9 Jun

RESIDENTIAL  MARKET UPDATE

General

Posted by: Adriaan Driessen

 

Industry & Market Highlights 

COVID-19 Ontario Announces Regional Approach Reopening Into Stage 2

Ontario will be taking a regional approach to move into Stage 2. As directed by the province, each region will be permitted to enter Stage 2 when safe to do so as public health criteria outlined in the framework are met.

Regions are based on public health unit boundaries.

Find the full details HERE.

Residential Market Commentary – CMHC takes a bite out of purchasing power

While forecasting a collapse in house prices of as much as 19% over the next 12 months, Canada Mortgage and Housing Corporation is tightening the rules for its mortgage insurance.

As of July 1st, applicants will need a bigger credit score, a smaller debt load and more, real money up front.  It could be seen as an effort to squelch any growth in demand triggered by improved affordability.

CMHC is upping its credit score to 680 from 600.  In an effort to reduce the practice of borrowing money for a down payment the agency will no longer treat unsecured personal loans and unsecured lines of credit as equity for insurance purposes.  The maximum gross debt servicing ratio (GDS) is being trimmed to 35%, down from 39%.  The maximum total debt service ratio (TDS) falls to 42% from as high as 44%.

The reduction in debt servicing levels is seen as having the biggest impact on home buyers.  By some calculations a household with an income of $100,000 and a 10% down payment could lose as much as 12% of their purchasing power.

The head of CMHC, Evan Siddall, has made no secret of his concerns about “excessive [housing] demand and unsustainable house price growth.”

“COVID-19 has exposed long-standing vulnerabilities in our financial markets, and we must act now to protect the economic futures of Canadians,” Siddall said in a press release.

“These actions will protect home buyers, reduce government and taxpayer risk and support the stability of housing markets,” he said.

Many market watchers are calling the moves excessive and say CMHC’s forecasts are unduly pessimistic.  They worry the new rules will batter the confidence of buyers and sellers, bruise market psychology and hurt the near-term housing outlook.

CMHC did decide to leave the minimum down payment size at 5%, which should keep the pool of potential buyers at about the same level.  By First National Financial.  

Business As Usual with Genworth Financial & Canada Guarantee

Both Genworth Financial & Canada Guaranty has released statements that they will not be changing any of their underwriting guidelines after CMHC tightened its lending rules for high ratio insured mortgages.  What this means to home buyers is that the recent change with CMHC will not impact their borrowing capacity and ability to qualify for a high ratio insured mortgage in Canada.

Genworth MI Canada Inc. Confirms That It Does Not Plan To Change It’s Underwriting Policy

Genworth MI Canada Inc. (the “Company”) (TSX: MIC) confirms that it has no plans to change its underwriting policy related to debt service ratio limits, minimum credit score and down payment requirements. One of the Company’s competitors announced changes to their internal underwriting guidelines with respect to the aforementioned underwriting criteria on June 4, 2020.

“Genworth Canada believes that its risk management framework, its dynamic underwriting policies and processes and its ongoing monitoring of conditions and market developments allow it to prudently adjudicate and manage its mortgage insurance exposure, including its exposure to this segment of borrowers with lower credit scores or higher debt service ratios,” said Stuart Levings, President and CEO.  By Genworth Financial. 

Canada Guaranty Underwriting Policy Clarification

Canada Guaranty confirms that no changes to underwriting policy are contemplated as a result of recent industry announcements.

Canada Guaranty utilizes a dynamic underwriting process where our underwriting policies are consistently updated to reflect evolving economic environments and emerging mortgage default patterns. This philosophy has resulted in the lowest loss ratio in the industry. Recent insurer announcements relating to down payment and minimum credit score represent a very small component of Canada Guaranty’s business, and we will continue to be prudent in these areas. Given implementation of the qualifying stress test and historic default patterns, Canada Guaranty does not anticipate borrower debt service ratios at time of origination to be a significant predictor of mortgage defaults.  By Mary Putnam, Canada Guaranty.

Canada’s housing agency criticized for alarming home price forecast

Last week, the head of Canada’s housing agency made a startling prediction that home prices could fall up to 18 percent in the next year as a result of the economic devastation caused by the COVID-19 pandemic.

Canada Mortgage and Housing Corporation (CMHC) President Evan Siddall’s comments during testimony before the House of Commons Finance Committee were widely reported by media across the country (including this publication).

The media frenzy inspired by the comments was not surprising due to both the source of the warning and the scale of the decline Siddall warned of — even his low-end prediction was a nine percent price dip.

The CMHC is Canada’s public mortgage insurer and responsible for hundreds of billions of dollars in assets. So when the president of Canada’s largest Crown corporation makes a dire prediction like this one, it gets picked up, not just nationally, but beyond the country’s borders as well.

An article published this week by Australian business daily The Australian Financial Review, carried the headline ‘Canadian housing market to crater amid pandemic’ and cited only the CMHC’s recent commentary on the pandemic’s housing market impact.

But since Siddall’s House of Commons testimony was reported, several prominent industry voices have criticized the claim, zeroing in on the potential worst-case scenario 18 percent price drop figure.

Brokerage RE/MAX Canada was quick to jump on the claim with a blog post titled ‘No Nosedive Ahead for Canadian Real Estate Prices.’ In it, the brokerage cited economists from several large Canadian banks who believe the market is at risk of a milder 5 to 10 percent decline as things currently stand.

“RE/MAX brokers in some of the biggest Canadian real estate markets say a dramatic price drop is unlikely under current conditions, barring any major unforeseen circumstances — and as we’ve all come to learn recently, anything is possible,” the brokerage said in the blog post.

“But assuming current market conditions remain stable, the current inventory of homes for sale continues to fall short of demand — even amidst this pandemic, social distancing measures and the economic fallout,” the blog post continued.

Stephen Brown, an economist at Capital Economics, cautioned that the CMHC forecasts are “not as alarming as they first seem” but the “very public warning” from the Crown corporation could become self-fulfilling. He went on to note that his firm’s forecast pegs the pandemic-induced fall in Canadian home prices at 5 percent.

Further, he explained that the CMHC is looking at declines to average selling prices, while Capital Economics makes forecasts based on the Teranet-National Bank Home Price Index. The difference is that predictions based on selling price look simply at the average sale price for all homes sold during a particular period, while the Home Price Index-based forecast looks at the price change for any given home over time.

“This is an important distinction, because changes in average selling prices and changes in like-for-like house prices can be very different in downturns,” Brown wrote.

“As we have already seen in the home sales data for April, during market downturns the proportion of higher-value homes that are sold often falls significantly. That in turn pulls down the average selling price,” he added.

In its blog post, RE/MAX Canada highlighted the regional diversity in how markets will experience the pandemic fallout and subsequent recovery. The brokerage said a five percent price correction is possible in Vancouver while prices appear to be stable so far in Toronto. Alberta’s major markets are expected to be hit hardest as they grapple with an oil price shock significantly impacting employment.  By Sean MacKay. 

Mortgage rates will stay historically low until economy nears recovery

The Bank of Canada this week announced it’s maintaining its mortgage-market influencing key interest rate at 0.25 percent, a rock bottom level unseen since the peak of the 2008-2009 Global Financial Crisis.

The key interest rate acts as a guide for lending rates offered by all of Canada’s financial institutions. Changes to the rate are announced by the Bank of Canada at eight scheduled times each year.

With the key interest rate sitting so low, and being expected to remain there for some time as the pandemic’s economic impacts continue to be strongly felt, mortgage market experts are projecting that these favourable rates offered to Canadian homebuyers will persist for the foreseeable future.

“The Bank is committed to maintaining the key rate at its current level until the economy has recovered,” wrote Ratehub.ca in an email to subscribers on Wednesday.

“The historic low mortgage rates currently in the market should therefore continue until the economy approaches its pre-pandemic level. This means that anyone with a variable rate can expect prime to remain unchanged. Fixed rates will stay near historic lows,” the email continued.

In early May, BMO economist Robert Kavcic wrote that he didn’t anticipate the Bank of Canada to increase its key interest rate until 2022 at the earliest, though this doesn’t mean mortgage rates will stay exactly as low as they are now.

That said, rates were already considered low through 2019, and Kavcic noted that in May, they were about 50 points lower than last year’s average levels as a result of cuts that followed the pandemic outbreak. When rates do begin climbing back up, it will likely be at a very gradual pace.

This week’s rate announcement was also noteworthy for its relatively optimistic tone, as the Bank of Canada stated that the country’s economy “appears to have avoided the most severe scenario” that had been envisioned in its April report. With a harrowing second quarter nearly behind us, the Bank noted that economic growth is expected to resume in the third quarter, though there is still significant uncertainty around the path of Canada’s recovery.  By Sean MacKay. 

Bank of Canada Takes A More Positive Tone

On the heels of a devastating decline in the Canadian economy, the Bank of Canada suggested today that the worst of the pandemic’s negative impact on the global economy is behind us, conceding, however, that uncertainty remains high. The Bank today maintained its target overnight rate at 0.25%. No additional rate cut was expected as the Bank has described the 0.25% level as the effective lower bound of the policy rate. Governor Poloz has all but ruled out negative interest rates unless the economy deteriorates dramatically further.

Today’s Governing Council meeting is Stephen Poloz’s swan song, as the new Governor, Tiff Macklem, takes the helm today. Macklem took part as an observer in the Governing Council’s deliberations and endorsed today’s rate decision and measures announced in the press release, thereby assuring continuity in monetary policy.

The Bank has taken very aggressive action to support liquidity and the full functioning of financial markets by buying short- and long-term securities. The central bank’s balance sheet holdings of securities have grown to about 20% of Canada’s GDP, up from 5% pre-crisis. That’s still well below the levels seen at the US Federal Reserve, the Bank of Japan, and the European Central Bank, which have conducted these quantitative easing operations since the financial crisis more than a decade ago. However, the Bank of Canada’s securities purchases have been extraordinary in relation to the size of our economy.

“Decisive and targeted fiscal actions, combined with lower interest rates, are buffering the impact of the shutdown on disposable income and helping to lay the foundation for economic recovery.” According to the central bank, the Canadian economy appears to have avoided the most severe scenario presented in the Bank’s April Monetary Policy Report (MPR).

The level of real GDP in Q1 was 2.1% below the level in the fourth quarter of 2019. The Bank of Canada is now predicting that real GDP in Q2 will likely post a further decline of 10%-to-20%, as continued shutdowns and sharply lower investment in the energy sector take an additional toll on output. That suggests a peak-to-trough decline of 12% to 22%, instead of the 15% to 30% scenario the central bank had previously been estimating. “The Canadian economy appears to have avoided the most severe scenario,” the Bank of Canada said.

Bottom Line: While the degree of uncertainty remains high, there is evidence that the worst of the economic downturn is behind us. Preliminary data for May suggests that home sales picked up on a month-over-month basis in May in the GTA and GVA, although home sales continued to be down significantly from levels one year ago.

Some people are concerned that the extraordinary stimulus in monetary and fiscal measures in recent months might, in time, be inflationary. Governor Poloz has made it clear that the dire results of the economic shutdown would have been highly deflationary had these actions not been taken. Deflation, coupled with high debt levels, would have triggered a depression. Economic models are ill-equipped to deal with the fallout of the pandemic. Policymakers need to be nimble in responding, and when the economy has recovered sufficiently, they will begin the unwinding of all of this stimulus, which will require an equally deft response on both the fiscal and monetary side.  By Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres.

May Sees An Uptick in Sales, Listings and Prices

The London and St. Thomas Association of REALTORS® announced that 668 homes exchanged hands last month in its jurisdiction, down 41.6% from May 2019 and 26.3% less than in May 2010. The number of LSTAR’s listings was 973 in May, which represents a 42.3% decrease from a year ago and 41.5% from ten years ago.

“Even though the total number of residential transactions remained well below the 10-year average, in May, we saw notable month-over-month increases: 42.4% in home sales and 31.8% in listings, which we find very encouraging,” said Blair Campbell, 2020 LSTAR President. “In addition, when looking at the year-over-year percentage changes, one can notice that the decrease in home sales is directly proportional to the one in listings, which means that the ratio between supply and demand is almost unchanged,” he added.

“Despite the new social distancing rules, the open house prohibition and the lay-offs caused by COVID-19, the local real estate market succeeded in staying in Sellers’ territory, which speaks to the strength of its fundamentals,” Campbell emphasized.

The overall average home price saw an increase of 7.4% over a year ago, rising to $445,732 in May. This average sales price includes all housing types – from single detached homes to high-rise apartment condominiums. All the five major areas of LSTAR’s region witnessed increases in their average home sales price. The following table illustrates last month’s average home prices by area and how they compare to the values recorded at the end of May 2019.

“Looking at London’s three main geographic areas, London South saw the highest number of home sales last month, while London East saw the biggest price gain compared to May 2019,” Campbell said.

The average home price in London East was $365,261, up 8.4% from the same time last year, while in London North increased 7.7% over the same period to $531,626. In London South, which also includes data from the west of the City, the average home price was $462,334, up 6.5% over May 2019. St. Thomas saw an average price of $370,182, an increase of 1.7% from last May.

According to a report by the Canadian Real Estate Association, last month, in London, the median number of days that a home was on the market was 14 – up from 9 days in May 2019. As compared to a year ago, in Elgin County, the median number of days spent by a home on the market was 17 – down from 26; in Middlesex County it was 22 – up from 17; in Strathroy was 19, up from 14; and in St. Thomas it was 12 days – exactly the same as in May 2019.

The following chart is based on data taken from the CREA National Price Map for April 2020 (the latest CREA statistics available). It provides a snapshot of how home prices in London and St. Thomas compare to some other major Ontario and Canadian centres.

Economic Highlights

Good News in May Job Report, Employment Rebounds 10.6% 

The doomsayers have been proven wrong by this employment report and by the high-frequency data that have been pointing to the start of a rebound in Canada’s economic activity. We have been signalling green shoots in the economy for several weeks, and while these are early days, those green shoots are surely growing. We are optimistic but mindful that just under 5 million Canadians remain without work or with substantially reduced hours.

Job Market Has Improved From Mid-April to Mid-May

Canada’s  Labour Force Survey (LFS) results for May, released this morning by StatsCanada, reflect jobs market conditions as of the week of May 10 to May 16. By then, some provinces had begun to gradually ease the pandemic lockdown that has thrown our economy into recession. Already, as of mid-May, the jobs market had shown a marked improvement, and no doubt, it has subsequently continued to revive.

From February to April, 5.5 million Canadian workers were affected by the pandemic shutdown. This included a drop in employment of 3.0 million and a COVID-related rise in absences from work of 2.5 million. Economists were expecting another 500,000 job losses last month. They were wrong.

In May, employment rose by 289,600 (1.8%), while the number of people who worked less than half their usual hours dropped by 292,00 (-8.6%). Combined, these changes represented a recovery of 10.6% of the pandemic-related employment losses and absences recorded in the previous two months. Three-quarters of the employment gains from April to May were in full-time work. The growth was across most industries and provinces, though largely driven by higher employment in Quebec, the province hardest hit by the pandemic. 

Compared to February–prior to the lockdown–however, full-time employment was down 11.1% in May, while part-time work was down 27.6%.

Unemployment Rate Rises As More Canadians Look For Work

Even though we posted employment gains from mid-April to mid-May, the jobless rate rose to 13.7%–up from 13.0%–as easing restrictions caused more discouraged workers to actively look for employment (see chart below). The 13.7% figure is the highest jobless rate recorded since comparable data became available in 1976. In February, prior to the economic shutdown, the unemployment rate was a mere 5.6%. It shot up to 7.8% in March and to 13% in April.

Unlike previous economic downturns. the bulk of the job losses were felt first in the services sector. The pandemic impact subsequently spread to the goods-producing and construction industries in April. Last month, employment rebounded more sharply in the goods-producing sector ( +5.0% or 165,000) than in services (+1.0% or 125,000). The construction industry enjoyed the largest gains in hours worked from April to May with 19.0% growth.

Quebec Accounts For Nearly 80% Of Overall Employment Gains in May

The Quebec provincial government eased restrictions on business activity before the jobs report reference week of May 10 to May 16, notably in construction from mid-April, and in retail trade and manufacturing outside Montréal from May 4. The proportion of workers labourers from a location other than home increased from 60% in April to 65% in May.

The largest employment increases in Quebec were in construction (+58,000), manufacturing (+56,000) and wholesale and retail trade (+54,000), three industries with a relatively high proportion of jobs that are difficult to do from home.

Employment increased by 97,000 (+5.3%) within the Montréal census metropolitan area.

Employment Declines Continued in Ontario But At A Slower Pace

Ontario was the only province where employment continued to fall in May. This is consistent with the fact that most restrictions on economic activity remained in place in Ontario during the week of May 10 to May 16.

While employment declined in Ontario in May (-65,000), it did so at a much slower pace than in March (-403,000) and April (-689,000). All of the employment decline in the province in May was in the services-producing sector (-80,000). At the same time, employment rose by 15,000 in the goods-producing sector, driven by manufacturing (+14,000).

The proportion of employed people in Ontario who worked less than half their usual hours dropped from 22.1% in April to 21.2% in May.

In Ontario, 55% of workers worked from a location other than home in May, the lowest proportion of all provinces and little changed from April.

As most restrictions on economic activity remained in place in Ontario, the number of people who were not in the labour force but wanted to work and did not look for a job was little changed. The unemployment rate continued its upward trend, rising from 11.3% in April to 13.6% in May (see the table below).

Employment Picture Mixed In Western Provinces

Employment in British Columbia increased by 43,000 in May and the unemployment rate rose 1.9 percentage points to 13.4%, as more people looked for work. Almost all of the employment increase in the province was in the services-producing sector (+41,000), led by accommodation and food services (+12,000), educational services (+12,000), and wholesale and retail trade (+12,000).

British Columbia announced a first phase of reopening on May 6, with a plan to lift restrictions on non-essential medical services and parts of the retail trade industry starting May 19, after the reference week.

The number of employed people in Alberta grew by 28,000 in May, following a cumulative decline of 361,000 from February to April. The employment increase in the province was entirely driven by the services-producing sector (+33,000). The unemployment rate increased by 2.1 percentage points to 15.5%.

Alberta allowed some businesses such as restaurants and non-essential shops to start operating from May 14.

In Manitoba, employment increased by 13,000 in May. At the same time, the proportion of employed Manitobans who worked less than half their usual hours fell by 1.7 percentage points to 12.9%. In May, most of the employment increase in Manitoba was in the services-producing sector (+12,000), the majority of which was in wholesale and retail trade (+7,000).

On May 4, Manitoba allowed a number of services businesses to resume their activities, with limited occupancy and physical distancing requirements.

There was little change in overall employment in Saskatchewan. Increases in wholesale and retail trade, manufacturing and accommodation and food services were offset by declines in many sectors, led by information, culture and recreation as well as in construction.

Employment increases in all Atlantic provinces

With the exception of Nova Scotia, provincial governments in the Atlantic provinces started to ease restrictions in early May, with New Brunswick reopening most of its economy from May 8. The number of employed people increased in New Brunswick (+17,000), Newfoundland and Labrador (+10,000), Nova Scotia (+8,600) and Prince Edward Island (+2,600).

Green Shoots

There is increasing evidence that the economy has bottomed and is gradually improving. Business shutdowns are easing, and while it will be some time before we see a complete reopening, early signs of improvement are evident.

A Bloomberg News poll taken at the end of May found that 30% of respondents who had lost their job or seen hours decline because of the coronavirus pandemic said they were re-employed or working more. The survey, conducted by Nanos Research, is consistent with other high-frequency data from Indeed Canada and Google that suggest stabilization in labour conditions and economic activity over the past few weeks.

The rebound story is also reinforced by Canadians’ movement patterns. Mobility data from Apple and Google smartphones during the latter half of May suggest more people present in retail stores and parks — coinciding with re-openings across Canada. While transit usage remains down, driving and walking have picked up, a positive sign for commerce.

In addition, the Office of the Superintendent of Bankruptcy Canada reported that the total number of insolvencies (bankruptcies and proposals) decreased by 38.7% in April compared to the previous month. Bankruptcies decreased by 41.5% and proposals decreased by 37.2%. The total number of insolvencies in April 2020 was 43.5% lower than the total number of insolvencies in April 2019. Consumer insolvencies decreased by 43.1%, while business insolvencies decreased by 54.8%.

On another positive note, commodity prices have rebounded. Most notably for Canada, oil prices have risen sharply–great news for Alberta and Saskatchewan. As well, the Canadian stock market has rebounded significantly and the Canadian dollar is up. The Bank of Canada noted this week that the worst of the pandemic decline is behind us.

The Royal Bank economists survey of consumer spending in May shows continued recovery as discretionary spending is returning.

  • “As Canadian provinces take steps to reopen their economies, consumers have begun spending more on the discretionary items they shunned during the early phase of the pandemic.
  • Entertainment and art spending has benefited most from easing restrictions.
  • Spending on dining out continues to recover from lows, as restaurants adapt to take-out and other delivery models.
  • Formerly slow spending at merchants selling apparel, gifts & jewelry picked up steam in early May; Canadians spent more at clothing stores in particular.
  • Spending at merchants selling household goods remains strong, reflecting spending at DIY construction stores, and on appliances and furniture.
  • Canadians began to drive more through early May, and card spending on auto expenses continued to pick up.
  • In mid-May, spending at entertainment and art merchants was down 37% from a year earlier, compared with a 58% drop in late April.
  • Golfers dusted off their putters as golf courses opened up around the country. Those who prefer playing inside continued to spend on online and console gaming.”

Concerning the housing market, before the pandemic, we were going into the spring season with the prospect of record sales activity in much of the country. Aside from oil country–Alberta and Saskatchewan–all indications were for a red-hot housing market. So the underlying fundamentals for housing remain positive as the economy recovers. How long that will take depends on the course of the virus and whether we see a second wave in the fall.

Real estate boards report a pick-up in home sales in May in the GTA and GVA.

Interest rates have plummeted. Thanks to the 150 basis point decline in the prime rate, variable rate mortgage rates have fallen for the first time since late 2018. Once the Bank of Canada was able to establish enough liquidity in financial markets, even fixed-rate mortgage rates have fallen.

The posted mortgage rate finally fell to 4.94% last week, but it remains well above contract rates; but with any luck at all, this qualifying rate for mortgage stress tests will ease in coming months and the regulators will change the qualifying rate to a contract rate plus 200 basis points, as planned to happen in April before the pandemic hit.

The Bank of Canada will remain extremely accommodating. In my view, interest rates will not rise until 2022.

One piece of bad news for housing was yesterday’s CMHC announcement of a tightening in mortgage qualification rules for mortgage borrowers with less than a 20% down payment. As I wrote yesterday, I believe this action flies in the face of measures taken by the Bank of Canada, OSFI, and the Department of Finance to cushion the blow of the pandemic and prevent unnecessary insolvencies. CMHC’s tightening measures reduce housing affordability, especially for first-time home buyers, by more than 10% and are totally unwarranted from a prudential perspective. For more on that, see yesterday’s report. As well, Bloomberg News also suggested the same in their article, Canadian Housing Agency Draws Fire For Tightening Mortgage Rules.  By Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres.

Near-Record Decline in Q1 GDP Better Than Flash Estimate

The hand-wringing about the Q1 GDP data released today misses the point that the data were actually better than expected. The Canadian economy declined at an 8.2% annualized rate in the first quarter, less harsh than the earlier estimate by StatsCan of -10%. Of course, every sector of the economy was hit by the enforced shutdown, but not by nearly as much as most economists anticipated. For the month of March, the decline was 7.2%, less dire than the -9% earlier estimate.

In light of the current unprecedented national and global economic environment, StatsCan is providing leading indicators of economic activity. Their preliminary flash estimate for April is an 11% decline in real GDP. This estimate will be revised as more info becomes available, but the March and April decreases are likely to be the largest consecutive monthly declines on record.

 

The Economy Has Bottomed

It looks increasingly likely that we are already past the bottom of the latest economic downturn, with GDP potentially getting back on a positive growth trajectory as early as May.

That won’t be enough to prevent a historically large drop in Q2 output– likely multiples of the decline in Q1–but it would leave the data tracking along the more “optimistic” end of the -15% to -30% growth range estimated by the Bank of Canada in their last Monetary Policy Report. Government support programs for those losing work have been unprecedented–household disposable income actually edged up slightly in Q1 despite the large drop in overall economic activity, boosted by government transfers. With the decline in spending in March and April and the rise in disposable income, the savings rate is soaring. All of us are saving money by doing our own cooking and cleaning. We aren’t travelling and shopping is certainly limited, not to mention the savings on gasoline, entertainment, hairstyling and gym memberships. Hopefully, this could provide a cushion to support spending and the economy will turn sharply higher in Q3.

Still, the three million jobs lost over March and April will not be recouped quickly. The lockdown is easing only gradually, and any activities requiring large gatherings–think tourism, conferences, concerts, movies and sports–will remain closed until there is a vaccine or effective treatment. We expect things will begin to get better from this point, but still look for the unemployment rate to remain elevated at 8.5% in Q4 of this year. It is currently 13%.

The Housing Outlook

Much has been made of the recent CMHC Housing Market Outlook report released this week. The gloomy outlook of up to an 18% drop in home prices, a delayed recovery not until 2022, and a 20% arrears rate garnered headlines. First-time homebuyers were warned that housing was no longer a good investment, at least not over a three-year horizon. But the CMHC’s own data shows that home prices have risen an average of 5% annually over the past twenty-five years. And though no one’s retirement nest egg should consist solely of their residential real estate, a home is one of the few investments that you can actually use. People buy homes for many reasons well beyond wealth accumulation. The pride of ownership and lifestyle choice dominates the decision to buy for many.

Also this week, the Governor of the Bank of Canada suggested that the doomsters were overly pessimistic and asserted his view that the economy would recover from its medically induced coma much faster than the pessimists were suggesting. Clearly, none of us have a crystal ball, nor have we ever before experienced a pandemic recession. While we rise from the abyss, the pain may well be far from over. People are still losing jobs and many businesses continue to sink. Any recovery is dependent on whether the virus cases keep slowing and whether there is a second wave of infections.

But oil prices have risen sharply, a major boon for Alberta and some high-frequency data have improved. The stock market is well off its lows, interest rates have fallen sharply and the qualifying rate for mortgage stress tests has fallen to 4.94%. Actual mortgage rates are near record lows and are likely to remain low for the foreseeable future.

In time, immigration to Canada will restart, and foreign students will return. New businesses are blossoming even now and many sectors will continue to advance. To name a few, we are seeing burgeoning growth in telemedicine, artificial intelligence, big data analysis, cloud services, cybersecurity, 5G, home entertainment, virtual everything, home fitness, DYI renovations, indeed, DIY anything.  By Dr. Sherry Cooper Chief Economist, Dominion Lending Centres.

Mortgage Interest Rates

Fixed mortgage rates appears to have bottomed out with rates right back at historically low levels.   Variable rates discounts deepened in the last week to become more competitive and appealing  compared to fixed rates.   View rates Here – and be sure to contact us for a quote to help you find the lowest rate for your specific needs and product requirements.

The Bank of Canada’s kept it’s overnight rate is 0.25%.  Prime lending rate remains at 2.45%.  What is Prime lending rate?  The prime rate is the interest rate that commercial banks charge their most creditworthy corporate customers.  The Bank of Canada overnight lending rate serves as the basis for the prime rate, and prime serves as the starting point for most other interest rates.  Bank of Canada Benchmark Qualifying rate for mortgage approval is 4.94%. 

Mortgage Update - Mortgage Broker London

Mortgage Update – Mortgage Broker London

Your Mortgage

If you have concerns about your mortgage and the rapidly changing market, please contact us to discuss your needs, concerns and options in detail to protect your best interest.

Ensure that your current mortgage is performing optimally, or if you are shopping for a mortgage, only finalize your decision when you are confident you have all the options and the best deals with lowest rates for your needs.

Here at iMortgageBroker, we love looking after our clients’ needs to ensure you get all the options and the best deals and best results.  We do this by shopping your mortgage to all the lenders out there that includes banks, trust companies, credit unions, mortgage corporations & insurance companies.  We do this with a smile, and with service excellence!

