To say the last couple of weeks have been chaotic, would be an understatement. It’s an unsettling time for most people and we are all trying to navigate through with the best of our knowledge and ability. In the mortgage world we have also had some big changes. I would imagine most have heard that the Bank of Canada has lowered it’s overnight rate twice now, few have heard that the new Stress Test rules are currently on hold, lots are worrying if they will be able to cover their mortgage payment if they have to take a step back from work to self quarantine and 100% of everybody has heard about the toilet paper shortage – this last point I think we are all still trying to wrap our ahead around. When it’s comes to your mortgage, we are here to help you. I can’t stress this enough! We are never too busy. Here is a short breakdown on some of the biggest changes:
Bank of Canada
The Bank of Canada has now dropped its overnight rate twice. Once during a scheduled meeting and once during an unscheduled meeting. What does this mean for you? For rates? To start off with, let’s talk about variable rates. When the Bank of Canada lowers the overnight rate it doesn’t necessarily have an affect on variable rates, until the mortgage lenders start to honour the decrease as well, and change their prime. It’s once lenders decrease their prime that you will notice the change in your payment. Most mortgage lenders will send you a letter letting you know what your next payment will be and when it will take into affect. There has been times where the Bank of Canada has lowered their overnight rate and the mortgage lenders have not followed in pursuit, which in turn means there is no benefit for the borrower. With the last change in the overnight rate we are now seeing some mortgage lenders honour that discount. With regards to fixed rates, this has to do with bond yields. Last week we noticed fixed rates take a huge dive bringing out some of the lowest rates I have seen in my eight years as broker. However we have started to see some of these rates start to rise again.
The stress test changes recently announced for both insured and uninsured mortgages will no longer go into effect April 6th as announced by both The Office of the Superintendent of Financial Institutions and the Finance Department. The market is rapidly changing. Stay tuned for updates.
Mortgage lenders have options to help Canadians being affected by the COVID-19. Most have deferrals and skip a payment option. To help we have included a picture of all our major lender customer service numbers. If you plan to call to ask for help, please contact us first and we can provide you your mortgage number. Please do be patient when calling as the wait times might be long.
If you mortgage was insured another option might be to go through your insurer. CMHC, Genworth, and Canada Guaranty are looking to help homeowners financially impacted by the COVID-19 outbreak, which would allow payment deferral of up to 6 months on insured mortgages.
Other tools available include:
• Deferral of payment
• Re-amortization of the loan • Capitalization of outstanding interest arrears and other eligible expenses • Special payment arrangements
We are here to help you during these trying times. Stay healthy and be safe ❤️