25 Mar



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.

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.

“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. 


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


Ontario Health


Government Canada Public Health


World Health Organization: 


Factual Statistics Coronavirus COVID-19 Global Cases



25 Mar


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


Ontario Health


Government Canada Public Health


World Health Organization: 


Factual Statistics Coronavirus COVID-19 Global Cases



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
25 Mar


Latest News

Posted by: Adriaan Driessen


Many people, including myself, are feeling concerned about the health crisis and financial crisis that is slowly developing in front of our own eyes.  We are experiencing a time of uncertainty, unknown territory, economic & market volatility and financial liquidity/solvency concerns.

This is why I decided to put together a Canadian HomeOwners Guide to the Health Crisis & Financial Crisis triggered by the COVID-19 Pandemic based on some great information found online.

As your broker, I carefully watch markets and the economy as it relates and integrates into real estate, mortgage financing and general finances, and we use data and information received form analysts, economists and other specific industry professionals that interrelates, in order to be able to better guide, counsel and advise our clients.  We also seek out important and helpful sources of other information that we can share with our clients.

I have found some great resources from PeakProsperity.com that we are implementing ourselves, and that I am sharing with others as I know this will benefit you immensely.

Peak Prosperity The Coronavirus Home Lockdown Survival Guide: How To Stay Healthy, Sane & Solvent.  Watch the video presentation here:


In summary: We do not know how long the coming mandatory lock-down quarantine period will last; it could be weeks, it could be months.

Stock your home for success, stay physically healthy, stay emotionally health, stay financially solvent.  This too shall pass.

Here are the recommendations – a Canadian HomeOwners Guide to the Health Crisis & Financial Crisis triggered by the COVID-19 Pandemic:

  • Stock a deep pantry, have sufficient food supplies. 
  • Use PPE (personal protection equipment) if you need to go out.
  • Sufficient cleaning supplies to keep your home clean.
  • Medicine and supplements and first aid supplies.
  • Emergency preparedness eg. power outage, water etc.
  • Reduce your non essential expenses.
  • If you have emergency finances put away, now is the time to release it and have it available.  If you have some investments that you can liquidate, contact your financial advisor to assist you to release funds.  Hopefully your financial advisor had you prepare for times like this in advance.
  • If you are a homeowner and you do not have 6 months worth of living expense finances put away, consult with your mortgage broker for options and potential of equity take out if sufficient equity is available in your property.  
  • If you are a homeowner and you experience income loss and are at risk of default, contact your current bank/lender customer service departments to see what options they have available for relief on mortgage payments to avoid default.  You can also contact your mortgage broker for other solutions to avoid default and foreclosure to prevent loosing your home.
  • If you are a tenant/renter, contact your landlord to see what options they have available for relief on rent payments to avoid default.  Also contact the Landlord & Tenant Board to review options to protect tenants during the COVID-19 pandemic. http://www.sjto.gov.on.ca/ltb/
  • Review the Government of Canada Canada’s COVID-19 Economic Response Plan: Support for Canadians and Businesses to see what benefits and options are available to you.   https://www.canada.ca/en/department-finance/news/2020/03/canadas-covid-19-economic-response-plan-support-for-canadians-and-businesses.html
  • Alternatively get access to low-cost unsecured credit like a line of credit from your bank or credit union, or as a last resort high interest credit cards though only a last resort recommendation.
  • Free up some cash by selling articles that are not used and/or not needed in the local market place using Kijiji or social media local marketplaces while you still can.
  • Eat healthy food.
  • Take your vitamin supplements, especially vitamin C&D to boost your immunity.
  • Regular exercise.
  • Sufficient sleep.
  • Get sunshine & fresh air.
  • Mind your mental & emotional health.  Stimulate your mind.  Read, learn, set goals, positive thinking, journal. Practice thankfulness in all circumstances.  Set up constructive activities.  Create routines. Stay connected with friends virtually.  Speak to someome if you need help – Mental health helpline ConnexOntario 866-531-2600. https://www.connexontario.ca/treatment-information-service-call
  • Mind your relationships.  Avoid resentment and criticism.  Practise respect, patience, consideration, grace, mindfulness, kindness. 
  • If you feel ill with mild flu symptoms, isolate and self medicate.  Stay hydrated and well nourished, and rest.  Regulate low grade fever with Tylenol. Should you develop respiratory distress, that is the time to go to hospital and seek medical help.  If uncertain, contact Telehealth Ontario for fast, free medical advice Toll-free: 1-866-797-0000.  Do not go to the Hospital unless you have to. 
  • Stay informed and updated. Visit my Blog with regular updates on the economy and markets as the COVID-19 pandemic develops and evolves over time.  http://imortgagebroker.ca/blog/

We are living in very interesting times.  Remember that there have been way worse events in world history.  Let’s be thankful we live in a free country, with free healthcare (albeit high taxes to pay for that), where neighbours still care for neighbours, where our government though falling very short, is still a democracy and not communist.  Reminder of the words spoken by President  Franklin D. Roosevelt. ”The Only Thing We Have to Fear is Fear Itself”.

One last thought:  Fear is used to manipulate us. If you have one last fear, the fear over death, please reach out to me.  There is a great HOPE that overcomes death.

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
18 Mar



Posted by: Adriaan Driessen


Industry & Market Highlights 

Is coronavirus about to prompt a house price crash?

The impact of the COVID-19 coronavirus outbreak is being felt across the world, but what will it do to Canada’s housing market?”

The short answer, of course, is that no one really knows, but the latest assessment of the housing market by RBC Economics suggests that things are about to get rocky.

Senior economist Robert Hogue said that the “light was on” in the housing market in February but that it is “about to be turned off.”

“The world has changed in March,” he wrote in the RBC Monthly Housing Market Update. “And so has the outlook for the Canadian housing market.”

Hogue said that fears of the spread and social distancing are set to decimate house viewings and buyers are likely to take a wait-and-see approach.

Then there’s the impact that Canadians’ investments have suffered from falling asset values. Hogue notes that some homebuyers would be relying on these investments to fund their down payment.

Despite mortgage rates remaining low, especially following recent interest rate cuts and the potential for more, consumer confidence is likely to outrank them.

Sales plunge but what about prices?

Hogue’s outlook is that home sales will plunge in the coming weeks before a rebound at some (undeterminable) point.

But he expects home values nationally to be resilient with tight supply in many markets providing a cushion against correction.

For Toronto, Vancouver, Ottawa, and Montreal, recent price escalations are predicted to cool but there could be tougher conditions for the Prairies where market conditions are softer and the oil price fall will be a further blow.  By Steve Randall.

Shock move by Fed over the weekend

For the second time this month, the Federal Reserve cited the deleterious impact created by the coronavirus in announcing a surprise cut to the US federal funds rate, lowering it to a range of 0% to 0.25%.

