As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.
In 2009 and 2010, for the first time ever we saw mortgage rates under 2.00%. That’s right, if you were in a variable rate mortgage, you had a rate under 2.00%. We were coming off the catastrophic US sub-prime mortgage crisis. The financial US scam that cost the world trillions of dollars in lost pensions and investments. Tens of thousands of people lost everything they had. It was horrible. While we, in Canada, were largely untouched. We weren’t smarter, we were just lucky not to be exposed to the subprime mortgages to the extent the rest of the world was. As they say, Canada is five years behind the US, and in this case, we got lucky.
That said, let’s get back to mortgage rates and fast forward to 2020.
NEW HISTORICAL LOW MORTGAGE RATE MILESTONE REACHED.
Last week, we saw a 5 year fixed rate mortgage at under 2.00%. That’s right… 1.99%. If you qualified, the rate applied to purchases where the mortgage is Canada Housing and Mortgage Corporation (CMHC) insured and paid for by the client. But that rate didn’t last long and that offer is over. I know, things move fast.
But let’s get back to current rate offers. We are in uncharted waters, again. 11 years ago, we were coming out of the US sub-prime mortgage crisis… does anyone remember that? Back then, the stock markets crashed, just like this year, they recovered, just like this year, but interest rates remained low for many years. In fact, they remained at or near 3.00% for the next 11 years.
The message here is this…. there will be small moments in time when interest rates will be extra low… this is one of those times. If you have a mortgage, get a review done! Find out if it makes sense to refinance or early renew or to break your current mortgage, pay a penalty and lock into today’s low rates. Speak with an UNBIASED PROFESSIONAL. Speak with an experienced mortgage broker. You have nothing to lose and everything to gain.
I originally posted a breakdown of how mortgage penalties are calculated by different lenders on January 4, 2011.
A recent article outlining how TD Bank charged a $30,000 mortgage penalty to a woman forced to sell her home due to the Covid-19 pandemic shows how this remains relevant today.
WE TOOK THE MYSTERY OUT OF HOW PENALTIES ARE CALCULATED
We decided this needed a more detailed explanation… but a strange thing happened when we started to answer these questions. We made a startling discovery. We caution you – the results could get your blood boiling if you’ve had to pay a penalty!
We found that the banks have shrunk or reduced the spreads between their Posted and Discounted rates on shorter-term mortgages over the past few years… and this has had a huge impact on Interest Rate Differential (IRD) penalty calculations. Continue reading “Beware of Mortgage Penalties”
Following are the highlights from a telephone conversation with Jean-Francois Perrault, Chief Economist Scotiabank and John Webster, President and CEO Scotia Mortgage Corporation which took place on Thursday, April 9, 2020 at 4:30 p.m.
First, it’s not all bad news. While I’ll have to include some unpleasant information in order to provide a complete picture, that is not the focus.
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.
I participated in a Q & A with one of my good realtor friends, Jenelle Cameron of Remax. We had a chance to discuss the current impact of COVID-19 on mortgages and the real estate market in general. Find out the latest on mortgages, what’s happening with closings during this time, and more!
We’ve all heard about the 6 month deferred mortgage payment option. It was thrown out there by the government in an attempt to help property owners. We now have some more info that I’d like to share.
I’m getting a little sick and tired of the media being so negative and pessimistic. The banks and other financial institutions are offering to defer mortgage payments for 6 months. This is GOOD news. While it might not seem that way if you read some of the media posts, let’s clear things up:
NO, it won’t harm your credit rating.
NO, it isn’t expensive. Read on…
NO, this isn’t automatic. Your mortgage payments will not be forgiven for 6 months without calling anyone. But most lenders are happy to postpone your payments without much fuss.
If you require more than $100,000, there is another program being offered by BDC which the details have yet to come out. Rumor has it will be based on completion of (a) statement of personal affairs form by each shareholder (b) application for financing and (c) last 2 years of financials prepared by a CPA
Support for entrepreneurs impacted by the coronavirus COVID-19
Effective March 18, 2020, new relief measures for qualified businesses include:
Working capital loans of up to $2 million with flexible repayment terms such as principal postponements for qualifying businesses;
Postponement of payments for up to 6 months, free of charge, for existing BDC clients with total BDC loan commitment of $1 million or less;
Reduced rates on new eligible loans;
Additional details regarding Business Credit Availability Program (BCAP) measures, including industry specific support, to be announced in the coming days.
There’s a document floating around the internet from Goldman Sachs. Have you seen it? It’s a private client summary regarding the coronavirus. 1,500 companies dialed in to this call.
For the record, Goldman Sachs has said the summary text was not authorized by them and it contains erroneous information which was not used during the call. Still, there seems to be a consistent message here. I wanted to share this with everyone because I do believe in much of what is being said. Have a read. It’s a summary but a bit lengthy. I strongly recommend reading the entire summary as the message in the end is positive and is in line with historically recovery patterns.
Canada and the banks announced a six month deferral of mortgage payments. I have been fielding many calls on how this works and the answer is different for each financial institution. I will be posting updates as they become available. Some of the financial institutions have not yet come out and said they will give a full six months of deferred payments, while others have. It’s still early but I will keep you informed as the details roll out.
Another update on the rates. Fixed rates are up again slightly. Variable rate pricing for new applications has increased as well. Most financial institutions are now offering variable rates at prime (Prime: 2.95%) or just minus .05%. No surprise as stock market jitters is spooking everyone.
This will pass and we will come out okay on the other side of this. That’s my message. We’re all in this together and we will come out of it together. Call or message me if you need anything. My team and I are here to help.
There have been many changes lately and there will be many more to come. As this is a critical and fast-moving situation, I wanted to get these updates out and will be updating you regularly as we all work through this.
We’ve all heard about the Bank of Canada rate cuts. Two one-half percent rate cuts in less than two weeks. Unprecedented. And while common logic would dictate that mortgage rates would fall, that’s not exactly happening.
Stop… don’t sign any mortgage renewal, refinance or other mortgage offer from your banker. It is important to remember that they are not your friend. They are employees of a huge corporation paid to push you into the most profitable product for the bank.