At the end of last week CMHC announced they would lower their debt ratios limits on insured mortgages reducing an applicant’s borrowing power, so not what we would want going forward.

Debt Ratios Explained: 

When qualifying for a mortgage there are two debt ratios that a lender and insurer use to see how much an applicant can borrow.

GDS: which on insured mortgages is currently 39% of gross income includes the monthly mortgage payment, property taxes, heat, and condo fees (if any) and cannot be more then 39% of an applicant’s gross income.

TDS: is the same as GDS but will include other monthly debt payments such as car loans, credit cards etc.  This currently cannot be more then 44% of applicant’s gross income.  Once an applicant reaches either of these debt ratios, they have reached there maximum borrowing power.

The impact of CMHC lowering there debt ratios to GDS 35% and TDS 42% is roughly $30,000.00 in mortgage.  So, someone able to borrow $500,000.00 is now reduced to $470,000.00 using CMHC guidelines.

It is not all doom and gloom.  Right now, there are three insurers in Canada, CMHC, Genworth and Canada Guaranty.  The other two insurers have not to date made any changes.  Not all mortgage lenders use CMHC and some use two or all three insurers so that is why working with a mortgage broker makes sense to make sure your mortgage is submitted to the right lender and insurer allowing the maximum borrowing permitted.

This change is for CMHC Insured mortgages only so does not include refinances where one takes out new money,  20% or down payment on conventional mortgages or any mortgage outside of insurers guidelines.

Please do not hesitate to reach out with any questions.

We have seen some small up and down movement on fixed rates over the past couple of weeks.  This has been a result of the fluctuations in both the stock and bond markets and will continue like that until we get into more stable markets.  Fixed rates however still remain low and should continue to remain so for the foreseeable future.

The Variable Rate (The Bank of Canada Rate) has not changed since The Bank of Canada’s 1.50% rate reduction in March. There is still room for a possible further reduction which we could see later in the year.  Variable rates are at there lowest in 5 years.

The Real Estate Market is picking up with stronger purchases/sales in May.  We are not close to last years numbers but there is certainly a lot more activity which should continue as things open more and we get back to a normal world again.

Mortgage Product of the week:  Mortgage Switch is when you take your existing mortgage and move over to a new mortgage lender and product without adding on new money, so there is no lawyer or appraisal fee involved.  With rates as low as they are now there is tremendous opportunities to switch your mortgage.  If your mortgage is coming up for renewal, please do not just auto renew without exploring new opportunities and even If you are not up for renewal a switch mortgage could still work for you so let m know if interested.

Please do not hesitate to call or email me with any questions!

Happy Easter and Happy Long Weekend,

• It was a more stable week in the mortgage world this week, the stock Market is another story, with not too much news or activity. Most people seem to be settling into now to the new reality and waiting to see what happens next.
• Mortgage rates have settled down and we do not expect to see too much movement in nay direction for the next few months. Remember lenders have now reduced their prime rate on the variable products so the variable product is attractive again.
• It is business as usual, but we seen a slow down in applications which is expected given the circumstances.
• We are seen some lenders tighten up there lending guideline on some products but nothing too drastic yet. With the Government interventions, who are now helping to insure refinance mortgages too I do not believe lending guidelines will change that much.
• Lender will be more diligent on verification of income and will most likely wait until closer to closing to do so.
•
Government Program Updates
• For those of you applying for assistance through the Government personal and business programs remember you can apply directly through your CRA online personal and business accounts. For the small business loans up to 40k you apply through your bank.

Have a great weekend.

Take care
Robert Clancy

Self Employed Mortgages
It is business as usual in the mortgage world although lenders are monitoring the current situation and implementing changes as they move along. For self employed borrowers the lenders will look at the industry of the borrower to get an understanding of how that industry maybe effected by the current economic situation. Remember when qualifying for a self-employed mortgage your last two years tax returns are used to qualify or if they are not strong enough then your last six months bank statements so a lender cannot call an employer for employment status. So, their approval judgement will be based on the income documents along with how the borrower’s industry is currently been affected.
Please reach out with any questions.

