Welcome to the new normal.
First, I want to acknowledge the strong leadership that we are seeing across all party lines. I want to say thanks to the thousands of Canadians who are working their butts off keeping us healthy and safe, at their own risk. The health-care staff, the operational staff, the store clerks, everybody. Thank you.
10:23am 2:30PM. I am going to regularly update this post to give you as much information as possible as to what is going on. It has been a week and we have no idea which direction anything is headed in, so these updates will be real-time and may change in nature moving forward. Forgive me.
Last night news emerged that the big banks are working on a six month mortgage deferral programand I have received many calls and emails about this. Will others follow suit? What about credit unions? I will post a separate thread where you will find the contact emails and phone numbers to all the lenders that I can provide info on, and we will contact them as best we can to figure out who is doing what. This is a new proposal so we will know very soon how they will implement it. I hope there won’t be much red tape involved, and it’ll be a simple process. Details to follow.
Interest rates are moving wildly. Like nothing I’ve seen before. Contrary to what you see in the news – interest rates are moving UP. This is due to the wild fluctuations in the bond market which can be found here. Fixed rates are expected to continue increasing for two reasons. 1. Bond yields. 2. Lenders are seeing a run on lines of credit and business / personal borrowing. It may create a liquidity issue. Therefore lenders need to raise rates to offset this risk.
Variable rate discounts are going away. Pretty soon we’ll have Prime or Prime+. If you have a variable-rate mortgage, hang onto it. If you want one, get in there asap with a pre-approval. Be realistic with your pre-approval. Are you going to be buying in the next 90-120 days?
Lawyers. You will need to meet your lawyer. We are still unclear which lenders are allowing for remote signing. Everything is up in the air. Some law firms are advising clients they can meet you remotely. Ensure that when talking to your lawyer that they are 100% on board with that lender. I believe moving forward this will become the regular standard. (sidenote: Blockchain can’t come soon enough!)
Appraisals are starting to be an issue. Slowly. Not values. Rather, visits. Appraisers are starting to completely shut down visiting properties. Each company has their own policy on this. Give your appraiser time to get the valuation done. Get your lender/broker to order your appraisal asap and don’t delay it.
Right now is not the best time to be shopping around from lender to lender. Look – I want the best deal for you. I also want to advise you which lender will and which won’t have issues on closing. Let’s pick a lender that will give you the best possible outcome AND the best possible deal.
If you are concerned about your income being in flux moving forward and you purchased a home but have not closed it yet – my advice: complete that file ASAP with your lender. Get all income docs in PRONTO. There are many ways to pull T4s and tax returns. If you need my help doing this even if you aren’t my client I would be more than glad to help you (with your consent).
That is all the update(s) I have for you right now. Please know that I am absolutely available to talk you through this. The best way is via email, text, or a call. 416-910-4448
Be safe. More updates coming.
The Appraisal Institute of Canada released a note today to heavily encourage appraisers to ONLY do site vistis, and no in-house appraisals. Pushing lenders to also acccept these kinds of appraisals. This can have huge impacts on you in the following ways:
- If you renovated your house to the nines, and want to extract as much equity as you can, that appraiser will not be able to see your beautiful kitchen. Take photos, save invoices, and do a video walk-through if you want any hope of seeing that value. (PS now is not the time to do this but it may be your last time before/if prices fall).
- If you bought over asking and set a price record, get your appraisal asap. Otherwise, it’ll take longer and you may have less choice soon.
- If you bought with a quick-close, get your appraisal asap. See above. Longer, less choice.
- Be prepared financially for any appraisal short-falls. I.E. if you bought with 20% down and you only have 20% down and the appraisal is short, be ready.
- Your lender may not accept a desktop or drive-by appraisals. Be ready to move lenders. Rate doesn’t matter right now. Closing does. Of course, ask your lawyer, if this ends up screwing you somehow.