Scotiabank: Millennials hopeful about buying homes despite COVID-19

Banks & Bank of Canada DAZADA DIAMOND 24 Sep

Scotiabank: Millennials hopeful about buying homes despite COVID-19

Scotiabank: Millennials hopeful about buying homes despite COVID-19Compared to other demographics, Canadian millennials are more optimistic about purchasing a home during the COVID-19 pandemic, according to a new survey by the Bank of Nova Scotia.

The 2020 Scotiabank Housing Poll found that around 18% of young Canadians in the 18-34 age range have “accelerated their plans” to buy their next homes or investment properties. However, roughly 32% of them said that they will only make their purchases once property prices drop.

Scotiabank said that these intentions are mainly driven by lower interest rates. Approximately 68% of those planning to buy will be using their savings, while 42% will be using the equity from their primary homes.

Millennials were also more optimistic (36%) about home price declines within the next 12 months, compared to 24% of those in the 35-54 age cohort and 17% of those older than 55 years old.

Additionally, better purchasing power fed into a greater appetite for renovations, with around 26% of Canadians considering major reworks in their current homes.

“The pandemic has caused many Canadians to turn their living rooms into classrooms, their dining rooms into offices, and their basements into home gyms,” said John Webster, head of real estate secured lending at Scotiabank. “This is motivating many to consider investing more in their current homes or re-evaluating their living spaces altogether.”


Partnership to help create 5,000 new affordable homes across Canada

Real Estate DAZADA DIAMOND 22 Sep

Partnership to help create 5,000 new affordable homes across Canada

TORONTO, Sept. 18, 2020 /CNW/ – Every Canadian deserves a safe and affordable place to call home. Thanks to investments made by the Government of Canada and a unique partnership with the United Church of Canada, up to 5,000 new affordable housing units will be built across the country over the next 15 years.

Today, the Honourable Ahmed Hussen, Minister of Families, Children and Social Development and the Minister Responsible for Canada Mortgage and Housing Corporation (CMHC) announced that the Affordable Housing Innovation Fund is providing the United Church of Canada’s newly formed development corporation, United Property Resource Corporation (UPRC), with a $20 million line of credit to be accessed for pre-development and pre-construction costs as the UPRC builds affordable housing across Canada. The UPRC will develop over 200 strategic sites in the United Church of Canada’s land inventory.

The announcement was held at 1598 Queen Street East in Toronto, the site of the first R-Hauz all-mass timber residential building in Toronto. The environmentally sustainable building represents UPRC’s commitment to fill the “missing middle” in housing across the country and advocate for progressive real estate models that are environmental and financially sustainable.

The Affordable Housing Innovation Fund is a $200 million initiative through the National Housing Strategy that has been instrumental in creating the next generation of housing in Canada. The goal of the Innovation Fund is to encourage new funding models and innovative building techniques in the affordable housing sector. The Innovation Fund:

  • supports the development of innovative approaches to affordable housing
  • creates inclusive and accessible communities
  • contributes to the fight against homelessness

The UPRC brings professional real estate development and management expertise to collaborate with public and private partners who want to make a difference by building lasting affordable housing for all.


“Innovative approaches will help build more affordable housing in Canada, addressing the need we have across this country. By thinking outside-the-box, the United Church of Canada is contributing to providing more Canadians with housing that meets their needs and they can afford and the National Housing Strategy’s Innovation Fund is assisting them with some of the significant upfront costs to get started with these developments.”– The Honourable Ahmed Hussen, Minister of Families, Children and Social Development and the Minister responsible for CMHC

“UPRC represents an exciting opportunity to reimagine Canadian neighbourhoods by building diverse, affordable, places where all can live, gather and thrive. We are not just building housing we are building homes and communities for all Canadians. If these community assets were sold today the vital benefit to our neighbourhoods would be lost forever. With the assistance of the Affordable Housing Innovation Fund, our vision to develop open resilient sustainable communities can truly be realized.” – Tim Blair, CEO, United Property Resource Corporation

