DP renews call for federal government to suspend rent, mortgage payments

Latest News & Economy DAZADA DIAMOND 31 Mar

DP renews call for federal government to suspend rent, mortgage payments

Hundreds of thousands of homeowners seek mortgage payment deferral

Credit & Debt DAZADA DIAMOND 30 Mar

Hundreds of thousands of homeowners seek mortgage payment deferral

Hundreds of thousands of homeowners seek mortgage payment deferralSince the introduction of a mortgage-payment deferral plan to help homeowners cope with the financial impacts of the COVID-19 pandemic, Canada’s biggest banks have reported an increase in mortgage-related calls, reaching hundreds of thousands.

According to the Canadian Bankers Association, more than 213,000 requests to defer or skip payments have been completed or are being processed since the announcement more than a week ago. The figure accounts for about 5% the banks’ total number of mortgages.

Read more: Canada’s largest banks slash prime lending rates

“The large number of customers that have been helped continues to grow as the result of concerted efforts by front-line workers, contact-center agents and operations teams working diligently,” Mathieu Labreche, spokesman for the Canadian Bankers Association, said in an interview with BNN Bloomberg.

On March 17, Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank of Canada released a joint statement introducing mortgage-deferral measures to aid Canadians homeowners experiencing financial hardships due to the coronavirus outbreak. The lenders said that customers in good standing can apply with deferrals available for an indefinite period.

Under the plan, payments are skipped for a period of time and interest accrued is added to the mortgage’s outstanding balance. The additional interest is incorporated in future monthly payments when they resume or upon renewal at the end of the mortgage’s term.

At the end of January, the banks’ combined mortgage balances amounted to about $1.06trn. The figure accounts for nearly two-thirds of the country’s overall mortgage market, according to data from Bank of Canada.

“Last week, our contact centers in Canada received close to 80,000 calls per day, with calls to our mortgage and loan teams up 500%,” Scotiabank chief executive officer Brian Porter said in a March 22 statement.

Toronto-Dominion is “receiving thousands of requests daily for mortgage deferrals, and have processed thousands already,” spokeswoman Julie Bellissimo said in a statement emailed to BNN Bloomberg. “We are moving quickly through applications so that we can help provide our customers some immediate financial relief.”

“The need of Canadians for relief and support is at a scale and urgency we have never seen before as an industry and as a bank,” Laura Dottori-Attanasio, who oversees personal and business banking in Canada, said in a statement. “While we have helped tens of thousands of clients in the first week, we know we have much more to do.”

  • https://www.mortgagebrokernews.ca/news/hundreds-of-thousands-of-homeowners-seek-mortgage-payment-deferral-328062.aspx

Millions of Canadians already missing payments due to COVID-19

Latest News & Economy DAZADA DIAMOND 27 Mar

Millions of Canadians already missing payments due to COVID-19

Millions of Canadians already missing payments due to COVID-19We are still relatively early in the coronavirus crisis but already many people are missing payments.

A new report from insolvency practitioners Bromwich+Smith with Leger Research has found that 49% of households in Ontario and Alberta, and more than half in British Columbians, have suffered an immediate income reduction since the crisis began.

The share of households who reported already falling behind with payments on credit cards, utilities, or telecoms is 24% in Alberta, and 19% in Ontario and BC.

“The results are quite staggering really. Of course, we get a sense of what is happening when we read the news, but the survey results make it far more real having interviewed 750 people across BC, Alberta and Ontario,” says David de Lange, Senior Vice President of Leger Research.

Getting help
Most of those struggling will reach out for help from the federal and provincial governments but almost a quarter of respondents said they didn’t know how they would adjust to a reduction in income.

Bromwich+Smith advises that getting government help is a good first step for those that cannot pay their debts followed by asking their mortgage lender to see if a deferral could work for them or call a licensed insolvency trustee to understand if restructuring debts makes sense for their current state.