“The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” said the central bank’s policymaking Federal Open Market Committee (FOMC) in a statement. “Global financial conditions have also been significantly affected.”

Although the Fed insisted the national economy “came into this challenging period on a strong footing” and the job market remained strong, it also observed that “business fixed investment and exports remained weak” while the energy sector “has come under stress,” ultimately concluding that the “effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook.”

The Fed is also expected to purchase up to $500 billion in Treasury securities and $200 billion in mortgage-backed securities, returning to the policy of quantitative easing. The FOMC was near-unanimous, with only Cleveland Fed CEO Loretta J. Mester opposing the rate cut.

Mike Fratantoni, senior vice president and chief economist for the Mortgage Brokers Association (MBA), welcomed the announcement and predicted that it will help strengthen the housing market.

“By the end of last week, markets across the board were showing increasing signs of stress, with unprecedented volatility and widening spreads,” he said. “Today’s dramatic action by the Fed, lowering rates to zero, buying Treasuries and MBS, and encouraging banks to go to the discount window, will significantly reduce stress in the system. MBA expects these actions will lower mortgage rates, helping homeowners save money through refinancing, and thereby providing a boost to the broader economy.”  By Phil Hall. 

Mortgage stress test changes are on hold until further notice

The planned change and review of the mortgage stress test has slipped down the priority list for the Canadian government due to the COVID-19 coronavirus crisis.

Until the outbreak, it was expected that Office of Financial Sanctions Implementation (OFSI) would consider changes after a consultation with stakeholders. It was hoped this would make the rate used to determine affordability for uninsured mortgages more dynamic instead of its current rigidity.

But OSFI said late Friday that, in unison with other government agencies, it was focusing on ensuring the resilience of Canadian financial institutions and the financial system.

“As a result, the benchmark rate as currently published by the Bank of Canada will remain in force until further notice,” OSFI said in a statement.

But it’s not just the review for uninsured mortgages that are affected.

“The Minister of Finance has also announced the suspension of the April 6, 2020 coming into force of the new benchmark rate used to determine the minimum qualifying rate for insured mortgages,” the statement clarified.

Maintaining credit supply

To ensure that Canadian financial institutions have enough liquidity to continue lending, OSFI has also cut its buffer requirements.

The Domestic Stability Buffer, which large financial institutions are required to maintain in case of financial crisis, was due to be 2.25% as of the end of April 2020 but this has been cut to 1% immediately and remain in place for at least 18 months.

The regulator says the release of banks’ funds from the buffer should be used for lending to businesses and households and not for shareholder distributions.

OSFI says that financial institutions’ dividend increases and shareholder buybacks should be halted.  By Steve Randall. 

Bank of Canada acts to shore up funding liquidity

The Bank of Canada is to help bolster financial stability by injecting liquidity into the funding markets.

In a similar move to the Fed, the BoC is acting to support interbank funding amid concerns about tightening credit resulting from the coronavirus outbreak.

“The Bank of Canada continues to closely monitor global market developments and remains committed to providing liquidity as required to support the functioning of the Canadian financial system,” a BoC statement said late Thursday.

The central bank is increasing the frequency at which it buys government bonds and is also stepping up its bond buybacks program whereby it sells newer bonds for older issues.

This will add billions of dollars into markets.

Along with further expected cuts in interest rates, the bank hopes that the moves will avoid a credit crunch which exacerbated the Great Recession a decade ago.

“In addition to using just the blunt tool of lowering interest rates, they’re trying to help with liquidity in the market,” Ian Pollick, head of rates strategy at CIBC in Toronto told Bloomberg. “They’re just liquefying the system. It’s consistent with moves we saw earlier today with the Fed.”

Federal finance minister Bill Morneau tweeted that “We are seeing volatility in the markets due to COVID-19. In the face of this uncertainty, we will continue to protect the health of Canadians and our economy. I want to tell all Canadians: we have your back.”  By Steve Randall. 

Canadian economy severely tested for another quarter

The Canadian economy had a rocky start this year after already showing significant signs of slowing down at the end of 2019. Indeed, economic growth was only 0.3% in the fourth quarter. This poorest performance of the year, while still in line with Bank of Canada forecasts, brought GDP growth to only 1.6% in 2019.

Economic activity was penalized last year by the decline in business and residential investment, by less than 1% each. Consumer and public spending were the driving forces of the economy, although their growth also slowed.

The economic rebound that might have been expected at the start of the year will undoubtedly be delayed. The Canadian economy is not out of the woods and growth will probably continue to be held back by temporary factors, at least in the first quarter.

Growth still victim of temporary disruptions

Fears about the coronavirus (Covid-19) are growing and the global pandemic could stifle investment and slow national industrial activity. The impact of the pandemic is already being felt on stock markets, and the Chinese slowdown is hurting many commodities—including oil. Rail blockades have also weakened Canada’s economic growth.

From the coronavirus to a crude oil price war

The coronavirus crisis has affected the oil market. The slowdown in oil demand caused crude oil prices to plunge 35% between early January and early March. At the time, OPEC was expected to intervene to counter the drop in global prices.

At its latest meeting with its partners, however, OPEC did not get Russia to go along with its proposal to withdraw an additional 1.5 million barrels per day from the market in order to rebalance supply and demand and bolster crude prices. In addition, no agreement was reached on extending the current cuts, so as of April 1, 2020, producers will be able to pump as much oil as they want.

In retaliation for Russia’s refusal to cooperate, Saudi Arabia launched a full-scale price war on Monday, March 9, selling its crude for $29.05 per barrel to capture market share from its Russian competitor.

The last crude oil price war occurred in 2014 and plunged Canada into a technical recession. Given its importance to some Canadian provinces and the country terms of trade, the current collapse of crude oil prices will further limit growth this year. The question now is how long this price war can last. To learn about it, check out our article of the month on oil.

Rail blockades to derail the economy?

Canada’s rail system is at the heart of the Canadian economy. For this reason, blocking railways that carry freight from coast to coast is yet another obstacle to growth in the first quarter of 2020 at a time when the economy must already cope with disruptions caused by the coronavirus and low oil prices. (For more details, see this month’s featured article). Overseas containers piled up in ports in February, and retailers struggled to get adequate supplies.

Besides the transportation sector, this rail blockage will have an impact on a number of industries. Manufacturing, energy, chemicals, raw materials and agriculture are all affected by the rail shutdown.

The layoffs announced by companies directly affected by the blockades are proof of their impact on the economy. Canadian National temporarily laid off 450 workers. VIA Rail followed suit with temporary layoffs of nearly 1,000 employees. Despite these economic setbacks, the Canadian economy created more than 30,000 jobs in February.

This is the second rail shutdown in just a few months. Last November, when a CN strike partially suspended rail transportation in the country, the GDP generated by the transportation industry fell by 0.6%. This slowdown also coincided with a decline in international trade. The stoppage affected rail shipments and, as a result, both exports and imports.

