change for months.  

NO –  Don’t lock in now.  Speaking of variable rates, if you are at a variable rate, stay there.  Variable rate is historically the lowest rate.  I would not be locking in today.  

What it comes down to for most things is IT DEPENDS ON YOU. For new borrowers, or anyone taking out a mortgage today, I have a different strategy. For some it may involve taking a shorter term. Each of us is different and has different needs. I would need to review your situation before I could provide my best recommendations.   Call me.  I’m here to help.

IT IS OVER YET?  Those words will be spoken and sooner than you think but not fast enough.  Many of us have been in lockdown mode for over 3 weeks now.  3 weeks is not an eternity, although, at times, it feels like it’s been 3 months. This will pass.  We will come out stronger.  My father always told me to put myself in the position of someone less fortunate whenever I felt down or when things weren’t going well for me.  It could be worse, he said, and he was right.  This usually brings me out of any rut and ignites my fire again. If you need anything, call me… even just to talk.  I’m here to help!

As always, I welcome your comments, calls and questions.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Your best interest is my only interest.