17 Jun

Canadian real estate gains in May 2020.

General

Posted by: Anne Martin

 

There was good news in the real estate and housing markets. Home sales surged by 56.9% in May from Aprils collapse.  The Canadian Real Estate Association’s data showed that national home sales recovered by about one third of its Covid related loss between February and April.  Year over year activity was down almost 40%.  There was a jump in sales which together with a surge in new listings shows that there was pent up demand for housing by buyers who want to take advantage of record low interest rates.

Transactions were up from the Covid coma we were all in with sales rising in the Greater Toronto Area by 53% among other Canadian locations.

Current data suggests that housing activity has been steadily rising from the middle of April until at least the first week of June.

The number of new listings increased by a record 69% in May compared to April including gains across the country.  The number of sales to new listings ratio fell to 58.8% compared to 63.3% in April.  This shows some measure of balance in the housing market even though our economy suffered such a major blow.

Many homes that were already listed stayed on the market during the lockdown with reduced  expectations for showings.  They are now coming off the market, many by reason of a sale, leaving the real estate markets depleted of listings.

Prices haven’t fallen by much especially in the GTA and Golden Horseshoe Area around Toronto from a year ago.  In fact, some cities such as Ottawa, Montreal and Moncton prices have been climbing but at a slower pace than before the lockdown.

For further info please see – http://ow.ly/h9Ic30qQYsK

Barrie and District Association of Realtors Inc. said its region showed a strong recovery from April as the number of residential units sold doubled.  In May, prices showed a month over month increase of .6% from April 2020.    The average price of units sold in the City of Barrie during May 2020 was $519,915.  This was 1.8% less than the average price during April 2020.  Last year the price increased by 1.3% for the same period.

For comparison and interest, in Simcoe County there were 2.2% less properties sold over last year during the same time frame from January to May 31st.  The City of Barrie had a growth of 4.4% properties sold.

The average price in Barrie increased by 8.5% to $522,265 from the same time of year in 2019.  Simcoe County saw a price increase of only 5.7%.  Barrie accounted for 48.9% of al properties sold.

The Housing Price Index (HPI) showed a year-over-year increase of 12.0% between May 2020 and May 2019.

Info extracted from “May 2020 Statistics” released by the Barrie and District Real Estate Association.

https://www.bdar.ca/post/may-2020-statistics

8 Jun

CMHC mortgage changes, June 2020

General

Posted by: Anne Martin

 

 

 

 

 

 

 

CMHC (Canada Mortgage and Housing Corporation) has made some changes to their insured lending policies.  If you are buying a home with less than 20% down payment, you are required to purchase mortgage default insurance.  The premium is usually added to the mortgage amount. There are 3 providers in Canada, CMHC, Canada Guaranty and Genworth.  So far, only CMHC has made these changes.  These changes will come into affect July 1st, 2020.

They include –

  1. At least on borrower must have a minimum credit score of 680.  This can be anyone on the mortgage and does not have to be the principal borrower or highest wage earner.
  2. You will not be allowed to borrower your down payment any longer from lines of credit, credit cards etc but you will still be able to receive a gift from a close relative, use your liquid assets or receive a government grant.
  3. The debt servicing ratios (GDS/TDS) are being reduced to 35/42 from 39/44.  This means that instead of having a maximum percentage of your income being used for principal, interest, heating and property taxes being 39%, it will now be 35%.   And instead of using 44% of your income for all those plus all other monthly debts and expenses, it will now be 42%.

These ratios are being used by some banks and lending institutions already but will now be required of all mortgage applications submitted to CMHC.  This may adversely affect some home purchasers but not all considering the average debt servicing ratios in Canada is actually 27/37, well within the new CMHC range.

Canada Guaranty and Genworth have not changed their policies at this time and have said they will not however, we will have to see if that changes.

These changes are not expected to have a large impact on the housing markets across Canada but we will have to follow closely to monitor the situation.