However, the November drop in GDP from the transportation industry was more than offset by a 1.5% increase in December. The impact of rail was also moderated by increased use of other means of transportation, such as air transport.

This time around, these alternatives could further mitigate the economic impact of the blockades. A number of companies have resorted to trucking for their supplies, and the passenger air transportation network has partially compensated for the closure of a few key routes. Indeed, Porter Airlines reported that demand for its Montreal-Ottawa-Toronto flights rose strongly. However, these two options remain significantly more expensive than rail transportation for both businesses and travellers.


By BDC Business Development Bank of Canada.

Canada’s housing starts down in February

Last month saw a decline in housing starts, according to new data form the Canada Mortgage and Housing Corporation (CMHC).

The seasonally adjusted annual rate (SAAR) of housing starts totaled 210,069 units in February, a 1.9% decline from the 214,031 units recorded in January. Urban starts were also down by 1.9% from 203,220 units in January to 199,304 units in February. Within the urban sector, multiple urban starts fell by 6.1% to 146,072 units while single-detached urban starts increased by 11.9% to 53,232 units. Rural starts were estimated at a seasonally adjusted annual rate of 10,765 units.

The SAAR measurement of housing starts has seesawed over the past few months: January saw an 8.8% increase from December, but December recorded a 3% decline from November.

“The national trend in housing starts declined in February, driven by lower-trending multi-unit starts.” said Bob Dugan, CMHC’s chief economist. “Single and multi-unit starts in Toronto both trended lower, while activity in Montréal declined due to lower-trending multi-unit starts. This offset a slight up-tick in Vancouver, which follows four consecutive declines in that CMA.”

Among the provinces, Saskatchewan recorded the steepest percentage decline in month-over-month housing starts, toppling from 3,270 units in January to 1,966 in February, a 40% fall. Quebec had the second greatest percentage decline during that period, with 44,991 in February compared to 73,304 in January, a 39 percent plummet.

On the flip side, Nova Scotia recorded the greatest percentage increase between the months: a 227% leap from the 2,378 housing starts in January to 7,771 in February. Prince Edward Island also recorded a three-digit percentage upswing, rising 163% from 429 housing starts in January to 1,127 last month.

Among the nation’s major metropolitan areas, Guelph recorded the steepest percentage decline with an 80% drop from 667 housing starts in January to 133 last month. Saguenay recorded the second steepest drop, with a 72% plunge to 313 housing starts in February from 1,117 in January.

The major metropolitan areas that saw the most vibrant activity in housing starts during the year’s first two months included Halifax (a 340% increase form 1,319 in January to 5,800 in February), Windsor (a 331% spike from January’s 264 total to 1,137 in February) and Hamilton (a 307% rise from 1,734 in January to 7,061 in February).

The CMHC data follows a recently published report by Altus Group that found total housing starts in Canada during the 2010s were virtually identical to the previous decade. According to Altus Group’s data, housing starts reached 201,000 units on an average by the end of the 2010s, tying for the second-best decade ever recorded, after the 1970s. The decade recorded the lowest volume of housing starts in 2013, with just under 188,000 units, while the highest starts of the decade were recorded in 2017 at 220,000 units. The 2010s were also the strongest decade ever for apartment starts, with around 92,000 apartment units being started and most of the focus being given to condominium apartments developments.

“In general, the 2010s were not a very volatile period for annual total housing starts at the Canada-wide level,” the report stated. “In fact, it was the least volatile of any of the past six decades for annual total housing starts.”  By Phil Hall. 

Economic Highlights

Fed Cuts Overnight Rate One Percentage Point But Markets Plummet

In an unprecedented Sunday afternoon meeting, the US Federal Reserve cut their key policy rate by 100 basis points (bps) to a level of 0%-to-0.25% (see chart below). Also, the Committee announced increased access to the discount window where the Fed makes loans to banks. The Fed is the lender-of-last-resort and is signalling that it will provide liquidity wherever needed. As well, with interest rates already so low, the Fed is well aware that rate cuts can only do so much. Thus, they are returning to quantitative easing–the buying of large volumes of U.S. government Treasury bills and bonds as well as mortgage-backed securities (MBS), to inject liquidity into the financial system.

The Treasury and US MBS markets are usually the deepest, most liquid markets in the world. But over the past two weeks, liquidity has dried up. Financial instability has risen sharply with the high level of volatility. Banks have experienced significant withdrawals as consumers are hoarding cash like everything else. The cost of funds to banks has risen sharply because of the enhanced perception of risk. With the collapse in oil prices, banks exposed to the oil sector are building up reserves for nonperforming loans. As businesses everywhere in nearly every sector shutdown, the risk of delinquencies rises further. Consumers who are housebound spend less money, and those who are freelancers or hourly wage earners might not get paid. Moreover, the shuttering of schools puts an added burden on parents who have no other daycare options for their kids.

All of this disruption, which according to the Center for Disease Control, could last months–the CDC recommended yesterday the shutdown of meetings of more than 50 people for eight weeks–has led to rising concern about the riskiness of banks. Bank shares have plummeted, and the yields on bank bonds have surged. Besides, banks and other mortgage lenders are fearful of being inundated with requests for refinancing, especially in the US, where penalties for breaking a mortgage are much lower than in Canada. Because of the refinancing surge in the US, the price of MBSs has fallen sharply, raising their yields and making the market highly illiquid.

The rising risk premiums, likely recession and illiquidity are causing banks in Canada and the US to raise some mortgage rates. Lenders are tightening the discount off the prime rate on variable-rate mortgage loans. Some fixed rates have edged higher as well. Such spread widening between mortgage rates and government yields happened during the financial crisis. Bank balance sheets will expand as troubled businesses and consumers extend their borrowings on their open lines of credit. Many will be unable to make timely interest payments. Loan loss reserves, already climbing, will rise further. Liquid deposits will be depleted as many are forced to live off of savings while shying away from selling stocks at markedly depressed prices.

These are not normal times. The Fed’s actions did nothing to calm markets. Indeed, stocks and bond yields plummeted in overnight trade, and the stock markets opened sharply lower in North America. The S&P 500 opened down over 8% while the TSX opened down 11%, triggering a circuit-breaker time out. This is the third time in a week the circuit breaker has hit. The TSX is down roughly 35% from its recent high (see chart below). The S&P 500 is down over 20%. The relative underperfomance of the Canadian stock market reflects our out-sized representation of the energy sector. The two weakest sectors in the TSX are the energy and financial sectors.

The world knows that the Fed and other central banks are running out of ammunition. Governor Powell said yesterday that he would not take the key fed funds rate into negative territory but instead would use “forward guidance” and asset purchases (quantitative easing) going forward.