  • https://www.mortgagebrokernews.ca/archived/millions-of-canadians-already-missing-payments-due-to-covid19-328024.aspx?utm_source=GA&utm_medium=20200327&utm_campaign=MorningBriefing-20200327&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Canadians are struggling to save, according to new poll

Latest News & Economy DAZADA DIAMOND 26 Mar

Canadians are struggling to save, according to new poll

Canadians are struggling to save, according to new pollThree out of four Canadians are finding it hard to balance spending on what they need now with saving for later.

A new poll by RBC found that more than half of Canadians are taking a “whenever I can” approach to saving, as opposed to regularly setting aside money. That’s the highest level in five years.

In addition, 56% of respondents say their highest financial priority is to save for retirement, while 53% have a top goal of adding to their rainy day fund. While Canadians have good intentions of saving, actually putting it into practice is proving more difficult.

“Less than half of poll respondents who identified these two priorities actually put any savings toward them over the past year, with only 46% contributing to a rainy day fund and 43% putting money aside for retirement,” the report stated.

Baby boomers are the most worried about their retirement savings. Four in ten Canadians over 55 don’t think they have squirrelled away enough money for their retirement years. 40% are also worried about the impact of inflation and 36% are concerned about what the weakening of markets could mean for the value of their savings and investments.

Even with these looming concerns however, less than half of Canadian seniors have a financial plan in place.

“It’s easy to connect the dots: many who aren’t saving enough don’t yet have a financial plan,” said Stuart Gray, director of the financial planning centre of expertise at RBC. The most important step is for people to understand what their current finances will allow them to achieve and find a financial advisor to help develop a plan to close any gaps, he added.

Those with a financial plan were a bit more optimistic about their financial future, according to the survey. They reported feeling more organized, confident and reassured about their money.

For the second consecutive year, the poll found that more Canadians own TFSAs (60%) than RRSPs (49%). If forced to choose between contributing to their RRSP or contributing to their TFSA, the tax free savings account was the more popular choice by double.

The RBC poll stated that Canadians who want to grow their savings, the big advantage of both TFSAs and RRSPs are the impact of compounding when financial contributions to TFSAs and RRSPs are invested.

“We explain this as gaining interest not only on your original investment, but also interest on your interest, which helps your earnings generate even more earnings,” adds Gray. “That’s a win for anyone who invests inside their TFSAs and RRSPs.”

For this survey, RBC conducted an online poll for a week in December last year with 2000 Canadian adults.

  • https://www.mortgagebrokernews.ca/news/canadians-are-struggling-to-save-according-to-new-poll-326825.aspx?utm_source=GA&utm_medium=20200228&utm_campaign=MBNW-Newsletter&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Deferred Mortgage Payments: A Credit Score Gamble?

Latest News & Economy DAZADA DIAMOND 25 Mar

Deferred Mortgage Payments: A Credit Score Gamble?

Last week, the President of the Canadian Bankers Association announced that all six major banks would offer deferral payments on their mortgages and other credit products. Just like many public announcements over the last couple of months, many were left with more questions than answers.

One question that still has yet to be answered is, how deferred mortgage payments might affect your credit score? Equifax recently announced, “In the event that a [lender] makes a credit relief or payment deferral program available to its consumers to opt out of making monthly payments during the pandemic, Equifax’s expectation is that the [lender] would take actions on its system to ensure that it does not report any derogatory/missed payment information to the credit bureaus that is misaligned with the program it has implemented.”

millennials in debtScott Hannah, B.C.-based CEO of the non-profit Credit Counselling Society, was quoted in the Globe and Mail as saying, “I don’t see creditors punishing consumers for being as responsible as they can under circumstances beyond their control.”

Many financial professionals have been posting messages online and sending emails to reassure the public and their clients that a deferral payment will not affect their credit score.

I agree that Canadians should not have their credit affected by deferred payments, although I predict a much different reality for consumers starting April 1. Lenders update the payment history of each credit account electronically to Equifax and TransUnion.

In order for these deferred payments to not be reported to the credit reporting agencies as late, as Equifax alluded to, the lender would need to “take actions on its system to ensure that it does not report any derogatory/missed payment information to the credit bureaus.”