Reach out to us – let us do all the hard work in getting you the best results and peace of mind!

We encourage you to follow guidelines from our public health authorities:

Middlesex Health Unit

https://www.healthunit.com/novel-coronavirus

Southwestern Public Health

https://www.swpublichealth.ca/content/community-update-novel-coronavirus-covid-19

Ontario Ministry of Health

https://www.ontario.ca/page/2019-novel-coronavirus

Public Health Canada

https://www.canada.ca/en/public-health/services/diseases/coronavirus-disease-covid-19.html

Factual Statistics Coronavirus COVID-19 Globally:

https://www.worldometers.info/coronavirus/

https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

 

28 May

RESIDENTIAL MARKET UPDATE

General

Posted by: Adriaan Driessen

Industry & Market Highlights 

The Benchmark Qualifying Rate Dropped from 5.04% to 4.94%

Announcement on Monday, May 25th from the Bank of Canada that the Benchmark rate dropped from 5.04% to 4.94%.  This means that the average household income purchasing power has increased slightly and that you may qualify for on average $3k to $7k more in your maximum purchase price point.  It is not going to make a large difference you your qualifying, but for many first time home buyer every little bit helps.  Contact us for more information!

 

Housing market beginning to normalize after historically bad April: TD

Home sales dropped off a cliff in markets across Canada to what TD Senior Economist Brian DePratto called “historically depressed levels” in April.

It was enough to give most market observers whiplash as the year started on such an upbeat note that some commentators were even worrying that areas of the market were at risk of overheating during what was expected to be a blazing hot spring homebuying season.

But as the COVID-19 pandemic bore down on Canada, buyers began stepping to the sidelines before eventually being forced to do so by strict physical distancing measures introduced to curb the virus’ spread and the economic turbulence that came with it.

The result was a countrywide drop in sales activity last month that blew past any decline recorded during the 2008-2009 Global Financial Crisis for the worst for volume since 1984.

The enormity of the declines thankfully did not blindside housing market experts who had been predicting a huge, but temporary, hit to activity. And with April behind us, the market will now begin the steep, long climb back to some version of normalcy.

“With April in the rear-view, we can start talking about ever so tentative improvements in sales activity as provinces begin to gradually re-open their economies,” wrote TD’s DePratto in a research note late last week.

“We do expect sales to remain depressed for a few months longer as job markets slowly improve and buyers remain cautious, but a normalization process is likely already underway,” he continued.

DePratto’s counterpart on RBC’s economics team, Robert Hogue, issued a similar prediction that April’s activity levels would be as bad as things get for Canada’s resale housing market.

“Provinces are beginning to relax some restrictions—including Quebec earlier this week lifting its lockdown orders on the real estate industry—which will help house hunting function a little more normally going forward in parts of the country,” wrote Hogue in a note published Friday.

“Exceptionally low interest rates will also contribute to a gradual recovery taking hold in most markets across Canada,” he added.

Hogue went on to point out that the Canadian Real Estate Association, which released its grim April sales and pricing data on Friday, noted that it had already observed an uptick in sales and listings in its preliminary data for May.  By Sean MacKay.

 

Residential Market Commentary – Downplaying dire doomsayers

As the Canadian economy starts its slow walk back toward normalcy, or towards whatever the new normal is going to be, Bank of Canada Governor Stephen Poloz is calling out the doomsayers.

With about a week to go before he steps aside on June 2, Poloz says he believes the economy is on track for a healthy recovery from the COVID-19 pandemic, starting in the second quarter of this year.

“Where we are today suggests we’re still tracking to our best-case scenario … not the dire scenario,” Poloz told reporters during a video roundtable last week.

“I do believe the… [pessimism]… I’m hearing is a little too dire.  It’s a little overblown,” he said.

To Poloz’s way of thinking, too many forecasters are fixating on the collapse of the country’s GDP.  But he points out that the underlying “behavioral adjustment” by people, the “downward spiral in confidence” normally associated with recession and depression is not occurring.

The Governor’s theory appears to be born-out, at least modestly, by the latest read on consumer confidence by the Conference Board of Canada.  The figures for May show a 16 point increase in confidence from the record low of 47.5 hit in April. 

The index now sits at 63.7 points.  That is still 60 points below the pre-lockdown reading in February.  But the numbers are also improving as Canadians look ahead.  There is less pessimism about future finances and worries about future employment have also eased.  By First National Financial. 

 

Separating during the pandemic: What homeowners need to know

COVID-19 has impacted all sectors of the economy, including real estate. The uncertainty is particularly challenging for homeowners who are at a crossroad in their relationship or in the process of separating.

The heightened tension created by the pandemic can fuel anger and conflict, leaving children especially vulnerable. If it becomes too tense in the residence and someone needs to leave, the process has become a little more challenging than before, but there are still viable options.

Should homeowners sell when there is a separation during the pandemic?

At the time of writing, real estate remains a sellers’ market with little supply. It may be more difficult for families in need of alternative living arrangements to allow for a physical separation.

It is also challenging for couples to get an accurate value of their property because the markets are in such flux. Compounding this is the difficulty for a spouse to qualify for a mortgage if their income has been affected by a layoff or a termination as a result of the coronavirus. With such an overwhelming scenario and an uncertain economy, now may not be the best time to make important decisions such as selling the family home.

It may make more sense to access short-term rental accommodation during the pandemic while the legalities of the separation are sorted. The protocols for finding a rental property have changed to accommodate physical distancing, with virtual showings, and only people with serious offers may be able to attend in person to see the place before finalizing the offer to lease.

Consider the best interest of children

Couples struggle to know if it is in their children’s best interest to stay together under the same roof, even if there is a lot of acrimony, or if it’s better to live physically apart.

While it’s likely harmful to the children’s well-being if the family stays together under tense or acrimonious circumstances, there may also be harm to the children if a parent leaves without a formal parenting plan in place. Struggling parents should look for counsellors, lawyers, mediators and financial planners who now offer their services by phone or videoconference, to get quick, professional guidance toward the solutions that work best for the family’s circumstances.

Who pays what?

Money is often the biggest source of conflict, and this could get worse if someone’s livelihood was affected by the pandemic. They struggle to find a fair way to pay the household expenses and the children’s expenses after the decision to separate has been made – even if they continue to live under the same roof.

While there is no one-size-fits-all solution, there are many ways to deal with expenses. It depends on a number of factors, including who has financial resources. It may make sense to continue the same arrangements that were in place before the decision to separate until professionals can guide the family towards different arrangements.

In some cases, couples put an agreed amount of money in a joint account and use that to pay family expenses until there is a more long-term arrangement in place. Sometimes, separating spouses may even be able to structure their payments in a way that maximizes tax savings. It should be noted that if a couple decides to live in two separate residences during separation, these expenses are shared equally.

Family laws are fairly complex when it comes to finances and money, and it is recommended to speak to a family law lawyer or mediator about these types of questions.

Legal ways to separate

Among the various legal approaches, there are two very good options for separating families, and they are collaborative negotiations and mediation. These two systems are encouraged as the first choice under Ontario’s revised Family Law Act, to help families reach agreements out of court with the aim of preserving some kind of relationship after the legal process is complete. The cost also tends to be less than going to court.

Professionals that work in these two systems have received special negotiation and communication training, using specific techniques that are very beneficial to helping their clients and families.

Especially with courts closed during the pandemic, and only urgent matters being heard, collaborative negotiation and mediation offer fantastic avenues for couples to quickly access help and find solutions that are best for their family’s needs.  By Nathalie Boutet. 

 

OREA sets new ground rules for realtors as Ontario’s economy restarts

The Ontario Real Estate Association (OREA) has published its latest guidelines on home purchase transactions in the era of COVID-19.

“The health and safety of our realtors and their clients is OREA’s top priority during this pandemic,” said Sean Morrison, president of OREA. “As Ontario’s economy reopens, many Ontarians are looking to get back into the real estate market. Realtors are here to help make home buyers and sellers feel comfortable and safe while they work to find their dream home. OREA’s guidelines have been informed by up-to-date information from public health, best practices from the industry and experiences in jurisdictions across North America.”

OREA was among the earliest organizations to have petitioned a shift to mostly online transactions once the coronavirus pandemic took hold in late March.

“Now that the Ontario government has announced stage one of its plan to re-open the economy and with many consumers looking to get back into the market, it is important that realtors continue to help their clients feel safe and secure and keep the virus at bay,” OREA said in a statement this week.

The association is mandating its agents to “continue [using] virtual tools, conduct virtual open houses and virtual showings to the greatest extent possible,” despite the restarting of the economy. This includes maximizing the use of phone, email, and video communications with clients, as well as processing all documents via electronic channels.

Agents should also “thoroughly disinfect surfaces, leave doors open and keep lights on at all times during in-person showings,” OREA said. “When interacting with clients, maintain physical distancing and use personal protective equipment when distancing is not possible.”  By Ephraim Vecina. 

 

Pandemic disruptions won’t cause new home supply shortage: BMO

After a good showing in April, the team at BMO Economics is confident that home construction across Canada won’t see a major disruption due to the COVID-19 pandemic.

A report from the Canada Mortgage and Housing Corporation (CMHC) published late last week saw housing starts in April rise 11 percent over the same period last year despite the significant economic turbulence caused by the pandemic.

While starts still declined from March’s activity levels before the pandemic’s impact was fully felt, BMO Senior Economist Robert Kavcic called the home construction activity level “solid” amid shutdowns across many other sectors. Housing starts measure how many homes began construction during a given period and are generally viewed as a key factor in determining market health.

“Indeed, construction is one sector that appears to have skated through April with less damage than most, given softer restrictions and the ability to social distance on site,” wrote Kavcic in a research note.

With his relatively upbeat commentary, Kavcic joins fellow industry experts at TD and real estate consultancy Altus Group in predicting that home construction across the country would likely be less vulnerable to the disruptive effects of the pandemic than other sectors of the economy and even segments of the real estate industry.

Altus Group had published a projection last month that Canadian homebuilding would bounce back by July, but this was before the encouraging and prediction-defying April construction figures were published.

“One takeaway from this is that we’re not likely to see any material [housing] supply shortage coming out the other side, and the bigger risk for housing is that demand is more permanently depressed if the job market isn’t able to come back strongly,” wrote Kavcic.

The recession’s duration and the ultimate scale of the job loss caused by the virus are key questions economists have been grappling with when making predictions about the ability of the Canadian housing market to regain momentum after the worst effects of the pandemic have subsided.

Many in the industry, both in resale and new construction, are pinning their hopes on homebuyers sidelined during the crisis returning to the market in the late summer and fall, resulting in a late-year home sales rebound.

Those in the homebuilding industry have had plenty of reasons to celebrate so far this month with the better than expected housing starts data and the Ontario provincial government continuing to loosen restrictions on home construction activities.

But, as Kavcic pointed out, this is only one side of the supply and demand equation.  By Sean MacKay

 

Home sales fall, debt worries rise

The latest statistics from the Canadian Real Estate Association are stark but they should not be surprising.  April sales hit a 36-year low, down nearly 57% from a month earlier and down almost 58% year-over-year.

As with March, though, average prices remained steady.  Compared to a year ago the national average dipped 1.3% to just over $488,000.  With Toronto and Vancouver taken out of the calculation the national average drops by nearly $100,000.

CREA points out that its composite Home Price Index shows an increase of almost 6.5% YoY.

The association is not offering any forecasts on sales or prices going forward.

As the COVID-19 pandemic continues to run roughshod through the housing market, the Bank of Canada is repeating its concerns about high household debt.  The Bank sees the number of vulnerable households – those that put more than 40% of their income toward debt payments – increasing and falling behind on loan payments. 

Calculations by the BoC indicate that up to one-in-five home-owning households do not have enough money to cover two months of expenses.  One-third do not have enough to cover four months.  Some 700,000 households have received deferrals, so far.

The central bank’s projections see the mortgage arrears rate climbing by about 0.8%, peaking next year when payment deferral plans offered by lenders start to expire.  This is the Bank’s current, worst case scenario.  The current mortgage arrears rate stands at just 0.2%.  By First National Financial.   

 

Key trends indicate slower housing market for rest of 2020

Flagging immigration numbers along with much-reduced purchasing power will pull down market activity for the rest of the year, according to the latest TeranetNational Bank of Canada House Price Index.

The steep climb in national unemployment numbers – from February’s 5.6% to 13% in April – will also have a significant influence in housing sales and values.

“In this context, demand for housing may decrease due to a reduction in immigration and would-be first-time homebuyers not being able to qualify for a mortgage loan,” Teranet said. “At the opposite, supply may be fuelled by homeowners unable to meet mortgage payments and for that reason will look to sell their home. In other words, a lasting high unemployment rate could mean downward pressure on house prices.”

The composite index in April was 5.3% higher than the same time last year. Ottawa-Gatineau (13.2% higher) imparted the most upward movement, along with Montreal (9.5%), Halifax (9.5%), Hamilton (8.9%), and Toronto (8.2%).

With the COVID-19 pandemic continuously savaging global markets, Canada Mortgage and Housing Corporation (CMHC) said that the pace of recovery will be markedly slow, with pre-recession prices returning only after three years.

“For Canada and for Ontario, I think, the best case we’re looking at … house prices getting back to their pre-recession levels, at the earliest, by the end of 2022,” CMHC Chief Economist Bob Dugan said.  By Ephraim Vecina.

 

Household debt growth outstripping all other debt types

Over the last few decades, household debt growth accelerated faster than every other debt class, according to real estate information portal Better Dwelling.

Citing data from the Bank of Canada, the analysis said that the trend “makes Canadian households [among] the most vulnerable” globally.

“In 2000, household debt was just 58% of GDP. By the end of 2019 Q4, that number has hit 100% of GDP,” Better Dwelling said. “This is amongst the highest of advanced economies.”

BoC numbers indicated that national household debt hit a peak of $2.28 trillion in March, increasing by 0.44% from February and 4.6% from March 2019. Outstanding mortgages accounted for $1.64 trillion of this sum, rising by 0.49% monthly and 5.3% annually.

The impact on monthly budgets was inevitable: Even before the COVID-19 pandemic took hold, Canada’s insolvency incidence was already at 11,575 filings as of February, which was the highest level since 2010.

The Office of the Superintendent of Bankruptcy Canada said that this volume was 9% higher on an annual basis. Ontario posted the greatest increase during that month, at 3,837 filings (up 16.8% year over year), with Quebec’s 3,770 filings (up 1.9% annually) coming in at a close second.

“[These figures] underscore how vulnerable Canadian households are to income interruption. Over the next few months we’ll likely see an unfolding of two crises: the global pandemic and the bursting of the Canadian consumer debt bubble,” MNP LTD president Grant Bazian said. “Many households were already limited in their ability to face any kind of financial disruption. Now, all Canadians are feeling the effects on their paycheques, pocketbooks and stock portfolios. Those who were already saddled with a lot of debt are in economic survival mode.”  By Ephraim Vecina.

 

Expect rapid post-pandemic recovery – BoC’s Poloz

Despite multiple headwinds and the continuous ravages of COVID-19, Canadian market activity and purchasing power will be able to recover quickly after the outbreak eases, according to outgoing Bank of Canada Governor Stephen Poloz.

“We have to be able to manage the risks around those things, so I’m not going to dismiss [the worst scenarios],” Poloz told BNN Bloomberg. “But, me personally, I do think on balance what I’m hearing, the flow that I’m hearing, is a little too dire, a little bit overblown.”

In the greater scheme of things, the coronavirus will not be a fatal roadblock, Poloz said. While the national economy is still on track to decline at least 15% this year, “you should see a very rapid return to production” once the economy restarts in late 2020, he said. “I’m relatively optimistic, what I find, compared with what the talk is.”

These predictions dovetailed with other observers’ forecasts of speedy post-pandemic recovery across the board, pointing at the Canadian financial system’s robust fundamentals.

However, the pace of this recovery will depend on homeowners not selling their assets, according to TD Economics.

“Absolutely key to our forecasts is the assumption that listings mirror sales by dropping substantially in the near term and recovering gradually thereafter,” said TD economist Rishi Sondhi. “This puts a floor on prices and sustains relatively tight supply-demand balances across most markets, allowing for the resumption of positive price growth as provincial economies are re-opened.”  By Ephraim Vecina. 

 

Why does CMHC’s Evan Siddall think Canada is headed for a ‘deferral cliff’?

In comments delivered to the Standing Committee on Finance on Tuesday, Canadian Mortgage and Housing Corporation CEO Evan Siddall laid out a potentially bleak scenario for the country’s homeowners. Siddall told parliamentarians that by September, if Canada’s economic recovery fails to generate enough momentum, 20 percent of mortgages could be in arrears.

“A team is at work within CMHC to help manage a growing debt ‘deferral cliff’ that looms in the fall, when some unemployed people will need to start paying their mortgages again,” Siddall said during the Committee’s videoconference. “As much as one fifth of all mortgages could be in arrears if our economy has not recovered sufficiently.”

It was one of many disturbing claims made by Siddall, who also told the Committee that the nominal house price in Canada could fall by as much as 18 percent over the next six to 12 months, with the biggest losses expected in oil-driven economies like Alberta and Saskatchewan and in overheated markets like Toronto. If prices fall by 10 percent, Siddall said first-time buyers could lose as much as $45,000 on a $300,000 home.

But the deferral issue didn’t seem to phase him.

“Canadians do a very good job of paying their mortgages, even when they’re under water, so our loss forecasts are not extreme,” he said in an exchange with Progressive Conservative MP Pierre Poilievre. When asked by Poilievre for CMHC’s potential loss forecast, Siddall estimated that it could be as high as $9 billion.

According to DLC’s Dr. Sherry Cooper, Siddall’s claim that 20 percent of mortgages could be delinquent by September borders on the ridiculous.

“It’s kind of bizarre to me,” she says. “Most economists are finding fault with it.”

An arrears rate of 20 percent would essentially mean that the Bank of Canada’s efforts to ensure the availability of credit and the federal government’s pumping of billions of dollars into the economy to prevent business closures and forced bankruptcies will actually accelerate the rate at which Canadian mortgages are turning sour.

“The Bank of Canada estimates that the delinquency rate could possibly move up from .25 percent to .8 percent. And now we’re talking about 20 percent delinquency rates?” Cooper says. “Give me a break.”

When asked if there was a possibility that Siddall was referring to deferrals when he used the word “arrears”, Cooper was doubtful.

“No, he’s a very smart guy,” she says, despite the unlikelihood of his prediction.

“It’s not going to happen. The highest delinquency – which is what ‘arrears’ is – rates we’ve ever seen in history are nowhere near [the projected 20 percent],” she says.

Centum FairTrust owner Jimmy Hansra agrees with Cooper’s assessment.

“The government has been pretty proactive in terms of providing as many programs as they possibly can to weather the storm,” he says, adding that there’s “no way” Siddall’s arrears projection is accurate.

“Even his comments about CMHC seeing housing prices falling by 18 percent I think are overblown, too,” says Hansra. “Nobody knows what’s happening with house prices.”

Hansra isn’t preparing for the kind of worst-case scenario Siddall laid out. Instead, he says his team is readying themselves for a potential, although still unlikely, stream of borrowers looking for refinancing or equity take-out solutions that will require private money.

“I don’t see it happening,” he says, “But if it does, I think that’s the only way mortgage professionals are going to be able to provide financing for their customers. Because if they’re not going to be able to make their mortgage payments and they have equity sitting in their home, either people are going to look to use home equity lines of credit to make those payments or they’ll look for some sort of second or third mortgage financing.”

Hansra stresses that projections like Siddall’s, particularly when they’re made at a time with no parallel in human history, need to be taken with a few million grains of salt.

“It’s all a guess,” he says.

If CMHC did envision a 20 percent arrears rate by fall, a fair question to ask, says RateSpy founder Robert McLister, is why they are not acting now to mitigate what would be an utter catastrophe for the Canadian economy.

“I think that if the government really thought there was going to be 20 percent arrears, they would take action,” McLister says. “You can’t have one in five homeowners not paying their mortgage, with a large percentage of those leading to liquidation. You know what that would do to home prices. You know what that would do to the economy. It’s not going to happen.” By Clayton Jarvis

 

Stress test 2.0? What a 10% minimum down payment requirement would mean for Canadian buyers

Canadian Mortgage and Housing Corporation CEO Evan Siddall’s recent address to the Standing Committee on Finance contained a plethora of negative projections, from housing prices falling by 18 percent to one-fifth of all Canadian mortgages being in arrears by September. But it was his comments around the advantages of making 10 percent down payments and CMHC’s attempts to limit demand that have the industry wondering if an increase in the minimum down payment requirement may be in the cards.

As Siddall made his case for the approaching “deferral cliff”, a scenario where unemployed homeowners who have deferred their mortgage payments are asked to start making them again despite not returning to work, he shared with parliamentarians two key pieces of data that associate five percent down payments with increased risk.

The first, a chart that tracks the percentage of loans in deferral by their loan-to-value ratios, showed that 69 percent of the mortgages currently in deferral fall into the 90-95 percent LTV category. The implication seems to be that if there were fewer borrowers putting down five percent, the deferral cliff Siddall described might be less towering.

Siddall singled out first-timers again when he discussed the potential losses they could face if housing prices fall by 10 percent.

“Unless we act, a first-time homebuyer purchasing a $300,000 home with a 5 per cent down payment stands to lose over $45,000 on their $15,000 investment if prices fall by 10 per cent,” Siddall’s statement read. “In comparison, a 10 per cent down payment offers more of a cushion against possible losses.”

Because CMHC will be on the hook for any insurance claims triggered by failing mortgages, Siddall also said the Corporation is evaluating its underwriting policies.

“So if housing affordability is our aim, as surely it must be, then there must be a limit to the demand we help to create, especially when supply isn’t keeping up,” he said.

That’s the same logic that gave Canada its mortgage stress test. Many brokers are worried that a 10 percent minimum down payment would have a similarly chilling effect on business

Few in the industry seem to think the change is imminent. Either way, the discussion around down payment levels has shone a harsh light on the anxiety-ridden situation facing first-time buyers.  By Ephraim Vecina.

 

Re/Max challenges CMHC home price projections

Housing industry players are opposing Canada Mortgage and Housing Corporation’s dire forecast of an 18% decline in home prices over the next 12 months, claiming that demand remains elevated and inventories continue to hover near record lows.

“Assuming that demand continues its current course, Canadian real estate prices will likely remain relatively stable or experience a single-digit price correction at worst,” RE/MAX said, adding that its agents are still reporting multiple offers on a regular basis.

“CMHC doesn’t seem to understand the sheer number of sellers that would have to accept this kind of price reduction, in order for average housing prices to plummet to this degree in such a short time span,” said Christopher Alexander, executive vice president and regional director with RE/MAX of Ontario Atlantic Canada. “Sellers simply won’t accept that kind of discount on their listings. A statement of this nature is panic-inducing and irresponsible.”

Government agencies should instead focus on how the housing markets – and the Canadian financial system as a whole – could weather the unprecedented impact of the coronavirus, according to the C.D. Howe Institute.

“Ottawa and the provinces need to recommit to fiscal and monetary anchors in light of the unprecedented stimulus response provided by all levels of government and the Bank of Canada throughout the COVID-19 crisis,” C.D. Howe said. “Canada is emerging from the first wave of the pandemic with very high public and private debt loads and is increasingly dependent on domestic and foreign investors to finance them. With the loss of Canada’s fiscal anchor, maintaining investor confidence so that public and private debt can be carried at a reasonable cost is essential.”  By Ephraim Vecina. 

 

Mortgage Interest Rates

Fixed mortgage rates have been dropping steadily in the past two weeks with fixed rates right back at historically low levels.   Variable rates discounts deepened only slightly.   View rates Here – and be sure to contact us for a quote to help you find the lowest rate for your specific needs and product requirements.

The Bank of Canada’s target overnight rate is 0.25%.  Prime lending rate is 2.45%.  What is Prime lending rate?  The prime rate is the interest rate that commercial banks charge their most creditworthy corporate customers.  The Bank of Canada overnight lending rate serves as the basis for the prime rate, and prime serves as the starting point for most other interest rates.  Bank of Canada Benchmark Qualifying rate for mortgage approval is 4.94%. 

 

Mortgage Update - Mortgage Broker London

Your Mortgage

If you have concerns about your mortgage and the rapidly changing market, please contact us to discuss your needs, concerns and options in detail to protect your best interest.

Ensure that your current mortgage is performing optimally, or if you are shopping for a mortgage, only finalize your decision when you are confident you have all the options and the best deals with lowest rates for your needs.

Here at iMortgageBroker, we love looking after our clients’ needs to ensure you get all the options and the best deals and best results.  We do this by shopping your mortgage to all the lenders out there that includes banks, trust companies, credit unions, mortgage corporations & insurance companies.  We do this with a smile, and with service excellence

Reach out to us – let us do all the hard work in getting you the best results and peace of mind!

We encourage you to follow guidelines from our public health authorities:

Middlesex Health Unit

https://www.healthunit.com/novel-coronavirus

Southwestern Public Health

https://www.swpublichealth.ca/content/community-update-novel-coronavirus-covid-19

Ontario Ministry of Health

https://www.ontario.ca/page/2019-novel-coronavirus

Public Health Canada

https://www.canada.ca/en/public-health/services/diseases/coronavirus-disease-covid-19.html

Factual Statistics Coronavirus COVID-19 Globally:

https://www.worldometers.info/coronavirus/

https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

 

11 May

RESIDENTIAL MARKET UPDATE

General

Posted by: Adriaan Driessen

Industry & Market Highlights 

How you are doing after 7 weeks or social distancing and quarantine restrictions due to the COVID-19 pandemic health crisis and the economic crisis?  We will continue to stay positive and take this one day at a time though we are all experiencing some devastating lows.  

There are signs of change and more positive news are brining hope that tides have turned and that we are taking a turn to head back to normal, but time will tell.  The return to new normal might look different than what we expect.  The spring market in real estate has returned and in our minds the sense of a new season have helped and we all hope the current new reality will become distance history sooner than later.

Thank you to our essential workers for their courage and compassion during fearful and uncertain times.  

We are always here to help you with good advice, guidance, counsel, direction or the right connections for your real estate mortgage financing related questions or needs.  Reach out to us!

Reminder to always research and consider facts and to not allow news media or social media to manipulate or disable our critical thinking with fear.

Factual Global Statistics Including COVID-19:

https://www.worldometers.info

Ontario announces new list of businesses that can reopen

TORONTO — Ontario has announced a list of more businesses than can open, with strict guidelines in place, as the province moves with “cautious optimism” to restart the economy.

Premier Doug Ford said Wednesday garden centres and nurseries will be allowed to reopen as of Friday at 12:01 a.m. On Saturday, hardware stores and safety supply stores will also be allowed to reopen.

On May 11, retail stores with a street entrance will be allowed to reopen for curbside pickup.

We’ve been preparing to get more and more of our economy working again safely and cautiously because when it comes to reopening our economy I’d rather be safe than sorry,” Ford said Wednesday.

MORE: Full list of businesses that can reopen in Ontario

“I want to be clear, all public health measures remain in place and will be strictly enforced. We can’t take the progress we have made for granted.”

“We will move with cautious optimism.”

A small list of other non-essential businesses in the province were allowed to reopen on Monday, when some seasonal businesses and construction projects were given the green light to continue operating.

Businesses that can now open their doors to customers will have to follow the same guidelines as grocery stores and pharmacies currently do, including promoting physical distancing and frequent hand-washing, sanitizing surfaces, installing physical barriers, staggering shifts, and offering contactless payment.

The province is not yet at the point of entering the first stage of its reopening framework, which — in addition to allowing workplaces that can modify operations to reopen — would see the opening of parks, allowing for more people at certain events such as funerals, and having hospitals resume some non-urgent surgeries.

Before Ontario can reopen, the chief medical officer of health is looking for a consistent, two-to-four week decrease in the number of new cases.

Last week, provincial government released a list of sector-specific guidelines industries must follow in order to reopen. 