Quick Facts

  • Today’s announcement was held at 1598 Queen Street East, the traditional territories of the Ojibway, the Anishnabe and the Mississauga’s of the New Credit. The territory is covered by the Upper Canada Treaties
  • The UPRC commits to building a minimum of 5,000 affordable housing units – both rental and ownership – over the next 15 years
  • More than 30 projects are currently under development by the UPRC
  • A minimum of LEED Gold Certification or equivalent will be pursued for each of the UPRC’s projects, with a commitment to reduce greenhouse gasses and energy use by a minimum of 10% compared to Canada’s National Energy Code for Buildings for 2017
  • At least 10% of units in a project will meet or exceed minimum local building code requirements for accessibility. All common areas will be fully accessible
  • UPRC works alongside the largest landowner groups in Canada to unlock value in real estate that is then reinvested in social purpose. The National Trust estimates 9,000 communities of faith will close over the next decade, creating huge opportunity to repurpose assets and build sustainable communities open to all.
  • The Affordable Housing Innovation Fund is providing $200 million over 5 years for projects that showcase new funding models and innovative building techniques, lowering the costs and risks of financing affordable housing projects and helping to make the affordable housing sector more attractive for private market developers and investors.
  • The Government of Canada is currently rolling out its National Housing Strategy (NHS), an ambitious 10-year, $55 billion plan that will create 125,000 new housing units and lift 530,000 families out of housing need, as well as repair and renew more than 300,000 housing units and reduce chronic homelessness by 50 percent
  • Under the Investing in Canada plan, the Government of Canada is investing more than $180 billion over 12 years in public transit projects, green infrastructure, social infrastructure, trade and transportation routes, and Canada’s rural and northern communities.

Associated Links

  • As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers unbiased housing research and advice to all levels of Canadian government, consumers and the housing industry. For more information, visit our website or follow us on Twitter, YouTube, LinkedIn, Instagram and Facebook.
  • To find out more about the National Housing Strategy, visit

SOURCE Canada Mortgage and Housing Corporation

For further information: on this release: Jessica Eritou, Office of the Minister of Families, Children and Social Development,; Angelina Ritacco, Media Relations, Canada Mortgage and Housing Corporation, 416-218-3320,; Laura Currie Ryder, United Property Resource Corporation, 416-317-9447,; Francesca MacKinnon, R-Hauz Solutions Inc., 514-265-2546,

Related Links


Five reasons Canadians have little reason to fear a housing crash

Real Estate DAZADA DIAMOND 17 Sep

Five reasons Canadians have little reason to fear a housing crash

Five reasons Canadians have little reason to fear a housing crashWhether they take place during a pandemic-fuelled recession or during a period of sustained economic expansion, record-shattering home sales in Canada always seem to be accompanied by the same phenomenon: talk of the country’s “inevitable” housing crash.

Questioning the logic of homebuyers who engage in wild bidding wars in the midst of historic job losses is hardly unreasonable, but saying that behaviour will trigger a catastrophic fall in home prices, like the 18 percent decline projected as a potential outcome by the Canada Mortgage and Housing Corporation in May, is a train of thought Nick Kyprianou, president of RiverRock Mortgage Investment Corporation, is encouraging Canadians to abandon.

Talk of a crash in home prices has been persistent since CMHC first floated its dire 18 percent figure, even though neither CMHC nor any other housing authority, lender or brokerage has provided any evidence or metrics that tie current market activity or the economic slide caused by COVID-19 to plummeting home prices. And yet, the spectre of an 18 percent decline persists, hanging over the market like the reaper’s scythe, just waiting to harvest the souls and credit ratings of unfortunate Canadians.

Kyprianou is another market-watcher who can’t fathom the CMHC’s projection. His theory is that, in determining its absolute, institution-destroying, worst-case scenario as part of its annual report to the Office of the Superintendent of Financial Institutions, CMHC may have concluded that its own breaking point would come if home prices shrank by 18 percent.

“I think [CMHC CEO Evan Siddall] just spouted off the worst-case scenario,” Kyprianou says. “Well, the chance of the worst-case scenario is so remote, everything has to line-up perfectly – multiple times – for it to happen.”

Using five key metrics to compare the current economic situation to that which proceeded the last true housing crash in Ontario (1989-1995), Kyprianou says today’s consumers can remain confident that home values will largely maintain their strength, even as COVID-19 continues to cast its shadow over the Canadian economy.

1. Interest rates
“Interest rates are your biggest factor,” Kyprianou says “If interest rates keep going up, that’s the biggest burden on housing because your dollar just doesn’t go as far.”

Interest rates almost doubled during Ontario’s last crash, rising from from eight to fifteen percent, putting pressure not only on buyers but the province’s builders as well. That is simply not going to happen this time around. The Bank of Canada estimated that it may not raise its key interest rate target before 2022.

2. Unemployment
There is no question that Canada’s employment situation is a worry. Unemployment was 10.2 percent in August 2020, almost double the rate seen in August 2019. But Kyprianou says there’s more to the story than just the headline.