Lenders big and small have been bombarded with phone calls that have put pressure on their personal and electronic systems. Are you willing to gamble your credit score and assume that every lender has updated its reporting system?

Millions of Canadians have found errors in their credit reports. For over a decade, I personally have received thousands of calls from consumers stating that a customer service rep told them one thing, only to find out that it was reported incorrect on their credit report.

In reality, it doesn’t matter what the customer service rep, the government, or what the industry experts tell you. If the lender’s internal system sees it as a late payment, that is how it will report. No one will know for sure if all these deferred payments will report correctly or not.

might a mortgage payment deferral affect your credit scoreWe can all agree that the amount of deferred payments over the coming months is unprecedented. For this reason, I expect an increase in the amount of mortgage, loan and credit card payments reporting incorrectly on Canadian credit reports.

Even with the chance that a deferred payment will show up as a late payment, many Canadians will still need to take advantage of such programs being offered by banks.

For those that don’t really need to defer their payments this month, I suggest you wait until it is necessary. A deferred payment is not free money. You will have to pay the lender back with interest.

Any delay is just going to increase the amount on future required payments. My hope is that, going forward, underwriters or those reviewing credit applications will be lenient on any late payments during the COVID-19 pandemic.

However, I am positive that the credit scoring system will not show much sympathy. On average, one late payment will drop your score 20 to 40 points.

A low credit score, regardless if it was caused by an error or not, will make it much more difficult to qualify for best-rate financing, renting, some employment opportunities and discounted insurance premiums. This is not to say your life will be over, but it will take at least 6 to 12 months for your credit to recover.

For those who have no choice but to request a deferred payment, here are some ways to protect your credit.

  1. Request electronic or written confirmation that the payment is being deferred.
  2. Ask for the employee number or service rep’s name that confirmed your deferred payment.
  3. Write down the day and time you talked to the customer service rep.
  4. Place all supporting documentation and record keeping in a safe place where you will actually remember where to find it.
  5. Track both your Equifax and TransUnion credit reports for at least the next few months.
  6. If you do see an error, reach out to your lender and the credit reporting agencies to open up a dispute.

mortgage payment relief announcedI’m sure the thought of making another call might be overwhelming for the hundreds of thousands of Canadians who have already spent hours on the phone to request the deferred payment.

For anyone who has something better to do than to spend hours listening to the annoying automated voice and elevator music, I suggest you start with suggestion number three.

I don’t want to create panic or be like Chicken Little saying the sky is falling. The point I sincerely want to get across is that reporting errors are common and always have been.

It is unrealistic to think there won’t be any errors as a result of the increased demand for deferred payments. Regardless of what happens, now is the perfect time to monitor and learn how to better protect your credit.

  • https://www.canadianmortgagetrends.com/2020/03/deferred-mortgage-payments-credit-score-gamble/

Canada’s population growth is concentrated to just three cities

Latest News & Economy DAZADA DIAMOND 24 Mar

Canada’s population growth is concentrated to just three cities

CanadaThe lion’s share of Canadian population growth last year was just in three markets: Toronto, Montreal, and Vancouver.

Recent data from Statistics Canada showed that the total urban population increase nationwide was 463,424. Toronto had the largest urban increase with 127,575 new residents in 2019. This pushed the city’s total population up to 6,471,850.

On a regional basis, the Kitchener-Cambridge-Waterloo area saw the strongest upward movement with its 2.82% annual gain, reaching a total of 584,259 people last year.

Ontario’s strength is further fuelled by the fact that nearly half of all immigrants to Canada in the year ending September 30, 2019 went to the province, StatsCan said. This amounted to approximately 209,200 newcomers, compared to the 89,400 that went to Quebec and the 65,000 that chose British Columbia.

Montreal posted the second strongest urban increase with 65,205 new residents, pushing up the total to 4,318,505. Vancouver had 39,045 people added to its population last year, reaching 2,691,351 residents.

Population growth impelled by intensified inbound immigration to Canada is driving an unprecedented housing boom, according to a recent analysis by Dominion Lending Centres chief economist Sherry Cooper.