The government said the new safety guidelines provide direction to various industries including retail, health care, manufacturing, tourism, restaurant and food service, offices, construction sites, and transit and transportation services.

The premier also unveiled a three-phase plan to reopen following weeks of shutdown. The plan, dubbed “A Framework for Reopening our Province,” states the parameters of each “gradual stage.”

Ontario also extended its emergency orders today, which include the continued closure of non-essential businesses, as the province reported 412 new cases of COVID-19 and 68 more deaths.

With files from The Canadian Press.  By Sean Davidson

Home Sales Drop in April, While Average Sales Price Remains Steady

Local home sales decreased more than 50% in April, as the COVID-19 pandemic and the social distancing rules incurred by it slowed the momentum on what was shaping up to be another record year for LSTAR REALTORS®.

Last month, there were 469 home sales in the entire jurisdiction of the London and St. Thomas Association of REALTORS®, down 55.4% from April 2019 and 54.8% less than in April 2010. The number of LSTAR’s listings dropped to 738 in April, which represents a 50.3% decrease from a year ago and 56.8% from ten years ago.

“As anticipated, the volume of sales was one of the lowest for April since the Association started tracking data, back in 1978,” said 2020 LSTAR President Blair Campbell. “However, when analyzing these figures, one has to take into account a few facts: at the beginning of April, the Government of Ontario prohibited open houses, many Sellers decided to postpone putting their properties on the market and many REALTORS® stopped trading in order to protect their families and their clients. Now, with the provincial Government planning to re-open the economy, we are expecting that, once that happens, the local markets will start to gradually recover,” he added.

Compared to a year ago, the overall average home price saw an increase of 0.4%, rising to $423,143 in April. This average sales price includes all housing types – from single detached homes to high rise apartment condominiums. In the five major areas of LSTAR’s region, average home sales price performed differently. The following table illustrates last month’s average home prices by area and how they compare to the values recorded at the end of April 2019.

“Looking at London’s three main geographic areas, London South saw the highest number of home sales last month, while London North saw the biggest price gain compared to April 2019,” Campbell said.

The average home price in London East was $353,009, up 3.7% from the same time last year, while in London North increased 4.6% over the same period to $530,499. In London South, which also includes data from the west of the City, the average home price was $428,479, down 1.6% over April 2019. St. Thomas saw an average price of $367,566, an increase of 3.1% from last April.

According to a report by the Canadian Real Estate Association, last month, in London, the median number of days that a home was on the market was 14 – up from 9 days in April 2019. In Elgin County, the median number of days spent by a home on the market was 18 – up from 16.5; in Middlesex County it was 16 – up from 15.5; in St. Thomas it was 14 days – up from 11; and in Strathroy was 8, down from 12 as compared to a year ago.

The following chart is based on data taken from the CREA National Price Map for March 2020 (the latest CREA statistics available). It provides a snapshot of how home prices in London and St. Thomas compare to some other major Ontario and Canadian centres.

By LSTAR London St.Thomas Association of Realtors.

There’s no such thing as a balanced market

You can’t dance at two weddings at the same time.

In terms of real estate, I would say this saying could refer to a balanced market. Is there even such a thing as a long-term balanced market? I would suggest that the short answer is no. It is either a seller’s market or a buyer’s market.

We are well accustomed to these terms, which relate to months of inventory on MLS, sales-to-new-listing ratios or absorption rates. These are key figures to look at, as they are indicative of whether we are in an over-supply or under-supply situation. Supply is everything. Ignore days on market or sales-to-list price ratios, as these figures can be easily manipulated.

According to CREA, in March 2020, we had 4.3 months of inventory nationwide, with higher inventory in the Prairies and Newfoundland/Labrador. The sales-to-new listings ratio was 64 per cent. Both figures would indicate very light seller’s market conditions.

You may think that 4.3 months of inventory is substantial (the long-term national average is 5.2 months, according to CREA). However, keep in mind that this inventory includes overpriced listings, unsaleable listings (usually because they are overpriced) and houses that are located on super-busy streets, in substandard areas and/or in poor physical condition (again, usually this is not reflected in the price). Irrespective of market conditions, I would suggest to you that, at a minimum, at least one-third of inventory falls into these categories. Yes… at least one-third of sellers are unmotivated (and this figure is probably higher). But this situation has existed for an eternity and won’t go away.

A balanced market lies somewhere in-between. The glass is half full or half empty. Or is it? It is sort of like purgatory. Neither heaven nor hell.

I think that a balanced market is temporary. The sand keeps shifting, so sellers and buyers do not know how to react. During this temporary period, sellers usually lean towards the “glass is half full” mindset, sure that market conditions are bound to improve. Buyers tend to lean towards the “glass is half empty”, thinking that the sky is falling. This is why, during balanced market conditions, it is so difficult to bring deals together. There is a chasm between the mindsets of both parties. We can only start doing more business when inventory either decreases or increases, and the gap between seller and buyer mindsets closes.

We are set to enter buyer’s market conditions across our fair nation. This means that we will see inventory exceed five months on average and the sales-to-new-listings ratio fall to below 40 per cent. Assuming inventories don’t swell, it certainly will be easier to bring buyers and sellers together than during temporary balanced times. Mark my words, inventory will grow as we enter into an economic recession.

Purchasers will be worth gold in a buyer’s market. So will motivated sellers. There is an old adage in real estate that I learned from the wonderful, late real estate mentor Howard Brinton: “In life you want to be the first-born child, the second spouse and the third Realtor.” Maybe it’s time to say good-bye to unmotivated clients and refocus on good business. Gone are the days where the seller says, “We are in no rush to sell” or “We are not going to give it away.” If we each had a loonie for every time that we heard that in our careers, we would be sitting together on a beach in the Caymans.

When we represent buyers in the new market reality, we need to keep a list of “the top 10 buys in today’s market.” Who doesn’t want a great buy? When we represent sellers, we need to show them where their home falls in relation to the competition, and price ahead of the market. More than ever, our listings need to be best in class, beautifully presented and the best priced in their segments.

And, we’ll have to be more creative in putting deals together. Buyers will be fussier than ever on inspections. Old roof shingles may be a problem. Sellers may have to re-roof or replace their furnace as a contingency in an offer. Vendor-take-back-mortgages may come back in vogue for hard-to-finance buyers.

In my last article in REM, I wrote about getting back to basics in our business. Part of this new reality is to take a hard look at our buyer and seller clients and choose to work with those who are most motivated. The glass is half full.  By Paul Maranger.

Residential Market Commentary – The new boss. Same as the old boss?

The Bank of Canada has a new Governor.  And it could be said that everything old is new again.

Current Governor Stephen Poloz will step down, as scheduled, at the start of next month.  He will be replaced by Tiff Macklem, an old hand at the central bank.

Macklem is currently the dean of the Rotman School of Business at the University of Toronto, but he has a long history at the Bank of Canada and was the senior deputy governor under Mark Carney.  He was also a deputy to finance minister Jim Flaherty and helped guide Canada through the Global Financial Collapse and the Great Recession.

Macklem’s experience with that crisis appears to have been a key factor in his appointment, as Canada now faces the economic fallout of the coronavirus pandemic.

Macklem and the Bank of Canada are in a tight spot.  They have run out of room to reduce interest rates and they are spending billions of dollars a week buying government bonds.  Macklem has already expressed his reluctance to see interest rates go negative, calling that move “a new source of disruption”, in an already disrupted financial system.

Given Macklem’s record we can look forward to a more staid, Carney-like, Governor.  (Stephen Poloz has been positively lively compared to many of his predecessors.)  As during the last crisis, the Bank could work to calm markets and investors with more forward guidance.  And, it is unlikely Macklem will tinker with the Bank’s 2% target for inflation, which he helped develop back in 1991.  By First National Financial. 

COVID-19 to push the housing sector on a downward slope – Moody’s

Market growth and activity in the Canadian housing sector will trend downward this year amid the sustained economic impact of the coronavirus outbreak, according to a recent study by Moody’s Analytics.

In its “Canada Housing Market Outlook: Tough Times Ahead” report released last month, Moody’s said that any pre-pandemic forecasts will have to be essentially scrapped.

“Shelter-in-place orders and social distancing have brought house hunting to a virtual halt while layoffs, the collapse in oil prices, and the plunge in equity prices have kept prospective buyers at bay,” Moody’s said. “The COVID-19 pandemic comes at a terrible time for Canada’s economy. Trade and investment were already struggling to make gains as the U.S.-China trade war and Brexit weighed on global demand. The pandemic soured this already-weak outlook almost overnight.”

With a clear majority of Canadians preparing themselves for the economy to worsen over the next few months, weaker consumer confidence and purchasing power will affect some regions more than others.

“The worst effects will be felt in regions that rely disproportionately on the leisure/hospitality, trade and energy industries,” Moody’s said, pointing at British Columbia and the Prairie provinces, in particular.

The report also said that these events will most likely aggravate other worrying trends.

On the national level, “the mortgage debt service ratio tracked by Statistics Canada increased from 6.4% of disposable income in mid-2016 to 6.8% in late 2019,” Moody’s said. “Consumer debt performance has also shown some signs of strain. In particular, bankruptcy filings and insolvency proposals have risen.”  By Ephraim Vecina

Home construction to start bouncing back in July: Altus

While home construction in Canada will be significantly disrupted through the spring by the COVID-19 pandemic, one of the country’s largest real estate consultancies sees builder activity beginning to ramp back up by the summer as restrictions introduced to combat the virus are loosened.

Speaking as part of a newly released web series, Altus Group Vice President and Chief Economist Peter Norman said home construction across the country would experience “considerable interruption” between April and June due to the strict social distancing and business shutdown measures in effect.

“Thereafter starts will begin to pick up again, but still be impacted by short-term interruptions to the sales cycle, and from supply chain turbulence at least through the third quarter. By the fourth quarter, starts are expected to have returned to normal and may even exceed recent highs as builders play catch up,” said Norman.

Altus Group is currently forecasting 158,000 housing starts in Canada for 2020, a massive decline from the 208,700 starts recorded across the country last year. Prior to the pandemic, the firm had been projecting 209,000 starts for the year and 214,000 starts for 2021.

Housing market observers will then be pleased to hear that Norman believes the construction bounce back through 2021 will be substantial, with Altus pencilling in over 210,000 starts for the year.

In mid-March, before the scale of the pandemic’s impact had fully emerged, Altus Group Executive Vice President Patricia Arsenault released a collection of scenarios that sought to outline the potential severity of the future disruptive effects on home construction.

Of the three scenarios explored — a minimal, moderate and prolonged disruption — Altus Group’s current view on the pandemic’s impact on Canadian home construction in 2020 aligns closely with Arsenault’s ‘prolonged disruption’ scenario, the bleakest of the three.

However, Norman’s forecast that housing starts will bounce back in 2021 is more upbeat and closer to the firm’s original pre-pandemic prediction for the year.  By Sean MacKay.

Mortgage Update - Mortgage Broker London

Mortgage Update – Mortgage Broker London

Economic Highlights

Pandemic Batters Canadian Jobs Market

A Recession Like No Other

The Canadian economy has been put in a medically induced coma. Never before in modern history have we seen a forced shutdown in the global economy so, not surprisingly, the incoming data for April is terrible. There is a good chance, however, that April will mark the bottom in economic activity as regions begin to ease restrictions.

The economy will revive, but the psychological shock is perhaps the most unnerving. Rest assured, however that, as severe as this is, there are real opportunities here along with the challenges. There are economic winners, not just losers. More on that later.

Employment in Canada collapsed in April, with 2 million jobs lost, taking the unemployment rate to 13.0%, just a tick below the prior postwar record of 13.2% in 1982 (see chart below). The record decline is on the heels of the 1 million job loss in March, bringing the cumulative two-month total to 15.7% of the pre-virus workforce.

Economists had been expecting double the job destruction–a 4 million position decline in April–in reaction to the reports that over 7 million Canadians had applied for CERB. Today’s news reflected labour market conditions during the week of April 12 to April 18. The applications for CERB are more recent, so we may well see these additional losses reflected in the May report. 

The 13% unemployment rate underestimates the actual level of joblessness. In April, the unemployment rate would have been 17.8% if the labour force participation rate had not fallen. Compared to a year ago, there were 1.5 million more workers on permanent layoff not looking for work in April – and so not counted as unemployed.

Also, the number of people who were employed but worked less than half of their usual hours for reasons related to COVID-19 increased by 2.5 million from February to April. As of the week of April 12, the cumulative effect of the COVID-19 economic shutdown—the number of Canadians who were either not employed or working substantially reduced hours—was 5.5 million, or more than one-quarter of February’s employment level.

In April, both full-time (-1,472,000; -9.7%) and part-time (-522,000; -17.1%) employment fell. Cumulative losses since February totalled 1,946,000 (-12.5%) in full-time work and 1,059,000 (-29.6%) in part-time employment.

Decline In Employment is Unprecedented

The magnitude of the decline in employment since February (-15.7%) far exceeds declines observed in previous labour market downturns. For example, the deep 1981-1982 recession resulted in a total employment decline of 612,000 (-5.4%) over approximately 17 months.

More of the drop in employment now is the result of temporary layoffs. In April, almost all (97%) of the newly-unemployed were on temporary layoff, whereas in previous recessions, most of the dismissals were considered permanent.

In April, more than one-third (36.7%) of the potential labour force did not work or worked less than half of their usual hours, illustrating the continuing impact of the COVID-19 economic shutdown on the labour market. But job losses were also still weighted, on balance, more heavily in lower-wage jobs. Average wage growth for those remaining in employment spiked sharply higher as a result to 11% above year-ago levels.

 

All provinces have been hard-hit

Employment declined in all provinces for the second month in a row. Compared with February, employment dropped by more than 10% in all regions, led by Quebec (-18.7% or -821,000).  Quebec leads the country in the number of COVID-19 cases and deaths.

The unemployment rate rose markedly in all provinces in April. In Quebec, the rate rose to 17.0%, the highest level since comparable data became available in 1976, and the highest among all provinces (see table below). The number of unemployed people increased at a faster pace in Quebec (+101.0% or +367,000) than in other regions.

Employment dropped sharply from February to April in each of Canada’s three largest census metropolitan areas (CMAs). As a proportion of February employment, Montréal recorded the largest decline (-18.0%; -404,000), followed by Vancouver (-17.4%; -256,000) and Toronto (-15.2%; -539,000).

In Montréal, the unemployment rate was 18.2% in April, an increase of 13.4 percentage points since February. In comparison, the unemployment rate in Montréal peaked at 10.2% during the 2008/2009 recession. In Toronto, the unemployment rate was 11.1% in April (up 5.6 percentage points since February), and in Vancouver, it was 10.8% (up 6.2 percentage points).

Employment Losses By Sector

In March, almost all employment losses were in the services-producing sector. In April, by contrast, employment losses were proportionally larger in goods (-15.8%; -621,000) than in services (-9.6%; -1.4 million). Losses in the goods-producing sector were led by construction (-314,000; -21.1%) and manufacturing (-267,000; -15.7%).

Within the services sector, employment losses continued in several industries, led by wholesale and retail trade (-375,000; -14.0%) and accommodation and food services (-321,000; -34.3%).

Industries that continued to be relatively less affected by the COVID-19 economic shutdown included utilities; public administration; and finance, insurance and real estate.

In both the services-producing and the goods-producing sectors, the employment decreases observed in the two months since February were proportionally larger than the losses observed during each of the three significant labour market downturns since 1980.

As economic activity resumes industry by industry following the COVID-19 economic shutdown, the time required for recovery will be a critical question.

After the previous downturns, employment in services recovered relatively quickly, returning to pre-downturn levels in an average of four months. On the other hand, it took an average of more than six years for goods-producing employment to return to pre-recession levels following the 1981-1982 and 1990-1992 recessions. After the 2008-2009 global financial crisis, it took 10 years for employment in the goods-producing sector to return to pre-crisis levels.

Green Shoots

As bad as things are, there is some evidence that the economy is approaching a bottom. Business shutdowns are easing in most provinces, and while it will be some time before we see a complete reopening, early signs of improvement are evident. Business sentiment appears to have improved somewhat towards the end of April, as evidenced by data from the Canadian Federation of Independent Business. The Royal Bank economists report that credit card spending looked less weak at the end of April. Housing starts for April held up better than expected. And, most importantly, the spread of Coronavirus has eased, and regions are starting to relax some of the rules to flatten the curve

Concerning the housing market, before the pandemic, we were going into the spring season with the prospect of record sales activity in much of the country. Aside from oil country–Alberta and Saskatchewan–all indications were for a red-hot housing market. So the underlying fundamentals for housing remain positive as the economy recovers. How long that will take depends on the course of the virus and whether we see a second wave in late fall. 

Interest rates have plummeted. Thanks to the 150 basis point decline in the prime rate, variable rate mortgage rates have fallen for the first time since late 2018. Once the Bank of Canada was able to establish enough liquidity in financial markets, even fixed-rate mortgage rates have fallen. 

The posted mortgage rate appears stuck at 5.04%, far above contract rates; but with any luck at all, this qualifying rate for mortgage stress tests will ease in the coming months. The Bank of Canada will remain extremely accommodating. In my view, interest rates will not rise until 2022.

Opportunities-There Will Be Winners

Even now, some businesses are enjoying a surge in revenues and profitability. Just to put a more positive note on this period of rapid change, I jotted down a list of companies that are thriving. Top of the list is Shopify, a Canadian company that helps businesses provide online shopping services. Shopify is now the most highly valued company in Canada, as measured by its stock market valuation, surpassing the Royal Bank. 

Many who never relied on online shopping have become converts during the lock-down. Amazon is another business that is benefiting, but Amazon needs more competition, and many Canadians would welcome some homegrown online rivals.

Loblaws, with its groceries and drug stores, is booming. So are the cleaning products companies like Clorox and paper products company Kimberly Clark. Staying at home has boosted sales at Wayfair, the online furniture and home products site. Peloton and suppliers of dumbbells and other fitness equipment are seeing increased revenues as people look for in-home alternatives to the locked-down gyms and health clubs. 

Demand for cloud services has boosted revenues at Microsoft and Dropbox. Home entertainment is booming, think Netflix and YouTube. Zoom and Cisco (Webex) are also big winners. Qualcomm stands to gain from a more rapid move to 5G. And Accenture and Booz Allen, among other business and government consultants, are busy helping companies reinvent their operations in a post-pandemic world.

In times of enormous uncertainty and volatility, people need expert advice and hand-holding, particularly concerning their finances. That’s where mortgage professionals come in along with financial planners, realtors, accountants and tax lawyers.   By Dr. Sherry Cooper. Chief Economist, Dominion Lending Centres.

Housing will bear the full impact of COVID-19 by next year – CIBC

The impact of the coronavirus outbreak on the value of Canadian housing will fully manifest by next year, according to economists with the Canadian Imperial Bank of Commerce (CIBC).

“The expected volatility in overall economic activity in the coming quarters will not skip the resale market,” said CIBC economists Benjamin Tal and Katherine Judge in a report last week. “By 2021, as the economics of housing returns to fundamentals, we expect an array of factors to result in a weaker market with some downward pressure on prices.”

Among the most influential of these factors is the already-weakening employment sector, latest Statistics Canada figures indicated.

The national market suffered a 5.3% decline from February to March, representing more than 1 million lost jobs. Meanwhile, the unemployment rate rose by a record high 2.2% monthly, ending up at 7.8%.

Tal and Judge said that this trend will almost certainly lead to much slower demand. Rapidly-depleting budgets might also force some homeowners to sell in a less-than-ideal market environment, The Financial Post reported.

“Overall, as the fog clears, we expect to see average prices 5%-10% lower relative to 2019 levels, with high-cost units in the high-rise segment of the market seeing the most notable price declines,” the economists said. “The cumulative damage suggests that when we recover, potentially at one point in 2021, we will be recovering into recessionary conditions.” By Ephraim Vecina

Reduced selling will propel post-COVID-19 recovery – TD Economics

A vital component of the Canadian housing sector’s post-coronavirus recovery phase is homeowners refraining from selling their assets, according to TD Economics.

“Absolutely key to our forecasts is the assumption that listings mirror sales by dropping substantially in the near term and recovering gradually thereafter,” said TD economist Rishi Sondhi. “This puts a floor on prices and sustains relatively tight supply-demand balances across most markets, allowing for the resumption of positive price growth as provincial economies are re-opened.”

Such estimates have to be tempered by the reality of dwindling budgets forcing some homeowners to sell in a suboptimal market environment, however.

“Indeed, we anticipate the gap between listings and sales to grow in coming months, as financial stresses force some homeowners to list their properties,” Sondhi said.

Sales fell by 14.3% month-over-month, while new listings declined by 12.5% during the same period, according to March data from the Canadian Real Estate Association.

The TeranetNational Bank of Canada House Price Index predicted that this trend would only intensify, especially in traditional hotspots like Toronto and Vancouver, over the next few months.

“At the national level, resale home prices were still gaining momentum in March. But this is based on home sales reported in land registries,” Teranet said. “The most important real estate boards all mentioned a clear break of activity during the second half of March due to measures to contain propagation of COVID-19.”

On the other hand, homeowners might find a measure of relief in “a jobs market that will likely improve starting next month,” Sondhi said. “Next year should see much stronger activity, as markets benefit from significant pent-up demand and historically low interest rates.”  By Ephraim Vecina

COVID-19’s fiscal impact likely far worse than 2008-09 – economist

The effects of the coronavirus pandemic on Canadian finances are likely to be more pronounced than those seen during the 2008-09 recession, according to economist David Rosenberg.

“I think it is a global depression,” Rosenberg said in an interview with BNN Bloomberg. “It depends on what you want to define as a recession or depression. A recession is a haircut to GDP and within a year, who’s going to be talking about a recession anymore? Nobody. But with a depression, you’re still going to be talking about it for the next five, 10 years.”

As of Wednesday, more than 3 million cases of COVID-19 have been reported in over 185 nations and territories. Economies have stagnated as governments around the world implemented strict measures, including social distancing and work stoppages, to halt the spread of the contagion.

Mounting debt and unemployment are exacerbating the threats to Canada’s economy and financial system, Rosenberg said.

“If we call ‘08 and ‘09 the ‘Great Recession,’ this is 10 times worse at any level. How is this just a plain little recession?” Rosenberg said. “Depression is something that happens every century but the definition is that this will cause a secular shift in attitudes in terms of how we live, how we work and how we travel, and the approach toward debt and spending. This is going to be a long-lasting impact here.”

Laura Dottori-Attanasio, head of domestic banking at Canadian Imperial Bank of Commerce, recently mirrored these sentiments, saying that the crisis might trigger a vicious downward spiral in the national market.

“I think it’s been really tough on people, not just financially but mentally – there’s just so much stress in the system,” Dottori-Attanasio said. “That stress will continue to build until we get a little more clarity about what happens next and when it happens. We do have a highly indebted Canadian consumer that we’ve been talking about for quite some time, and just under half of Canadians live paycheque to paycheque.”  By Ephraim Vecina

Mortgage Update - Mortgage Broker London

Mortgage Update – Mortgage Broker London

Mortgage Interest Rates

Fixed mortgage rate are slowing trending downward again.  Variable rates remain unchanged.   View rates Here – and be sure to contact us for a quote to help you find the lowest rate for your specific needs and product requirements.

The Bank of Canada’s target overnight rate is 0.25%.  Prime lending rate is 2.45%.  What is Prime lending rate?  The prime rate is the interest rate that commercial banks charge their most creditworthy corporate customers. The Bank of Canada overnight lending rate serves as the basis for the prime rate, and prime serves as the starting point for most other interest rates.  Bank of Canada Benchmark Qualifying rate for mortgage approval is 5.04%. 

Your Mortgage

If you have concerns about your mortgage and the rapidly changing market, please contact us to discuss your needs, concerns and options in detail to protect your best interest

Ensure that your current mortgage is performing optimally, or if you are shopping for a mortgage, only finalize your decision when you are confident you have all the options and the best deals with lowest rates for your needs.

Here at iMortgageBroker, we love looking after our clients’ needs to ensure you get all the options and the best deals and best results.  We do this by shopping your mortgage to all the lenders out there that includes banks, trust companies, credit unions, mortgage corporations & insurance companies.  We do this with a smile, and with service excellence!

Reach out to us – let us do all the hard work in getting you the best results and peace of mind!

 

Adriaan Driessen
Mortgage Broker 
Dominion Lending Forest City Funding 10671
Cell:     519.777.9374
Fax:      519.518.1081
500 South Street, Suite 2
London, ON, N6B 1C3
 
Lori Richards Kovac
Mortgage Agent
Dominion Lending Forest City Funding 10671
iMortgageBroker Inc.
Cell:     519.852.7116
Fax:      519.518.1081
500 South Street, Suite 2
London, ON, N6B 1C3
Adriaan Driessen
Sales Representative & Senior Partner
PC275 Realty Brokerage
Cell:     519.777.9374
Fax:      519.518.1081
500 South Street, Suite 2
London, ON, N6B 1C3
29 Apr

RESIDENTIAL MARKET UPDATE 

General

Posted by: Adriaan Driessen

Industry & Market Highlights 

Home prices have some support despite sales slowdown – RBC Economics

The national market can still provide some impetus for home price growth despite declining sales, according to Royal Bank of Canada Senior Economist Robert Hogue.

“Prices are determined by both demand and supply. What we saw in March is that supply came down quite a bit as well,” Hogue said in the April 15 edition of the 10 Minute-Take podcast by RBC Economics. “Sellers in this kind of turbulent environment have decided to wait it out, or maybe they have changed their minds, because they might not get the full value of their property under these conditions.”

Robustness as a fundamental feature of the housing sector was also observed by Royal LePage. Hogue said that while the market couldn’t conduct business as usual due to the pandemic, there were still some notable bright spots.

“In markets like Toronto and Montreal, for instance, prices continued to accelerate relative to February,” Hogue said. “Now, we don’t think that markets will necessarily sustain that kind of acceleration, but nonetheless, the point is that there is still quite a bit of support for prices despite plummeting activity.”

However, Hogue warned that both Toronto and Vancouver might see steeper market declines in April, and that the long-term value of Canada’s homes will depend heavily on the duration of the slowdown.

“Our assumption is that the economy starts to open up again sometime in June. Prices are probably going to stay relatively flat in most cases.” Hogue said. “If lockdown measures and the recession last longer than expected, downward pressure on prices are going to build up across the board.”  By Ephraim Vecina. 

Residential Market Commentary – March madness

The national home sales numbers for March have been delivered by the Canadian Real Estate Association.  As expected, they show the promising start to this year’s spring buying season has come to an abrupt end.

Earlier CREA released sales figures for Toronto and Vancouver, the country’s biggest and busiest markets.  They showed those cities going into a tailspin in the second half of the month.  Nationally, the market followed suit.

Here is a quick look at the country’s biggest markets:
Greater Toronto Area: -28%
Montreal: -13.3%
Greater Vancouver: -2.9%
Calgary: -26.3%
Edmonton: -13.2%
Winnipeg: -7.3%
Hamilton-Burlington: -24.9%
Ottawa: -7.95%

CREA’s early numbers for April suggest more of the same.  Prices, though, are standing pat.

Generally, market watchers believe prices are holding steady because of a significant drop in new listings.  They were down 12.5% in March, compared to February.  The MLS Home Price Index rose 0.8% m/m and is up almost 7.0% compared to a year ago.  These are early statistics and April’s final results will likely give a better indication of what is in store.

Analysts will also be watching the bankruptcy and default numbers.  Increasing levels of unemployment and income loss, due to COVID-19 measures, could push debt laden households over the edge, forcing them to put their homes on the market.  Any surge in that kind of activity could well lead to price declines.  By First National Financial. 

Reduced purchasing power more apparent in Canada’s largest markets

Unemployment has a disproportionate impact on the country’s largest housing markets, according to new Statistics Canada figures.

Across Canada, the employment sector declined by 5.3% from February to March, representing more than 1 million lost jobs. The unemployment rate rose to 7.8%, spurred by a record high 2.2% monthly increase.