15 May

Canadian Real Estate Sales and New Listings down in April

General

Posted by: Anne Martin

Its not a surprise that real estate figures are down for the month of April and it won’t be surprising if they are down in May as well, even though we are beginning to come out of the coma.

According to the Canadian Real Estate Association, sales in Canada’s largest markets fell by 66.2% in the Greater Toronto Area (GTA), 64.4% in Montreal, 57.9% in Greater Vancouver, 54.8% in the Fraser Valley, 53.1% in Calgary, 46.6% in Edmonton, 42% in Winnipeg, 59.8% in Hamilton-Burlington and 51.5% in Ottawa.

However, the real estate industry is not standing still but is utilizing as much technological innovation as they can creating new ways to accommodate the purchase and sale of homes.  Stats for May are showing that sales have started to pick up in line with the use of technology which will probably be utilized for some time, given we are not out of the woods yet.

Perhaps some good news on the mortgage qualification front.  Last week some of the banks lowered their posted posted rates which have been above 5% since the stress test began in January 2018.  The stress test rate has  fallen a couple of times since it began at 5.34% to 5.04%.  If the banks keep reducing their posted rates, the stress test rate could fall even further.

For further facts and figures and an overview of how Canada has reacted politically and financially to Covid 19 see Dr. Sherry Coopers blog http://ow.ly/F1kO30qGrz1 

15 Apr

Bank of Canada holds its overnight rate. April 15, 2020

General

Posted by: Anne Martin

Given the situation felt around the globe, the Bank of Canada is taking unprecedented actions even though we are seeing record job losses, a collapse in oil prices and shutdown of most businesses.  The world is under extreme financial distress as economies contract around the world.

The Monetary Policy Report said that

“While the global and Canadian economies are expected to rebound once the medical emergency ends, the timing and strength of the recovery will depend heavily on how the pandemic unfolds and what measures are required to contain it. The recovery will also depend on how households and businesses behave in response. None of these can be forecast with any degree of confidence.”

Canada was in a solid economic position before the virus but given the numbers of unemployed people, shuddered businesses and 6 million applications for the Canadian Emergency Benefit program and Covid-19s  varied affects across the country, the recovery might be “protracted and uneven”.

Our government and the Bank of Canada have made substantial efforts ease the economic fallout providing money to those who need it and liquidity to financial institutions.  The Bank of Canada reduced its prime overnight rate 3 times in the previous months but did not feel that resorting to negative interest rates was appropriate at this time.

Dr. Sherry Cooper writes how the Bank of Canada is ready to do whatever it takes to preserve our countries economy and get us back to a positive functioning society as soon as the pandemic is over.   Read further – Bank of Canada Puts The Economy on Life Support http://ow.ly/KXRl30qya7H

6 Apr

What’s happening with interest rates.

General

Posted by: Anne Martin

Its currently April 6th and its been a very difficult few weeks not only because of our primary concern for our health but also concern for the economy and how we will fair once we finally come out of this.  It’s of the utmost importance that we all do our best to comply with the guidelines designed to help us stay safe and healthy.  Our government is doing its best to try to soften the during and after we get back to work and normal life, whatever that will be.

This is definitely a confusing time and the explanation for this can be equally confusing but I’ll give it a try, this is the way I understand it.

We are in the throws of a global pandemic and our government and financial institutions are doing their best to preserve our economy and create a future recovery scenario.  The Bank of Canada has reduced their prime lending rate 3 times in the last few weeks.  This action in the past has caused a reduction in interest rates particularly variable rates.  However, as nothing is normal right now, their rate reduction has caused the opposite effect involving mortgage interest rates.

Although prime rate has gone down affecting variable interest rates and lines of credit, the discounts being applied on new mortgages approvals has gone down.  Variable rates are often prime minus a figure often anywhere between half a percentage to a full percentage.  Now the rates are often prime plus half a percent or more.  Causing the cost of borrowing on a variable rate mortgage to be higher than normal.  This is because the banks and mortgage lenders often borrow the funds that they loan to you and because of the riskier situation that we are all in, the cost of that money has increased.