Thanks
Robert Clancy
Residential and Commercial Mortgage Agent
————————————————-
SAFEBRIDGE Financial Group
Broker License #10524
Direct Line | 416-899-1467
Fax | 1866 385-4049
Facebook: https://www.facebook.com/bestratesmortgages/
E-mail | robert@safebridgefinancial.com
Website|www.bestratesmortgages.ca

This week the banks came out with a statement saying they will allow up to six deferred mortgage payments. Remember this is case by case and is up to six deferred payments not a guarantee six payments. Reading into this I would also believe that you will need a good reason to defer the payments such as a loss of employment or slow down in business for self employed borrowers. A lot of the non-bank mortgage lenders have so far said they will allow one time skip a payment. The best option is to call your lender directly for more information.
Mortgage rates have been increasing this week with the variable mortgage discount been wiped out completely. This seems very strange in a market heading into a recession. Although the Bank of Canada reduced its prime rate by 1.00% all the banks and nonbank mortgage lenders have now cut back on their discounts with some lenders adding to the rate. The reason for this I am told is a risk of liquidly in the market. For existing mortgage holders your rate Is not affected.

Don’t hesitate to reach out with any questions.

Have a great weekend

Robert Clancy
Residential and Commercial Mortgage Agent
————————————————-
SAFEBRIDGE Financial Group
Broker License #10524
Direct Line | 416-899-1467
Fax | 1866 385-4049
Facebook: https://www.facebook.com/bestratesmortgages/
E-mail | robert@safebridgefinancial.com
Website|www.bestratesmortgages.ca

Hi,
We have seen some turbulent times in the Mortgage and Stock Market over the past week or so. From crashing stock markets to declining interest rates, its been interesting to say the least. From my perspective the stock market correction was coming for along time. If you look at the stock market performance (especially since Trump came into power) its been practically an elevator run up to $30,000.00 points which we hit it a few weeks ago. Back in 2009 when we had the last big correction the Dow Jones Index was at roughly 14,000.00, then went down to 8,000.00 and in pretty much 11 years climbed to 30,000.00 so a correction was always going to happen sooner or later. It always takes some world event thing to trigger a correction and the coronavirus was the spark.
As a result, Mortgage rates have also fallen making borrowing money cheaper. The Bank of Canada finally cut rates by .50bps last week. This was long overdue and lagged G7 countries who have been reducing rates for the past 12 months. This rate drop now makes a variable mortgage more attractive again given its flexibility and with just 3-month interest penalty to break. Forecast are that The Bank of Canada may reduce the Prime/Variable Rate again in June so we will have to wait and see.
The coronavirus along with the drop in oil pries lead to a heavy sell off in the equity markets which has driven fixed rates lower. Remember fixed rates can fluctuate a lot more then the variable rate because they are corelated to the bond market so if people jump out of stocks and into bonds (seen as a safer investment) which we are seen right now, this will bring mortgage rates down, however the opposite is also true so when people jump back into equites and sell the bonds (which will happen eventually) fixed mortgage rates will go up again. So, no one knows for sure how long these lower fixed rates will be around, a lot depends on the containment of the virus and if things get better or worse. The lower prime/variable rate will stay around as The Bank of Canada take much longer to make these decisions on rate cuts or increases and will wait to see the impact of the rate cuts on the economy as a whole which can take a year or longer to have its full effect.
So, if you are in a variable mortgage you will see your mortgage payment come down which is good news. If you plan on purchasing a property or making any other changes to your mortgage a variable mortgage is now a good option along side the lower fixed options. For borrowers coming up for renewal, looking to consolidate debts, pull out some equity to renovate there home, for down payment on another property or just to get a lower rate to save on cash flow now is a great time to look at these options.

Please don’t hesitate to reach out with any questions.
Thanks
Robert Clancy
Residential and Commercial Mortgage Agent
————————————————-
SAFEBRIDGE Financial Group
Broker License #10524
Direct Line | 416-899-1467
Fax | 1866 385-4049
Facebook: https://www.facebook.com/bestratesmortgages/
E-mail | robert@safebridgefinancial.com
Website|www.bestratesmortgages.ca

The Government approved a reduction in the mortgage stress test qualifying rate for High Ratio mortgages beginning April 6th. This is for High Ratio Mortgages where the borrower is putting down less then 20% and needs mortgage insurance. We do expect the conventional mortgage (non-insured mortgages with 20% or more down payment) stress test which is currently at 5.19% also to follow suit but nothing is official yet.