Of particular concern is the sharp drop in employment in the private sector (down 6.7%), which was at a rate nearly double that of the public sector (down 3.7%).

“Unemployment increased by 413,000 (+36.4%), largely due to temporary layoffs,” Statistics Canada said. “In addition, the number of Canadians who had worked recently and wanted to work, but did not meet the official definition of unemployed, increased by 193,000.”

The agency’s March figures also indicated that unemployment rates in Toronto, Vancouver, and Montreal have experienced rapid increases last month.

The trend is compounding the already severe socio-economic effects of the COVID-19 pandemic, according to real estate information portal Better Dwelling.

Toronto’s unemployment rate stood at 7.8% as of March, having grown 11.42% annually. Meanwhile, Vancouver saw its share of unemployed workers shoot up by 68.89% year-over-year to reach 7.6% – a sharp about-face from the numbers traditionally associated with the city’s robust labour sector.

Of the top housing markets, Montreal suffered the highest unemployment rate last month, increasing by 51.67% annually to end up at 9.1%.  By Ephraim Vecina. 

First-time homebuyers suffering massive job losses during pandemic: Altus

Canadians in the typical first-time homebuyer age range were hit with full-time job losses that neared 200,000 in March when compared to employment levels just a month prior.

Real estate consultancy Altus Group used recent figures from Statistics Canada’s Labour Force Survey and its own internal data to assess the impact that the COVID-19 pandemic may have on future homebuying activity in Canada.

First, Altus Group mined its own recent data on first-time homebuyer demographics across the country. It found that Canadians between the ages of 25 and 44 made up 84 percent of first-time homebuyers over the last two years according to Altus Group data. The narrower 25 to 34-year-old segment made up the majority, with 64 percent of first-time homebuyers falling into this age range.

The firm then reviewed Statistics Canada’s preliminary data on job losses that came as a result of COVID-19’s spread across the country. It observed that 108,000 full-time jobs were lost in the 25 to 34-year-old range while 77,000 were lost in the 35 to 44-year-old range. Of course, losses were felt across all age ranges, with under-24s seeing the largest percentage decline when compared to the previous month and the 45 to 54-year-old age group rivalling the total job losses seen in the 25 to 34-year-old range.

That being said, potential first-time homebuyers are likely to be more adversely affected by job loss when it comes to their future ability to purchase a home. Older groups typically have more savings and a previously purchased property to leverage, while younger groups have yet to enter their prime homebuying years. Potential first-time buyers in the 25 to 44-year-old range — especially those at the younger end of the spectrum — are counting on this time to save for a downpayment and enter the market.

“These job loss patterns could have implications not just for absolute housing demand levels going forward, but also the relative mix of demand between the various segments (for example, first-time buyer, move-up buyer, move-down/lifestyle and “younger” senior segments),” wrote Altus Group in a post titled ‘Massive job losses among key potential first-time homebuyer age groups’ that was published recently on its website.  By Sean Mackay.

‘Buyer’s market’ for renters may change the rules for Canada’s residential real estate: Don Pittis | CBC News

There is nothing so bad that it does not end up helping someone is the old saying, and while the COVID-19 outbreak is bad for pretty well everyone, long-suffering renters may finally get a break.

Newly unemployed gig workers and real estate investors will be collateral damage, but experts in the property market are already observing what may be an inflection point in a trend where rents have gobbled up an increasing share of young workers’ incomes.

Already, there are early signs that while the supply of rental properties continues to grow, demand has slumped, even in Canada’s hottest property markets, such as Vancouver and Toronto. And while the demand for housing will likely eventually resume its climb, there are reasons to expect the decline in rental prices will outlast the immediate economic effects of the coronavirus.

That’s partly because the market was already showing signs of strain and was due for a readjustment. Like other sectors of Canadian real estate, the sudden economic downturn will expose faults in a rental market dependent on high levels of borrowed money.

‘Swimming naked’

The quote from world-famous investor Warren Buffet that “only when the tide goes out do you see who is swimming naked” may turn out to apply in this case.

A report on Friday from property analysts Urbanation showed that while the 2020 rental market started the year strong, there were already early signs of a slowdown in rental price increases. But with the arrival of COVID-19, that slowdown transformed into an absolute rental price dip.

“As demand fell faster than supply in the second half of March, rents experienced a slight decline,” said the report. “The average monthly rent in the post-COVID-19 period decreased 0.7 per cent year-over-year.”

Rental-focused construction is at a 50-year high, and while demand is falling sharply amid the outbreak, once started, projects are hard to stop.

People like Hilliard MacBeth, long-time financial analyst and author of When the Bubble Bursts, have repeatedly warned that the over-leveraged Canadian property market was merely waiting for something to prick it with dangerous results for the whole economy. The Bank of Canada has said stress testing has shown Canada’s financial system can take the heat.

Nonetheless, a report last week by business news service Bloomberg that Canadian property “once safer than gold” is heading for a reckoning was widely retweeted and sent shivers through the real estate sector.

And it is clear that not just ordinary Canadians up to their eyes in debt from a mortgage on their own home are suffering. Banks have also been deferring the mortgage payments of rental property owners, prompting objections from those who blame short-term rentals, in particular, for soaring house prices and rents.

“Should someone with four properties really be granted financial assistance?” Steve Saretsky, a Vancouver real estate agent asked in the Bloomberg report.

There are plenty of signs that a plunge in tourism has already upset the shortest of rentals of the type offered by Airbnb hosts. And mortgage deferrals are not free money if the banks continue to charge interest on the amounts landlords invested in hope of earning a profit.

Good for renters, not for landlords

But one well-respected adviser to the private sector property market has warned that pain for landlords is not over.

“All this is going to hit the rental market first,” says Ben Rabidoux, who runs North Cove Advisors, an information service for the professional residential real estate market. Of course, a warning to landlords of falling rents will be good news for renters.

In one respect, Rabidoux is far less gloomy than some about the home resale market overall, saying defaults remain unlikely so long as the economic meltdown caused by COVID-19 is less than six months.

But the real estate insider says there are strong signals that just as the supply of rental properties is hitting a peak, the number of people wanting to rent is falling.

The devastated Airbnb market, down about 95 per cent, is only part of it. Unemployed gig workers and students are moving in with relatives. Immigration has slowed to a trickle.

And Rabidoux’s research shows that the influx of non-permanent residents, including foreign students and people on work permits to fill gaps in Canada’s tight labour market, both of whom depend on the rental market and normally about 200,000-strong, has gone into reverse.

“We have a 50-year high in rental units under construction and a 50-year high in completions of those rental units coming online,” says Rabidoux. That’s over and above the current flood of condos built to sell to Canadians as rental investment properties. And once underway, he says, those projects will continue to inundate the market over a two-year timeline.

While people who have bought homes to live in them will be less affected, falling rental prices will inevitably impact other parts of the market, convincing some to rent rather than buy, said Rabidoux.

“You’re going to see it bleed into the resale market three, six, nine months down the road,” he said.

But for anyone renting, maybe now is the time to start shopping around.  By Don Pittis. 

COVID-19 creating legal issues for sellers

With just over a week until rent cheques are due, the blizzard of rent and mortgage deferrals that hit the Canadian housing market on April 1 is expected to blow in once again.

While most landlords at this point have come to some understanding with their tenants regarding late or adjusted rent payments, RealEstateLawyers.ca senior partner Mark Weisleder says there is no shortage of other issues his clients are still coming to grips with when it comes to selling their homes.

“It’s tough for everybody,” Weisleder says.

One question Weisleder has been repeatedly asked involves what to do when a sold property’s rental occupants express an unwillingness to vacate, ostensibly because of the restrictions COVID-19 has placed on their ability to either work or locate a new place to live.

Multiple sellers approached their tenants in February with 60-day notices to vacate, which allows them to stay in place until the end of April while giving the property’s new owners until May to take possession. But with the 60-day period now elapsed and the world stumbling collectively through an economic concussion many of these tenants are choosing not to leave.

According to Weisleder, sellers in this predicament have few options.

“You can’t evict them because the Board is closed down,” he says, estimating that the backlog of cases due to clog up Ontario’s Landlord Tenant Board could last up to a year. “You have to work something out. Work with the tenant – maybe find them another place to live – otherwise you’re going to have to extend your deal. Or maybe pay the buyer an incentive to just assume the tenant for as long as it takes.”

Weisleder says there have also been cases where buyers have been refused access to their new properties by the current rental tenants, even though the seller has agreed in writing to allow them into the property.

“They have the right,” he says of the tenants. “It’s safety.”

With 44% of Canadian households reporting some form of work disruption, there will inevitably be a number of potential buyers forced to abandon their plans mid-deal. The consequences could be dire for any buyers who agreed to purchase a property only to see their finances go up in smoke weeks later.

Weisleder points to the instant dip the Ontario market experienced following the 2017 Fair Housing Plan as a parallel. Prices and appraised values plummeted, forcing a rash of buyers, whose financing plans fell apart, to back out of deals to which they had already agreed.

He recalls a specific case where a set of buyers had put down a $50,000 deposit on a property only to walk away from the deal because of an inability to get the purchase financed. The sellers wound up selling the home for $500,000 less than what had been agreed to. After being taken to court, the buyers were ordered to make up the difference and pay the sellers the full $500,000.

Regardless of the excuse, whether it be sickness or quarantine or an inability to access capital, buyers cannot walk away after they have agreed to purchase a property.

“If they don’t close and a settlement is not reached, the seller can sue them,” Weisleder says.

But there are similar cases when legal action may not be the proper play for sellers. If a first-time buyer puts down five percent but ultimately walks away from a deal because of a lack of funds, the option to sue exists, but Weisleder questions the value such a step would have for the seller, who would be accruing $30,000-40,000 in legal fees for the privilege of suing someone who has no money.

He suggests that sellers in this case may be better off negotiating further with their buyers, possibly agreeing to the smallest price reduction possible that would still allow them to secure financing.

“For a seller, with these buyers, that’s a good deal,” he says.

The high number of calls Weisleder is fielding should provide comfort for anyone watching the Ontario housing space. The high volume of requests for assistance illustrates just how alive the market was prior to the arrival of COVID-19.

“Most deals,” Weisleder reminds us, “are closing.”  By Clayton Jarvis. 

Real Estate Services COVID-19 legal update on support services

REALTORS® services were deemed essential by the Province. But it’s not business as usual. Real estate was deemed essential so Realtors could continue to serve clients who were closing transactions or who urgently needed to sell or buy property.

On that note, we have received many questions about whether or not the essential business designation extends to include photographers, videographers, stagers, cleaners and home inspectors.

To help guide our Members during this incredibly challenging time, OREA has obtained a legal opinion on whether photographers, videographers, stagers and cleaners (referred to as “Service Providers” in this email) can provide services to REALTORS® given that Ontario has ordered all places of business to close, except those on the ‘Essential Business’ list (referred to as the “Order”).

Home Inspectors have received their own legal opinion and the Ontario Association of Home Inspectors has advised that “OAHI’s corporate counsel has confirmed home inspections are still essential ‘in the context of a real estate transaction process…’” during the State of Emergency.  Their letter can be found here.

Here’s what you need to know:

Yes, Service Providers such as photographers, videographers, stagers and cleaners may generally be able to do what they need to do at the Seller’s home in support of a real estate transaction.

Service Providers would fall within the “Essential Business” category of Supply Chain businesses that supply another Essential Business, namely the real estate agent services.  However, at least the following steps are required:

  1. The REALTOR® (and not their client) contracts with and retains the Service Provider’s services;
  2. Especially in the case of videographers, cleaners and stagers, the REALTOR® has appropriately contracted with their client to provide the client with those services;
  3. Only people absolutely necessary attend; and
  4. All other Emergency Orders and laws are followed (e.g. no more than 5 persons on the property etc.) including local public health authority guidelines.

This is based upon Ontario’s Emergency Orders in place April 9, 2020. As the COVID-19 situation is constantly changing, please note that the rules can change at any time.

Most importantly, because the condition and characteristics of the property, the market and the specific contracts a REALTOR® may have with both the Service Provider and their client are unique and the behaviour of both the Service Provider and REALTOR® are also contributing factors, this document can only act as a ‘general guide’. An absolute answer requires consideration of all of these factors on a case-by-case basis.

Finally, the responsibility rests with the Service Providers to comply with any Emergency Orders and the law when providing their services. A REALTOR® should not instruct the Service Provider to do anything a Service Provider does not consider to be legal.

For more information please see a summary of the detailed analysis here.  By Sean Morrison, President, Ontario Real Estate Association.

Economic Highlights

Residential Market Commentary – Crumbling confidence

The latest consumer confidence numbers from the Conference Board of Canada are another dull spot on an already gloomy outlook.

The April survey by the policy think-tank suggests the future outlook of debt-laden Canadians is at an all-time low and the plunge happened at a record pace – 73 points in just two months.  By comparison, the financial collapse of 2008 also saw a 73-point drop, but that took 13 months.

The Conference Board survey indicates 36.1% of respondents expect to see their finances deteriorate over the next six months.  That is 14 percentage points higher than the previous record of 22.1%.  The survey also suggests a majority of Canadians have a grim view of future employment with 53% of respondents saying they expect their job prospects to get worse over the next six months.

This pessimism is affecting spending plans, at least in the near term.  More than three-quarters of those surveyed, 76.5%, say this is a bad time to make a major purchase like a vehicle or a home.  That is more than 20 percentage points higher than the previous record, posted in February, 2016.

The Conference Board’s readings seem to be confirmed by government figures that show a sharp drop in inflation, a spike in unemployment and a jump in insolvencies.  Nationally, filings for personal and business bankruptcies and proposals rose 9% in February, compared to a year earlier – even before the coronavirus pandemic really took hold.  (Consumer filings led the way with a 9.2% increase.  Business filings were up 1.9%.). By First National Financial. 

Head of CFIB: “Tens of thousands” of businesses will close in wake of COVID-19

In recent comments to Bloomberg, Canadian Federation of Independent Business president Dan Kelly predicted the damage done to the economy by measures to slow the COVID-19 pandemic will spell the end for an obscene number of businesses.

Kelly said on Wednesday that, even with the assistance provided by government support programs, he sees “no scenario under which there are not tens of thousands of permanent business closures.”

It’s an alarming projection, but according to BMO chief economist Doug Porter, Kelly’s estimate is reasonable.

“Those numbers seem quite realistic,” Porter told MBN in an email. “I would point out that in a typical year, there are often as many as 140,000 new businesses created in Canada and almost that many that “exit” every year. That is by no means to downplay the figure, and there will no doubt be plenty of hardships among small businesses.”

A series of weekly surveys conducted by the CFIB illustrates growing anxiety among the Federation’s members. The most recent data show that 80% of businesses are either partially or fully closed because of COVID-19, an increase of approximately 27% over the past four weeks.

That lack of business has left a gaping hole where revenues should be. The CFIB survey found that 55% of respondents have experienced a decrease in gross sales revenue of at least 50% since the outbreak of COVID-19. As of April 16, the average amount the extended disruptions have cost respondents was $203,461.

(Interestingly, 44% of respondents said they are unsure if their businesses will survive if current conditions are kept in place until the end of May, yet only 36% have tried to apply for the Canada Emergency Business Account.)

Just how many of these impacted businesses wind up going broke remains to be seen. But if Kelly’s prediction is even marginally accurate, it will mean fewer businesses turning to lenders for funding.

“As far as the lending space is concerned, certainly loan losses will rise,” says DLC’s Dr. Sherry Cooper, who stresses the uncertainty of the current situation. “Banks and other lenders are already increasing reserves for these losses. How much these losses will be depends on how long this lasts.”  By Clayton Jarvis. 

Debt, unemployment compounding market threat of COVID-19

Mounting household debt and unemployment risk are likely to have a dangerous domino effect on the national market, according to a senior bank official.

“I think it’s been really tough on people, not just financially but mentally – there’s just so much stress in the system,” said Laura Dottori-Attanasio, head of domestic banking at Canadian Imperial Bank of Commerce. “That stress will continue to build until we get a little more clarity about what happens next and when it happens.”

“We do have a highly indebted Canadian consumer that we’ve been talking about for quite some time, and just under half of Canadians live paycheque to paycheque,” Dottori-Attanasio told BNN Bloomberg.

A recent report by the federal government’s Parliamentary Budget Officer (PBO) indicated that the unemployment rate was at 7.2% as of the end of the first quarter. This is likely to worsen significantly in the coming months: 14.8% in Q2, 15% in Q3, and 12.7% in Q4, with the year-end rate pegged at 12.4%.

MNP LTD’s late-March survey also found that 49% of Canadians are just $200 or less away from insolvency. Another 46% said that they are anxious about their current debt levels, while 34% fear for the stability of their employment.

Dottori-Attanasio said that the greatest threat in the near future is the accumulated stress on a consumer base already burdened by uncertainty surrounding the COVID-19 pandemic.

“If you add that people are no longer working and generating cash flow, I do think it makes for a toxic combination that’s going to be much more difficult to overcome the longer this takes to resolve,” Dottori-Attanasio said.  By Ephraim Vecina. 

Mortgage Update - Mortgage Broker London

Mortgage Update – Mortgage Broker London

Mortgage Interest Rates

Fixed mortgage rate movement has stabilized and levelled out in the past week as lenders get more familiar with the new normal during uncertainty and as bond markets stabilized more.   Variable rates have also responded the same way.   Some lenders are using this opportunity to take market share for more competitive pricing and a slight drop in rates.  View rates Here – and be sure to contact us for a quote to help you find the lowest rate for your specific needs and product requirements.

The Bank of Canada’s target overnight rate is 0.25%.  Prime lending rate is 2.45%.  What is Prime lending rate?  The prime rate is the interest rate that commercial banks charge their most creditworthy corporate customers. The Bank of Canada overnight lending rate serves as the basis for the prime rate, and prime serves as the starting point for most other interest rates.  Bank of Canada Benchmark Qualifying rate for mortgage approval is 5.04%.  Changes to the mortgage qualifying rate is coming into effect April 6, 2020: Instead of the Bank of Canada 5-Year Benchmark Posted Rate, the new benchmark rate will be the weekly median 5-year fixed insured mortgage rate from mortgage insurance applications, plus 2%.  Read the Government of Canada Department of Finance summary on Benchmark Rate for Insured Mortgages statement here. 

Mortgage Update - Mortgage Broker London

Mortgage Update – Mortgage Broker London

Your Mortgage

If you have concerns about your mortgage and the rapidly changing market, please contact us to discuss your needs, concerns and options in detail to protect your best interest.

Ensure that your current mortgage is performing optimally, or if you are shopping for a mortgage, only finalize your decision when you are confident you have all the options and the best deals with lowest rates for your needs.

Here at iMortgageBroker, we love looking after our clients’ needs to ensure you get all the options and the best deals and best results.  We do this by shopping your mortgage to all the lenders out there that includes banks, trust companies, credit unions, mortgage corporations & insurance companies.  We do this with a smile, and with service excellence!

Reach out to us – let us do all the hard work in getting you the best results and peace of mind!

We encourage you to follow guidelines from our public health authorities:

Middlesex Health Unit
https://www.healthunit.com/novel-coronavirus

Southwestern Public Health
https://www.swpublichealth.ca/content/community-update-novel-coronavirus-covid-19

Ontario Ministry of Health
https://www.ontario.ca/page/2019-novel-coronavirus

Public Health Canada
https://www.canada.ca/en/public-health/services/diseases/coronavirus-disease-covid-19.html

Factual Statistics Coronavirus COVID-19 Globally:
https://www.worldometers.info/coronavirus/
https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

17 Apr

RESIDENTIAL MARKET UPDATE

General

Posted by: Adriaan Driessen

Industry & Market Highlights 

Residential Market Commentary – What we know, What we can hope for

We have been receiving a lot of unsettling economic data lately.

Coming out of February, unemployment stood at 5.6% and nearly 250,000 jobs had been created in the previous 12 months.  By the end of March, nearly a million jobs had disappeared.  The Conference Board of Canada projects that could climb to 2.8 million by the end of April.  The best guess right now is that unemployment stands at about 20%.

Nationally, March housing starts dropped 7.3% compared to February.  The value of building permits – a forward looking indicator – crashed in March, dropping 23%.

As distressing as the numbers are, the real anxiety remains the unknown.  But, many of the country’s best-known economists are putting on brave faces.  They point to the temporary nature of the job losses.  StatsCan reports most workers expect to be back on the job in about six months, once the coronavirus pandemic is deemed to be under control.  We have also come to know that month-to-month job numbers can be volatile and need to be watched over time to establish trends.

The decline in housing starts can, at least in part, be attributed to bans on new construction.  A number of jurisdictions are restricting builders to the completion of existing projects, only.  And the drop in building permits is uneven across the country.  B.C. is down nearly 27%, Ontario is down 50.5%, while Alberta increased nearly 12% and Halifax jumped 153%.  By First National Financial. 

Housing Market Another Victim of the Virus

Data released this morning from the Canadian Real Estate Association (CREA) showed national home sales fell 14.3% on a month-over-month (m-o-m) basis in March, the first national indication of the early impact of social isolation. The economic disruption and massive layoffs caused both buyers and sellers to increasingly retreat to the sidelines over the second half of the month.

Transactions were down on a m-o-m basis in the vast majority of local markets last month. Among Canada’s largest markets, sales declined in the Greater Toronto Area (GTA) (-20.8%), Montreal (-13.3%), Greater Vancouver (-2.9%), the Fraser Valley (-13.6%), Calgary (-26.3%), Edmonton (-13.2%), Winnipeg (-7.3%), Hamilton-Burlington (-24.9%) and Ottawa (-7.9%).

Actual (not seasonally adjusted) sales activity was still running 7.8% above a quiet March in 2019, although that was a considerable slowdown compared to the y-o-y gain of close to 30% recorded in February.

“March 2020 will be remembered around the planet for a long time. Canadian home sales and listings were increasing heading into what was expected to be a busy spring for Canadian REALTORS®,” said Jason Stephen, president of CREA. “After Friday the 13th, everything went sideways. REALTORS® are complying with government directives and advice, all the while adopting virtual technologies allowing them to continue showing properties to clients already in the market, and completing all necessary documents.”

“Numbers for March 2020 are a reflection of two very different realities, with most of the stronger sales and price growth recorded during the pre-COVID-19 reality which we are no longer in,” said Shaun Cathcart, CREA’s Senior Economist. “The numbers that matter most for understanding what follows are those from mid-March on, and things didn’t really start to ratchet down until week four. Preliminary data from the first week of April suggest both sales and new listings were only about half of what would be normal for that time of year.”

New Listings

The number of newly listed homes declined by 12.5% in March compared to the prior month. As with sales, the declines were recorded across the country.

With sales and new listings each falling by similar magnitudes in March, the national sales-to-new listings ratio edged back to 64% compared to 65.4% in February. While this is down slightly, the bigger picture is that this measure of market balance was remarkably little changed considering the extent to which current economic and social conditions are impacting both buyers and sellers.

Based on a comparison of the sales-to-new listings ratio with the long-term average, two-thirds of all local markets were in balanced market territory in March 2020. Virtually all of the remainder continued to favour sellers.

There were 4.3 months of inventory on a national basis at the end of March 2020. While this is up from the almost 15-year low of 3.8 months recorded in February, it remains almost a full month below the long-term average of 5.2 months. With the overall number of listings on the market continuing to fall in March, the m-o-m decline in the months of inventory measure was entirely the result of the outsized drop in sales activity.

The number of months of inventory is well above long-term averages in the Prairie provinces and Newfoundland & Labrador. By contrast, the measure is running well below long-term averages in Ontario, Quebec and the Maritime provinces. The measure remains in balanced territory in British Columbia.

Home Prices

With measures of market balance at this point, little changed from recent history, and most of the impact on sales and listings from the COVID-19 situation only showing up towards the end of March, the impact on housing prices will likely take a little longer to become apparent. Price measures for March 2020 were strongly influenced by very tight markets and a very strong start to the spring market in many parts of Canada before physical distancing measures were implemented.

The Aggregate Composite MLS® Home Price Index (MLS® HPI) rose 0.8% in March 2020 compared to February, marking its 10th consecutive monthly gain.

The MLS® HPI was up in March 2020 compared to the previous month in 16 of the 19 markets tracked by the index. (See the Table below)

Looking at the major Prairie markets, home price trends have ticked downwards in Calgary and Edmonton to start 2020 but have generally been stable since the beginning of last year. Prices in Saskatoon have also been stable over the last year, while those in Regina have continued to trend lower. Prices in Winnipeg have been on a slow upward trend since the beginning of 2019.

Meanwhile, the recovery in home prices has been in full swing throughout British Columbia and in Ontario’s Greater Golden Horseshoe (GGH) region. Further east, price growth in Ottawa, Montreal and Moncton continues as it has for some time now, with Ottawa and Montreal prices accelerating to start 2020.

Bottom Line: Clearly this is only the beginning, but the plunge in sales and new listings in the second half of March is indicative of the stall out in housing market activity likely until social distancing is removed and people feel safe enough to resume normal activities. No doubt, at that point, there will be buying opportunities, but right now, housing is just another contributor to the collapse in the economy.  By Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres.

Canadian home sales saw 14% drop in March

Home buying activity in major markets across Canada dropped steeply in the second half of March, leading to what amounted to a 14 percent decline in sales compared to February’s total.

While the strength of the first half of the month and the relative weakness of March 2019 ultimately led to a year-over-year national sales gain of 7.8 percent, the impact of the COVID-19 pandemic on Canada’s housing market is clear in the data published today by the Canadian Real Estate Association (CREA).

“March 2020 will be remembered around the planet for a long time. Canadian home sales and listings were increasing heading into what was expected to be a busy spring for Canadian REALTORS®. After Friday the 13th, everything went sideways,” said CREA President Jason Stephen in a media release accompanying the data.

The pandemic’s impact on housing activity is especially evident when comparing the relatively modest year-over-year sales gain seen in March to the near 30 percent increase recorded in February.

Although CREA published Canadian home sales data for the full month as is standard practice, the association’s Senior Economist Shaun Cathcart said the early March numbers reflect a “pre-COVID-19 reality which we are no longer in.”

“The numbers that matter most for understanding what follows are those from mid-March on, and things didn’t really start to ratchet down until week four,” Cathcart said. “Preliminary data from the first week of April suggest both sales and new listings were only about half of what would be normal for that time of year.”

As sales fell in March, CREA observed new listings declining by “similar magnitudes.” New listings dropped by 12.5 percent last month when compared to February data.

The CREA team believes that the full impact of the COVID-19 crisis on the Canadian housing market will become apparent in the months to come. While there is scant data to draw from on just how deeply affected Canadian housing will be, many industry leaders have come forward to voice confidence in the market’s ability to remain relatively stable through this challenging period.

“The impact of COVID-19 on the Canadian economy has been swift and violent, with layoffs driving high levels of unemployment across the country,” said Royal LePage CEO Phil Soper.

“While it is sad that these people skewed strongly to young and to part-time workers, for the housing industry, the impact of these presumably temporary job losses will be limited as these groups are much less likely to buy and sell real estate,” he continued.

Soper noted that evidence from past housing downturns leads him to believe that Canadian home prices will not be significantly impacted in 2020.

“Home price declines occur when the market experiences sustained low sales volume while inventory builds. Currently, the inventory of homes for sale in this country is very low, matching low sales volumes as people respect government mandates to stay at home,” he said.  By Sean MacKay. 

Real Estate Not Business As Usual

The Ontario Government extended emergency orders for the province until April 23, 2020. The list of essential businesses still includes real estate agent services, which the Government has grouped under Financial Services. Please note the Government has prohibited open house events, stipulating “Every person who is responsible for a business that provides real estate agent services shall ensure that the business does not host, provide or support any open house events.”

Not Business As Usual

The Real Estate Council of Ontario RECO) has emphasized, “Real estate brokerages, brokers and salespeople must cease hosting and attending open houses. In addition, RECO strongly recommends that brokers and salespeople follow the direction of health officials by limiting showings to situations where they are absolutely necessary.”