Fixed rate mortgage rates have gone up because people are pulling their money out of their accounts and cashing investments causing the banks reserves that they loan out in mortgages and lines of credit to begin to dry up.  Luckily, the federal government has given money to CMHC to buy mortgages from banks and other lending institutions which will help to prop up their reserves and hopefully, make funds available to consumers.  This should help to control the bond market which dictates fixed mortgage rates.

The bottom line is that there is lots of fear in the market right now which drives prices up because the banks and other lenders are trying to entice investors and consumers back to keep the economy going therefore, they are increasing the payments that they are making to the public.

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

We don’t know for sure what the future holds but what we do know is that we will come out of this in some fashion, life will go on and we will prosper again.  Please see the attached document produced by DLC which outlines resources that you may use to help you navigate through these tough times.  Covid19_resource brochure

I wish everyone stays healthy and safe and know that if you need any help, I will always be there.

 

 

26 Mar

Important Covid 19 information

General

Posted by: Anne Martin

We are in unprecedented times.  The Covid-19 outbreak is taking a toll on all everyone around the world.  My hope is that all my clients stay healthy and safe.  I can’t emphasize enough how important it is to follow the guidelines of the World Health Organization and Canada’s public health advisories.  Stay indoors as much as possible, isolate yourself, wash your hands frequently, don’t touch your face and SOCIAL DISTANCE.  We will get through this, there is just no other way!

I was going to come to you today via video but DLC (our parent company) has released the following discussion with Dr. Sherry Cooper, our resident economist, who gave an excellent overview of the situation from a health and economic perspective.  Its long but definately worth the watch.  https://vimeo.com/400390895

As I am writing this message, a new initiative has been announced by the Federal government to support laid off workers.  They are combining two earlier announced initiatives, the Emergency Care Benefit and the Emergency Support Benefit into one program, the Canada Emergency Response Benefit.  It will provide $2000 a month for four months for individuals who lost their jobs and are without an income as a result of Covid-19.  It will help those who are full time contract workers, self employed, or even if you are still employed but not receiving an income. The funds will be available through an application process.

Here’s the link to further info on CTV News. https://1l.ink/JMKBB5T

Strategies on dealing with this crisis are evolving at a much faster pace than any government changes have done before.  I will do my best to keep you updated on current mortgage information and policies relating to Covid-19.

Please understand that the lenders have been inundated with phone calls and emails from worried borrowers.  You may contact me if you have any questions or concerns.  Please check your mortgage companies website on how to best communicate with them and how to apply for a deferred payment, if needed.  Keep in mind that there is an application process and dererred payment(s) will be added to your outstanding mortgage balance, so in essence you will will still make the missed payment(s) only later.

Your options may be –

Deferred payments, Capitalization of outstanding interest and costs, re-amortization of the loan, other special payment arrangements         

You can check my website for further Covid-19 information.  www.barriemortgagelocators.com

As always, I am here to help and please don’t hesitate to call if you have any questions.  We will get through this together.

Stay healthy and safe

 

13 Mar

Fiscal stimulus and measures announced including rate cut.

General

Posted by: Anne Martin

In response to the coronavirus and various economic issues world wide, the Bank of Canada held an emergency meeting on Friday March 13, 2020 as part of a fiscal stimulus package in efforts to slow the economic damage caused by the coronavirus and plunging oil prices.

There have been multiple announcements by all governments this week that will hopefully stem the spread of the virus and help workers, businesses, home owners and those who become stricken with the flu.

Dr.  Sherry Cooper explains it best.  Click here for more info

4 Mar

Bank of Canada announcement March 4, 2020

General

Posted by: Anne Martin

Bank of Canada Update

The Bank of Canada (BoC) announced March 4th that it was slashing its key interest rate target by half a percentage point to 1.25%, in an effort to soften the economic impact of the coronavirus outbreak.

