The Bank of Canada (BoC) announced at the end of April 2018, that after a weak economic performance in the first quarter of 2018, it is predicting a rebound for the economy in the coming months.
“GDP growth in the first quarter was weaker than the Bank had expected but should rebound in the second quarter, resulting in 2 percent average growth in the first half of 2018,” reads the BoC announcement.
The weak first quarter performance — which saw GDP growth fall sharply from 2.5 to 1.3 percent — has been widely attributed to a flagging housing market, as home sales dropped after the introduction of a new mortgage stress test on January 1.
“Slower economic growth in the first quarter primarily reflects weakness in two areas,” reads the Bank’s announcement. “Housing markets responded to new mortgage guidelines and other policy measures by pulling forward transactions in late 2017…Some of the weakness in housing…is expected to be unwound as 2018 progresses.”
According to BMO economist Benjamin Reitzes, the central bank’s more optimistic outlook for the second quarter reflects a belief that the housing market has adjusted to the new mortgage stress test, and will soon begin to recover.
“While Q1 GDP growth was cut sharply to 1.3 per cent…Q2 was introduced at a very solid 2.5 percent, suggesting that the BoC is looking for some stability in housing over the coming months, at a minimum,” he writes in a recent note.
Reitzes also agrees that a warmer housing market is likely this spring. “We’re looking for a similar rebound in Q2, so can’t argue with that,” he writes.”
It’s a sentiment echoed by Scotiabank economist Marc Desormeaux, who believes that the housing market is on its way to bottoming out, and will see a surge in activity later in the year.
“March’s uptick in home purchases [of 1.3 per cent] implies some bottoming out of sales activity, he writes, in a recent note. “Following the first quarter contraction, we anticipate a modest but broad-based recovery in sales activity [in the second quarter.]”
Deal with the Saskatoon Mortgage broker experts you can trust at Your Mortgage Now and be sure that you have looked at all of the options, and that you have the best mortgage products and the best mortgage rates to suit your needs.
Devin Cristo and Wes Will are Trusted Saskatoon Licensed Mortgage Associates with Your Mortgage Link, Brokerage License #315794. Your Mortgage Link is a Saskatchewan based brokerage operation, with offices in Saskatoon and Regina, competing in the wholesale mortgage market Canada wide. Our goal is to offer clients a broad range of mortgage products, and create competition between many of Canada’s top lenders.
Mortgage Payment Difficulties
When unforeseen financial circumstances impact your ability to make regular mortgage payments, or disaster strikes, it’s important for you to take quick action. With early intervention, cooperation, and a well executed plan, you can work together with your mortgage professional to find a solution to your financial difficulties.
What Can We Do to Help?
If you find yourself facing financial difficulties, as a result of job loss, family income reduction, or for other reasons, it can be an overwhelming experience leaving you feeling uncomfortable and unsure of what to do. By following these three simple steps, you can make a big difference in resolving your financial difficulties.
1. Talk to your mortgage professional
To increase the chance of successfully managing your financial situation through early intervention, call your mortgage professional at the first sign of financial difficulty;
Ask the mortgage professional about information on the options available for managing your financial situation; and
Keep the mortgage professional informed as circumstances evolve.
2. Clarify the financial picture
In order to help your mortgage professional fully understand your financial situation, before meeting with them, prepare a detailed list of financial obligations including any credit cards, loans, household bills with the amounts owing and their due dates. Be sure to include information about your current income, savings accounts, investments, and any other assets.
3. Stay informed
The more information you have at your disposal on managing your finances, the easier it will be to make the right decisions.
Take Charge of Your Debts is an online tool from the Government of Canada that is designed to help borrowers like you understand debt problems, and includes information on making a budget, budget counselling, collection agencies, credit, and credit repair. To view this tool, log on to www.ic.gc.ca(Industry Canada) and search for “Take Charge of Your Debts”.
How Can Your Mortgage Now and CMHC Help?