In the early 1990s, when unemployment was hovering around 11 percent, most of the jobs being lost belonged to high earners – middle management, skilled tradespeople, factory workers – who saw their employers close up shop and move their operations to countries like Mexico during the first rocky years of the North American Free Trade Agreement.

“When these jobs are evaporating and the bulk of the unemployed are the higher income earners, that is going to have an effect on housing,” Kyprianou says, adding that most of the labour disruption caused by COVID-19 has been proven to involve low-wage earners who are predominantly renters, not prospective home buyers.

“That’s a big dynamic change,” he says. “You just can’t look at what the unemployment number is. You have to drill down through it and look at who is unemployed.”

3. Equity
Much of the concern expressed by CMHC’s Siddall over Canadian debt levels and high-ratio mortgages is the risk of borrowers being dragged underwater if falling home prices leave them in a negative equity position. Fair enough. But Kyprianou, quoting statistics provided by Canadian Mortgage Professionals, says the vast majority of Canadians have far more than five percent equity in their homes.

In its most recent Annual State of the Residential Mortgage Market in Canada report, CMP found that 88 percent of Canadian homeowners have equity ratios of 25 percent or higher. Among the 6 million homeowners with mortgages, 81 percent have equity ratios of 25 percent or more.

Kyprianou says there is also the concept of emotional equity to consider. Defaulting on a mortgage is seen as an embarrassing failure most homeowners will do all they can to avoid. He saw many of them get resourceful during the last recession – taking on boarders, getting a second job, asking their families for assistance – as a means of making their monthly mortgage payments. He expects the same level of effort from today’s borrowers.

“You gotta make it work,” he says.

4. Taxes
In the early 90s, sky-high personal and corporate tax rates were deemed responsible for driving companies and individual professionals into the waiting arms of the United States. The resulting brain drain eventually led to lower tax rates in Canada, but the damage was done.

With unemployment high and business confidence muted, it is highly unlikely that taxes will see any kind of significant spike over the near-term. Canadians are likely to be up in arms when their CERB payments are taken into account come tax time next year, and the billions in government aid used to prop up the economy for six months will eventually need to be recouped, but it’s safe to say the feds won’t threaten the nation’s economic recovery – or their polling numbers – by implementing any significant new taxes.

5. Immigration
In the 1989-1995 downturn, the problem wasn’t a lack of new Canadians, it was an inability to keep them. The brain drain days are over, but by limiting international immigration, COVID-19 has thrown a wrench into the works. With just over 100,000 permanent residents being welcomed into the country in the first six-months of 2020, Canada has little chance of hitting its immigration target of 341,000 for the year.

Immigration has been a significant driver of all things good in Canada over the past several years – population growth, innovation, economic expansion, home sales – but Kyprianou doesn’t see a fall in immigration numbers having too negative an impact on home prices, largely because immigrants don’t tend to buy properties for the first two years after arriving in Canada.

“If the pandemic affects immigration for three years, it’s not going to be a problem,” he says. “If it’s just a year, year-and-a-half, it’s not going to be a problem.”

Canada’s reputation for being a stable presence in a chaotic world has also been strengthened by the country’s handling of the pandemic (and the humiliating failure of our neighbours to the south to do the same). Once recovered from COVID-19, the country should still offer the same opportunity for new arrivals to find not only a safe environment to raise their families, but high-paying jobs in growing industries like tech and financial services.

The only sub-market where Kyprianou sees prices softening is high-rise condos. But with so many investors having purchased rapidly appreciating pre-construction properties over the past five years, even those who may be forced to sell, like unlucky Airbnb operators, are unlikely to face a loss. If the average price per square foot in Toronto, for example, falls from its current level of approximately $1,100 to $900, anyone who purchased at $500 per square foot in 2015 will still be making a hefty profit.

“It’s not like there’s going to be a bloodbath,” Kyprianou says. “They just don’t make as much money if they have to sell.”


How much does a “middle class” lifestyle cost in Toronto?

Latest News & Economy DAZADA DIAMOND 4 Sep

How much does a “middle class” lifestyle cost in Toronto?

How much does a “middle class” lifestyle cost in Toronto?Condos in Toronto’s downtown core have become increasingly out of reach of most household budgets, skewing what it means to be “middle-class” in one of Canada’s hottest cities.

Speaking to the Daily Hive, Fong and Partners Inc. said that a “middle-class” one-child household living in a modest condo in the area will cost a family around $123,388 annually after taxes – an income level currently accessible to only the top 10% earners.

