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.
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.
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.
As the dust starts to settle on yesterday’s Bank of Canada rate cut, here’s some clarification on what happens next.
To all my pending clients or clients with something on the go, your rates will be automatically adjusted downward.
For new clients, prospective purchasers, or people that want to take advantage of these falling rates, don’t hesitate to reach out to my office today. I am happy to discuss how you can take advantage of this.
Your best interest is my only interest.
As always, I welcome your comments, calls and questions.
After years of seeing countless articles and posts about interest rates, housing affordability issues, mortgage stress tests disqualifying some people from being able to buy, higher personal debt levels, does it still make sense to buy a home?
Yes! There is positive news. You can still buy a home. And you can still qualify for a mortgage.
In case you missed it, Finance Minister Bill Morneau announced this week that adjustments to the “Stress Test” are coming on April 6th. While the government says the change will make the stress test qualifying rate more responsive to market conditions, what does that really look like?
On the bright side, this new qualifying rate will probably be lower by around 0.30%. This will increase the amount of a house one can buy by around 5%.
Example… $500k increases to $525k.
On the dark side, this isn’t really making a whole lot of difference. I don’t want to sound pessimistic, but I’d like to point out the shortcomings of his announcement. It’s purely political. They said they would do something and I guess, technically they did. But it really has no significant impact.
Some great stats just came out in Genworth’s regional risk reports. Here are a few of the highlights.
As expected, Ontario’s housing market has been very healthy and active and has been picking up steam over the last 2 years.
Alberta’s economy has been hit hard over the past 3 years due to the inability to bring its biggest resource, oil and gas, to the market. We’ve all read and heard about the pipeline debacle. However, the housing market is rebounding as is shown in the stats. Let’s hope action is taken to get our western Canadians some positive changes.