This demand for more housing is also stimulating a greater need for professionals like construction workers and electricians – industries that are seeing an increasing proportion of immigrants, Cooper added.

  • https://www.mortgagebrokernews.ca/news/canadas-population-growth-is-concentrated-to-just-three-cities-326342.aspx?utm_source=GA&utm_medium=20200218&utm_campaign=MBNW-Newsletter&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Canadians have become much less interested in buying homes

Down Payment & Buying DAZADA DIAMOND 23 Mar

Canadians have become much less interested in buying homes

Canadians have become much less interested in buying homesCOVID-19 has reverberated across all segments of Canadian society and has become particularly acute in the housing sector.

Open houses and inauguration events have fallen out of favour, amid the imposition of policies like social distancing and isolation.

Interest in buying homes across Canada has also substantially plummeted over the past few weeks, if new data from residential information portal Point2 Homes is any indication.

“The outbreak has shattered seasonality, transforming the spring months, which was normally the time when the housing market was starting to pick up speed, into a period of anxious down time,” Point2 Homes stated in its analysis. “Much of the activity associated with homebuying and home selling is simply on hold, as people and institutions alike are trying to see where the pandemic is headed.”

The decline in home searches made through the portal reached as much as 32% by March 16. The downward trend has been clear, with an 8% drop registered on March 11, a 20% decrease on March 12, and a 24% plunge on March 13.

And the impact upon Canadian housing does not stop there, as the societal effects of the disease are likely to change some aspects of the homebuying and selling business permanently.

“There certainly could be long-lasting impacts in terms of shifts in preferences for location and even features of homes,” according to Jim Clayton, director of the Brookfield Centre in Real Estate & Infrastructure at York University’s Schulich School of Business.

“Some people may be more hesitant about being part of a crowd and hence avoid mass/public transit. The work, and learn, from home revolution that many have been calling for over the past decade could become much more of a reality and may change how and where people want to live,” Clayton explained in an interview with Point2 Homes.

  • https://www.mortgagebrokernews.ca/news/canadians-have-become-much-less-interested-in-buying-homes-327773.aspx?utm_source=GA&utm_medium=20200323&utm_campaign=Newsletter-20200323&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Canadian consumer confidence takes unprecedented slump

Latest News & Economy DAZADA DIAMOND 19 Mar

Canadian consumer confidence takes unprecedented slump

Canadian consumer confidence takes unprecedented slumpA measure of Canada’s consumer confidence has reported its biggest drop ever amid the COVID-19 pandemic.

The Conference Board of Canada’s Index of Consumer Confidence slumped 32.0 points this month, an unprecedented decline. There were no positives, with every region posting double-digit decreases and each question garnered weaker responses.

“COVID-19 is causing anxiety in Canadians and this has implications for Canada’s economy given that consumers have been the main engine of economic growth, said Pedro Antunes, Chief Economist for The Conference Board of Canada. “With many people self-isolating, large gatherings mostly cancelled and tourism activity drying up, many Canadians are staying home, which will have a profound impact on economic growth.”

Atlantic Canada and Quebec each saw their largest monthly declines ever. Ontario, British Columbia and Saskatchewan-Manitoba all saw their second largest, while Alberta saw its fourth largest.

A recent Conference Board report said that the Canadian housing market will still have a “big year” despite the current gloom.

Worsening finances
Nationally, almost 21% of respondents expect their finances to be worse in six months, with less than 20% expecting improvement. This flips around from February when more than 24% were expecting finances to be better in six months while less than 15% were pessimistic

 

The Conference Board of Canada @ConfBoardofCda

Today’s Consumer Confidence Index is a pulse-check on how Canadians are feeling about their current and expected financial situations. No surprise in sentiment – but a significant shift. https://www.conferenceboard.ca/e-library/research/icc/2020/10651 

See The Conference Board of Canada’s other Tweets

 

 

  • https://www.mortgagebrokernews.ca/archived/canadian-consumer-confidence-takes-unprecedented-slump-327680.aspx?utm_source=GA&utm_medium=20200319&utm_campaign=MorningBriefing-20200319&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Canada’s largest banks slash prime lending rates

Banks & Bank of Canada DAZADA DIAMOND 18 Mar

Canada’s largest banks slash prime lending rates

Canada’s largest banks slash prime lending ratesFollowing the Bank of Canada’s surprise announcement last week that it is lowering interest rates by 50 basis points to 0.75%, the country’s largest banks cut their prime lending rates to 2.95% from 3.45%.