What this means to the borrower: Currently when qualifying for a mortgage the qualifying rate used is The Bank’s Posted Rate of 5.19%. The Government Department of Finance will use their own weekly Median rate + 2.00%, so today would be around 4.89%, to be implemented on April 6th. The rate will be set each week. So today 4.89% qualifying rate vs the current qualifying rate of 5.19% would add roughly another $15,000.00 to a mortgage so nothing to get overly excited about but could help on a tight approval.

Let me know if you have any questions

Have a great day

Robert Clancy
Residential and Commercial Mortgage Agent
————————————————-
SAFEBRIDGE Financial Group
Broker License #10524
Direct Line | 416-899-1467
Fax | 1866 385-4049
Facebook: https://www.facebook.com/bestratesmortgages/
E-mail | robert@safebridgefinancial.com
Website|www.bestratesmortgages.ca

After the sell off in the stock market over the past few weeks, although they have bounced back again, and the movement of investors into bonds we did see a reduction of .05bps in the fixed rates. Not the whopping reduction the media would make you believe. We may see further discounting over the next few weeks especially with the Spring market around the corner.

Hi, I just want to say Welcome to 2020 and wishing you the best of health and prosperity.

2019 was a roller coaster year within the mortgage markets. Most of us are finally coming to terms with the constant Government regulation and the impact and sleepless nights it has caused. We are hoping for a more stable 2020 and based on feed back so far the consumer seems to be finally adjusting to the new lending land scape.

In 2019 the 5 year fixed mortgage rate fluctuated between 2.69% to 3.24% with the prime/variable rate remaining steady. (Remember always do your home work when taken a fixed rate option). The mortgage rate and terms do change depending on the mortgage lender type (A or B lending) (High Ratio or Conventional), property type and location. Current High Ratio is at 2.94% with conventional at 3.19%. On line quotes do not disclose the full picture.

We do finally expect the Bank of Canada to reduce the prime/variable rate in 2020 which is good news for borrowers holding variable rate mortgages. Canada is the only Country out of the big G7 who has not reduced its prime rate. 2020 will be the year as a slowdown in the world economies will be a factor. The Bank of Canada has been cautious in lowering its prime rate based on our real estate valuations. Lower rates may put pressure on these prices again especially if supply remains a issue.

We are expecting some new innovated mortgage products to hit the market this year and hopefully a kinder lending approach to self employed and commission borrowers. I will keep you updated as these products are launched. January tends to be a “get your house in shape month” so not much happening right now but Spring will be here soon so expect some noise shortly.

A strong emphasis for me this year is to help my clients build there real estate portfolios by tapping into their existing equity in other properties. Toronto is going to continue to grow aggressively. There will be some knocks and slow downs along the way but we have a long way to go.

I just returned from Ireland where I spent the Christmas holidays with my family. I had a great time and always find connecting with my roots grounding to my spirit and soul but not too kind to my liver. So here is a quote from my Mom who is in my thoughts, “just look forward and do your best, as long as you have your health, stick to your principles and values and be kind the rest will fall into place”.

Here’s to a fabulous 2020 and looking forward to connecting with you soon.

Hi,

With the coronavirus causing a lot of economic panic right now, investors are jumping back into bonds. These are seen as a safe haven when there is a potential crisis happening around the world, whether it be political, social or economical.

From a fixed rate perspective investor jumping into bonds lowers yields which as a result lowers fixed interest rate. So, we may see some aggressive fixed rate mortgage pricing on the way.  As with anything this can blow over very quickly so the window of opportunity could be open for a week or two at most.

I will keep you posted but if you a have a need to renew, refinance or take out a mortgage for any reason this could be a time to take advantage of a sudden rate drop and lock in your rates. Remember, sudden rate drop opportunities are only for live applications AND not pre-approvals.

Robert