Even singles – who would need to make around $74,000 annually after taxes – will find it exceptionally difficult to sustain themselves in the downtown area: A one-bedroom condo with one parking spot in Toronto’s core will cost approximately $2,540 a month in mortgages alone.

Those who are counting on the long-term impact of coronavirus pandemic to moderate home price growth should abandon such notions, according to Victor Fong, president of Fong and Partners.

“This is because of the money-printing that is happening in the US, Europe, and Canada to battle the economic effects of COVID-19. Money printing causes inflation in asset markets such as real estate, which naturally increases prices,” Fong said.

Recent Royal LePage data supported Fong’s stance, with the national aggregate home price growing by 6.8% year over year during Q2 to reach $673,072.

“Home prices shot up in the second quarter as a crush of buyers entered the market, attracted by extremely low interest rates and the perception of bargains to be had,” said Phil Soper, president and CEO of Royal LePage. “Once provinces allowed regular real estate activity to resume, demand surged in many markets. Inventory levels, already constrained pre-pandemic, have failed to keep pace.”


COVID-19 Stokes Canadian Homebuying Intentions: MPC Report

Real Estate DAZADA DIAMOND 11 Aug

COVID-19 Stokes Canadian Homebuying Intentions: MPC Report

The global pandemic may have brought the Canadian real estate sector to a near standstill this spring, but over the longer term it appears to have stoked homebuying intentions.

Fourteen percent of current renters say they plan to purchase a home within the next 12 months, up from 7% reported in late 2019, according to new survey results released by Mortgage Professionals Canada. The percentage of renters who say they would never purchase a house has also fallen by more than half, from 32% at year-end 2019 to 14% post-COVID.

Among current homeowners, the results show 9% plan to buy within the next year, which is also up from 7% at year-end 2019.

Study author Will Dunning, Chief Economist at MPC, admitted to being surprised by the results showing increased homebuying expectations for the near future.

“It is possible that the evolving emergency has caused more non-owners to decide that they want to buy homes (for example, to move out of an apartment building, where social distancing is challenging, to a lower-density environment),” he noted, while adding historically low mortgage rates are also making homeownership more affordable.

Dunning did caution, however, that buying intentions don’t always fully translate into actual home purchases, for several reasons.

“Some people, when they research their options, may decide not to buy,” he said. “Or, they might discover that because of the mortgage stress tests, they would be unable to obtain the financing they would require.”

Reasons for Wanting to Buy a Home

The top reasons cited by renters for wanting to purchase a home include:

  • 28%: “I want to live in a nicer home”
  • 14%: “My home is no longer suitable”
  • 14%: The current situation makes this a good time to get a deal”
  • 12%: “Low interest rates make this a good time to buy”
  • 11%: “I want to live somewhere less expensive”

For existing homeowners, their biggest motivator for wanting to purchase a new home is that their current home is no longer suitable (38%), whether due to size or location. Another 13% said they want to live in a nicer home, while 12% cite low interest rates.

The report further explored reasons why respondents said their current dwelling is not suitable, the majority of which are directly related to the lockdowns in place earlier in the year:

  • “Spending more time at home means I need more space”
    • 31% for owners and 33% for non-owners
  • “The space isn’t conducive to the inclusion of a dedicated work area and can’t be or isn’t easily modified”
    • 17% for owners, 24% for non-owners
  • “When quarantined, the property doesn’t support my mental health or provide enough outdoor space”
    • 14% for owners, 17% for non-owners
  • “I need to live somewhere where social distancing is easier”
    • 9% for owners, 7% for non-owners

Additional Mortgage Consumer Trends

Here are some of the other key findings from MPC’s report, Rapidly Evolving Expectations in the Housing Market:

  • House price growth expectations
    • They’re the “smallest we’ve ever seen,” the report noted
  • Canadians’ confidence in their ability to weather a downturn in the housing market
    • Unchanged from pre-pandemic results, at a score of 6.91 out of 10, with 10 representing strong agreement
  • How Canadians view their homes
    • They predominantly see their homes as a place to live (75%), and to a lesser degree as an investment (25%)
  • Is now is a relatively good time to buy?
    • There was a slight rise in the score among homeowners, but a more significant rise among non-owners, from a negative score of 5.23 at the end of 2019 to a positive score of 6.28 in this survey
  • Interest rate expectations
    • Responses in previous surveys “always show an expectation of rising rates”
    • The latest response “might be the lowest ever recorded by this survey”
  • COVID-19 impacts
    • 20% of homeowners reported impaired income due to COVID-19
    • 68% of first-time buyers and 75% of repeat buyers said they would have no difficulty making their mortgage payments
    • 1% of first-time buyers said they would only be able to make partial or infrequent payments (vs. 0% for repeat buyers)

“What we have seen clearly is that the vast majority of homeowners are not feeling a long-term financial impact related to COVID-19, and that potential homebuyers are still very much in the market for a home, signs of which are being seen in regions across the country,” said Paul Taylor, President and CEO of Mortgage Professionals Canada.