The good news is that the banks are highly capitalized and much more resilient than during the financial crisis. Central banks since that time have put in place measures to monitor financial stability. Last Friday, the Canadian Office of the Superintendent of Financial Institutions (OSFI) reduced the capital requirements for Canadian banks to free up $300 billion for banks to support troubled borrowers. OSFI warned against the use of these funds to buy back stocks or raise dividends.

OSFI also suspended the proposed revision in the qualifying mortgage rate slated to begin April 6. The posted mortgage rate, published weekly by the Bank of Canada, will remain the qualifying mortgage rate. It is currently 5.19%, but it is expected to fall this week to around 4.95%.

But in these extraordinary times, there is a loss of confidence in the financial system. Some are calling for a full shutdown of the stock markets–but imagine the panic if no one could sell assets. There would truly be a run on the banks. Now is not a time to panic.

The Canadian Housing Market

The Canadian Real Estate Association announced this morning that home sales recorded over the Canadian MLS Systems rose 5.9% in February, marking one of the more substantial month-over-month gains of the past decade. Actual (not seasonally adjusted) sales activity stood 26.9% above year-ago levels–keeping in mind that activity was quite weak one year ago. February 2019 marked a decade-low for the month, so a good part of the significant y-o-y gain reflects low levels of activity recorded at the time. February 2020 also benefited from an additional day due to the leap year.

The CREA President, Jason Stephen, said, “Home prices are accelerating in markets where listings are in increasingly short supply, specifically in Ontario, Quebec and the Maritimes which together account for about two-thirds of national sales activity. Meanwhile, ample supply across the Prairies and in Newfoundland and Labrador means increased competition among sellers.”

The number of newly listed homes jumped 7.3% in February compared to January, more than erasing the declines of late last year. New supply gains were posted in some large markets, including the Fraser Valley, Calgary, Edmonton, the GTA, Hamilton-Burlington, Kitchener-Waterloo, Windsor-Essex, Ottawa and Montreal.

The Aggregate Composite MLS® Home Price Index (MLS® HPI) rose 0.7% in February 2020 compared to January, marking its ninth consecutive monthly gain. The actual (not seasonally adjusted) national average price for homes sold in February 2020 was around $540,000, up 15.2% from the same month the previous year. See the table below for the regional move in prices.

But this is old news, particularly given all that has happened in the past two weeks. What comes next for the housing market? That depends on the course of the pandemic. Lower interest rates would typically be great news for the housing market, particularly for first-time homebuyers. But social distancing is hardly consistent with open houses and home shopping.

Moreover, volatility and instability reduce consumer confidence. Buyers that parked their downpayment savings in the stock markets have lost nearly a third of their money on paper. And how many sellers want a trail of strangers wandering through their homes during the pandemic. So the housing market, like everything else, is likely going to slow over the near term.

The Bank of Canada is hopeful that its rate cuts will stabilize the housing market from what might have otherwise been a substantial shutdown. Lower rates will filter through to lower monthly payments for floating-rate mortgage borrowers. Expect the Bank to cut rates again to near-zero levels, following in the footsteps of the Fed. So far, as of this writing, the Canadian banks have not responded to Friday’s BoC rate cut. The prime rate went down a full 50 bps on March 5 after the Bank cut its key rate by that amount on March 4. But so far, the Big-Six banks have not responded to the 75 bps cut three days ago.

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

Residential Market Commentary – Coronavirus treatment has side effects

The Coronavirus and the broader economic concerns around the world have seen the Bank of Canada make two, 50 basis point cuts in its benchmark interest rate in the last two weeks.  It now stands at 0.75%.  And it is very likely to go lower.

The emergency rate cut on Sunday that dropped the U.S. Federal Reserve rate to, essentially, zero all but guarantees the Bank of Canada will cut rates further.  Market watchers predict the overnight rate will drop to 0.25%, and that could happen at any time.

The cuts are part of a larger tool kit of measures being unpacked to support the broader economy as the Coronavirus pandemic spreads.  One of the tools that will not be used, though, is the easing of the mortgage stress test.  And there are mixed reactions to what all this means for the housing market.

The most predictable reaction is: hot markets will get even hotter.  Lower interest rates tend to improve affordability and draw more buyers into the market.  Given the tight supply of housing across the country, though, it seems certain there will be renewed price acceleration.

Commenting on the first 50 bps cut made on March 4th, Phil Soper, CEO of real estate giant Royal LePage speculated it could act as a “relief valve” for overheated markets which have seen a lot of “pent-up” demand.  In an interview with the Financial Post he was not explicit about how the relief valve would work, but he hinted at a possible increase in housing supply.

On Friday the 13th, during the announcement of the emergency 50 bps cut, Bank of Canada Governor Stephen Poloz made it clear the BoC’s concerns about the housing market have been overtaken by worries about the Coronavirus.  But, during the announcement of the March 4th cut, Poloz said that move could help stabilize the housing market.  He cited declining consumer confidence in the overall economy as a factor that could have led to a housing market slump.

However, those same consumers could just as easily stay away.  Social distancing, self-isolation and fears of a recession could see purchasers putting their buying plans on hold.  The stock market plunge has stymied many people who were working to build their down payment through investments.

The potential decline in buyers and forecasts of a recession already have some sellers rethinking their plans.  An absence of multiple offers and fears that the value of their property may be declining could delay plans to sell, or even see properties taken off the market, further tightening supply.  By First National Financial. 

Mortgage Update - Mortgage Broker London

Mortgage Update – Mortgage Broker London

Mortgage Interest Rates

The Bank of Canada today lowered its target for the overnight rate by 50 basis points to ¾ percent, effective Monday, March 16, 2020. The Bank Rate is correspondingly 1 percent and the deposit rate is ½ percent.  Prime lending has lowered an additional 50 bps 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.  Some Banks/Lenders have followed suit and made announcements of dropping their Prime lending rate in correlative response.  Bank of Canada Benchmark Qualifying rate for mortgage approval is still at 5.19% 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%. 

Fixed rates halted moving down further due to the sever market volatility.  Some lenders started increasing interest rates due to liquidity concerns.  Lenders have started cutting back on the deep discounts offered by some for variable rates making adjustable variable rate mortgages less desirable.

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

Mortgage Update - Mortgage Broker London

Mortgage Update – Mortgage Broker London

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.

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.

Here at iMortgageBroker, we love looking after our clients needs to ensure your best interest is protected.  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 click below:

Middlesex Health Unit


Ontario Health


Government Canada Public Health


World Health Organization: 


Factual Statistics Coronavirus COVID-19 Global Cases



14 Mar



Posted by: Adriaan Driessen

Industry & Market Highlights 

Coronavirus COVID-19:  Helping our Clients

As this COVID-19 pandemic continues to evolve, we want you to know that we will be doing everything we can to support our customers and clients through this difficult time, both with their financial needs and also their safety and well-being.  

iMortgageBroker is setup to service our clients all over Ontario, whether you prefer in person, or remotely: virtually or over the phone.  As long as you have access to a phone and also internet, or scan email, or fax, or courier services, or can drop documentation at our office – we have you covered.