Your mortgage professional wants to establish and maintain a positive relationship with you over the long term, and is fully trained and equipped with the tools to help you deal with the temporary financial setbacks that you may be facing.
For mortgages insured by Canada Mortgage and Housing Corporation (CMHC), CMHC provides mortgage professionals with tools and the flexibility to make timely decisions when working with you to find a solution to your unique financial situation. These tools include:
Converting a variable interest rate mortgage to a fixed interest rate mortgage in order to protect you from a sudden interest rate increase, should one occur.
Offering a temporary short-term payment deferral. Your mortgage professional may be prepared to offer greater payment flexibilities, particularly if previous lump sum prepayments have been made, or if you have previously chosen an accelerated payment schedule.
Extending the original repayment period (amortization) in order to lower your monthly mortgage payments.
Adding any missed payments (arrears) to the mortgage balance and spreading them over the remaining mortgage repayment period.
Offering a special payment arrangement unique to your particular financial situation.
CMHC is also willing to consider other alternatives proposed by the mortgage professional to resolve or avoid mortgage payment default. In every case, the options available will depend upon your individual financial circumstances.
CMHC Tools to Support Canadians Affected by Fires in Fort McMurray and Area
CMHC joins Canadians in expressing our concern for the people of Fort McMurray and the surrounding area that are dealing with devastating forest fires.
As residents continue to deal with the effects, CMHC wishes to remind mortgage professionals that we can help you assist homeowners that may be affected by these unfortunate events. and their impending Mortgage Payment Difficulties.
For borrowers with CMHC-insured mortgage loans that are affected by the fires and who may require special arrangements to meet their mortgage payment obligations, CMHC offers Approved Lenders a series of default management tools including:
o Deferral of payment o Re-amortization of the loan, to result in lower payments o Capitalization of outstanding interest arrears and other eligible expenses o Special payment arrangements o A combination of the above
Approved Lenders have the flexibility to make these special arrangements quickly and without CMHC approval provided that they retain a documented analysis of the borrower’s financial situation on file. Approved Lenders can refer to the CMHC Homeowner Default Management Guide for complete details on CMHC’s default management program. Please find attached a flyer providing a summary of these arrangements.
Approved Lenders are reminded that properties must be adequately protected by standard insured perils and that any damage exceeding $5,000 should be reported to the CMHC Claim Payment Centre.
CMHC recognizes that homeowners affected by the fires may experience some financial hardship due to income shortages resulting from temporary evacuations or due to the need to rebuild or repair their homes. CMHC encourages homeowners with CMHC-insured mortgages to contact their financial institution at the first signs of financial difficulty to discuss their specific situation.
To help you share information with any of your clients that may be affected, please also find attached CMHC’s “Dealing with Mortgage Payment Difficulties” factsheet.
CMHC’s Default Management Tool Selector can also help lenders to determine what CMHC default management tools are most appropriate given the borrower’s circumstances. CMHC also offers comprehensive training to Approved Lenders covering CMHC’s default management tools and more. If you are interested in obtaining training, please contact your CMHC Account Manager, Client Relations.
CMHC’s Default Management and Claim Specialists are also available to assist you at any time, including before a default occurs and during early stages of payment delinquency. The Specialists have the expertise to help you manage unusual or complex default situations. Contact the Claim Payment Centre, Monday to Friday at 1-866-358-9999or by email at email@example.com, to speak with a Specialist. You can work with confidence, knowing that you are supported by an experienced and informed mortgage loan insurance provider in the Canadian housing market.
Do not hesitate to contact me if you have any questions or require assistance.
CMHC is Canada’s national housing agency. For over 65 years CMHC has shared a wealth of knowledge and housing expertise to help create an informed and reassured homeownership experience for Canadians.