RBC Royal Bank, BMO Bank of Montreal, Toronto-Dominion Bank (TD Bank), Scotiabank, and CIBC slashed their prime rates – which underpins variable-rate mortgages and lines of credit – effective Tuesday, March 17. Meanwhile, National Bank of Canada will reduce its prime rate effective Wednesday, March 18.

The Bank of Canada said that it cut interest rates, the second in two weeks, as a proactive measure “taken in light of the negative shocks to Canada’s economy arising from the COVID-19 pandemic and the recent sharp drop in oil prices.” The move was welcomed by several in the mortgage industry as a strong response to the uncertainty caused by these economic challenges.

“The Bank [of Canada] is acting forcefully to reduce the impact of the coronavirus on the economy,” said James Laird, co-founder of Ratehub.ca and president of CanWise Financial. “It is in these uncertain times that Federal institutions acting quickly and intelligently can reduce the negative impact of unforeseen events.”

However, some experts have warned that the same uncertainty will cause banks to hold back on passing the 50-basis-point rate cut to consumers.

In an email to BNN Bloomberg, Rob McLister, founder of mortgage comparison website RateSpy.com, said a slew of macroeconomic headwinds facing the big banks make him skeptical the lenders will pass along the 50-basis-point prime rate cut to consumers.

“What banks giveth with one hand they will taketh with the other by way of variable-rate discount reductions,” Rob McLister, founder of RateSpy.com, told Bloomberg News. “The weather forecast for banks is hurricane, tornado, and tsunami all in the same month. They’re getting sucker-punched by surging credit spreads, shrinking interest margins, rising loan loss reserves, and increasing default risk (even though mortgage arrears are little changed yet.)”

  • https://www.mortgagebrokernews.ca/news/canadas-largest-banks-slash-prime-lending-rates-327598.aspx?utm_source=GA&utm_medium=20200318&utm_campaign=Newsletter-20200318&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

 

Is coronavirus about to prompt a house price crash?

Real Estate DAZADA DIAMOND 17 Mar

Is coronavirus about to prompt a house price crash?

Is coronavirus about to prompt a house price crash?The impact of the COVID-19 coronavirus outbreak is being felt across the world, but what will it do to Canada’s housing market?”

The short answer, of course, is that no one really knows, but the latest assessment of the housing market by RBC Economics suggests that things are about to get rocky.

Senior economist Robert Hogue said that the “light was on” in the housing market in February but that it is “about to be turned off.”

“The world has changed in March,” he wrote in the RBC Monthly Housing Market Update. “And so has the outlook for the Canadian housing market.”

Hogue said that fears of the spread and social distancing are set to decimate house viewings and buyers are likely to take a wait-and-see approach.

Then there’s the impact that Canadians’ investments have suffered from falling asset values. Hogue notes that some homebuyers would be relying on these investments to fund their down payment.

Despite mortgage rates remaining low, especially following recent interest rate cuts and the potential for more, consumer confidence is likely to outrank them.

Sales plunge but what about prices?
Hogue’s outlook is that home sales will plunge in the coming weeks before a rebound at some (undeterminable) point.

But he expects home values nationally to be resilient with tight supply in many markets providing a cushion against correction.

For Toronto, Vancouver, Ottawa, and Montreal, recent price escalations are predicted to cool but there could be tougher conditions for the Prairies where market conditions are softer and the oil price fall will be a further blow.

  • https://www.mortgagebrokernews.ca/archived/is-coronavirus-about-to-prompt-a-house-price-crash-327570.aspx?utm_source=GA&utm_medium=20200317&utm_campaign=MorningBriefing-20200317&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619
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