We are actively monitoring the Coronavirus (COVID-19) situation and are taking precautionary measures to help keep our communities safe.  We are implementing best practices to prevent the spread of the virus so that we can be there to help when you need us.

To help with prevention for in person meetings we are taking these added precautions to keep our clients and agents safe:

Staff will be wearing face masks for in person face-to-face consultations and meetings, and will be avoiding direct contact.

We follow the local Municipal Health Unit directions for prevention of spreading germs with frequent disinfection of used surfaces and washing of hands.  See the details here.

We ask our customers who are concerned about their health, or who are concerned that you may have contracted the virus to allow us to serve you remotely.  PLEASE follow the Government Canada Public Health Agency directions on how to protect yourself and others.  See the details here.

Thank you for doing your part to help keep our communities safe, and for supporting one another as we navigate through this difficult time together.

The Public Health Agency of Canada recommends that we all take the following everyday precautionary measures to help prevent the spread of germs and viruses:

  • Wash your hands thoroughly and often with soap and water for at least 20 seconds. If soap and water are not available, use an alcohol-based hand sanitizer
  • Avoid touching your face, eyes, nose and mouth
  • Avoid close contact with people who are sick
  • Stay home when you are sick
  • Clean and disinfect frequently touched objects and surfaces
  • Cover your mouth and nose with your arm when coughing and sneezing
  • Avoid all non-essential travel

One last thought:  It is okay to say “Hi” to new faces and old friends during a health pandemic and show you care without physical touch.  A sincere smile, kinds words and caring for others goes a long way!

Extraordinary Coordinated Policy Actions To Ease the Economic Impact of Pandemic In Canada

Prime Minister Justin Trudeau said Canada would introduce a “significant” fiscal stimulus package, as part of a coordinated effort with other Group of Seven countries to counter the virus-driven global economic slowdown and calm markets. In an exceptional press conference held at 2 pm today, Finance Minister Morneau sat at the side of the Governor of the Bank of Canada, and the head of the Office of the Superintendent of Financial Institutions (OSFI) to announce measures to soothe financial markets, boost confidence and support the Canadian economy.

Only nine days after the Bank of Canada cut the overnight policy rate by 50 basis points to 1.25%, Governor Poloz announced another 50 bps reduction in the policy rate to a level of 0.75%. Here is the Bank of Canada’s official statement:

  • “The Bank of Canada today lowered its target for the overnight rate by 50 basis points to ¾%. The Bank Rate is correspondingly 1%, and the deposit rate is ½ percent. This unscheduled rate decision is a proactive measure taken in light of the negative shocks to Canada’s economy arising from the COVID-19 pandemic and the recent sharp drop in oil prices.
  • It is clear that the spread of the Coronavirus is having serious consequences for Canadian families, and for Canada’s economy. In addition, lower prices for oil, even since our last scheduled rate decision on March 4, will weigh heavily on the economy, particularly in energy-intensive regions.
  • The Bank will provide a full update of its outlook for the Canadian and global economies on April 15. As the situation evolves, Governing Council stands ready to adjust monetary policy further if required to support economic growth and keep inflation on target.”
  • The Bank has also taken steps to ensure that the Canadian financial system has sufficient liquidity. These additional measures were announced in separate notices on the Bank’s website. The Bank is closely monitoring economic and financial conditions, in coordination with other G7 central banks and fiscal authorities.”

At the press conference, a reporter asked Poloz whether he would take the policy rate down to negative levels. He responded that he “does not like negative interest rates” and that “there is sufficient fiscal firepower in Canada” so that, hopefully, “negative interest rates are not likely to be needed.”

He also commented: “Combined with the other measures announced today, lower interest rates will help to support confidence in businesses and households. For example, borrowing costs will be lowered both for new purchases of homes and through variable-rate mortgages and mortgage renewals.”

Today, the Bank also announced a new Bankers’ Acceptance Purchase Facility. This facility will support a key funding market for small- and medium-sized businesses at a time when they may have increased funding needs, and credit conditions are tightening. The facility will buy 1-month BAs starting the week of March 23. More details are forthcoming. This comes in addition to introducing a 6-month and 12-month bi-weekly repo operation yesterday.

Finance Minister Morneau announced he would deliver a fiscal stimulus package next week that will include an additional $10 billion in new funding to the country’s two business financing agencies — the Business Development Bank of Canada and Export Development Canada. This announcement follows $1 billion of funding for the country’s public health response outlined earlier this week, which came with some modest measures to support disrupted workers.

So significant fiscal stimulus measures are coming next week. There were no details on the size of these measures, but something on the order of 1% of GDP seems like a reasonable estimate. Mr. Morneau also noted that the government is looking at providing direct aid to individuals and families. The floodgates are about to be flung open.

The final bit of stimulus came from OSFI’s lowering capital requirements for the Big Six Canadian banks. Jeremy Rudin, head of Canada’s banking regulator, announced he would reduce the nation’s “domestic stability buffer” by 1.25 percentage points of risk-weighted assets, effective immediately. The buffer will drop to 1%, from its prior level of 2.25%. He said that the government is looking at providing direct aid to individuals and families. This action will free up about $300 bln in funds for the big banks to lend. It will also offer some solace to the stock market, where bank stock prices have plunged in the past two weeks. Concern about the Canadian banks’ balance sheets is always rife when markets are stressed.

In another move, the government announced that it is suspending consultation on the proposed change to the uninsured mortgage stress test. The insured stress test revision will start on April 6 as planned. OSFI wants to wait until markets return to more normal activity before making a final decision on the insured qualifying rate. Hopefully, banks will cut their posted mortgage rates in response to the combined 100 bp decline in the overnight rate and the plunge in 5-year bond government yields (see chart below). As of yesterday, March 12, the BoC Daily Digest held the conventional mortgage rate (5-year, aka the posted rate) steady at 5.19%.

We will now watch what the Canadian banks do in response to these actions. Will they cut their prime rates another full 50 basis points? And will they pass that on to borrowers of variable-rate mortgage money? Monday will be an interesting day.

Bottom Line: This is an excellent start to getting ahead of what will likely be a very challenging period for the Canadian economy. However, we need to see more of the details. Look for additional fiscal stimulus to be announced in the coming days and weeks (from the federal government as well as the provinces), and expect the Bank of Canada to ease policy rates another 50 bps to a level of 0.25% for the overnight benchmark rate by April. And, if conditions deteriorate more than anticipated, there’s room for the BoC, government and OSFI to do more.

This is in direct contrast to the inept and disjointed policy response south of the border. Hopefully, the financial markets will take note that Canada is far better equipped both financially as well as from a public health perspective than our recent stock market performance has suggested.