Devin Cristo and Wes Will are Trusted Saskatoon Licensed Mortgage Associates with Your Mortgage Link, Brokerage License #315794. Your Mortgage Link is a Saskatchewan based brokerage operation, with offices in Saskatoon and Regina, competing in the wholesale mortgage market Canada wide. Our goal is to offer clients a broad range of mortgage products, and create competition between many of Canada’s top lenders. More than anything we want to make your mortgage experience as stress free and easy as possible. We are never happier than when are clients share that we achieved that … as in the testimonial below.
Your Mortgage Now Testimonial from Sarah
“Going through a divorce is a stressful, emotionally stunning time. Thinking about all the ins and outs of daily life not to mention the big picture items such as mortgage, bills, children’s care and expenses that accumulate with legal fees is overwhelming and pressure-filled. It is not insurmountable however when you have the right people in your corner, working with you, being patient with you, and providing you as much guidance as they can as you navigate through the waters. Devin and his team have gone above and beyond for someone like me. I felt respected and listened to at all times, and my concerns were real. I never felt rushed and I was encouraged to ask questions when I needed more explanation. I felt cared about and for. When the time came for some excitement and I wanted to remain optimistically reserved I was granted the time to smile as they also felt excited for me. Devin is a kind, patient, and heartfelt businessman. I am grateful for the support through what I know to be one the hardest things to go through in this lifetime. I have a new mortgage and my smiles exist and I feel safe and secure for myself and my children. Hard work is ahead of me but with this kind of professional care I know I am not alone and that has made the world of difference. For all people going through divorce I recommend this team from the bottom of my heart. ”
The Crown Corporation, which monitors the housing market in the country, is coming around to the view that there may be some overvaluation and overbuilding in some Canadian cities.
Canada Mortgage and Housing Corp. said Wednesday that overvaluation can be “detected” in nine of the 15 cities it monitors with overbuilding recorded in seven.
“While we see weak evidence of problematic conditions for Canada, we do detect moderate evidence of overvaluation. This means that house prices are higher than levels that can be supported by fundamental factors such as income growth and population growth,” said Bob Dugan, chief economist with CMHC.
CMHC’s valuation is part of its quarterly Housing Market Assessment, something the Crown Corporation calls an early warning system, alerting Canadians to areas of concern developing in our housing markets so that they may take action in a way that promotes market stability.
Since its last assessment, CMHC added Vancouver, Hamilton, and Saskatoon to cities where housing prices may be overvalued. The averaged detached home in metro Vancouver is almost $1.8 million today and prices are rising about 23 per cent year over year in Canada’s most expensive city for home ownership.
The Crown Corporation says there “strong evidence of problematic conditions” in the overall market for Toronto, Calgary, Saskatoon and Regina. Toronto’s issues are price acceleration and overvaluation. In Calgary, Saskatoon and Regina, the issue is a combination of overvaluation and overbuilding.
CMHC defines problematic conditions as imbalances in the housing market that occur when overbuilding, overvaluation, overheating and price acceleration, or combinations of those issues exceed historical norms.
It can be very beneficial to buy a home you can afford sooner rather than later. A home allows you to build equity and with every mortgage payment you make each month, you are building equity in a place of your own – unlike a rent payment.
Equity is the difference between the value of a home and your outstanding mortgage balance. The longer you stay in your home (and the more mortgage payments you make), the more equity you’ll have. Unlike most things you buy, a home will almost certainly increase in value over time – which builds even more equity.
Once you’re a homeowner, the payoff can be great. As the equity in your home grows, your financial flexibility also increases. Think of it as an extra source of financing for when the unexpected happens. An added benefit of borrowing money against the equity in your home, is it usually comes with a lower interest rate than other forms of credit, such as consumer loans, lines of credit and credit cards.
Here are some ways you can use the equity in your home:
Pay off other debts with higher interest rates (like credit card debt)
Renovate or repair your home – build a new room or put in a swimming pool
For important life events – a wedding, dream vacation or university tuition
Purchase a second home or vacation property
Emergencies – like a serious illness
Investing in a home can have a significant payoff over time. And the sooner you begin, the sooner you’ll start building equity.