The decision comes after the US Federal Reserve implemented a similar cut March 3rd, acting ahead of its next scheduled policy meeting on March 17-18.

While Canada’s economy has been operating close to potential with inflation on target, the virus is a “material negative shock” to the Canadian and global outlooks, and monetary and fiscal authorities are responding, the BoC reports. Further adjustment to monetary policy may be required to support economic growth and keep inflation on target.

The next rate announcement is scheduled for April 15th.


Best fixed rates are as low as *2.59 – 3.69 % for a 5 year fixed,
variable rate mortgages from as low as p-.95%
Prime Rate is 3.95%

*High Ratio/Quick Close Specials
This is a critical time to sit down and review your household financing needs. Please do not hesitate to contact me should you have any questions.

If you are in the market for a home, book an appointment today to see how the recent regulatory changes by the Office of Superintendent of Financial Institutions will affect your purchase.

**rates subject to change with market conditions – *OAC  **conditions apply E. & O. E.


Terms Bank Rates Our Rates
6 Month 3.34% 3.30%
1 YEAR 3.59% 3.04%
2 YEARS 3.74% 2.89%
3 YEARS 3.89% 2.89%
4 YEARS 3.94% 2.94%
5 YEARS 5.34% *2.59 – 3.69 %
7 YEARS 5.80% 3.44%
10 YEARS 6.10% 3.7%
Rates are subject to change without notice. *OAC E&OE

 **Please note that rates shown above are subject to change without notice. The rates shown are  posted rates and the actual rate you receive may be different, depending upon your personal financial situation. “Some conditions may apply. Rates may vary from Province to Province. Rates subject to change without notice. *O.A.C. E.& O.E.”

Check with your Dominion Lending Centres Mortgage Professional for full details and to determine what rate will be available for you.

20 Feb

Finance Minister Announces new qualifying rate for insured mortgages.

General

Posted by: Anne Martin

Minister Morneau Announces New Benchmark Rate for Qualifying For Insured Mortgages

The new qualifying rate will be the mortgage contract rate or a newly created benchmark very close to it plus 200 basis points, in either case. The News Release from the Department of Finance Canada states, “the Government of Canada has introduced measures to help more Canadians achieve their housing needs while also taking measured actions to contain risks in the housing market. A stable and healthy housing market is part of a strong economy, which is vital to building and supporting a strong middle class.”

These changes will come into effect on April 6, 2020. The new benchmark rate will be the weekly median 5-year fixed insured mortgage rate from mortgage insurance applications, plus 2%.This follows a recent review by federal financial agencies, which concluded that the minimum qualifying rate should be more dynamic to reflect the evolution of market conditions better. Overall, the review concluded that the mortgage stress test is 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 Office of the Superintendent of Financial Institutions (OSFI) also announced today that it is considering the same new benchmark rate to determine the minimum qualifying rate for uninsured mortgages.

The existing qualification rule, which was introduced in 2016 for insured mortgages and in 2018 for uninsured mortgages, wasn’t responsive enough to the recent drop in lending interest rates — effectively making the stress test too tight. The earlier rule established the big-six bank posted rate plus 2 percentage points as the qualifying rate. Banks have increasingly held back from adjusting their posted rates when 5-year market yields moved downward. With rates falling sharply in recent weeks, especially since the coronavirus scare, the gap between posted and contract mortgage rates has widened even more than what was already evident in the past two years.

This move, effective April 6, should reduce the qualifying rate by about 30 basis points if contract rates remain at roughly today’s levels. According to a Department of Finance official, “As of February 18, 2020, based on the weekly median 5-year fixed insured mortgage rate from insured mortgage applications received by the Canada Mortgage and Housing Corporation, the new benchmark rate would be roughly 4.89%.”  That’s 30 basis points less than today’s benchmark rate of 5.19%.