Residential Market Commentary – Buying season off to a brisk start

The annual spring home buying season seems to have jumped the gun and is already out of the blocks.  Canada’s biggest and busiest markets are reporting significant sales and price increases based on activity recorded even before the announced easing of the B-20 stress test and the, coronavirus inspired, drop in the Bank of Canada rate.

February figures from Greater Vancouver show a 45% sales increase over a year earlier.  Toronto is reporting a 46% jump.  Calgary, which has been struggling because of the depressed energy sector, saw a 23% increase.  Montreal continues to boom with a record setting 5,334 sales in February – a 23% increase over a year ago.

Of course, last February’s numbers were extraordinarily low, which takes some of the shock value out of the increases.  However, prices are seeing renewed acceleration.

Vancouver’s MLS composite benchmark price stands at $1.02 million.  That is just 0.3% higher than a year ago, but it is a 2.7% increase over the past six months.  In Toronto the composite benchmark price increased by 10.2%.  The average sale price for all types of housing rose to $910,000.  (The average price for a detached home has, once again, topped $1 million.)  Montreal’s median price is up about 12%.  Calgary remains, essentially, flat.

Markets across the country are tightening as sales outpace new listings, signalling the strong probability of even greater price acceleration.

Given the recent actions of the BoC, the announced intentions of the federal government, and the slumping bond market it seems unlikely there will be any move to step on the brakes.  By First National Financial. 

Ontario’s Property Assessment System, Re-assessment of all properties in Ontario in 2020

The Municipal Property Assessment Corporation (MPAC) is an independent, not-for-profit corporation funded by all Ontario municipalities. Our role is to accurately assess and classify all properties in Ontario. We do this in compliance with the Assessment Act and regulations set by the Government of Ontario.

We are the largest assessment jurisdiction in North America, assessing and classifying more than 5.3 million properties with an estimated total value of $2.78 trillion in 2018.

We are accountable to the Province, municipalities and property taxpayers of Ontario through a 13-member Board of Directors. The Board of Directors is comprised of provincial, municipal and taxpayer representatives appointed by the Minister of Finance.

MPAC completes a province-wide Assessment Update every four years based on a legislated valuation date. The valuation date, established by the Ontario government, is a fixed day on which all properties are valued.

The last province-wide Assessment Update took place in 2016, based on a January 1, 2016 valuation date. In 2020, MPAC will update the assessments of all properties in Ontario to reflect a new legislated valuation date of January 1, 2019. These assessments will be in effect for the 2021-2024 property tax years.

To provide an additional level of property tax stability and predictability, market increases in assessed value between Assessment Updates are phased in gradually over four years. A decrease in assessed value is introduced immediately.

Annual property assessment increases are revenue neutral, which means they have no impact on the total property tax amount that a municipality might raise. Rather, these changes provide for a redistribution of property taxes within a municipality, based on the value of the property owned. Learn more in this video: https://www.youtube.com/watch?v=xgGbLotF_QQ.

Visit the MPAC Fact Sheet for more information here.

Mortgage Interest Rates

Prime lending has lowered an additional 50 bps 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 is still at 5.19% 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%. 

Fixed rates are moving down further with lower bond yields.  Deep discounts are offered by some lenders for variable rates making adjustable variable rate mortgages very attractive again.

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

Mortgage Update - Mortgage Broker London

Ensure that your current mortgage is performing optimally, or if you are shopping for a mortgage, only finalized your decision when you are certain 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 your best interest is protected.  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!


6 Mar


Latest News

Posted by: Adriaan Driessen

Industry & Market Highlights 

Bank of Canada lowers overnight rate at second 2020 meeting

The Bank of Canada lowered its target for the overnight rate by 50 basis points to 1.25 percent from 1.75 percent.

This is the first time the benchmark rate has changed since October 24, 2018.

Comparing the Bank’s two most recent statements (today and January 22, 2020), we find several notable new comments:

  • It is “becoming clear that the first quarter of 2020 will be weaker than the Bank had expected” when CPI inflation was “stronger than expected”
  • While Canada’s economy has been operating close to potential with inflation on target, “the COVID-19 virus is a material negative shock to the Canadian and global outlooks”
  • COVID-19 “represents a significant health threat to people in a growing number of countries” and in some regions, business activity has fallen sharply, supply chains have been disrupted, commodity prices have been pulled down and the Canadian dollar has depreciated
  • The drop in Canada’s terms of trade, if sustained, will weigh on income growth
  • Business investment “does not appear to be recovering as was expected following positive trade policy developments”
  • Although markets continue to “function well,” the Bank of Canada will continue to ensure that the Canadian financial system has sufficient liquidity

As a result of its revised near-term outlook, the Bank’s Governing Council noted that it “stands ready” to adjust monetary policy further if required to support economic growth and keep inflation on target.

BoC’s next policy announcement is set for April 15, 2020 and in the ensuing period the Bank’s Governing Council intends to coordinate with other G7 central banks and fiscal authorities as it “closely” monitors economic and financial conditions. We will closely monitor these conditions as well.  By First National Financial. 

Ontario passes Trust in Real Estate Services Act

The Ontario Government has passed the Trust in Real Estate Service Act, 2019 (TRESA), and was announced at the Ontario Real Estate Association’s REALiTY Conference and AGM by new OREA President Sean Morrison.

The legislation was called back on Wednesday, and the Bill was unanimously passed after its third and final reading. TRESA amends the Real Estate & Business Brokers Act, 2002 (REBBA).

“This is a huge win for our Realtor members, their clients and hardworking Ontarians across the province,” said OREA President Sean Morrison. “Thanks to the Ford Government’s newly passed legislation, Ontario’s homebuyers and sellers can have greater confidence that the Realtor at their side during the largest financial transaction of their life has the highest professional standards, training and modern tools in North America, such as the ability to form personal real estate corporations.”

TRESA is one of the few pieces of legislation in Ontario to receive bi-partisan support following constructive debate in the Legislature led by Minister Lisa Thompson and NDP Consumer Critic Tom Rakocevic and other MPPs.

“By strengthening consumer protection and fixing the broken real estate discipline system, the Government of Ontario is showing Realtors and home buyers and sellers that it is on their side,” said OREA CEO Tim Hudak. “Ontarians deserve the best when it comes to making the biggest financial transaction of their lives and TRESA will make this province the North American leader once again when it comes to a well-regulated real estate market.”

OREA has been advocating for a review of REBBA for over a decade and finally, the Ontario Government has passed this historic piece of legislation.

There are five primary goals in the proposed legislation: enable regulatory changes that would improve consumer protection and choice; improve professionalism among real estate professionals and brokerages through enhanced ethical requirements; update the powers available to RECO to address poor conduct and improve efficiency; create a stronger business environment; and bring legislation and regulations up-to-date and reduce regulatory burden.

Ontario’s real estate rules were nearly 20 years old and this legislation brings the profession into the modern age, Hudak indicated.

