Vaughan Zawadzki Ontario Mortgage Agent
9 Sampson Mews M3C 0H5 Toronto, ON, Canada

Admittedly I have no crystal ball. However; I believe in my professional life as well as my personal life that we should try to prepare ourselves for tomorrow’s challenges and have a plan on how we will face them. One potential challenge is a possible dip in the down town Toronto condo market. As you might be preparing potential buyers for an entrance strategy I try to prepare my mortgage clients for seamless financing. Lower prices would mean more activity and more trans...actions (great!) So where are the pitfalls? Largely, appraisal values. If values dip, so will the appraised value. A few years ago the GTA market took a pause on the monumental gains we were experiencing and low appraisal values caused some major financial woes for buyers. Here are a couple of tips to get ahead of this potential problem. A Financing condition! This is Real Estate/Mortgage 101 but should always be taken advantage of. This is the sure fire way to protect your buyer’s down payment. You still need to move quickly on the financing but this is guaranteed safety. I understand that winning the bidding war sometimes requires a firm offer but we may see financing conditions return in the short term. If the purchaser has less than 20% down, find a lender that will allow you to choose the mortgage insurer. If it’s an insured deal, the insurer conducts/orders the appraisal. My advice right now would be to steer clear of CMHC. CMHC has a very conservative forecast, to the point of doom and gloom, for the Canadian housing market. They even changed their qualifying criteria! While I have not heard stories about low appraisals, when dealing with a first time home buyer I would not be rolling the dice with CMHC. Ask your lender to insure with Canada Guaranty or Genworth. Get the appraisal done right away. Don’t sit back and wait for new comps with lower prices. Any mortgage broker/agent that’s on the ball will know this and be on top of it for you. So find a broker/agent that works for you. Slow response to this puts your clients and your deal at risk.

Predictably, the Bank of Canada has held the overnight rate at .25% leaving the prime lender rate at 2.45%. This is great news for any line of credit holders and variable mortgage holders. The Bank of Canada has indicated, in an untypical fashion, that the rates are likely to stay low over the next 2 years. 5 year Canadian bond yields also remain low. The bond yields are what drives the 5 year fixed rate. With the cost of borrowing as low as it has been in the last deca...de and the pent up demand from the lock down we should anticipate a red hot fall market. Here is a quick rate comparison: Insured mortgage rates (client has less than 20% down payment) 5 year fixed: 1.89% 5 year variable: 1.80% Conventional mortgage rates (20% down or more) 5 year fixed: 2.09% 5 year variable: 1.95%

A home equity tax or capital gains on your primary residence? Go home CMHC you're drunk.

Still a great tool to help realtors meet new clients. Let’s not let billboards and paid advertising be the only way a realtor gets their name out. https://torontostoreys.com/ontario-open-houses-resume-stag/

Genworth Mortgage Insurer has confirmed they will NOT be changing their underwriting policies along with CMHC. It’s business as usual (for now).

CMHC Announces Changes to Mortgage Insurance Underwriting and Acceptance Criteria Yesterday afternoon, CMHC announced changes to its mortgage insurance underwriting and acceptance criteria.... Effective July 1, the following changes will apply for new applications for homeowner transactional and portfolio mortgage insurance: The maximum gross debt service (GDS) ratio drops from 39 to 35 The maximum total debt service (TDS) ratio drops from 44 to 42 The minimum credit score rises from 600 to 680 for at least one borrower Non-traditional sources of downpayment that increase indebtedness will no longer be treated as equity for insurance purposes You can read the full release HERE. It is important for our members to note that this is a CMHC announcement, and as the release states: These decisions are within CMHC’s authorities under the National Housing Act. This is not a directive from the Ministry of Finance. As such, as Canada’s private mortgage insurers, Genworth’s and Canada Guaranty’s criteria is not directly affected. Early indications seem to suggest that the private insurers will not follow in lockstep with these changes, but each are currently determining their specific response. More details are expected early next week, and I anticipate some differentiation in risk appetites will create additional competition and a shift in market share over time. We will keep you informed of additional details as they become clear.

TD is a great lending partner in the broker channel. This type of penalty is easy to avoid. A variable rate mortgage has a standard 3 month interest penalty to break the mortgage. Any non bank lender will also have reduced penalties even on a 5 year fixed mortgage. It’s nightmare stories like this that really boost the value of using a licensed mortgage agent/broker. We are looking out for you when we recommend variable rate mortgages and non-bank fixed mortgages. At the end of the day these penalties are something on the contract but if you aren’t using a broker, you may not be made aware of them. We know these penalties exist and can avoid them by choosing the right product up front. I’m looking out for you. https://www.cbc.ca//bu/mortgage-penalty-pandemic-1.5588741

Shopify is doubling down on investing in people/business with ecommerce grants. Excellent way to build their funnel and generate growth as well as help boost the economy. Great stuff!

If you are curious about getting mortgage relief, as outlined in the COVID-19 press conference from the Federal Government yesterday morning, please see the list of lenders and insurers contact information below. You will need your mortgage number and your mortgage insurance number (if applicable). Please contact me if you need any help. Stay healthy, stay safe.

Extra time on your hands and wondering about the state of your mortgage? Contact me any time. Business is OPEN today and every day. I am fortunate to be able to work entirely from home. Social Distancing is not a problem. Call or email any time. There are still some outstanding rate specials available for rate holds, renewals and refinances. [email protected] 416-903-7317 Stay healthy. Stay safe!

Wow, hot off the press. Bank of Canada just cut the overnight rate by another 50 basis points (.5%). This is a full percent rate drop in one month! Contact me for details.

And here’s the big interest rate cut as expected. 0.5% is quite the dip indeed. Anyone with a variable rate mortgage or line of credit will be happy today. Don’t spend it (the savings) all in one place.

Mortgage Professionals Canada (member) has a new commercial hitting the airwaves soon. More support for our industry leads to more support for you, the client.

I can't stress this enough. If you have the ability to get into the market before April 6 I would encourage you to pull the trigger on a purchase. [Of, course if it makes sense for you.] Rates are falling due to panic in the world bond markets. On top of that the qualifying rate 'stress test' is being reduced. What does that mean? More buying power in April for anyone with less than a 20% down payment. With inventory as low as it is we will likely see housing prices tha...t will make your jaw drop. It's go time! ***disclaimer, I do not have a crystal ball. This is speculative. Make the decision that is right for you! Happy Hunting https://mailchi.mp/dominionlending/e3es7zpv71-410739