RECO has also said, “Everyone, including registrants, must take this crisis seriously for their own health and that of the general public. The Real Estate and Business Brokers Act, 2002 and the Code of Ethics include provisions that require registrants to practice with integrity, to promote the best interests of their clients and to act honourably and professionally. We take these matters very seriously. Registrants who demonstrate a blatant disregard for the protection of the public, by ignoring the direction of health officials during their trading activities, will face serious sanctions, including possible disciplinary prosecution by RECO.”

Check out more from RECO on some questions and guidelines.  By London St. Thomas Association of Realtors LSTAR 2020 President Blair Campbell.

What Landlords Need To Know

Despite federal and provincial government supports, a prolonged COVID-19 crisis and the resultant loss of jobs and income will make it difficult for some tenants to pay their rent.

As a landlord, it is important to know what type of supports you have in order to continue making mortgage payments and paying the bills. Both tenants and landlords alike need a more comprehensive solution through this crisis with the shared understanding that all Ontarians need a secure place to call home.

What are my responsibilities as a landlord?

Landlords should maintain an open line of communication with their tenants to ensure that both parties are aware of each others’ expectations during this time. Landlords should ensure that they comply with occupancy limits, increase sanitation of their properties and are able to comply with social distancing measures by providing video tours of properties.

As many have fallen on hard financial times due to COVID-19, it should be noted that the Ontario government has ordered a stop to all evictions during the State of Emergency.

Buying or selling a tenanted property?

If a client has an urgent need to buy or sell a home during the COVID-19 crisis, REALTORS® have the modern tools and knowledge at their disposal to do virtual showings.

REALTORS® should work with landlords and tenants to ensure that the health and well-being of Ontario’s home buyers, sellers and families remains a focus. REALTORS® and landlords are encouraged to use modern technology that facilitates remote interactions, such as virtual tours, video conferencing and digital signing.

Do tenants need to pay rent?

Tenants need to continue paying rent during the COVID-19 pandemic. If your tenants’ financial situation has been affected by the coronavirus, landlords should work with their tenants to come to an agreement surrounding rent payments, reductions and deferrals.

What financial relief is available for landlords?

Mortgage Deferral

Canada’s big six banks are offering deferred mortgage payments for up to six months on a case-by-case basis. Landlords may be eligible for mortgage deferrals on their non-principal residence, including a rental property. For more information, please see our detailed guide for homeowners and reach out to your financial advisor.

Tax Extensions

The Canada Revenue Agency (CRA) has extended the deadline for filing income tax returns to June 1, 2020, and the deadline for payment of income tax to September 1, 2020.

Temporary Wage Subsidy for Employers

A Temporary Wage Subsidy is available for eligible employers, like landlords, that will allow for a reduction in the amount of payroll deductions require to be remitted to the CRA. Employers must see a 15 percent decline in revenue for March compared to January and February of 2020 to apply for the subsidy. Employers can apply through the CRA’s My Business Account portal.

Read an open letter to Minister Steve Clark from OREA CEO Tim Hudak about supporting rental-housing providers during the COVID-19 Crisis.  By OREA.

Economic Highlights

Bank of Canada holds the line on its benchmark rate

This morning, the Bank of Canada left its target overnight benchmark rate unchanged at ¼ percent, which the Bank has framed as its effective “lower bound.”

This decision was expected after the BoC lowered its target for the overnight rate 150 basis points since the beginning of March.

Comparing the Bank’s two most recent statements (today and March 27, 2020), we find several notable new comments on the economy and financial markets:

  • While the outlook is “too uncertain” to provide a complete forecast, analysis of alternative scenarios suggests the level of real economic activity was down 1-3 percent in the first quarter of 2020 and will be 15-30 percent lower in the second quarter than in Q4 2019.
  • CPI inflation is expected to be close to 0 percent in the second quarter of 2020 “primarily due to the transitory effects of lower gasoline prices.”
  • Efforts to contain the COVID-19 pandemic have “caused a sudden and deep contraction in economic activity and employment worldwide.”
  • In financial markets, this has driven a “flight to safety and a sharp repricing of a wide range of assets” and has pushed down prices for commodities.
  • One “early measure of the extent of the damage” was an unprecedented drop in employment in March, with more than one million jobs lost across Canada. Many more workers reported shorter hours, and by early April some six million Canadians had applied for the Canada Emergency Response Benefit.
  • Fiscal programs, “designed to expand according to the magnitude of the shock,” will help individuals and businesses weather this shutdown phase of the pandemic, and support incomes and confidence leading into the recovery.

The Bank also reported that it is “temporarily increasing” the amount of Treasury Bills it acquires at auctions to up to 40 percent, effective immediately.

More new measures to support Canada’s financial system

The BoC also announced new measures to provide additional support to Canada’s financial system and ease pressure on Canadian borrowers including the development of:

  1. A new Provincial Bond Purchase Program of up to $50 billion to supplement its Provincial Money Market Purchase Program.
  2. A new Corporate Bond Purchase Program, in which the Bank will acquire up to a total of $10 billion in investment-grade corporate bonds in the secondary market.

The central bank promised both programs will be put in place in the coming weeks. The Bank also announced it is enhancing its Term Repo Facility to permit funding for up to 24 months.

As containment restrictions are eased and economic activity resumes, BoC believes that fiscal and monetary policy actions will help “underpin confidence and stimulate spending by consumers and businesses to restore growth.”

The Bank also released its Monetary Policy Report for April. During a related news conference, Stephen Poloz,  Governor of the Bank of Canada noted that the Bank has so far “accumulated over $200 billion of new assets—amounting to about 10 percent of Canada’s GDP – in liquidity support for the economy.”

BoC’s next scheduled policy announcement is June 3, 2020 and in the ensuing period the Bank’s Governing Council noted that it “stands ready to adjust the scale or duration of its programs if necessary.” It further stated that all of its actions are “aimed at helping to bridge the current period of containment and create the conditions for a sustainable recovery and achievement of the inflation target over time.”  By First National Financial.  

Bank of Canada Stands Ready To Do Whatever It Takes

On the heels of a devastating decline in the Canadian economy, the Bank of Canada is taking unprecedented actions. With record job losses, plunging confidence and a shutdown of most businesses, this month’s newly released Monetary Policy Report (MPR) is a portrait of extreme financial stress and a sharp and sudden contraction across the globe. COVID-19 and the collapse in oil prices are having a never-before-seen economic impact and policy response.

The Bank’s MPR says, “Until the outbreak is contained, a substantial proportion of economic activity will be affected. The suddenness of these effects has created shockwaves in financial markets, leading to a general flight to safety, a sharp repricing of risky assets and a breakdown in the functioning of many markets.” It goes on to state, “While the global and Canadian economies are expected to rebound once the medical emergency ends, the timing and strength of the recovery will depend heavily on how the pandemic unfolds and what measures are required to contain it. The recovery will also depend on how households and businesses behave in response. None of these can be forecast with any degree of confidence.”

“The Canadian economy was in a solid position ahead of the COVID-19 outbreak but has since been hit by widespread shutdowns and lower oil prices. One early measure of the extent of the damage was an unprecedented drop in employment in March, with more than one million jobs lost across Canada. Many more workers reported shorter hours, and by early April, some six million Canadians had applied for the Canada Emergency Response Benefit.”

“The sudden halt in global activity will be followed by regional recoveries at different times, depending on the duration and severity of the outbreak in each region. This means that the global economic recovery, when it comes, could be protracted and uneven.”

Today’s MPR breaks with tradition. It does not provide a detailed economic forecast. Such forecasts are useless given the degree of uncertainty and the lack of former relevant precedents. However, Bank analysis of alternative scenarios suggests the level of real activity was down 1%-to-3% in the first quarter of this year and will be 15%-to-30% lower in the second quarter than in Q4 of 2019. Inflation is forecast at 0%, mainly owing to the fall in gasoline prices.

“Fiscal programs, designed to expand according to the magnitude of the shock, will help individuals and businesses weather this shutdown phase of the pandemic, and support incomes and confidence leading into the recovery. These programs have been complemented by actions taken by other federal agencies and provincial governments.”

The Bank of Canada, along with all other central banks, have taken measures to support the functioning of core financial markets and provide liquidity to financial institutions, including making large-scale asset purchases and sharply lowering interest rates. The Bank reduced overnight interest rates in three steps last month by 150 basis points to 0.25%, which the Bank considers its “effective lower bound”. It did not cut this policy rate again today, as promised, believing that negative interest rates are not the appropriate policy response. The Bank has also conducted lending operations to financial institutions and asset purchases in core funding markets, amounting to around $200 billion.

“These actions have served to ease market dysfunction and help keep credit channels open, although they remain strained. The next challenge for markets will be managing increased demand for near-term financing by federal and provincial governments, and businesses and households. The situation calls for special actions by the central bank.”

The Bank of Canada, in its efforts to provide liquidity to all strained financial markets, has, in essence, become the buyer of last resort. Under its previously-announced program, the Bank will continue to purchase at least $5 billion in Government of Canada securities per week in the secondary market. It will increase the level of purchases as required to maintain the proper functioning of the government bond market. Also, the Bank is temporarily increasing the amount of Treasury Bills it acquires at auctions to up to 40%, effective immediately.

The Bank announced new measures to provide additional support for Canada’s financial system. It will commence a new Provincial Bond Purchase Program of up to $50 billion, to supplement its Provincial Money Market Purchase Program. Further, the Bank is announcing a new Corporate Bond Purchase Program, in which the Bank will acquire up to a total of $10 billion in investment-grade corporate bonds in the secondary market. Both of these programs will be put in place in the coming weeks. Finally, the Bank is further enhancing its term repo facility to permit funding for up to 24 months.

The Bank will support all Canadian financial markets, with the exception of the stock market, and it “stands ready to adjust the scale or duration of its programs if necessary. All the Bank’s actions are aimed at helping to bridge the current period of containment and create the conditions for a sustainable recovery and achievement of the inflation target over time.”

This is exactly what the central bank needs to do to instill confidence that Canadian financial markets will remain viable. These measures are a warranted offset to panic selling. Too many investors are prone to panic in times like these, which has a snowball effect that must be avoided. As long as people are confident that the Bank of Canada is a backstop, panic can be mitigated. The Bank of Canada deserves high marks for responding effectively to this crisis and remaining on guard. Governor Poloz and the Governing Council saw it early for what it is, a Black Swan of enormous proportions.

As a result, Canada will not only weather the pandemic storm better than many other countries, but we will come out of this economic and financial tsunami in better condition.  By Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres.

Mortgage Interest Rates

The Bank of Canada’s target overnight rate is 0.25%.  Prime lending rate is 2.45%.  What is Prime lending rate?  The prime rate is the interest rate that commercial banks charge their most creditworthy corporate customers. The Bank of Canada overnight lending rate serves as the basis for the prime rate, and prime serves as the starting point for most other interest rates.  Bank of Canada Benchmark Qualifying rate for mortgage approval is 5.04%.  Changes to the mortgage qualifying rate is coming into effect April 6, 2020: Instead of the Bank of Canada 5-Year Benchmark Posted Rate, the new benchmark rate will be the weekly median 5-year fixed insured mortgage rate from mortgage insurance applications, plus 2%.  Read the Government of Canada Department of Finance summary on Benchmark Rate for Insured Mortgages statement here. 

Fixed mortgage rate movement has stabilized and levelled out in the past week as lenders get more familiar with a new normal during uncertainty.   Variable rates have also responded the same way.   

View rates Here – and be sure to contact us for a quote to help you find the lowest rate for your specific needs and product requirements.

Mortgage Update - Mortgage Broker London

Mortgage Update – Mortgage Broker London

Your Mortgage

If you have concerns about your mortgage and the rapidly changing market, please contact us to discuss your needs, concerns and options in detail to protect your best interest.

Ensure that your current mortgage is performing optimally, or if you are shopping for a mortgage, only finalize your decision when you are confident you have all the options and the best deals with lowest rates for your needs.

Here at iMortgageBroker, we love looking after our clients’ needs to ensure you get all the options and the best deals and best results.  We do this by shopping your mortgage to all the lenders out there that includes banks, trust companies, credit unions, mortgage corporations & insurance companies.  We do this with a smile, and with service excellence!

Reach out to us – let us do all the hard work in getting you the best results and peace of mind!

We encourage you to follow guidelines from our public health authorities:

Middlesex Health Unit

https://www.healthunit.com/novel-coronavirus

Southwestern Public Health

https://www.swpublichealth.ca/content/community-update-novel-coronavirus-covid-19

Ontario Ministry of Health

https://www.ontario.ca/page/2019-novel-coronavirus

Public Health Canada

https://www.canada.ca/en/public-health/services/diseases/coronavirus-disease-covid-19.html

Factual Statistics Coronavirus COVID-19 Globally:

https://www.worldometers.info/coronavirus/

https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

 

9 Apr

RESIDENTIAL MARKET UPDATE

General

Posted by: Adriaan Driessen

Industry & Market Highlights 
Update on Ontario Essential Businesses

The Government of Ontario announced it is reducing the list of businesses classified as essential and ordering more workplaces to close, to prevent the spread of COVID-19. The updated list of essential businesses does include real estate agent services, which the Government has grouped under Financial Services.

In his news conference today, Premier Ford said unnecessary industrial construction will stop, and new starts in residential projects will stop. There will also be higher scrutiny at critical construction sites, such as new hospitals, roads and bridges. The closure will take effect as of Saturday, April 4, 2020 at 11:59 pm.

Check out the full news release for more details.

Again, this is NOT business as usual. LSTAR urges its Members to practise social distancing and use all the tools available to support clients and close transactions remotely, following the guidelines from Public Health Authorities.  By LSTAR 2020 President Blair Campbell.

March home sales remain steady

London and St. Thomas Association of REALTORS® (LSTAR) announced that 866 homes exchanged hands in March, an increase of 6.9% compared to March 2019. Units sold are on par with the 10-year average.

“For the first quarter, home sales in 2020 are at 2,170, 12.3% ahead of 2019,” said 2020 LSTAR President Blair Campbell. “But with the COVID-19 pandemic affecting all businesses, there is an expectation the marketplace will be impacted in the coming weeks and months. We’ll have to wait and see what this means for LSTAR’s jurisdiction, based on data for the upcoming monthly cycles.”

“First I want to stress that LSTAR’s highest priority during this challenging time is the safety and well-being of its Members and staff,” Campbell said. “We continue to urge members to practice social distancing and follow the guidelines set by our public health authorities. It is not business as usual.”

Compared to a year ago, the overall average home price experienced an increase of 10.3%, rising to $447,152 in March. This average sales price includes all housing types, from single detached homes to high rise apartment condominiums. Across the five major areas of LSTAR’s region, average home sales price continued to increase. The following table illustrates last month’s average home prices by area and how they compare to the values recorded at the end of March 2019.

“Looking at average prices in London’s three main geographic areas, London East saw the biggest gain compared to March 2019,” Campbell said.

The average home price in London East was $393,661, up 20.8% from the same time last year, while London North increased 1.4% over to $527,231. In London South (which contains data from the west), the average home price was $458,666, up 13.8% over March 2019. St. Thomas saw an average price of $392,196, an increase of 8.5% from last March.

The following chart is based on data taken from the CREA National Price Map for February 2020 (the latest CREA statistics available). It provides a snapshot of how home prices in London and St. Thomas compare to some other major Ontario and Canadian centres.

According to a research report[1], a total of $67,425 in ancillary expenditures is generated by the average housing transaction in Ontario over a period of three years from the date of purchase.

“This means that our March home sales would bring more than $58 million back into the local economy throughout the next few years,” Campbell said. “The business of real estate affects many facets of the economy, so we’ll be monitoring the impacts of the COVID-19 pandemic.”  By LSTAR London St. Thomas Association of Realtors

Area realtors brace for pandemic’s impact despite solid month in March

Homes sales in the London region held their own in March despite the COVID-19 pandemic, but that could change in the coming months, warns the president of the local realtors association.

A total of 866 homes were sold last month, a figure on par with the 10-year average and 52 more than in March 2019, the London and St. Thomas Association of Realtors (LSTAR) says.

But the threat of the coronavirus looms large in the forecast, threatening to derail what was shaping up to be a strong year for the region that also takes in Strathroy, St. Thomas and parts of Elgin and Middlesex counties – though not enough to bring a dramatic drop in home prices.

“Unfortunately, it may not be the banner year that we were hoping,” said Blair Campbell, LSTAR’s president.

“The longer the COVID-19 situation goes on, the more likely that that banner year goes out the window.”

Including March sales figures, area realtors sold 2,174 homes in the first quarter of 2020.

That’s 232 more homes sold than in the same period of 2019, a year that ended up being only the third time in which annual sales topped 10,000, leading to the early optimism for 2020.

The stronger-than-expected numbers for March, coming amid social distancing rules and the shutdown of schools and non-essential businesses to slow the spread of the virus, are a reflection of what until now has been a sizzling hot real estate market, Campbell said.

“The coronavirus hit us mid-month and we were full steam ahead prior to that,” he said.

“We had lots of people that were mid-transaction who felt the need to really act quickly, so I think that’s where the numbers are coming from.”

April will likely be a different story, Campbell said.

“I think we will see, particularly next month, really what that impact” of the coronavirus is, he said.

“I think it’ll impact the total activity, the number of sales.”

Though March numbers don’t reflect it, there are other signs of how the coronavirus is already changing the market.

Open houses across the city have been cancelled and a growing number of showings are being done virtually. Urged to avoid in-person showing, realtors are following strict sanitation on viewings deemed necessary.

“It’s not business as usual, that’s for sure,” said Melissa Laprise, a Century 21 realtor.

“Considering what we’re going through right now, virtual tours are becoming a very, very utilized tool.”

Regardless, Laprise also anticipates a slow April, traditionally one of the strongest months for home sales.

“A lot of clients are holding off until this is clear.”

Nationally, social distancing measures could see resales plunge 30 per cent to a 20-year low and the first nationwide drop in prices since 2009, RBC says.

Campbell, however, wasn’t sure that will be the case in the London region, where the average resale price increased in March to $447,000, a 10.3 per cent jump from March 2019.

“I think what we’ll see is likely a stabilizing and a slowdown in total activity, both on the supply and demand side, so that should keep prices as an equilibrium,” he said, adding he expects the market to rebound in the fall and next year.

“It’s not that people don’t want to buy and sell homes. It’s just much more difficult to do that while staying in your own home.”  By Jonathan Juha, With files from Bloomberg.

Canadian housing market recovery may begin by early summer: RBC

Canada’s spring house hunting season — typically the busiest time of the year for home transactions — will be effectively cancelled this year.

The strict social distancing measures that are critical to the fight against COVID-19 will make it all but impossible to follow through with the activities that the conventional home sales process necessitates

That’s the takeaway for the near term Canadian housing picture from RBC Senior Economist and housing market expert Robert Hogue from a thought leadership piece published earlier this week.

“We expect realtors to suspend open houses and cut any private showings to a bare minimum,” he wrote. “There will be plenty of reasons for sellers to wait and see as well. A shock like this one is an inauspicious time to get full value for a property. We expect for-sale inventories to shrink, which will further contribute to stall activity.”

While the outlook for the spring months is bleak, Hogue delivers some much appreciated optimism about a timeline for a housing market recovery. This message is you shouldn’t expect activity to resume overnight, but RBC is currently “penciling in” an early summer “restart.”

Of course, as with all things during this uncertain period, the exact timing is highly dependent on the duration of the COVID-19 crisis and how soon the strict measures are lifted or gradually relaxed.

“We think the recovery will come in stages — taking buyers up to a year to regroup and rebuild confidence amid high unemployment,” wrote Hogue.

Even in an optimistic recovery scenario, Canadian home sales will take a huge hit on the year, with Hogue projecting a nearly 30 percent dive as sales reach a 20-year low at the national level. But looking to 2021, the economist sees a massive sales surge on the horizon when the “temporary shock” of the pandemic sits comfortably in the rearview mirror.

“Exceptionally low interest rates, strengthening job markets and bounce-back in in-migration will generate substantial tailwind. We project home resales to surge more than 40% to 491,000 units in 2021,” wrote Hogue.  By Sean Mackay.

Site closed: No new residential construction in ON after April 4

Speaking from Queen’s Park on Friday afternoon, Ontario Premier Doug Ford announced a halt to all residential construction in the province. As of 11:59 p.m. on April 4, the only projects allowed to continue will be those single-family, semi-detached and townhouse properties which have secured either footing or above-grade structural permits. Renovations to residential properties that were initiated prior to April 4 will also be permitted.

While the announcement was hardly unexpected considering the surging number of COVID-19 infections in the province, it comes at one of the worst possible times for Ontario home buyers. Demand for properties, both new and old, continues to be driven by rapid population growth, while active inventory is at record lows in community after community.

“If construction projects are delayed for four or five months, maybe the market will absorb that, and maybe we won’t feel a shock,” says Bosley Real Estate’s David Fleming. “But if you’re talking every single project that was supposed to be started is now delayed six, eight months – or let’s say that it takes longer to start up again after [builders] are given the green light – I do think that in the future you could have that period where you’re expecting the volume to come onto the market – and it doesn’t – and prices go up as a result.”

The question most prospective home buyers may be turning over in their minds is whether the higher prices associated with lower supply will be overpowered by the dip in prices most are expecting in the coming months. According to PSR Brokerage’s president of pre-construction and development, Ryan Yair Rabinovich, the price drops many are hoping for may not materialize.

Resale buyers, he says, unless they’re forced to by their own financial circumstances, are unlikely to sell if home prices fall, especially those who survived the global financial crisis of only a decade ago.

“2008 and 2009 is still fresh in many real estate owners’ minds,” he says. “They realize that it wasn’t actually as bad, and it didn’t take as long to recover, as people initially thought it would take.”

For new product, the likelihood of lower prices is even less likely, as developers are under severe pressure for their projects to remain profitable.

“Ninety-five percent of developers in the GTA use construction loans from banks,” Rabinovich explains. “Banks won’t lend a single dollar toward construction if you don’t have the minimal profit margin in a project.”

While he hopes that construction projects will be allowed to fire up in eight to 12 weeks, Rabinovich says shuttered projects will still face the same scaling-up challenges they dealt with before the COVID-19 crisis, which will only add to the delays.

“It’s not something where Ford unlatches the lock on this thing, and the next day you have all your trades on site. It requires a lot of coordination and lot of time,” he says.

With new construction projects often taking anywhere between four and six years to complete, the effects of the construction halt are impossible to gauge. But one thing is certain: anyone in Ontario who complains about “all the cranes in the sky” today will be feeling their absence soon enough. By Clay Jarvis

Landlords learn to navigate rent payment uncertainty during COVID-19 crisis

While April 1st has historically been a day reserved for practical jokes and gags, in 2020, there’s little to laugh about, especially when the rent is due.

The first day of April this year was not only when Canada surpassed 9,000 confirmed cases of COVID-19 nationwide, but the first of many months in which tenants and landlords will likely face rent payment difficulties. With the forced closure of non-essential businesses across Ontario, alongside layoffs and reduced staff hours, thousands of residential and commercial tenants have seen their source of income shrink or evaporate entirely. As tenants continue to grapple with forced unemployment, landlords of all sizes must also find the right approach to payments in the weeks and months to come.

“It looks like April seems to be okay, for now,” said Nawar Naji, a Toronto real estate investor and broker with Chestnut Park Real Estate. “The issues are possibly with May and June. As more companies lay off, more people go on EI, I think there will be more issues down the line.”

Naji has four residential tenants, along with clients who have tenants of their own. For April, Naji explained that rental payments don’t appear to be an issue, but some of his tenants have expressed concerns about rent as the shutdown drags on. In the weeks and months ahead, he plans to take a customized, one-on-one approach to his tenants’ rental payments.

“We’re going to talk to them the second, third week of April and see where everybody is at,” said Naji.

For Mark Kenney, President and CEO of Canadian Apartment Properties Real Estate Investment Trust (CAPREIT), tenant payment issues are not a new concept. The ongoing coronavirus crisis has left some tenants within CAPREIT’s 65,000 rental units mired in financial uncertainty, but for those who are facing difficulties, Kenney says that most of them have been open to working on an arrangement with property managers.

“Our compassion hasn’t changed,” said Kenney. “We’ve always, since our inception, made payment plans if somebody has economic disruption, and the pandemic, it’s not the first time people have experienced economic disruption, it’s just on a bigger scale.”

Payment solutions with landlords have varied, ranging from portional monthly payments — in which the remainder of the rent is paid later in the year — to using the tenant’s last-month deposit sum. Greenrock Real Estate Advisors (GREA), a Toronto-based property management and real estate services company with multiple rental buildings, developed a rental assistance program that allows their tenants to use their last month’s rent deposit as a credit towards their regular payments, either in portions or in full.

“GREA is also cognisant of the financial hardships its residents may face during this time,” GREA stated in a press release. “While our three levels of Government have promised various measures of support, it will take time for these relief funds to be disbursed.”

Amid forced closure, commercial tenants are also experiencing rental payment uncertainty, with restaurants and small businesses being among the most vulnerable. The federal government has offered up to $40,000 in interest-free loans to small businesses and not-for-profit organizations in response to COVID-19, though some business owners have argued that this would tack on more debt than many companies can bear. To provide relief, some larger commercial landlords have granted rent deferral options. Ivanhoé Cambridge confirmed to Livabl that it would be providing deferral solutions to certain Canadian retail tenants on a case-by-case basis.

While some landlords have been able to negotiate rental payments with their tenants, others have not been so empathetic. Governments across the country have intervened to varying degrees, with British Columbia banning most evictions during the pandemic and Ontario closing the Landlord and Tenant Board.

“Landlords can still give eviction notices, however, landlords are encouraged to work with tenants to establish fair arrangements to keep tenants in their homes, including deferring rent or other payment arrangements,” reads the Ontario.ca website.

However, there are exploitive outliers.

“I heard a story about a landlord who was coming up with a loan program to tenants, charging them interest. It’s disgusting,” says Kenney. “All landlords are not the same. We shouldn’t be painted with one brush. And all tenants aren’t the same, and they shouldn’t be painted with one brush. I think it’s really important that people exercise compassion and decency.”

Kenney, who said that he is vehemently against evictions right now, believes that more leadership needs to come from the government to protect tenants from landlords, such as those who could issue large rent increases on new construction units in the current environment.

Meanwhile, there have been calls for rent strikes by housing activists, such as Parkdale Organize, who advised residents not to pay rent on April 1st so tenants can “make the reasonable and responsible choice to keep the money they need to live in these uncertain times need support,” according to the Keep Your Rent webpage.

Both Kenney and Naji shared concerns about a possible rent strike’s impact on landlord mortgage payments. Kenney explained that while eligible homeowners can defer mortgage payments, some tenants feel that they don’t need to meet rental obligations, even if they’re still working. He is worried about the 80 percent of small landlords across Canada who are not protected by income from a large volume of units.

“Everybody’s got to pay their obligations and if there’s circumstances where people can’t pay rent or can’t pay a mortgage then they need to work it out together as a team, because we’re all in this together,” said Naji.  By Michelle McNally

Economic Highlights
Canada Loses Over a Million Jobs in March

Employment in Canada collapsed in March, with over one million jobs lost, wiping away over three years of job creation in a single month and highlighting the economic pain the coronavirus pandemic has swiftly delivered. The decline in jobs in Canada, on a proportional basis, was steeper than in the U.S. The record plunge was anticipated after officials here revealed that in the span of roughly a month, 5 million people, about 20% of the country’s labour force, have applied for emergency income support. This reflects Canada’s relatively rapid widespread implementation of social distancing.

The sharp increase in unemployment initially caught policymakers by surprise, prompting them to shift their response toward wage subsidies in order to prevent across-the-board layoffs. About 70% of direct stimulus spending is now targeted at keeping workers on payrolls.

The net number of new jobs plunged by 1.01 million from February, the largest decline in records dating back to 1976, Statistics Canada said Thursday in Ottawa. The jobless rate surged from 5.6% in February to 7.8% in March.

Actual hours worked declined by 14% from a year ago, and 15% from the previous month, both records.

