What's happened in the last couple of days

We are in unprecedented times with respect to quick financial market changes, government announcements, cancelled travel plans, and additional Covid-19 fears.

 I wanted to keep you informed with some quick mortgage points from this week(end)s news (especially point 4 below):

 The government of Canada announced that all current consultation regarding the mortgage stress test is “on hold”.  Therefore, the expected beneficial changes which were to occur on April 6th, will not be happening.  The mortgage stress test rate will remain at 5.19% (for now). 

The government of Canada made an emergency rate announcement dropping the Bank of Canada rate by another .50% (making a total drop of 1% in the last 8 days).  The banks have dropped their Prime rate, however some banks and lenders have already announced that they’re increasing both fixed and variable mortgage rates.  This is due to liquidity and market risks.

 Variable Rate Discounts are Disappearing: Similar to the last financial crisis, discounts on variable rate mortgage are headed the wrong way.  Scotiabank was the first bank to announce their new variable rate mortgages will be at Prime, or higher.  That’s an effective discount reduction off of Prime of about .70%.  Even though Banks dropped Prime by .50% as expected, NEW variable rate mortgages now become more expensive than they were yesterday.

 Spring time is the busiest time of year for lenders, let alone a spring with near record low interest rates.  And now, many lenders and lawyers are telling staff to work from home due to Covid-19.  To be safe, make sure to start your mortgage shopping well ahead of time, and allow 30 days minimum to close your mortgage or purchase.  And even more time than that if you’re refinancing or transferring your mortgage.