OREA will continue to work closely with the Government of Ontario as they develop regulations for the Bill, and work towards enacting the legislation into law.  By Kimberly Greene. 

Changes to stress test

Minister of Finance Bill Morneau announced changes to the benchmark rate used to determine the minimum qualifying rate for insured mortgages.

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%. These changes will come into effect on April 6, 2020.

The new benchmark rate will be published on a Wednesday and come into effect the following Monday.

“For many middle-class Canadians, their home is the most important investment they will make in their lifetime. Our government has a responsibility to ensure that investment is protected and to support a stable housing market. The government will continue to monitor the housing market and make changes as appropriate. Reviewing the stress test ensures it is responsive to market conditions,” Morneau said.

The minimum qualifying rate for insured mortgages will now be the greater of the borrower’s contract rate, which is the mortgage interest rate agreed to by the lending institution and the borrower; or the new benchmark rate.

The change comes after a recent review by federal financial agencies, which concluded that the minimum qualifying rate should be more dynamic to better reflect the evolution of market conditions. Overall, the review concluded that mortgage standards are working to ensure that home buyers are able to afford their homes even if interest rates rise, incomes change, or families are faced with unforeseen expenses. This adjustment to the stress test will allow it to be more representative of the mortgage rates offered by lenders and more responsive to market conditions.

The new Benchmark Rate for insured mortgages will be published weekly on the Bank of Canada’s website, and will be based on submitted mortgage insurance application contract rates. If, on any given week, there are any delays in updating the new Benchmark Rate, the previous week’s published Rate will stand until a new Rate is published.  By Kimberly Greene. 

Who are the winners with the new qualifying interest rate?

Mortgage brokers and homebuyers across Canada got the relief that many of them have been clamouring for: a change in the qualifying interest rate for insured mortgages.

Last week, Minister of Finance Bill Morneau announced changes to the benchmark rate used to determine the minimum qualifying rate for insured mortgages. As of April 6th, that rate will be the weekly median 5-year fixed insured mortgage rate from mortgage insurance applications, plus 2%.

“It’s fantastic news. Borrowers will now have a little more buying power,” said Michelle Campbell, principal mortgage broker at Mortgage District. “It’s definitely a step in the right direction.”

Others, however, are a little slower to rejoice.

“At this time it is too hard to tell – with no idea what the new benchmark rate is going to be, we don’t know if it is just a 10bps or 25bps difference. That difference might increase a borrower’s purchasing power a little but at the same time we will see a potential upswing in increases in prices for the Spring market as well as the perception that the market is hot—which could potentially just mitigate or counteract any potential this change might provide,” said Claire Drage, CEO of the Windrose Group.

The so-called stress test was put into place at a time where the interest rate environment was thought to be rising, and it did effectively put the brakes on the runaway housing markets of Toronto and Vancouver. Given that prices had begun to rise again in Toronto, however, some people question whether or not this is the right time to change it—and whether or not a more regional-specific strategy would had a better effect nationwide.

In fact, Royal LePage President and CEO Phil Soper recently reiterated this point a few weeks ago, calling for housing policy that meeds the varied economies and needs that vary region to region.

Mixed benefits have also been shared by industry analysts.

“Changes are likely to further increase home prices, further stretching affordability and consumer leverage,” RBC Capital Markets analyst Geoffrey Kwan told Bloomberg. “The changes are aimed at the demand side of the equation regarding home ownership, instead of addressing the supply side.”

But buyers aside—it could be that the entities that stand to benefit the most from this change are the companies with the highest gearing to the mortgage market (i.e., Equitable Group, Home Capital, Genworth MI, and First National) as opposed to companies that are more diversified, such as the big banks and regional lenders.

National Bank Financial Analyst Jaeme Gloyn told Bloomberg that the lower qualifying rate should shift part of the mortgage away from private, unregulated lenders back into the regulated mortgage market. Borrowers at least have a choice to get a larger mortgage or at least qualify for one, both of which stimulate the housing market and benefit lenders.

“In the short run, this change will likely help some Canadians who currently do not qualify for mortgage financing get into the housing market,” Cormark Securities Inc. Analyst Meny Grauman told Bloomberg. “However, over time this change is likely to only raise prices given increased marginal demand.”

The move could be a risky one, as household debt continues to rise. In a note to investors, Bank of Montreal economists said that “to the extent the rule change fans some already-hot regions, it might discourage the Bank of Canada from lowering rates.”

The Office of the Superintendent of Financial Institutions (OSFI) said it’s considering a similar change for uninsured mortgages and is seeking input before March 17.  By Kimberly Greene. 

London area home sales remain at peak levels

Last month, local residential real estate transactions remained at peak levels, with 740 homes trading hands in LSTAR’s jurisdiction – only 22 less than three years ago, when the Association had its best February sales ever.

“Overall, home sales took a leap over the previous month – from 568 to 740, which signals an early start of a busy spring market,” said 2020 LSTAR President Blair Campbell.

Compared to a year ago, the local residential sales activity saw a 23.7% increase, while the overall average home price experienced a 13% surge, rising to $445,535 in February.

“Even though the number of LSTAR new listings grew to 1,034, which is almost on par with the 10-year average, the number of active listings at month end was still much lower than normal. This reflects the strong demand for residential properties in our area,” stated Campbell.

Inventory is another important measure of the balance between sales and the supply of listings. This shows how long it would take to liquidate existing inventories at the current rate of sales activity. At the end of February 2020, there were only 1.8 months of inventory across the entire LSTAR district – the lowest level in the last ten years.

“Looking at the home sales activity in LSTAR’s five main regions, it’s interesting to see that three of them – Elgin County, Middlesex County and Strathroy – had their second best February ever. London witnessed its third best February with 488 home sales, while St. Thomas set a new absolute record for February home sales, with 68,” Campbell noted.

“However, if you will dig deeper into the London statistical figures, you will be surprised to discover that London South’s February home sales reached their highest peak ever. This demonstrates, once again, that real estate is local and that, if you’re looking for real estate information or guidance, a local REALTOR® is your best bet,” Campbell emphasized.

The following table illustrates last month’s average home prices in LSTAR’s main regions and how they compare to the values recorded at the end of February 2019.

“Analyzing average prices in London’s three main geographic areas, it is worth to note that London East saw the biggest year-over-year increase,” Campbell added.

The average home price in London East was $369,094, up 21.8% from last February, while London North saw an increase of only 6.1% over last February, with an average home sales price of $530,042. In London South, the average home price was $437,667 – up 11.5% over February 2019.

The following chart is based on data taken from the CREA National Price Map for January 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.

Toronto approves increase in residential property tax

In a move touted by local leadership as a vital component of a “good, responsible, realistic” budget, the Toronto city council has implemented a 4.24% residential property tax hike for 2020.

The new levy that came with the approval of the city’s $13.5-billion operating budget would mean an estimated $130 in additional expenses for each household this year.