The March Labour Force Survey (LFS) results reflect labour market conditions during the week of March 15 to 21. By then, a sequence of unprecedented government interventions related to COVID-19—including the closure of non-essential businesses, travel restrictions, and public health measures directing Canadians to limit public interactions—had been put in place. These interventions resulted in a dramatic slowdown in economic activity and a sudden shock to the Canadian labour market. Today’s data might just be a preview of even worse numbers ahead as the economy heads for its deepest downdraft since the Great Depression. 

As bad as these numbers are, Statistics Canada said they do not fully measure the size and extent of the impact of COVOD-19 on Canadian workers and businesses. Additional measures are required to do that which include the number of Canadians who kept their job but worked reduced hours, and the number of people who did not look for work because of ongoing business closures. Of those who were employed in March, the number who did not work any hours during the reference week (March 15 to 21) increased by 1.3 million, while the number who worked less than half of their usual hours increased by 800,000. These increases in absences from work can be attributed to COVID-19 and bring the total number of Canadians who were affected by either job loss or reduced hours to 3.1 million.

Regionally, employment fell in all provinces, with Ontario (-403,000 or -5.3%), Quebec (-264,000 or -6.0%), British Columbia (-132,000 or -5.2%) and Alberta (-117,000 or -5.0%) the hardest hit.

The unemployment rate increased in all provinces except Newfoundland and Labrador and Prince Edward Island. The largest increases were in Quebec (+3.6 percentage points to 8.1%), British Columbia (+2.2 percentage points to 7.2%) and Ontario (+2.1 percentage points to 7.6%). See the table below for the jobless rate in each province.

In March, the number of people who were out of the labour force—that is, those who were neither employed nor unemployed—increased by 644,000. Of those not in the labour force, 219,000 had worked recently and wanted a job but did not search for one, an increase of 193,000 (+743%); because they had not looked for work and they were not temporarily laid off, these people are not counted as unemployed. Since historically the number of people in this group is generally very small and stable, the full monthly increase can be reasonably attributed to COVID-19.

Employment decreased more sharply in March among employees in the private sector (-830,200 or -6.7%) than in the public sector (-144,600 or -3.7%).

The number of self-employed workers decreased relatively little in March (-1.2% or -35,900) and was virtually unchanged compared with 12 months earlier. The number of own-account self-employed workers with no employees increased by 1.2% in March (not adjusted for seasonality). Most of this increase was due to an increase in the healthcare and social assistance industry (+16.7%), which offset declines in several other industries. At the onset of a sudden labour market shock, self-employed workers are likely to continue to report an attachment to their business, even as business conditions deteriorate.

The service sector was hardest hit, with almost all of the 1 million decline in employment concentrated in that category. The largest employment declines were recorded in industries that involve public-facing activities or limited ability to work from home. This includes accommodation and food services (-23.9%); information, culture and recreation (-13.3%); educational services (-9.1%); and wholesale and retail trade (-7.2%).

Smaller employment declines were observed in most other sectors, including those related to essential services, such as health care and social assistance (-4.0%). Employment was little changed in public administration; construction; and professional, scientific and technical services. Surprisingly, employment in natural resources rose despite the collapse of oil prices in March.

Females were also more likely to lose jobs than their male counterparts. Among core-aged workers, female employment dropped more than twice that of men, which might reflect the dominance of males in the construction industry, which was in large measure considered essential work in March. The private sector was responsible for a majority of the losses with employment dropping by 830,200.

Bottom Line: The chart below shows the unprecedented magnitude of the drop in employment last month compared to other recession periods, but this is not your typical recession. This was a government-induced work stoppage to protect us from COVID-19; to flatten the curve of new cases so that our healthcare system could better accommodate the onslaught of critically ill patients. While these are still early days, the data suggests that Canada’s early and dramatic nationwide response to the pandemic has been the right thing to do. We only need to look as near as the United States, where shutdowns were piecemeal, tentative and late. The number of COVID-19 cases is more than 22 times larger in the US than in Canada, while the population is only ten times the size. 

To be sure, economic growth in the second quarter will be dismal. The economists at the Royal Bank have just posted a forecasted growth rate of an unprecedented -32% in Q2 and a jobless rate rising to 14.6%. They see a bounceback of +20% growth in the third quarter, although it will take until 2022 until Canadian GDP returns to its pre-pandemic level. Underpinning this forecast is the assumption that the economy will be in lock-down for about 12 weeks, with activity only gradually returning to normal after that. 

According to the Royal Bank report, “Home resales are expected to fall 20% this year. Job losses, reduced work hours and income, as well as equity-market declines, will keep many buyers out of the market. Governments and banks have policies in place to help owners through this tough patch which should limit forced-selling and a glut of properties coming onto the market. But that doesn’t mean prices won’t come under downward pressure. As in many other industries, we expect the recovery in housing will be gradual. Low interest rates will be a stabilizing force, though it will take a rebound in the labour market as well as a pickup in immigration before sales really accelerate. Our view is that most of the recovery will occur in 2021.”

Policymakers have been extremely aggressive in providing income and wage supports. The central bank is unlikely to reduce interest rates below the current overnight rate of 0.25%, but the BoC will continue large-scale purchases of government bonds, mortgage-backed securities (along with CMHC), bankers’ acceptances and commercial paper–reducing the cost of funds for the banks and improving liquidity in all markets. “All told, the government support measures add up to 11.5% of GDP making the entire package one of the largest of the developed countries.

Residential Market Commentary – March limps away

As the old saying goes, March comes in like a lion and goes out like a lamb.  For Canada’s housing market, that is all too true this year.  And the country’s two biggest markets make it abundantly clear.

The Canadian Real Estate Association reported strong year-over-year sales gains of 26% coming out of February.  The Toronto Region Real Estate Board clocked-in with a 49% y/y increase for the first 14 days of March.  But then COVID-9 entrenched itself as a bitter reality and things slumped. 

Government imposed shutdowns and the implementation of social distancing have pretty much ended open houses and any face-to-face meetings with clients for both realtors and mortgage brokers.  Real estate boards across the country have banned such interactions or are strongly recommending against them.

The Toronto-area market plunged in the second half of March, with sales falling to 16% below year ago levels.  The month ended with a 12% gain over March of 2019.  By comparison, February ended with a 44% increase over a year ago.  A rough calculation by one of the big banks puts March activity at 23% below February.

The country’s other hot market, Vancouver, experienced a similar second half collapse in March, but came out of the month with a 46% increase in sales activity.  That number is tempered, though, by a particularly weak March, last year.

Market watchers expect a continuing slowdown as the COVID-19 outbreak worsens and anti-virus measures intensify.  They caution that property values will likely come under increasing downward pressure and that extremely light activity will make the market vulnerable to erratic price moves.  By First National Financial

Ellis and McKenzie address COVID-19’s impact on borrowers and markets

On Friday afternoon, April 3, 2020, First National’s Jason Ellis, President and Chief Operating Officer, and Scott McKenzie, Senior Vice President of Residential Mortgages, participated in a special webinar dedicated to sharing insights into current conditions in Canada’s mortgage markets and efforts the company is making to assist mortgage brokers and their clients through this difficult time. Here are the key takeaways beginning with Jason’s synopsis of interest rate changes between January and March.

Bank debt, mortgage backed securities and asset-backed commercial paper were well bid and generally trading at relatively narrow spreads to open 2020. Toward the end of January 5-year Canada Bonds were trading around 1.5%, a 5-year fixed rate mortgage was approximately 2.89%, the Bank of Canada overnight rate was 1.75%, the prime rate was 3.95% and adjustable rate mortgages were generally offered at discounts to prime of as much as 1%.

As the reality of the pandemic began to play out, 5-year bond yields fell to as low as 35 basis points in intra-day trading and, with that, fixed mortgage rates also fell to as low as 2.39%. In March, the Bank of Canada cut rates by 50 basis points on three separate occasions.

The Bank of Canada’s overnight administered rate is now just 25 basis points, the lowest since the global financial crisis when the overnight rate was cut 425 basis points between December 2007 and May 2009.

The prime rate has followed the Bank of Canada rate lower, from 3.95% in January 2020 to 2.45% today. But fixed mortgage rates, which did drop briefly to 2.39%, have moved back up to 2.84% today, leaving them effectively unchanged despite the fact that underlying Government of Canada bond yields are 100 basis points lower. 

There is a common misconception that 5-year fixed mortgage rates are inextricably linked to 5-year Government of Canada bond yields and that cuts to the Bank of Canada’s overnight rate always result in lower 5-year fixed mortgage coupons. Although the five-year Canada bond yield does act as the base from which other rates are set including 5-year mortgages, the reality is there is not a one-to-one relationship.

Today, spreads on bail-in funds Schedule I banks use to fund mortgages have increased and spreads on mortgage backed securities (“MBS”) that non-bank lenders like First National use for funding have also increased. Effectively, the traditional relationship between mortgage coupons and government yields has broken down and as a result, the coupon on mortgages is higher than it would be otherwise.

A similar phenomenon has taken place for adjustable rate mortgages which are traditionally thought of as being linked to the prime rate. Behind the prime rate, bank and non-bank cost of funds more closely follow the CDOR or the Canadian Dollar Offered Rate.  CDOR is an index which references the market where asset backed commercial paper and Banker’s Acceptances (“BAs”) are generally traded. Normally there is a relationship between prime and CDOR that is predictable and stable. However, in this environment, bank clients are drawing down on their committed lending facilities. In order to meet demand for cash, banks are issuing Banker’s Acceptances. This supply of BAs has put pressure on the demand side and yields have increased. The normal relationship between CDOR and other rates like prime is now broken and lenders have been required to eliminate the discount from prime to normalize the relationship between mortgage coupons and the cost of funds.  As it costs lenders more to borrow, they must charge more to lend.

Market data show that home purchases declined in the last two weeks of March, and while volume reductions are likely to continue, it’s not possible to predict by how much or for how long.

Government Responses

Because this is more of a main street problem than a Bay Street problem, the government’s response to these economic conditions has been extraordinary – faster and bigger than anything we have ever seen. Some of the responses include the re-introduction of the Insured Mortgage Purchase Program which was first used during the liquidity crisis. It began at $50 billion but was quickly upsized to $150 billion. The Canada Mortgage Bond program has been increased from $40 billion to $60 billion. And the Bank of Canada is now purchasing Canada Mortgage Bonds in the secondary market and has introduced both a Banker’s Acceptance purchase program and a Commercial Paper purchase program along with a Term Repo Purchase Facility with an expanded set of eligible collateral including MBS.

While the government is spending a great deal of money funding initiatives like the Insured Mortgage Purchase program, it is buying triple A-rated securities at extremely elevated spreads and financing those purchases through the issuance of risk-free government debt at materially lower yields. As a result, the government stands to earn significant net interest margin by providing this liquidity.  This will ultimately help finance many of the government’s fiscal initiatives.

Despite all of these actions, including unprecedented help for consumers, the market response has been surprisingly muted. To be clear, the programs have been critical in providing liquidity and creating ceilings on spreads in BA, commercial paper and MBS markets. The programs have provided a critical stabilizing effect and spreads have narrowed from their widest levels. However, there is a long way to go before the markets return to anything close to normal conditions.

Mortgage Deferrals

Mortgage deferrals, when granted, continue to incur interest. The deferred interest from a deferred payment is capitalized to the principal of the mortgage at the prevailing coupon rate.  Some market commentators have been unfairly critical of this approach. For clarity, mortgage payment deferrals are not financed by a government program.  The financial burden falls on the mortgage lenders.  Banks and non-bank lenders alike fund mortgages with other debt including covered bonds, deposit notes, commercial paper, and mortgage backed securities.  The monthly interest and in some cases principal on these debt instruments must still be paid even while the payments on underlying mortgages are deferred. 

At maturity, borrowers with an approved deferral of payment from First National will be offered a rate to renew and their mortgage will be rolled seamlessly into a new term. This should be comforting for those who find themselves in a renewal situation while facing temporary financial hardship related to COVID-19.

Borrowers will not be expected to repay the deferred interest at the time of renewal. Because the deferred interest is capitalized, it will be paid out over the remaining amortization period unless the mortgage is discharged at the end of the term. 

If a borrower is granted a deferral by First National, the mortgage will not be reported as “in arrears.” Similarly, if a borrower misses a payment before being granted a deferral, that mortgage will also not be reported to credit rating agencies as “in arrears.”

Mortgage insurers have asked lenders to use deferrals as the way of helping borrowers facing issues rather than entertain other measures such as extending amortization periods.  By First National Financial

Purchasing power to further weaken as small businesses fold

Canadian purchasing power will significantly decline in the near future as nearly one-third (32%) of small business owners admitted that they are not sure they will reopen after the COVID-19 crisis, according to a new study.

The recent survey by the Canadian Federation of Independent Business (CFIB) also found that on average, small businesses lost around $160,000 due to the fiscal and economic ravages of the pandemic.

A separate poll has warned that 47% of Canadians cannot afford to miss even just one day of work as they have neither back-up funds nor benefits. Another 23% also fear that they might lose their current jobs, the Financial Post reported.

“The income level of these people is simply not going to be there, so the question is how can governments respond to it,” pollster John Wright said.

CFIB president Dan Kelly hailed the federal government’s announcement of a wage subsidy – which will be at a maximum of $847 per week – as a vital component of keeping the small business sector liquid.

“Putting in place a 75% wage subsidy was terrific news and we are already hearing from business owners who have delayed layoffs as a result,” Kelly told BNN Bloomberg in an interview.

Fully 68% of the respondents to the CFIB surveyed welcomed the subsidy.

“Stress among business owners is very high and it’s critical that the wage subsidy and other measures are accessible to as many businesses as possible to avoid a flood of permanent closures in the weeks and months to come,” Kelly added.  By Ephraim Vecina.

Mortgage Interest Rates

On April 2nd the Bank of Canada’s target overnight rate dropped a third time since the health and economic crisis and is now 0.25%.  Prime lending rate is now down to 2.45%.  What is Prime lending rate?  The prime rate is the interest rate that commercial banks charge their most creditworthy corporate customers. The Bank of Canada overnight lending rate serves as the basis for the prime rate, and prime serves as the starting point for most other interest rates.  Bank of Canada Benchmark Qualifying rate for mortgage approval lowered to 5.04% adding on average another $10,000 in increased borrowing capacity, but changes to the mortgage qualifying rate is coming into effect April 6, 2020: Instead of the Bank of Canada 5-Year Benchmark Posted Rate, the new benchmark rate will be the weekly median 5-year fixed insured mortgage rate from mortgage insurance applications, plus 2%. 

Banks/Lenders started raising fixed rates due to market volatility and and liquidity concerns.  Discounts on variable rates have also been reduced now at Prime plus. Bond markets are not operating as normal and lenders cost for hedging funds has become more expensive also affecting rates.

View rates Here – and be sure to contact us for a quote as rates are moving faster than can be updated.

Mortgage rates to climb further as institutional lenders react to increased risk

Greater risk on the part of financial institutions is the major element driving the recent sharp increases in mortgage rates for new loans, Dominion Lending Centres chief economist Sherry Cooper said.

“These disruptive forces of COVID-19 have markedly reduced the earnings of banks and other lenders and dramatically increased their risk,” Cooper wrote in an analysis recently published by DLC’s online portal.

“That is why the stock prices of banks and other publically-traded lenders have fallen very sharply, causing their dividend yields to rise to levels well above government bond yields,” she added. “Thus, the cost of funds for banks and other lenders has risen sharply despite the cut in the Bank of Canada’s overnight rate.”

The economic shockwaves emanating from the pandemic have proven disastrous, with industry players bearing the brunt of the impact so far.

“The banks are having to set aside funds to cover rising loan loss reserves, which exacerbates their earnings decline,” Cooper explained. “An unusually large component of Canadian bank loan losses is coming from the oil sector. Still, default risk is rising sharply for almost every business, small and large–think airlines, shipping companies, manufacturers, auto dealers, department stores, etc.”  By Ephraim Vecina. 

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Your Mortgage

If you have concerns about your mortgage and the rapidly changing market, please contact us to discuss your needs, concerns and options in detail to protect your best interest.

Ensure that your current mortgage is performing optimally, or if you are shopping for a mortgage, only finalize your decision when you are confident you have all the options and the best deals with lowest rates for your needs.

Here at iMortgageBroker, we love looking after our clients’ needs to ensure you get all the options and the best deals and best results.  We do this by shopping your mortgage to all the lenders out there that includes banks, trust companies, credit unions, mortgage corporations & insurance companies.  We do this with a smile, and with service excellence!

Reach out to us – let us do all the hard work in getting you the best results and peace of mind!

We encourage you to follow guidelines from our public health authorities:

Middlesex Health Unit

https://www.healthunit.com/novel-coronavirus

Southwestern Public Health

https://www.swpublichealth.ca/content/community-update-novel-coronavirus-covid-19

Ontario Ministry of Health

https://www.ontario.ca/page/2019-novel-coronavirus

Public Health Canada

https://www.canada.ca/en/public-health/services/diseases/coronavirus-disease-covid-19.html

Factual Statistics Coronavirus COVID-19 Globally:

https://www.worldometers.info/coronavirus/

https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

8 Apr

TO DEFER or NOT TO DEFER

General

Posted by: Adriaan Driessen

That is the question.

With so many people being temporarily laid off due to the COVID-19 Pandemic that also triggered an economic crisis, many Canadians are finding themselves in a financial pinch to keep up with expenses and fixed liabilities like mortgage payments, loan payments and credit payments.The Majority of lenders and banks are offering temporary relief with deferred payments on mortgages, loans and credit card payments up to 6 months, of course on a case-by-case basis subject to approval.

Many clients are asking for more resource to help understand the factors involved in whether they should consider a mortgage or other debt payment deferral if they are temporarily out of work and unable to make payments.  Others just want to know if they should jump on the opportunity even if they don’t’ really need it.

It is important to understand that borrowing money is not free, when it comes to lending the cost is principal and interest.  A deferred payment is not a forgiven payment.  Also free money being printed by the government and given to Canadians to help during the economic crisis like the Emergency Response Benefit, will impact us in the future with reduced purchasing power on goods and service, once inflation kicks in after the deflationary period.

Deferred payments on a loan contract that includes interest plus principal will result in interest being accrued.  That means the interest gets added to the loan and the loan amount compounds and grows larger.

Deferred payments are only recommend to avoid default.

If you are in financial distress and you are about to default on your mortgage payment, or other loans or debts – contact your lender for special arrangement to avoid default.  Once you default it will be reported to your credit and will have a negative impact in the future, resulting in higher interest rate and cost of borrowing in your mortgage payments when you have to renew or change your mortgage in the future.

If you can make your payments normally without deferral, that is definitely the recommenced way to go!  Should you experience financial distress, please visit my video blog article FINANCIAL DISTRESS MORTGAGE & FINANCES due to  CORONAVIRUS COVID-19 ECONOMIC IMPACT.

http://imortgagebroker.ca/mortgages/financial-distress-mortgage-finances-due-coronavirus-covid-19b-economic-impact/

Don’t’ hesitate to reach out to us to review your situation, review all the options available to you and help you understand and find the best solutions for your specific financing needs.

We are always here for you if you have any further questions or need assistance.

If you’d like to keep receiving timely, informative and relevant information or videos like this one, please hit the subscribe button below or sign up for my email newsletter at my website at http://imortgagebroker.ca/about/contact.

Thanks for your time and keep well!

2 Apr

RESIDENTIAL  MARKET UPDATE 

General

Posted by: Adriaan Driessen

Industry & Market Highlights 

Bank of Canada enacts another overnight rate cut

For the third time this month, the Bank of Canada cut to the overnight rate, this time slashing off 50 basis points to a new level of .025%. The Bank Rate is correspondingly 0.50% and the deposit rate is .025% percent.

In a press statement, the central bank said this “unscheduled rate decision brings the policy rate to its effective lower bound and is intended to provide support to the Canadian financial system and the economy during the COVID-19 pandemic.”

The BoC also launched two programmes designed to address the economic chaos created by COVID-19: The Commercial Paper Purchase Program (CPPP) is designed to “alleviate strains in short-term funding markets and thereby preserve a key source of funding for businesses,” while the second initiative will have the BoC acquiring Government of Canada securities in the secondary market, beginning with a minimum acquisition of $5 billion per week across the yield curve.

“The program will be adjusted as conditions warrant, but will continue until the economic recovery is well underway,” the BoC said, adding that its balance sheet “will expand as a result of these purchases.” By Phil Hall.

Government introduces Canada Emergency Response Benefit to help workers and businesses. 

The Government of Canada is taking strong, immediate and effective action to protect Canadians and the economy from the impacts of the global COVID-19 pandemic. No Canadian should have to choose between protecting their health, putting food on the table, paying for their medication or caring for a family member.

To support workers and help businesses keep their employees, the government has proposed legislation to establish the Canada Emergency Response Benefit (CERB). This taxable benefit would provide $2,000 a month for up to four months for workers who lose their income as a result of the COVID-19 pandemic. The CERB would be a simpler and more accessible combination of the previously announced Emergency Care Benefit and Emergency Support Benefit.

The CERB would cover Canadians who have lost their job, are sick, quarantined, or taking care of someone who is sick with COVID-19, as well as working parents who must stay home without pay to care for children who are sick or at home because of school and daycare closures. The CERB would apply to wage earners, as well as contract workers and self-employed individuals who would not otherwise be eligible for Employment Insurance (EI).

Additionally, workers who are still employed, but are not receiving income because of disruptions to their work situation due to COVID-19, would also qualify for the CERB. This would help businesses keep their employees as they navigate these difficult times, while ensuring they preserve the ability to quickly resume operations as soon as it becomes possible.

The EI system was not designed to process the unprecedented high volume of applications received in the past week. Given this situation, all Canadians who have ceased working due to COVID-19, whether they are EI-eligible or not, would be able to receive the CERB to ensure they have timely access to the income support they need.

Canadians who are already receiving EI regular and sickness benefits as of today would continue to receive their benefits and should not apply to the CERB. If their EI benefits end before October 3, 2020, they could apply for the CERB once their EI benefits cease, if they are unable to return to work due to COVID-19. Canadians who have already applied for EI and whose application has not yet been processed would not need to reapply. Canadians who are eligible for EI regular and sickness benefits would still be able to access their normal EI benefits, if still unemployed, after the 16-week period covered by the CERB.

The government is working to get money into the pockets of Canadians as quickly as possible. The portal for accessing the CERB would be available in early April. EI eligible Canadians who have lost their job can continue to apply for EI here, as can Canadians applying for other EI benefits.

Canadians would begin to receive their CERB payments within 10 days of application. The CERB would be paid every four weeks and be available from March 15, 2020 until October 3, 2020.

This benefit would be one part of the government’s COVID-19 Economic Response Plan, to support Canadian workers and businesses and help stabilize the economy by helping Canadians pay for essentials like housing and groceries, and helping businesses pay their employees and bills during this unprecedented time of global uncertainty.

March 25, 2020 – Ottawa, Ontario – Department of Finance Canada

https://www.canada.ca/en/department-finance/news/2020/03/introduces-canada-emergency-response-benefit-to-help-workers-and-businesses.html

Ontario Prohibits Gatherings of More Than Five People with Strict Exceptions

Stronger action required to stop the spread of COVID-19

The Ontario government is taking immediate and decisive action to further stop the spread of COVID-19 and protect the health and well-being of all Ontarians.

Based on the best advice of Ontario’s Chief Medical Officer of Health, the Ontario government is issuing a new emergency order under the Emergency Management and Civil Protection Act to prohibit organized public events and social gatherings of more than five people, effective immediately.

This order would not apply to private households with five people or more. It would also not apply to  operating child care centres supporting frontline health care workers and first responders provided the number of persons at each centre does not exceed 50 people. Funerals would be permitted to proceed with up to 10 people at one time.

“If we are going to stop the spread of COVID-19 now and keep our communities safe, we need to take extraordinary measures to ensure physical distancing,” said Premier Doug Ford. “I strongly encourage everyone to do the responsible thing and stay home unless absolutely necessary. I can assure everyone that we will do everything in our power to stop this virus in its tracks.”

“We are acting on the best advice of our Chief Medical Officer of Health and other leading public health officials across the province,” said Christine Elliott, Deputy Premier and Minister of Health. “These are extraordinary times that demand extraordinary measures to stop the spread of COVID-19 and protect our people. Nothing is more important.”

Organized public events include parades, events including weddings, social gatherings and communal services within places of worship. This order replaces a previous emergency order which prohibits organized public events of over 50 people.

Ontario declared a provincial state of emergency on March 17, 2020 and has issued orders to close non-essential workplaces, recreational programs, libraries, publicly funded schools, private schools, daycares, provincial parks, churches and other faith settings, as well as bars and restaurants, except those that may only offer takeout or delivery. Essential services, such as grocery stores, convenience stores, pharmacies, public transit, manufacturing facilities, and supply chain companies remain open and operational.

Quick Facts

  • Everyone in Ontario should be practicing physical distancing to reduce their exposure to other people. Avoid close contact (within 2 metres) with people outside of your immediate families.
  • On March 25, 2020, the federal government announced an Emergency Order under the Quarantine Act that requires any person entering Canada by air, sea or land to self-isolate for 14 days whether or not they have symptoms of COVID-19. They should monitor for symptoms of COVID-19 for 14 days.
  • Take everyday steps to reduce exposure to COVID-19 and protect your health: wash your hands often with soap and water or alcohol-based hand sanitizer; sneeze and cough into your sleeve; avoid touching your eyes, nose or mouth; avoid contact with people who are sick; stay home if you are sick.

Additional Resources

https://news.ontario.ca/opo/en/2020/03/ontario-prohibits-gatherings-of-five-people-or-more-with-strict-exceptions.html

Pent up housing demand during COVID-19 may lead to hot summer market

As Canada prepares to weather the worst of the COVID-19 pandemic, there are already hopeful signs emerging from China where the novel coronavirus originated months ago.

China is maintaining a long streak of reporting no new local COVID-19 infections as its economy is gradually ramping back up after coming to a screeching halt earlier in the year. With it, the Chinese housing market is experiencing a sharp rebound in March, in what could be a bellwether for anticipating Canada’s own market trajectory once the pandemic’s impact subsides in the country.

“China’s private housing market is springing back to life as more sales offices reopened across the country following a nationwide shutdown, saving home builders from a deeper financial slump this year,” wrote South China Morning Post reporter Iris Ouyang in an article published today.

Ouyang cited home transaction volume in eight large Chinese cities that has eclipsed levels observed in the final quarter of 2019. She also noted that property sales in 30 tier-1 and tier-2 Chinese cities tripled in March from February, a sign that the coronavirus crisis was waning. South China Morning Post uses a four-tier system to rank cities in China using GDP, population and political governance data.

“There’s a release of pent-up demand from the Spring Festival and the coronavirus lockdown period in February,” Yang Hongxu of E-House China Research and Development Institute, a Shanghai-based real estate research firm, told South China Morning Post. “Thus we are seeing partial warming up of the property market.”

While nothing can be guaranteed during these extraordinary times, many economists believe that the experience of China and other Asian countries that were first hit by the virus early in the year will largely mirror the experience of Western countries now facing the full brunt of their outbreaks.

“If the dynamics seen in Asia repeat (and we have reason to believe it will) we are about 3 to 4 weeks away from the global pandemic inflection point,” wrote Tamara Basic Vasiljev, senior economist at Oxford Economics, in a research note published today.

“True, the numbers of coronavirus cases continue to rise sharply and western economies have been unable to repeat the success of Asian quarantine and containment policies. But the dynamics of COVID-19 deaths in the West are similar to patterns seen in Asia, pointing to a near turnaround,” she continued.

When this turning point is reached in Canada and new infections begin to ebb, there is promise that pent up housing demand in the country’s major markets will be unleashed in the second half of the year.

The conditions are certainly right for a reinvigorated market in the summer and fall. BMO economist Priscilla Thiagamoorthy wrote earlier this month that Canada’s housing market “found a solid footing in the first couple of months of 2020” before being derailed by the unprecedented disruptive effects of the COVID-19 pandemic.