The Bank of Canada will calculate this new benchmark weekly, based on actual rates from mortgage insurance applications, as underwritten by Canada’s three default insurers.

OSFI confirmed today that it, too, is considering the new benchmark rate for its minimum stress test rate on uninsured mortgages (mortgages with at least 20% equity).

“The proposed new benchmark for uninsured mortgages is based on rates from mortgage applications submitted by a wide variety of lenders, which makes it more representative of both the broader market and fluctuations in actual contract rates,” OSFI said in its release.

“In addition to introducing a more accurate floor, OSFI’s proposal maintains cohesion between the benchmarks used to qualify both uninsured and insured mortgages.” (Thank goodness, as the last thing the mortgage market needs is more complexity.)

The new rules will certainly add to what was already likely to be a buoyant spring housing market. While it might boost buying power by just 3% (depending on what the new benchmark turns out to be on April 6), the psychological boost will be positive. Homebuyers—particularly first-time buyers—are already worried about affordability, given the double-digit gains of the last 12 months.

Written by Dr. Sherry Cooper  Chief Economist Dominion Lendiong Centres

7 Feb

Strong Canadian Job Growth in January 2020

General

Posted by: Anne Martin

January Starts 2020 With Strong Canadian Job Growth

January follows December in erasing the weak November job numbers providing good news for the Canadian economy. Manufacturing led the way as the jobless rate fell, and wage growth accelerated meaningfully. The robust labour market, coupled with consumer confidence holding firm in January at about historical averages, is a reassuring sign for the resilience of the economy.

Canada’s economy created 34,500 net new jobs in January, all in full-time positions, beating economists’ expectations. The unemployment rate fell slightly to 5.5%, wage growth accelerated to 4.4%, and hours worked rose by 0.5%. This second strong reading of Canada’s job market will reinforce the Bank of Canada’s assessment of the underlying health of the Canadian economy.

Slowing activity in the second half of last year was more a function of temporary disruptions and geopolitical tensions. Some of these factors remain, augmented by the coronavirus, which has disrupted travel and trade and dramatically reduced energy and other commodity prices.

Manufacturing and construction led the job gains, and agriculture picked up as well. Quebec, Manitoba and New Brunswick posted employment gains. Fewer people were employed in Alberta, and the jobless rate spiked in Saskatchewan. The resumed decline in oil and other commodity prices has hit both prairie provinces hard.

British Columbia continued to boast the lowest unemployment rate by province, followed by Manitoba, Quebec and Ontario (See table below).

Bottom LineCanada’s economy has been boosted by the fastest pace of immigration in the Group of Seven countries, spurring a housing boom that is pushing up demand for everything from plumbers to electricians. Indeed, Bloomberg News recently highlighted the more substantial surge in male employment in Canada relative to the US, where women have eclipsed men as the majority of jobholders.

Female job growth in Canada is also strong, and labour force participation rates are higher in Canada than in the US. The jobless rate for women age 25 and older is only 4.6% in Canada, compared to 4.9% for men.

According to Bloomberg News:

  • Jared Menkes, executive vice president at Toronto-based Menkes Developments Ltd., said finding enough labour is a constant source of angst. Central Toronto posted the fastest-growing population in North America last year with a dozen office buildings and countless condos under construction, along with 25 light rail stations, hospitals and all sorts of infrastructure work (see chart below). “We are short actual labour, whether it’s a crane operator, whether it’s drywallers, electricians, plumbers, drivers,” Menkes said. “We’re short truck drivers, architects, consultants.”

Roughly half of all immigrants to Canada located in Ontario, but as the second chart below shows, Quebec and British Columbia garnered their fair share of new residents as well. The Bank of Canada highlights this factor in suggesting that the economy will continue to grow in 2020 and 2021. Certainly, it is a strong positive for the housing markets in these provinces. 

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drcooper@dominionlending.ca