“The budget is balanced in the sense that the revenues meet the expenditures as is required by law. But I believe it is also balanced in the context of balancing all the competing interests and different interests that the city has,” Mayor John Tory said in a news conference earlier this week, as quoted by CBC News.

“I understand that people, in many cases, are finding life stressful on a financial basis today, but together with a modest tax increase, we’re also doing things to try to make their lives more affordable,” Tory added. “It will cost a lot more in the future if we don’t invest in transit and affordable housing and community safety now.”

Housing taxes have been repeatedly put forward as solutions to a wide assortment of market ills, and this has become an especially contentious topic in the higher-end market.

Among the suggestions put forward by city officials is a 3% tax on homes with sales values of $3 million and higher. Councillor Ana Bailao (Ward 9 Davenport) has also called for a policy similar to that of Vancouver’s vacant homes tax – which earned the latter city around $40 million last year alone.

However, Don Kottick of Sotheby’s warned that such a move will only end up discouraging talent from other places.

“I don’t think taxing is the right way to go. We’re already paying more tax than people pay in other countries,” the Sotheby’s CEO told the Toronto Star. “If you keep taxing we’re going to become anti-competitive.”

“At some point people are going to say, ‘Enough is enough.’”  By Ephraim Vecina. 

Economic Highlights

Interest Rates Nosedive as Bank of Canada cuts rates 50 BPS

Following the surprise emergency 50 basis point (bp) rate cut by the Fed, the Bank of Canada followed suit and signalled it is poised to do more if necessary. The BoC lowered its target for the overnight rate by 50 bps to 1.25%, suggesting that “the COVID-19 virus is a material negative shock to the Canadian and global outlooks.” This is the first time the Bank has eased monetary policy in four years. 

According to the BoC’s press release, “COVID-19 represents a significant health threat to people in a growing number of countries. In consequence, business activity in some regions has fallen sharply, and supply chains have been disrupted. This has pulled down commodity prices, and the Canadian dollar has depreciated. Global markets are reacting to the spread of the virus by repricing risk across a broad set of assets, making financial conditions less accommodative. It is likely that as the virus spreads, business and consumer confidence will deteriorate, further depressing activity.” The press release went on to promise that “as the situation evolves, the Governing Council stands ready to adjust monetary policy further if required to support economic growth and keep inflation on target.” 

Moving the full 50 basis points is a powerful message from the Bank of Canada. Particularly given that Governor Poloz has long been bucking the tide of monetary easing by more than 30 central banks around the world, concerned about adding fuel to a red hot housing market, especially in Toronto. Other central banks will no doubt follow, although already-negative interest rates hamper the euro-area and Japan.

Canadian interest rates, which have been falling rapidly since mid-February, nosedived in response to the Bank’s announcement. The 5-year Government of Canada bond yield plunged to a mere 0.82% (see chart below), about half its level at the start of the year. 

Fixed-rate mortgage rates have fallen as well, although not as much as government bond yields. The prime rate, which has been stuck at 3.95% since October 2018 when the Bank of Canada last changed (hiked) its overnight rate, is going to fall, but not by the full 50 bps as the cost of funds for banks has risen with the surge in credit spreads. A cut in the prime rate will lower variable-rate mortgage rates. 

Many expect the Fed to cut rates again when it meets later this month at its regularly scheduled policy meeting, and the Canadian central bank is now expected to cut interest rates again in April. Of course, monetary easing does not address supply-chain disruptions or travel cancellations. Easing is meant to flood the system with liquidity and improve consumer and business confidence–just as happened in response to the financial crisis. Expect fiscal stimulus as well in the upcoming federal budget. 

All of this will boost housing demand even though reduced travel from China might crimp sales in Vancouver. A potential recession is not good for housing, but lower interest rates certainly fuel what was already a hot spring sales market. Data released today by the Toronto Real Estate Board show that Toronto home prices soared in February, and sales jumped despite low inventories. The number of transactions jumped 46% from February 2019, which was a 10-year sales low as the market struggled with tougher mortgage rules and higher interest rates. February sales were up by about 15% compared to January.

Virus Anxiety and The Canadian Housing Market

As though things weren’t volatile enough, a new wave of virus terror is wreaking havoc on global financial markets. The novel conronavirus, COVID-19, continues to spread causing panic in worldwide stock and bond markets for the seventh day. Share prices have plummetted in Asia, Europe, the U.S. and Canada. The sell-off is fueled mostly by concern that measures to contain the virus will hamper corporate profits and economic growth, and fears that the outbreak could get worse.

Interest rates are falling sharply, hitting record lows reflecting a movement of cash out of stocks and commodities like oil, into the safer havens of government bonds and gold. In Canada, the 5-year bond yield has fallen to 1.16% this morning, down more than 50 basis points (bps) year-to-date and down 65 bps year-over-year (see chart below). Mortgage rates are closely linked to the 5-year government bond yield, so further downward pressure on mortgage rates is likely. Oil prices have fallen sharply, hitting the Prairie provinces hard. Crude oil WTI prices have fallen to just over US$45.00 a barrel compared to $62.50 earlier this year.

The Canadian dollar has also taken a beating, down to 0.7468 cents US, compared to a high of 0.7712 early this year.

The Canadian economy was already battered as today’s release of fourth-quarter GDP data shows. Statistics Canada reported that the economy came to a near halt in Q4 as exports dropped by the most since 2017 and business investment declined. Household spending was a bright spot–a reflection of a strong labour market and rising wages.

Monthly data for December, also released this morning, came in stronger than expected, showing the economy had some momentum going into 2020 before the coronavirus reared its ugly head.

The weak 0.3% growth in Q4 was expected as a series of temporary factors including a week-long rail strike, manufacturing plant disruptions and pipeline shutdowns slowed growth. Even though December posted an uptick, the first quarter will no doubt be hampered by the rail blockade and now virus-related supply and travel disruptions as well as reduced tourism.

Bottom Line: Panic selling in the stock market is never a good idea. The TSX opened down more 550 points this morning following yesterday’s outage. Trading on Thursday was suspended around 2 PM for technical reasons. None of this is good for psychology or the economy.

The Bank of Canada meets next Wednesday, and clearly, their press release will address these issues. It’s unlikely the Bank will cut rates in response on March 4, but if the economic disruption continues, rate cuts could be coming by mid-year.

The new stress test will be in place on April 6. If rates were at today’s level, the qualifying rate for mortgage borrowers would be more than 40-to-50 basis points lower than today’s level of 5.19%. This will add fuel to an already hot housing market.

Mortgage Interest Rates

Prime lending has lowered 50 bps is 3.45%.  Bank of Canada Benchmark Qualifying rate for mortgage approval is still at 5.19% 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%. 

Fixed rates are moving down with lower bond yields.  Deep discounts are offered by some lenders for variable rates making adjustable variable rate mortgages very attractive again.

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

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