In response to the pandemic’s wide-ranging economic impacts, the Bank of Canada slashed its key interest rate to a historic low last week.

With strong housing demand in the months prior to the pandemic and all-time low mortgage rates expected when Canada emerges on the other side of its COVID-19 crisis, there are plenty of reasons to expect a housing rebound in the subsequent months.

China is seemingly following this trajectory as its outbreak wanes, bolstering the case further that Canada’s market could bounce back rapidly if it follows the same path. By Sean MacKay. 

Economic Highlights

Bank of Canada Moves to Restore “Financial Market Functionality”

The Bank of Canada today lowered its target for the overnight rate by 50 basis points to ¼ percent. This unscheduled rate decision brings the policy rate to its effective lower bound and is intended to provide support to the Canadian financial system and the economy during the COVID-19 pandemic (see chart below).

Strains in the commercial paper and government securities markets triggered today’s action to engage in quantitative easing. The Governing Council has been meeting every day during the pandemic crisis. Market illiquidity is a significant problem and one the Bank considers foundational. These large-scale purchases of financial assets are intended to improve the functioning of financial markets.

Credit risk spreads have widened sharply in recent days. People are moving to cash. Liquidity has dried up in all financial markets, even government-guaranteed markets such as Canadian Mortgage-Backed securities (CMBs) and GoC bills and bonds. The commercial paper market–used by businesses for short-term financing–has become nonfunctional. The Bank is making large-scale purchases of financial assets in illiquid markets to improve market functioning across the yield curve. They are not attempting to change the shape of the curve for now but might do so in the future.

These large-scale purchases will create the liquidity that the financial system is demanding so that financial intermediation can function. Risk has risen, which creates the need for more significant cash injections.

At the press conference today, Senior Deputy Governor Wilkins refrained from speculating what other measures the Bank might take in the future. When asked, “Where is the bottom?” She responded, “That depends on the resolution of the Covid-19 health issues.”

The Bank will discuss the economic outlook in its Monetary Policy Report at their regularly scheduled meeting on April 15. In response to questions, Governor Poloz said it is challenging to assess what the impact of the shutdown of the economy will be. A negative cycle of pessimism is clearly in place. The Bank’s rate cuts help to reduce monthly payments on floating rate debt. He is hoping to maintain consumer confidence and expectations of a return to normalcy.

The oil price cut alone would have been sufficient reason for the Bank of Canada to lower interest rates. The Covid-19 medical emergency and the shutdown dramatically exacerbates the situation. All that monetary policy can do is to cushion the blow and avoid structural problems to the economy. The overnight rate of 0.25% is consistent with market rates along the yield curve.

High household debt levels have historically been a concern. Monetary policy easing helps to bridge the gap until the health concerns are resolved. The housing market, according to Wilkins, is no longer a concern for excessive borrowing by cash-strapped households.

At this point, the Bank is not contemplating negative interest rates. Monetary policy has little further room to maneuver, given interest rates are already very low. With businesses closed, lower interest rates do not encourage consumers to go out and spend money.

Large-scale debt purchases by the Bank will continue for an extended period to provide liquidity. The Bank can do this in virtually unlimited quantities as needed. The policymakers are also focussing on the period after the crisis. They want the economy to have an excellent foundation for growth when the economy resumes its normal functioning.

Fiscal stimulus is crucial at this time. The newly introduced income support for people who are not covered by the Employment Insurance system is a particularly important safety net for the economy. There are many other elements of the fiscal stimulus, and the government stands ready to do more as needed.

The Canadian dollar has moved down on the Bank’s latest emergency action. The loonie has also been battered by the dramatic decline in oil prices. Canada is getting a double whammy from the pandemic and the oil price war between Saudi Arabia and Russia. The loonie’s decline feeds through to rising prices of imports. However, the pandemic has disrupted trade and imports have fallen.

The Bank of Canada suggested as well that they are meeting twice a week with the leadership of the Big-Six Banks. The cost of funds for the banks has risen sharply. CMHC is buying large volumes of mortgages from the banks, which, along with CMB purchases by the central bank, will shore up liquidity. The banks are well-capitalized and robust. The level of collaboration between the Bank of Canada and the Big Six is very high.

The Stock Market Has Had Three Good Days

As the chart below shows, the Toronto Stock Exchange has retraced some of its losses in the past three days as the US and Canada have announced very aggressive fiscal stimulus. As well, the Bank of Canada has now lowered interest rates three times this month, with a cumulative easing of 1.5 percentage points. The Federal Reserve has also cut by 150 basis points over the same period. In addition to lowering borrowing costs, the central bank has also announced in recent days a slew of new liquidity measures to inject cash into the banking system and money markets and to ensure it can handle any market-wide stresses in the financial system.

The economic pain is just getting started in Canada with the spike in joblessness and the shutdown of all but essential services. Similarly, the US posted its highest level of initial unemployment insurance claims in history–3.83 million, which compares to a previous high of 685,000 during the financial crisis just over a decade ago.

These are the earliest indicator of a virus-slammed economy, with much more to come. All of this is without precedent, but rest assured that policy leaders will continue to do whatever it takes to cushion the blow of the pandemic on consumers and businesses and to bridge a return to normalcy.

By Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres.

Millions of Canadians already missing payments due to COVID-19

We are still relatively early in the coronavirus crisis but already many people are missing payments.

A new report from insolvency practitioners Bromwich+Smith with Leger Research has found that 49% of households in Ontario and Alberta, and more than half in British Columbians, have suffered an immediate income reduction since the crisis began.

The share of households who reported already falling behind with payments on credit cards, utilities, or telecoms is 24% in Alberta, and 19% in Ontario and BC.

“The results are quite staggering really. Of course, we get a sense of what is happening when we read the news, but the survey results make it far more real having interviewed 750 people across BC, Alberta and Ontario,” says David de Lange, Senior Vice President of Leger Research.

Getting help

Most of those struggling will reach out for help from the federal and provincial governments but almost a quarter of respondents said they didn’t know how they would adjust to a reduction in income.

Bromwich+Smith advises that getting government help is a good first step for those that cannot pay their debts followed by asking their mortgage lender to see if a deferral could work for them or call a licensed insolvency trustee to understand if restructuring debts makes sense for their current state. By Steve Randall.

Mortgage Update - Mortgage Broker London

Mortgage Update – Mortgage Broker London

Mortgage Interest Rates

The Bank of Canada’s target overnight rate is now 0.25%.  Prime lending rate is now down to 2.45%.  What is Prime lending rate?  The prime rate is the interest rate that commercial banks charge their most creditworthy corporate customers. The Bank of Canada overnight lending rate serves as the basis for the prime rate, and prime serves as the starting point for most other interest rates.  Bank of Canada Benchmark Qualifying rate for mortgage approval lowered to 5.04% adding on average another $10,000 in increased borrowing capacity, but changes to the mortgage qualifying rate is coming into effect April 6, 2020: Instead of the Bank of Canada 5-Year Benchmark Posted Rate, the new benchmark rate will be the weekly median 5-year fixed insured mortgage rate from mortgage insurance applications, plus 2%. 

Banks/Lenders started raising fixed rates due to market volatility and and liquidity concerns.  Discounts on variable rates have also been reduced now at Prime plus. Bond markets are not operating as normal and lenders cost for hedging funds has become more expensive also affecting rates.

View rates Here – and be sure to contact us for a quote as rates are moving faster than can be updated.

Why Are Mortgage Rates Rising?

Over the past month, the Bank of Canada has lowered its overnight rate by a whopping 1.5 percentage points to a mere 0.25%. Many people expected mortgage rates to fall equivalently. The banks have reduced prime rates by the full 150 basis points (bps). But, since the second Bank of Canada rate cut on March 13, banks and other lenders have hiked mortgage rates for fixed- and variable-rate loans. That’s not what happens typically when the Bank cuts its overnight rate. But these are extraordinary times.

The Covid-19 pandemic has disrupted everything, shutting down the entire global economy and damaging business and consumer confidence. No one knows when it will end. This degree of uncertainty and the risk to our health is profoundly unnerving.

Most businesses have ground to a halt, so unemployment has surged. Hourly workers and many of the self-employed have found themselves with no income for an indeterminate period. All but essential workers are staying at home, including vast numbers of students and pre-school children. Nothing like this has happened in the past century. The societal and emotional toll is enormous, and governments at all levels are introducing income support programs for individuals and businesses, but so far, no cheques are in the mail.

In consequence, the economy hasn’t just slowed; it has frozen in place and is rapidly contracting. Travel has stopped. Trade and transport have stopped. Manufacturing and commerce have stopped. And this is happening all over the world.

What’s more, the Saudis and Russians took advantage of the disruption to escalate oil production and drive down prices in a thinly veiled attempt to drive marginal producers in the US and Canada out of business. This has compounded the negative impact on our economy and dramatically intensified the plunge in our stock market.

Many Canadians are now forced to live off their savings or go into debt until employment insurance and other government assistance kicks in, and even when it does, it will not cover 100% of the income loss. The majority of the population has very little savings, so people are resort to drawing on their home equity lines of credit (HELOCs), other credit lines or adding to credit card debt. Businesses are doing the same.

The good news is that people and businesses that already have loans tied to the prime rate are enjoying a significant reduction in their monthly payments. All of the major banks have reduced their prime rates from 3.95% to 2.45%. So people or businesses with floating-rate loans, be they mortgages or HELOCs or commercial lines of credit, have seen their monthly borrowing costs fall by 1.5 percentage points. That helps to reduce the burden of dipping into this source of funds to replace income.

So Why Are Mortgage Rates For New Loans Rising?

These disruptive forces of Covid-19 have markedly reduced the earnings of banks and other lenders and dramatically increased their risk. That is why the stock prices of banks and other publically-traded lenders have fallen very sharply, causing their dividend yields to rise to levels well above government bond yields. As an example, Royal Bank’s stock price has fallen 22% year-to-date (ytd), increasing its annual dividend yield to 5.31%. For CIBC, it has been even worse. Its stock price has fallen 30%, driving its dividend yield to 7.66%. To put this into perspective, the 10-year Government of Canada bond yield is only 0.64%. The gap is a reflection of the investor perception of the risk confronting Canadian banks.

Thus, the cost of funds for banks and other lenders has risen sharply despite the cut in the Bank of Canada’s overnight rate. The cheapest source of funding is short-term deposits–especially savings and chequing accounts. Still, unemployed consumers and shut-down businesses are withdrawing these deposits to pay the rent and put food on the table.

Longer-term deposits called GICs, which stands for Guaranteed Investment Certificates, are a more expensive source of funds. Still, owing to their hefty penalties for early withdrawal, they become a more reliable funding source at a time like this. As noted by Rob Carrick, consumer finance reporter for the Globe and Mail, “GIC rates should be in the toilet right now because that’s what rates broadly do in times of economic stress. But GIC rates follow a similar path to mortgage rates, which have risen lately as lenders price rising default risk into borrowing costs.”

To attract funds, some of the smaller banks have increased their savings and GIC rates. For example, EQ Bank is paying 2.45% on its High-Interest Savings Account and 2.55% on its 5-year GIC. Other small banks are also hiking GIC rates, raising their cost of funds. Rob McLister noted that “The likes of Home Capital, Equitable Bank and Canadian Western Bank have lifted their 1-year GIC rates over 65 bps in the last few weeks, according to data from noted housing analyst Ben Rabidoux.”

The banks are having to set aside funds to cover rising loan loss reserves, which exacerbates their earnings decline. An unusually large component of Canadian bank loan losses is coming from the oil sector. Still, default risk is rising sharply for almost every business, small and large–think airlines, shipping companies, manufacturers, auto dealers, department stores, etc.

Lenders have also been swamped by thousands of applications to defer mortgage payments.

Hence, confronted with rising costs and falling revenues, the banks are tightening their belts. They slashed their prime rates but eliminated the discounts to prime for new variable-rate mortgage loans. Some lenders will no doubt start charging prime plus a premium for such mortgage loans. Banks have also raised fixed-rate mortgage rates as these myriad pressures reducing bank earnings are causing investors to insist banks pay more for the funds they need to remain liquid.

An additional concern is that financial markets have become less and less liquid–sellers cannot find buyers at reasonable prices. The ‘bid-ask’ spreads are widening. That’s why the central bank and CMHC are buying mortgage-backed securities in enormous volumes. That is also why the Bank of Canada has started large-scale weekly buying of government securities and commercial paper. These government entities have become the buyer of last resort, providing liquidity to the mortgage and bond markets.

These markets are crucial to the financial stability of Canada. Large-scale purchases of securities are called “quantitative easing” and have never been used before by the Bank of Canada. It was used extensively by the Fed and other central banks during the 2008-10 financial crisis. When business and consumer confidence is so low that nothing the central bank can do will spur investment and spending, they resort to quantitative easing to keep financial markets functioning. In today’s world, businesses and consumers are locked down, and no one knows when it will end. With so much uncertainty, confidence about the future diminishes. The natural tendency is for people to cancel major expenditures and hunker down.

We are living through an unprecedented period. When the health emergency has passed, we will celebrate a return to a new normal. In the meantime, seemingly odd things will continue to happen in financial markets.  By Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres.

Your Mortgage

If you have concerns about your mortgage and the rapidly changing market, please contact us to discuss your needs, concerns and options in detail to protect your best interest.

Ensure that your current mortgage is performing optimally, or if you are shopping for a mortgage, only finalize your decision when you are confident you have all the options and the best deals with lowest rates for your needs.

Here at iMortgageBroker, we love looking after our clients’ needs to ensure you get all the options and the best deals and best results.  We do this by shopping your mortgage to all the lenders out there that includes banks, trust companies, credit unions, mortgage corporations & insurance companies.  We do this with a smile, and with service excellence!

Reach out to us – let us do all the hard work in getting you the best results and peace of mind!

For Continued Updates on The COVID-19 Pandemic, please visit:

Middlesex Health Unit

https://www.healthunit.com/news/novel-coronavirus

Ontario Health

https://www.ontario.ca/page/2019-novel-coronavirus

Government Canada Public Health

https://www.canada.ca/en/public-health/services/diseases/coronavirus-disease-covid-19.html

World Health Organization: 

https://www.who.int/emergencies/diseases/novel-coronavirus-2019

Factual Statistics Coronavirus COVID-19 Global Cases

https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

https://www.youtube.com/watch?v=qgylp3Td1Bw&app=desktop

 

25 Mar

RESIDENTIAL MARKET UPDATE 

General

Posted by: Adriaan Driessen

Industry & Market Highlights

Trudeau announces new emergency programme for workers who lost work from COVID-19
Prime Minister Justin Trudeau has announced the federal government is launching the Canada Emergency Response Benefit, a new programme that will provide $2,000 a month for four months to individuals who lost their work as a result of the COVID-19 pandemic.
Speaking outside of his residence where he is self-quarantining with his family, Trudeau acknowledged the dilemma facing Canadians trying to process mounting bills without a steady income, noting that “far too many Canadians are having these tough conversations about their finances and their future.”

With nearly 1 million people applying for employment insurance last week, Trudeau stated the new programme is in the process of being set up.
“An application portal will launch as quickly as possible and people should start receiving money as soon as 10 days of applying,” he said.
The programme will replace a pair of initiatives, the Emergency Care Benefit and the Emergency Support Benefit, that were announced last week. Trudeau said the decision to combine the two earlier programmes into a new endeavour was done “in order to streamline the process.” By Phil Hall.

Canada’s COVID-19 Economic Response Plan: Support for Canadians and Businesses
The Government of Canada announced Canada’s COVID-19 Economic Response Plan: Support for Canadians and Businesses.

1. The Government will waive the one-week waiting period for EI for those individuals in imposed quarantine.  This is effective March 15, 2020. No medical certificate will be required to access the EI sickness benefits.

2. The Government announced the Emergency Care Benefit to provide up to $900 bi-weekly, for up to 15 weeks.  This will be administrated by Canada Revenue Agency.  Support will be provided to:
Workers including the self-employed, who are quarantined or sick with COVID-19 but do not qualify for EI sickness benefits.
Workers, including the self-employed, who are taking care of a family member who is sick with COVIC-19 such as an elderly parent, but do not qualify for EI sickness benefits.
Parents with children who require care or supervision due to school closures, and are unable to earn employment income, irrespective of whether they qualify for EI or not.

Application for the Benefit will be available in April 2020.  Canadians will be required to attest that they meet the eligibility requirements and they will need to re-attest every two weeks to reconfirm their eligibility.

3. The Government introduced an Emergency Support Benefit which will be delivered by Canada Revenue Agency to support workers who are not eligible for EI and who are facing unemployment.

4.The Government is going to implement an EI Work Sharing Program which will provide EI benefits to workers who agree to reduce their normal working hours as a result of developments beyond the control of their employers, by extending the eligibility of such agreements to 76 weeks, easing eligibility requirements and streamlining the application process.

5. For low- and modest-income families, the Government is going to increase the Goods and Services Tax credit (GSTC) for the month of May.  It will double the maximum annual GSTC payments for 2020.  The average boost to income for those benefiting will be close to $400 for single individuals and $600 for couples.

6. The Government is also going to assist families with children by increasing the Canada Child Benefit (CCB) payment amounts for 2020 by $300 per child.  These families will receive an extra $300 per child as part of their May payment.

7. The Bank of Canada and the Canada Mortgage and Housing Corporation are putting tools in place to ensure that Canadians do not lose their homes during this difficult time.  The important thing to remember is that if you are having difficulty paying your mortgage due to losing your job due to COVID or illness due to COVID please call your lender and discuss this with them.
https://www.canada.ca/en/department-finance/news/2020/03/canadas-covid-19-economic-response-plan-support-for-canadians-and-businesses.html

Ontario Orders Shutdown Of All Non-Essential Businesses
Ontario Premier Doug Ford ordered the closure Monday of all non-essential businesses in the province to help curb the spread of COVID-19.
It will take effect Tuesday at 11:59 p.m. and will last for at least 14 days.

“This is not the time for half measures,” Ford said. “This decision was not made lightly and the gravity of this order does not escape me.”
The full list of businesses that will be allowed to stay open will be released Tuesday, but Ontarians will still have access to groceries and medications, and their power and telecommunications will continue to run, Ford said.

Find the list HERE. https://www.ontario.ca/page/list-essential-workplaces

Ontario reported 78 new COVID-19 cases Monday — the largest increase in a day so far — bringing the provincial total to 503. That number includes six deaths and eight cases that have fully resolved.
At least six of the new cases are hospitalized, including a woman in her 30s, a man in his 40s, two people in their 50s and two people in their 70s.
In Ontario there are currently 23 people hospitalized due to COVID-19, said Ontario’s associate chief medical officer of health, and 26 of the positive cases have been health-care workers.
The vast majority of Ontario’s positive cases are people who have travelled, but about 17 per cent have no history of travel or being in close contact with another confirmed case, said Dr. Barbara Yaffe.
“I think it’s fair to say that yes in some small percentage of cases…there may be some local transmission of COVID-19,” she said.

“The number of positives is going up every day. It’s going up more and more. We know that we’re not able to test everybody yet…when we’re looking at the number of cases, it’s not the complete number of cases.”
The new non-essential business order follows last week’s declaration of a state of emergency, which ordered the closure of all facilities providing indoor recreation programs, all public libraries, all private schools, all licensed childcare centres, all theatres, cinemas and concert venues, and all bars and restaurants except to provide takeout food and delivery.
Ontario also previously ordered public schools closed until April 5, but Ford said Monday that kids won’t be going back to school on April 6.

“We’ve seen global economies grind to a halt,” Ford said. “We’ve seen health-care systems overwhelmed and we’ve seen heartache and loss and we’ve seen countries lose this battle. I’ll tell you, we in Ontario will not follow in those footsteps. We will not lose this battle. We will get ahead of this.”
An economic update being introduced Wednesday by the finance minister in lieu of a full budget will include compensation for businesses, Ford said.
Non-essential businesses can certainly operate remotely, with staff working from home, but the province doesn’t want people gathering in their facilities, Ford said. Bylaw and police enforcement are on the table, Ford and the solicitor general said, but resources for that are scarce.
“It’s absolutely critical that the people listen to the orders,” Ford said. “Again, we can’t be knocking on every single business of this province checking on them. They have a responsibility.”
The government also announced Ontario has 58 dedicated COVID-19 assessment centres running, well up from the 38 Ford said were open just a few days ago.

Since Sunday, more than 1,950 people received negative test results, while more than 8,000 people are still awaiting their results. Ontario is now doing more than 3,000 tests per day and hopes to be at 5,000 soon.
Ontario has also enhanced its COVID-19 self-assessment tool, making it interactive and allowing the province to gather data from it.
The new tool takes users through a series of questions about their symptoms and will help them determine if they are likely to have COVID-19 and what to do.

Health Minister Christine Elliott said in a statement that the tool will give the province real-time data on the number of people who are told to seek care, self-isolate or monitor for symptoms, as well as where in the province they live.
People calling Telehealth Ontario have reported long waits, but Elliott said the service now has more than 2,000 lines running, up from about 400 before the pandemic.

Ford also announced Monday that Ontario is providing a $200-million funding boost for social services, including shelters, food banks, emergency services, charities and non-profits.  Money is set to go to municipalities and social service agencies, and will help those organizations hire additional staff and operate using social distancing.
“Organizations across the province are doing critical work right now to help vulnerable Ontarians and these funds will allow them to directly help those who need it most,” Ford said in a statement.
The funding will also go toward an expanded emergency assistance program for people on welfare to help cover food, rent, informal childcare arrangements and other services. By Allison Jones, The Canadian Press.

Dyer: COVID-19 won’t change world forever, but it will change a lot for a long time
They teach you in journalism school never to use the phrase, “X has changed the world forever.” Or at least they should. COVID-19 is certainly not going to change the world forever, but it is going to change quite a few things, in some cases for a long time. Here’s nine of them, in no particular order.

1. The clean air over China’s cities in the last month, thanks to an almost total shutdown of big sources of pollution, has saved 20 times as many Chinese lives as COVID-19 has taken. (Air pollution kills about 1.1 million people a year in China.) People will remember this when the filthy air comes back, and want something done about it. India, too.

2. Online shopping already was slowly killing retail shops. Lockdowns will force tens of millions who rarely or never shop online to do it all the time. (Yes, all the websites are crashed or booked until mid-April now, but there will be lots of time to scale them up to meet demand.) Once customers get used to shopping online, most won’t go back, so retail jobs will disappear twice as fast.

3. Not so radical a change with restaurants, but basically the same story: more takeouts and home deliveries, fewer bums in seats. Habits will change, and a lot of people won’t come back afterward. Food sold out the door generates much less cash flow than food served at the table, and half of servers’ jobs are gone. There will be a severe cull of restaurants.

4. Once it becomes clear that “remote working” actually works for most jobs, it will start to seem normal for people not to go in to work most days. So a steep drop in commuting, lower greenhouse-gas emissions and eventually a lot of empty office space in city centres.

5. There will be a recession, of course, but it probably won’t be as bad or as long as the one after the financial crash of 2008. It isn’t a market collapse costing people their jobs this time — a virus made them stop working, and governments are doing far more than ever before to sustain working people through what probably will be a long siege.  When the virus is tamed and they can return to work, the work (in most cases) still will be there. There also will be a few trillion dollars of extra debt.

6. Don’t worry about the debt. Banks always have created as much money as the government requires. Put too much money into the economy and you’ll cause inflation, which is bad, but just replacing what people ordinarily would be earning so the economy doesn’t seize up is good.
So President Macron can tell the French that no business, however small, will be allowed to go bankrupt. Prime Minister Johnson can tell Britons the government will pay them 80 per cent of their normal income, up to the equivalent of $3,000 a month, if their work has vanished. And President Trump can talk about sprinkling “helicopter money” on the grateful masses.

7. What is being revealed here is a deeper truth: “Austerity” — cutting back on the welfare state to “balance the budget” — is a political and ideological choice, not an economic necessity. What governments are moving into, willy-nilly, is a basic income guaranteed by the state.
Just for the duration of the crisis, they say, and it’s not quite a Universal Basic Income, but that idea is now firmly on the table.

8. Collective action and government protection for the old and the poor no longer will be viewed as dangerous radicalism, even in the U.S. Welfare states were built all over the developed world after the Second World War. They will be expanded after the Plague ends.
Indeed, if Joe Biden were to drop out of the presidential race tomorrow for health reasons, Bernie Sanders would stand a fair chance of beating Trump in November.

9. Decisive action on the climate crisis will become possible (though not guaranteed), because we will have learned “business as usual” is not sacred. If we have to change the way we do business, we can.
So it’s an ill wind that blows no good (a saying that was already old when John Heywood first catalogued it in 1546). Some of the anticipated changes are definitely good, but we are going to pay an enormous price in lives and in loss for these benefits. It could have been dealt with a lot better.
And the West should learn a little humility. Taiwan, South Korea and China (after the early fumble) have handled this crisis far better than Europe and North America. These are already more dead in Italy than in China, and America, Britain, France and Germany certainly will follow suit.
By Gwynne Dyer, an independent journalist based in London, England.

COVID-19 OREA Ontario Real Estate Association
COVID-19 is the fastest moving, most dramatic issue I have seen in my lifetime. That means that governments make quick decisions, and all the implications are not immediately clear.

As you know, the Ontario Government ordered most workplaces to close-down effective Tuesday, March 24, at 11:59 p.m. This measure is to prevent the spread of COVID-19.

The Government has created a list of 75 “essential” services, which are businesses that are allowed to stay open, including “Land registration services, and real estate agent services and moving services.”
I have received many questions from Members on this announcement, and we are still gathering information from the Government, but here’s what I can tell you.

Why was “real estate” deemed essential?
We asked for the essential service designation and for the Land Registry Office to stay open because there are thousands of transactions in Ontario right now that have yet to close officially. Every one of them is different.

While some may not require the help of a REALTOR® to close, others will. OREA was concerned that if REALTORS® were not permitted to support these transactions, those families and businesses could have been left high and dry.

Many other professional services appear in the essential list, including banking, lawyers, and accountants. Shutting down these sectors completely, like real estate, could have had huge unintended consequences for consumers and a damaging domino impact on other deals.

What does this all mean?
It does NOT mean business as usual.
ALL REALTORS® should stop face-to-face business, including open houses, in-person showings, and maintaining agents and public office hours.

The Government gave the “essential” label to real estate to permit transactions to close – NOT to allow our Members to carry on with normal business practices during a crisis. All Members should be moving to remote work – full stop.

What about showings involving tenants?
No REALTOR® should, during this State of Emergency, participate in a face-to-face showing, especially of a tenanted property. Legally, the Residential Tenancies Act may permit showings, but for obvious health and safety reasons, these showings need to stop. Instead, I encourage you to work with your clients who are landlords to show these properties virtually.

These are challenging and unprecedented times. We all have an obligation to do what’s right to keep our families, colleagues, and communities safe.  We are working with officials to get more information on the impacts of the State of Emergency declaration and will communicate it to all Members when we have it. By Sean Morrison, OREA President.

Government of Canada Announces Additional Measures to Support Continued Lending to Canadian Consumers and Businesses
The Government of Canada is taking immediate and significant action to support Canadian individuals and businesses facing financial hardship as a result of the economic impacts of the global COVID-19 outbreak.

Today, Minister of Finance Bill Morneau announced amendments to mortgage insurance eligibility criteria, set out in regulations made under the National Housing Act and Protection of Residential Mortgage or Hypothecary Insurance Act. These changes will help provide stable funding and liquidity to financial institutions and mortgage lenders and support continued lending to Canadian businesses and consumers.

This announcement is in support of Canada Mortgage and Housing Corporation’s (CMHC) March 16, 2020 launch of a $50 billion Insured Mortgage Purchase Program (IMPP) and CMHC’s March 20, 2020 announcement on program details. The amendments allow mortgage lenders to pool previously uninsured mortgages into National Housing Act Mortgage-Backed Securities (NHA MBS) for CMHC to purchase these securities through the IMPP. The impact of this measure will provide financial institutions with more liquidity. This, in turn, will allow financial institutions to continue lending to businesses as well as individuals, while assisting customers who face hardship and need flexibility, on a case by case basis.

