These are uncertain times in the world right now with the COVID-19 Virus changing how we live our day to day lives. The impact is apparent within our communities and the response that people are having – the government is imposing new rules and regulations almost daily. This includes the mortgage industry.
We thought it would be beneficial to round-up the changes into one blog for our readers to understand what is truly going on. We also want to take this opportunity to reassure you that we are always focusing on ways to keep our clients educated and are closely watching rates and trends to help give our clients the sharpest rates and best mortgage products. We strive to always be on the cutting edge of information and work to keep the lines of communication open always.
Mortgage rates are a bit more of a complicated issue these days. With the COVID-19 virus, the Bank of Canada has taken steps to help with the economic impact. Initially, it started with a rate drop of 50 points (0.5% decrease) on March 4, 2020. This brought the Bank of Canada Key interest rate down to 1.25% which in turn caused the banks to lower their prime rates to 3.45%
With the spread of COVID-19 and economic uncertainty rising quickly, the Bank of Canada issued a secondary 50 point rate cut on Friday March 13. This brought the key interest rate down to 0.75% and banks seem to be following suite and are lowering their prime rate to 2.95%
What does this mean for you? Here are the nuts and bolts:
- The Bank of Canada rate impacts VARIABLE rate mortgage only—not fixed rates.
- When the bank of Canada lowers their key interest rate, lenders will also typically lower their prime rate.
- This does not necessarily mean that lenders will drop them a full 1% –it’s rare for lenders to slash rates to match, but there are typically savings passed on to the client.
- If you have a variable rate mortgage, your rate and your monthly payment will decrease.
- On average, it will equal about $27 for every $100,000 of mortgage money that you have for a 25 BPS reduction. To elaborate and give a further example, a 1% reduction, 100 BPS drop, would be $108 savings for every $100,000 mortgage money.
- If you have a fixed rate, right now the above does not impact you, however due to the world events as well there have been significant downward movement in fixed rates over the past month.
- The prime rate currently sits a 2.95%, a drop from the 3.45% we saw previously. It would appear that lenders are opting to pass on the full 50 BPS reduction to clients. Major banks have followed and their prime rate currently sits at 2.95%
There have been many questions by Canadians regarding how they can continue to pay their rent and their mortgages with businesses closing daily and employees being laid off temporarily during the COVID-19 outbreak. The Canadian Mortgage and Housing Corporation has continued to release statements and try to provide context as to what they will do in the upcoming weeks to support Canadians. This can and may change as time goes on, but their latest announcement was made on March 16 stating:
“As a further proactive and coordinated measure to bolster the financial system and the Canadian economy, the government is launching a revised Insured Mortgage Purchase Program (IMPP). Under this program, the government will purchase up to $50 billion of insured mortgage pools through CMHC. This action will provide stable funding to banks and mortgage lenders in order to ensure continued lending to Canadian consumers and businesses. Details of the terms of the purchase operations will be provided to lenders later this week.”
You can read the full press release HERE.
We are still investigating what this will mean for our clients and are waiting to hear from lenders in order to update our clients on what will happen next.
From an economic standpoint, the government has taken further measures to help business owners and families during these unprecedented times. The full press release can be read HERE.
The policies are changing quickly and daily regarding Canadian Mortgages. We would advise that you call us directly at 604-259-1486 to get the latest information.
WHAT GLM MORTGAGE GROUP IS DOING
First, our client’s safety and health come first. As most of our client interactions are via email and phone, we will continue to operate in this manner. We will also continue to work from our home offices and connect with clients daily to supply you with any new or upcoming information that applies directly to you.
We want our clients to know—we are here for you. These are times of uncertainty and a lot of unanswered questions. We want to provide you with every bit of information possible and make sure you fully understand what is happening from a mortgage perspective.
We are here to answer any questions you may have and please don’t think twice about reaching out to us. We want to help, and we want to be there to support you and your family.
WHAT IF I CAN’T MAKE MY MORTGAGE PAYMENT?
We know that in addition to the mortgage market being every changing, so are people’s workplace and employment. With the shut-down of many business and companies or individuals having to self-quarantine for extended periods, many families are left wondering where that leaves them financially.
From a mortgage stand-point, there are options available. If you find yourself in the position that you are to be self-isolated or quarantined and need help with your mortgage payments please reach out directly to your lender. Most lenders have options available to skip a payment or put a hold on a payment. It is imperative that you reach out to the lender and request this though. Each lender has different options and with how quickly COVID-19 is developing many lenders are updating their policies as well.
To help make it easier for you we have a list of our most common lenders below with a phone number to their customer service to get further details on their skip or hold a payment options.
- SCOTIA 1-800-472-6842
- TD 1-888-720-0075
- MANULIFE 1-800-567-9170
- RMG 1-866-809-5800
- MCAP 1-866-809-5800
- STREET CAPITAL (RFA) 1-877-416-7873
- FIRST NATIONAL 1-888-488-0794
- ENVISION FINANCIAL 1-888-597-6083
- PROSPERA 1-920-882-4800
If you don’t see your lender listed below please reach out to us. We will help you and guide you in the right direction.