This program builds on other measures announced by the government and Bank of Canada to support liquidity and credit to businesses and borrowers in these extraordinary times. These actions are an important part of Canada’s COVID-19 Economic Response Plan.
To complement the IMPP, the Minister of Finance is announcing today that the eligibility criteria for portfolio insurance are being temporarily relaxed to help mortgage lenders access the IMPP. This will allow previously uninsured mortgage loans that were funded before March 20, 2020, to be eligible for mortgage insurance and to be included in future NHA MBS issuance.
Effective March 24, 2020, the following low loan-to-value mortgages funded prior to the date of this announcement, March 20, 2020, are eligible for government-guaranteed insurance:

Low loan-to-value mortgages with a maximum amortization term up to 30 years commencing from when the loan was funded.
Low loan-to-value mortgages whose purpose includes the purchase of a property, subsequent renewal of such a loan, or refinancing.
All other eligibility criteria for government-guaranteed insurance will continue to apply to these mortgages. The above amendments will remain in force until December 31, 2020, at which time the eligibility criteria will revert to the existing rules. The Minister of Finance reserves the right to make amendments prior to this date, should circumstances change.
These changes will not apply to low loan-to-value mortgage loans funded on or after March 20, 2020. The other existing criteria which apply for transactional mortgage insurance will remain unchanged.

Quote
“These are extraordinary times and we are taking extraordinary measures. As a result of this measure, banks and lenders will have more liquidity—which, in turn, will enable them to work on a case by case basis with Canadian businesses and individuals who face hardship at this time. A co-ordinated approach is critical for making sure our economy remains strong and stable. The government will do whatever it takes to support Canadians and we are prepared to take further action as necessary to meet the challenges ahead.”
– Bill Morneau, Minister of Finance

Quick facts
Federal statutes require federally regulated lenders to obtain mortgage default insurance (“mortgage insurance”) for homebuyers who make a down payment of less than 20 per cent of the property purchase price, known as “high loan-to-value” or “high-ratio” insurance. Lenders also have the option to purchase mortgage insurance for homebuyers who make a down payment of at least 20 per cent of the property purchase price, known as “low-ratio” insurance because the loan amounts are generally low in relation to the value of the home.
Under the IMPP, CMHC will purchase insured mortgages in the form of National Housing Act Mortgage-Backed Securities—a securitization product that pools insured mortgages for resale as marketable securities.

In summary: New Emergency Liquidity Measure: The government has just made major amendments to “allow mortgage lenders to pool previously uninsured mortgages into National Housing Act Mortgage-Backed Securities (NHA MBS) for CMHC to purchase these securities through the recently announced Insured Mortgage Purchase Program. This includes mortgages for refinances and those with 30-year amortizations, both of which are presently excluded from government-sponsored securitization. To qualify, the mortgages must have closed before March 20, 2020 and be default insured by the lender. In other words, new refinances and amortizations over 30 years still cannot benefit from government-backed insurance and securitization. Although, we suspect that may change if funding markets deteriorate. The government says, “The above amendments will remain in force until December 31, 2020, at which time the eligibility criteria will revert to the existing rules. ” CMHC says it’s “also ready to expand the issuance of Canada Mortgage Bonds.”
Link to the article here.

Consumer confidence takes a beating from COVID-19
Canadian consumer confidence has noticeably declined over the past four weeks, as registered by the Bloomberg Nanos Confidence Index.
This was particularly apparent in the area of long-term financial health and economic expectations, which stood at 54.29 as of the latest reading on March 13. This was lower than the 12-month high of 59.06, the 2020 running average of 56.15, and the 56.90 level four weeks prior.

The report emphasized that the Index is currently on “a negative trajectory” – a fear shared by observers such as Scott Terrio, who recently warned of the national insolvency rate swelling if the coronavirus outbreak does not abate soon.
The manager of consumer insolvency at Hoyes, Michalos & Associates added that the 17.5% annual increase in Ontario’s insolvencies last January will likely be dwarfed in the near future.
“I think 20% estimates will be drastically low if this drags on for months,” Terrio told BNN Bloomberg. “This [virus impact] is now drastically out of control.”
The Bloomberg Nanos study further found that confidence in real estate prices experienced a steep drop to 49.76. This was in stark contrast to the 55.61 reading just four weeks before.
Expectations surrounding personal finances and job security fared better, with the Index at 58.81 compared to the 58.19 the month prior. By Ephraim Vecina.

Canadians have become much less interested in buying homes
COVID-19 has reverberated across all segments of Canadian society and has become particularly acute in the housing sector.
Open houses and inauguration events have fallen out of favour, amid the imposition of policies like social distancing and isolation.

Interest in buying homes across Canada has also substantially plummeted over the past few weeks, if new data from residential information portal Point2 Homes is any indication.
“The outbreak has shattered seasonality, transforming the spring months, which was normally the time when the housing market was starting to pick up speed, into a period of anxious down time,” Point2 Homes stated in its analysis. “Much of the activity associated with homebuying and home selling is simply on hold, as people and institutions alike are trying to see where the pandemic is headed.”
The decline in home searches made through the portal reached as much as 32% by March 16. The downward trend has been clear, with an 8% drop registered on March 11, a 20% decrease on March 12, and a 24% plunge on March 13.
And the impact upon Canadian housing does not stop there, as the societal effects of the disease are likely to change some aspects of the homebuying and selling business permanently.
“There certainly could be long-lasting impacts in terms of shifts in preferences for location and even features of homes,” according to Jim Clayton, director of the Brookfield Centre in Real Estate & Infrastructure at York University’s Schulich School of Business.
“Some people may be more hesitant about being part of a crowd and hence avoid mass/public transit. The work, and learn, from home revolution that many have been calling for over the past decade could become much more of a reality and may change how and where people want to live”. By Ephraim Vecina.

Calls Intensify for Freeze on Housing Costs
The recent announcement by the nation’s six largest banks that they are offering six-month deferrals on mortgage payments to help homeowners impacted by the COVID-19 outbreak is bringing a new call for financial assistance for the nation’s renters.
Marva Burnett, president of the Association of Community Organizations for Reform Now (ACORN) Canada, called on the federal government to put a temporary moratorium on rent that would mirror the aid homeowners are getting.

“ACORN thinks the government should put the rent freeze on, a total rent freeze,” Burnett said in an interview with CTVNews.ca. “The people who are going to suffer the most are the renters, the lower-income people of Canada.”
Burnett added that the temporary freeze concept should also be applied to instalment loans and payday lending.
“All these things need to be taken into consideration because it’s mostly upper-income people that have a mortgage, lower-income people have instalment loans to pay,” she said.

Calls for a national freeze on both mortgage and rental payments to assist Canadians struggling during the ongoing pandemic were recently made by the British Columbia Government and Service Employees’ Union (BCGEU) and United Steelworkers, while an independent petition on Change.org seeking these freezes has collected approximately 540,000 signatures as of Friday evening.
To date, the federal and provincial governments have not acknowledged calls for any type of freeze on housing expenses. Prime Minister Justin Trudeau’s $27 billion proposal for direct financial support to Canadians could be used by renters to pay their landlords, but the proposal did not include a moratorium on evictions. British Columbia announced a freeze on evictions on March 19, but that only covered tenants in subsidized and affordable housing, while Ontario had its own freeze announced the same day covering both residential and commercial properties.

“We don’t want you to worry about your job. We also don’t want you to worry about how you’re going to make rent this month,” said Ontario Premier Doug Ford. “That’s why I’ve directed that all eviction orders be suspended until further notice. We want to make sure you and your family can stay in your home during this difficult time. So, you can put your health and the health of others first.” By Phil Hall.

Resellers will have difficulty navigating the pandemic
Flippers will likely have it worse amid the COVID-19 outbreak, London agent Joyce Byrne warned.
This is because they will probably end up with an unsellable property – a seemingly impossible notion less than a month prior.

“A week-and-a-half ago we were listing houses, showing houses, selling houses. We were not worried about Lysol wipes,” Byrne told CTV News in an interview. “I had a listing and I had the property sold, but the person who bought the property had to go back and sell the house. So their agent is probably talking to them about how they’re going to market their current property now.”
The pandemic has proven to be a punishing environment for home sellers, who are left with less than optimal choices.
“Maybe they soften their price, maybe they open themselves up to conditional offers. Maybe they’ll be open to accepting something with a home inspection or other financing conditions attached,” Byrne said.

Compounding the situation is that brokers have been mandated to observe federal directives regarding the virulent disease. Among these are significantly limited office hours and stringent social distancing rules.
In a recent report, The Conference Board of Canada expressed optimism that Canadians’ purchasing power would recover somewhat, as the national economy will gain some lost ground with 2.5% growth by 2021. This will come after a projected 2.7% decline in Q2 2020.
“Despite the fact that the global economy is currently shaken at its core, we expect to see growth resume in the third quarter, meaning that the economy will avoid a technical recession,” according to Matthew Stewart, director economic forecasting at The Conference Board of Canada.
However, Stewart hastened to add that “due to the unpredictability of the coronavirus, there are still huge downside risks to the outlook.” By Ephraim Vecina.

Mortgage Update - Mortgage Broker London

Mortgage Update – Mortgage Broker London

Economic Highlights

The Special Economic Impact of Pandemics – Expect effects to be massive in ways that differ from other disasters

Public health officials are telling Americans to avoid face-to-face contact, including the commute to—and working in—one’s job location, in the hopes of subduing the coronavirus outbreak. As necessary as those steps might be from a medical standpoint, there’s a flipside to huddling up and avoiding the outside world for the foreseeable future: Large swaths of the economy are grinding to a halt. And because this is a global pandemic, the same thing is happening virtually all over the world.

Indeed, the more the SARS-CoV-2 virus spreads around the globe—there are more than 300,000 cases of the related COVID-19 disease, as of this writing—the greater the concern over not just our health, but our livelihoods.

Just how big an impact can a pandemic like COVID-19 have on the global economy? Researchers suggest that it will likely be significant, especially if the virus is not contained quickly.

Key Takeaways

• While the economic impact of a pandemic may not be long-lasting if the underlying cause is contained quickly, it can be powerful enough to shutter some businesses and lead to sharp spikes in unemployment.

• The biggest pandemic in modern history was the Spanish Flu of 1918-1919, during which many service-based businesses suffered double-digit losses.

• Government interventions, such as sending money directly to households, may have less impact when stores are closed and people are fearful of even receiving packages at their door.

• The advent of a pandemic is a good time for workers to shore up their emergency funds and make sure they’re prepared for a possible job loss.

The Interconnected Economy

With millions of people in the United States and around the world in a virtual lockdown, a ripple effect throughout the economy is inevitable.

Certainly, specific industries bear the brunt of the damage. Shops and restaurants start to empty out, if not close their doors altogether. Non-essential travel slows down, curtailing revenue for not just airlines and cruise-ship operators, but smaller businesses that rely on tourism revenue. The list goes on.

However, those employed in seemingly unrelated industries can also feel the secondary effects of social distancing. For example, manufacturers—especially those outside the medical field—may see fewer orders as shopping slows down. Banks may have to absorb more loan defaults as a portion of its customer base loses work. And oil companies see prices plummet as investors sense weaker demand.

The fear of the unknown can only exacerbate these economic impacts. That means even individuals and families with ostensibly stable employment may start to limit purchases in case the financial aftershock isn’t able to be contained.

Measuring the Effect of a Pandemic

Every pandemic is unique, which makes predicting the repercussions of any crisis more educated guesswork than science. What’s more, there simply aren’t many recent examples that compare to the worst-case estimates of something like COVID-19. For example, the H1N1 flu of 2009 was widespread, but not as deadly; the Centers for Disease Control estimate there were 60 million cases in the U.S., resulting in fewer than 13,000 deaths.2

The closest comparison in modern times occurred more than a century ago, when the so-called “Spanish Flu”—caused by a different strain of H1N1 virus—ravaged the globe from 1918 to 1919. According to CDC estimates, roughly 500 million people were taken ill with the disease, which ultimately took the lives of about 50 million worldwide.3

Economic data from the early 20th century is scarce. However, an analysis by the Federal Reserve Bank of St. Louis estimated that a lot of businesses, particularly service- and entertainment-oriented ones, “suffered double-digit losses in revenue.” 4 If there’s a silver lining, it’s that the economic disruption appears to have been short-lived, as the underlying health emergency subsided in 1919.

How does the current pandemic compare? Given the number of likely unreported cases, the true mortality rate of the virus that causes COVID-19 may not be known for some time. Based on available live data at the time of this writing, the crude mortality rate was slightly over 4%, making the reach of this pandemic a vital health concern.5 A group of researchers from the University of Hong Kong and Harvard wrote in the journal Nature that as many as one-quarter to one-half of the world’s population is likely to contract the virus, “absent drastic control measures or a vaccine.”6

The Impact of COVID-19

While experts can estimate what the economic fallout from a pandemic such as the coronavirus will be, the precise impact will vary based on how many people are affected, how severely it hits, and which societal interventions are necessary to contain its spread.

Back in 2005, a World Bank official predicted that a global influenza pandemic, for example, could kill tens of millions of people and cause $800 billion in economic losses.7 The impact of the current crisis, of course, won’t be clear for some time.

Financial projections for COVID-19 run the gamut. The Organization for Economic Cooperation and Development, an entity with 36 member countries, estimated earlier this month that a long-lasting and severe coronavirus pandemic that spreads throughout Asia, Europe and North America—a situation that seems more likely by the week—could cut the global growth rate to 1.5-percent in 2020. That’s roughly half the growth the world economy would otherwise achieve.8

A separate analysis by the consulting firm McKinsey & Company offers a similar outlook. Its research suggests that a more severe COVID-19 pandemic, in which city and suburban residents would have to significantly change their work habits and otherwise distance themselves socially for six to eight weeks, could cut global GDP in half, to between 1% percent and 1.5%.9

Increasingly, those projections look too rosy for the situation that’s now unfolding. Already, roughly 1 in 3 Americans are being ordered to stay indoors, creating a huge drag on consumer demand and worker productivity.10 Goldman Sachs estimates that as many as 2.25 million Americans will make their initial filing for unemployment benefits this week, a roughly eight-fold increase from last week.11

The chief U.S. economist for Oxford Economics, Greg Daco, told the New York Times last week that a recession is all but inevitable. He estimates that GDP will sink 0.4% in the first quarter before plunging 12% in the second quarter. Goldman Sachs offered an even more dire estimate, suggesting a second-quarter decline of 24%.12

A century ago, the economic toll from the Spanish Flu was not particularly long-lasting. However, no one can say for certain whether that will be the case this time around. Certainly, the more effective governments in the U.S. and abroad are in facilitating medical care and reducing the rate of transmission, the more muted the economic impact will be.

Clearly, investors see economic turmoil as an inescapable reality right now, with the S&P 500 index falling to a 3-year low as of last week.13

Last week, the investment bank Goldman Sachs predicted a staggering 24% drop in second-quarter output this year.

Can Government Intervention Help?

In an ideal scenario, legislatures and central banks would use the power of the purse to help mitigate an economic crisis. But those measures may prove less effective during a pandemic.

For example, efforts to open up the Treasury and send money directly to households might help individuals who have lost their job or seen their working hours reduced. But some experts argue that the impact is muted if many of the individuals receiving the funds can’t spend it—after all, many shops and restaurants are closed.

And interest rate cuts, intended to boost liquidity at a time when money is tight, may lose some of their potency when rates are already conspicuously low. The Fed slashed a key rate to zero last week, giving it precious little room to maneuver. “More interest-rate cuts into deep-red territory might help stock markets, but they also could trigger a run on cash,” wrote Hans-Werner Sinn, president of the Ifo Institute for Economic Research, in The Guardian this week.

Those aren’t the only devices that governments have in their toolkit, however. They can, for example, activate short-term financing mechanisms that help businesses stay afloat and retain workers during the healthcare crisis. And they can bolster unemployment insurance and provide other safety nets that keep the most vulnerable residents from losing their homes or going hungry.

Most important, perhaps, government leaders can help ensure that hospitals get the vital resources they need to treat patients and protect doctors and nurses. They can also work with the private sector to ensure that testing is readily available, something that has to date hampered efforts to contain the coronavirus in U.S. Indeed, some experts believe the best economic medicine that the public sector can provide is a quick resolution to the underlying health threat. “Anything that slows the rate of spread of the virus is the best kind of stimulus,” Austan Goolsbee, the former chair of the Council of Economic Advisers, told NPR this month.

Preparing Yourself Financially

While pandemics can cause significant economic damage, at least in the short term, there are steps individuals can pursue to protect themselves as much as possible. Here are a few of the measures you might consider as a pandemic takes hold:

  • Don’t obsess over your 401(k). Your investment statements are going to look very ugly for a while. But when it comes to long-term investing, it’s usually better to stay the course. By selling off your holdings, you’re locking in losses, which means you won’t benefit from an eventual recovery. For those with short memories, it only took a few short years for the market to rebound from the stock market collapse of 2008.
  • Build up your emergency fund. Conventional wisdom dictates that you should have three to six months’ worth of expenses readily available in your bank account at all times. A pandemic is one of the scenarios for which they’re intended. So if you’re a little short of the mark, now’s the time to build up your reserve if you can—you never know if you might need it.
  • Dust off your résumé. With less demand, some businesses aren’t going to be able to keep their entire staff on payroll. If you work in a hard-hit industry, now might be the time to start looking at other job opportunities. Start connecting with people who might be able to aid your job search and make sure your résumé is in good shape.
  • Reach out to lenders. Those who have already seen their incomes drop as a result of a pandemic might find it hard to pay their mortgage, rent, or student loans. Since so many people are going to be affected, lenders and landlords may be more willing to accommodate you than they otherwise would. The worst thing you can do when you miss a payment is keep your creditors in the dark.

The Bottom Line

As governments around the world limit the mobility of their people, most experts agree that a significant drop in economic output is inevitable. The more successful countries are at keeping the rate of infection in check, the smaller that impact will be. In the meantime, individuals can help themselves not only by social distancing, but by analyzing their financial situation and planning for the worst.   By Daniel Kurt, Investopedia.  

Forecast: Extended social distancing could cost 330,000 jobs

If social distancing continues for several months, the cost to the economy and labour force would be sizeable.

That’s according to a new alternate scenario forecast from the Conference Board of Canada which looks at the impact of social distancing continuing until the end of August in both Canada and the United States.

It concludes that, rather than its baseline scenario of 0.3% growth in Canada’s real GDP this year, there would be a 1.1% contraction. Job losses would be more than 330,000 over the second and third quarters, and unemployment would rise to 7.7%.

“These are extraordinary times. Canadian leaders, business owners and households are facing unprecedented uncertainty, said Pedro Antunes, Chief Economist at The Conference Board of Canada. “If this scenario holds true, we can expect a deeper and longer-lasting hit to the Canadian economy. Still, governments have acted swiftly to mitigate health and economic impacts, once COVID-19 is contained, the economy will rebound.”

Assuming a consumer-led recession in the US, with real GDP also down 1.1%, the diminished demand from Canada’s most important trading partner means real exports of goods and services would decline by 2.1% in 2020.  By Steve Randall.

Almost one million Canadians have filed jobless claims

Along with the daily reports of the health impact of the COVID-19 coronavirus pandemic, come figures highlighting its economic effects.

Bloomberg is reporting that the number of Canadian jobless claims is heading towards one million, including the 500,000 already announced by the prime minister, along with a surge of claims made over the weekend.

The unnamed source cited a not-yet-public figure of 920,000 claims for employment insurance benefits. The previous record claims in one week was 499,200 in 1957.

And this is just the beginning.

Bombardier said Tuesday that it was laying-off more than 12,000 workers – they will be on unpaid leave – effective immediately and continuing until at least April 12.

For households that are living paycheque to paycheque, the loss of work for even a week can be financially devastating.

Frightening outlook for oil

The Canadian oilsands is also bracing for a hit as the price of oil falls significantly – Western Canada Select heavy oil was trading at just $8.90 Tuesday – the energy industry is already making deep cost cuts.

University of Calgary School of Public Policy fellow Richard Masson told the Financial Post that the heavily-leveraged sector will have to shed jobs.

“As people continue to cut budgets, there’s no choice but to cut staff and mothball rigs and all that makes your debt covenants loom larger,” Masson said. “There’s no way to raise new money. There’s no place to get new business. It’s very, very frightening.”  By Steve Randall. 

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Mortgage Interest Rates

The Bank of Canada’s target overnight rate is 0.75%.  Prime lending rate is 2.95%.  What is Prime lending rate?  The prime rate is the interest rate that commercial banks charge their most creditworthy corporate customers. The Bank of Canada overnight lending rate serves as the basis for the prime rate, and prime serves as the starting point for most other interest rates.  Bank of Canada Benchmark Qualifying rate for mortgage approval lowered to 5.04% but changes to the mortgage qualifying rate is coming into effect April 6, 2020: Instead of the Bank of Canada 5-Year Benchmark Posted Rate, the new benchmark rate will be the weekly median 5-year fixed insured mortgage rate from mortgage insurance applications, plus 2%. 

Banks/Lenders started raising fixed rates due to market volatility and and liquidity concerns.  Discounts on variable rates have also been reduced. Bond markets are not operating as normal and lenders cost for hedging funds has become more expensive also affecting rates.

View rates Here – and be sure to contact us for a quote as rates are moving faster than can be updated.

Your Mortgage

If you have concerns about your mortgage and the rapidly changing market, please contact us to discuss your needs, concerns and options in detail to protect your best interest.

Ensure that your current mortgage is performing optimally, or if you are shopping for a mortgage, only finalize your decision when you are confident you have all the options and the best deals with lowest rates for your needs.

Here at iMortgageBroker, we love looking after our clients’ needs to ensure you get all the options and the best deals and best results.  We do this by shopping your mortgage to all the lenders out there that includes banks, trust companies, credit unions, mortgage corporations & insurance companies.  We do this with a smile, and with service excellence!

Reach out to us – let us do all the hard work in getting you the best results and peace of mind!

For Continued Updates on The COVID-19 Pandemic, please visit:

Middlesex Health Unit

https://www.healthunit.com/news/novel-coronavirus

Ontario Health

https://www.ontario.ca/page/2019-novel-coronavirus

Government Canada Public Health

https://www.canada.ca/en/public-health/services/diseases/coronavirus-disease-covid-19.html

World Health Organization: 

https://www.who.int/emergencies/diseases/novel-coronavirus-2019

Factual Statistics Coronavirus COVID-19 Global Cases

https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

https://www.youtube.com/watch?v=qgylp3Td1Bw&app=desktop

25 Mar

BUYING & SELLING DURING A HEALTH CRISIS

Mortgage Tips

Posted by: Adriaan Driessen

Many current and future homeowners, are feeling concerned about the real estate market due to the health crisis and financial crisis that is slowly developing.   Real estate is impacted by market volatility and financial liquidity/solvency concerns.  Real estate is a commodity, and property values fluctuate as the market changes due to many influences that include supply and demand, rules regulations and laws, seasons, micro and macro economics, demographics, consumer sentiment & confidence and many other factors.  All these impact local markets connected to the larger markets.  The extend of changes and corrections also depend on the current status of a market and the current values of local markets.  

For example, during the last recessions in 2008-2009, the London regional market saw a 2 year stagnation in growth in property values for average priced homes, and only executive high-valued homes saw a drop in property values.  Compared to property values in Toronto during that time that saw a large market correction in overpriced homes.

Though the market is London is currently still very active and hot, we are already experiencing and anticipate that a lot of buyers and sellers are choosing to put their plans on hold to wait and see how this crisis develops and hopefully resolves, sooner than later.

Our recommendation now because of the health crisis, is first and foremost to protect your family and household.  Follow the guidelines and instructions from your local Public Health Authority.  See also our HOMEOWNERS GUIDE TO THE HEALTH CRISIS & FINANCIAL CRISIS.

Only list and sell your home if you have to.  For example estate sales, required relocation, divorce/separation, or you have have already purchased and now have to sell in order to complete your purchase closing.  

Only buy if you have to, or if you have found your dream home, or that great deal and you absolutely have to make it yours.  We are recommending you follow the local real estate board and provincial real estate association directive that sales to be virtual as much as possible, with no open houses, and protection guidelines in place to limit exposing your home and family’s health. This might change in the near future should the government impose further mandatory lock-downs.

Make an offer conditional on financing if you need a mortgage, and conditional on an inspection if you have been unable to view it in person only virtually due to showing restrictions. 

A few additional important considerations:

  • Mortgage application turnaround times have increased during the current climate.
  • If an appraisal is required, additional time will most likely be required as appraisers may have limitations or delays in accessing subject properties. Some lender are allowing adjusted full appraisals with interior pictures through windows, and also drive by appraisals instead.
  • Rush transactions will be met with challenges and are not recommended at this time.
  • If your financial status e.g job loss  changes prior to your mortgage closing, the lender will most likely pull out and cancel the mortgage as mortgage approvals include clause that the lender has the right to cancel the transaction should there be any significant change to your material and financial status.
  • We have identified the top lenders that will allow mortgage documents to be signed via e-signatures and also lawyers who are able to complete transactions virtually so that no in-person meetings are required.  For now the Land Registry Office is open and running and we are able to complete mortgage transactions and land transfer transactions during social isolation and lock down for as long as the LRO remains open. Currently, there are no plans to close the LROs, however in the event of closure, then real estate transactions will not be able to proceed and you would need to seek extensions wherever possible. The good news is that everyone is in the same situation! The bad news is that there is no right in most re-sale agreements to insist on an extension, however, most people are understanding and you will have to rely on their goodness as well as common law principles to extend the transaction. 

To protect yourself against this, have your Realtor include a clause in your purchase transaction to protect you in case of delays in closing as result of the crisis.  Example: The parties herein acknowledge and agree that they are required to close this transaction notwithstanding any impacts of COVID-19, save and except the closing of the Land Registry Office(s) and all financial institutions. In the event the closing cannot occur due to a shutdown/disruption of the Land Registry System and/or banking system, then the closing date shall be automatically extended to the fifth (5th) business day following the date upon which said systems have returned to operational status and can clear funds accordingly.

These are extraordinary times we are living in with so many variables and uncertainties.   Keep yourself informed and continue to stay calm and work together to keep our families, clients and communities safe.  Follow the direction of your local health unit and the government to help flatten the curve of transmission so that our health care system can function well to help those who get sick with serious symptoms.

I’ll include in the text below links to our municipal, provincial and federal agencies, as well as other helpful links to keep you updated on facts.  For regular updates on the economy and markets as the COVID-19 pandemic develops and evolves over time visit my Blog:  http://imortgagebroker.ca/blog/

Also visit our Vlog regularly for more helpful information: https://www.youtube.com/channel/UCNYRjVZjsNph8ymVFEeBQhw

We are always here to help.  Reach out to us.

For Continued Updates on The COVID-19 Pandemic, please click below:

Middlesex Health Unit

https://www.healthunit.com/news/novel-coronavirus

Ontario Health

https://www.ontario.ca/page/2019-novel-coronavirus

Government Canada Public Health

https://www.canada.ca/en/public-health/services/diseases/coronavirus-disease-covid-19.html

World Health Organization: 

https://www.who.int/emergencies/diseases/novel-coronavirus-2019

Factual Statistics Coronavirus COVID-19 Global Cases

https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

https://www.youtube.com/watch?v=qgylp3Td1Bw&app=desktop

Adriaan Driessen
Mortgage Broker 
Dominion Lending Forest City Funding 10671
Cell:     519.777.9374
Fax:      519.518.1081
415 Wharncliffe Road South
London, ON, N6J 2M3

 

Lori Richards Kovac
Mortgage Agent
Dominion Lending Forest City Funding 10671
Cell:     519.852.7116
Fax:      519.518.1081
415 Wharncliffe Road South
London, ON, N6J 2M3

 

Adriaan Driessen
Sales Representative & Senior Partner
PC275 Realty Brokerage
Cell:     519.777.9374
Fax:      519.518.1081
415 Wharncliffe Road South
London, ON, N6J 2M3