Local real estate board has tough news for Calgary homeowners

Latest News & Economy DAZADA DIAMOND 7 Aug

Local real estate board has tough news for Calgary homeowners

The Calgary housing market needs to brace itself for a long-term downturn, according to the Calgary Real Estate Board.

Second-quarter home sales volume, which was 35% slower annually, might be a significant indicator of the trend despite better performance compared to prior estimates, the CREB said in its report.

“The situation may look brighter than it did a few months ago, [but] it is also important to note that challenges remain,” the CREB said. “Our local economy is still facing record-high unemployment rates, with significant job loss occurring not only in areas associated with the shutdown (e.g., accommodation and food, retail trade) but in our professional, scientific and technical services sector. Some of the jobs in areas impacted by closures will start to return as our economy re-opens, but the challenges weighing on the energy sector will likely have a lingering effect on employment.”

New listings fell to 2,557 units in July, from the 3,335 properties available as of the end of Q2.

“The pullback in new listings in the second quarter caused inventories to trend down, preventing a more significant decline in prices,” the CREB said.

However, the local economy will be burdened by the prolonged recovery of the highest-paying industries, with downside risk to the housing sector likely to last well into 2021.

“This will cause some persistent challenges for the upper end of the housing market, having a greater impact on those higher-priced homes versus product in the lower price ranges,” the CREB report said. “Overall, we continue to expect city-wide benchmark home prices to ease by just under 3% this year and sales activity will remain weak compared to the already low levels recorded last year.”


Buyer beware – of your Realtor

Real Estate DAZADA DIAMOND 15 Jul

Buyer beware – of your Realtor

During a typical home sale, the listing agent commits to negotiate for the highest possible price. The buyer’s agent commits to negotiate for the lowest possible price. That can work nicely for both sides of a deal – unless those agents happen to be the same person.

How does a single agent negotiate for parties with opposing financial objectives? This is the dreaded ‘double ending’ that CBC Marketplace exposed in a documentary about shady behaviour on the part of real estate agents. It’s a pretty obvious conflict of interest, one guaranteed to benefit the agent at the expense of buyers and sellers.

But what about a situation where the buyer’s agent happens to work at the same brokerage as the listing agent? It happens every day. To be clear, these are two different agents, ostensibly running distinct businesses, but they work for the same company.

This is exactly the same conflict of interest as double ending, but in this situation, it’s called ‘dual agency.’ The brokerage – not the agent – has signed two separate contracts for representation.  With one of them, the seller expects the brokerage to negotiate for the highest possible price. With the other one, the buyer expects the brokerage to negotiate for the lowest possible price. How the heck is that supposed to work?

Here’s how real estate brokerages make it work: The lawyers who drafted the standard contracts for representation anticipated this conflict of interest and disclose it right in the contract itself, cleverly hiding it in plain sight. When the agents involved in a transaction are employed by the same brokerage, the standard contract stipulates that the agents will remain impartial with respect to the negotiation. Neither agent will provide their client with information or opinion that is intended to benefit their client at the expense of the other party to the negotiation. In other words, they won’t negotiate on behalf of their client.

So why would a savvy investor like yourself sign a contract for representation if you thought your agent would withdraw negotiating services in the middle of the transaction? You wouldn’t. Not willingly, anyway.

Sure, the contract discloses the possibility of dual agency, but does the consumer understand the probability of dual agency actually occurring or what it might mean in terms of the price paid or received? Not a chance. Let’s have a look at these issues.

The potential fallout
First, what is the probability that dual agency occurs? When a brokerage has a large share of a community’s listings, the probability is pretty high. Some brokerages employ hundreds of agents and cover massive territories. A lot of investors don’t typically take note of the name of the brokerage where their agent is employed, but they should. The more prominent the brokerage, the higher the probability that the buyer’s agent and the seller’s agent will be working for the same company.

What about the impact on the price paid or received? Real estate agents are trained to negotiate, but if they have to withdraw that service, what is the financial impact on their clients? Happily, there is independent research on this. The efficacy of an agent during a negotiation has been measured as anywhere between 5% and 10% of the price of the home – so on a transaction worth $1 million, dual agency can make a difference of $50,000 to $100,000 on the final price that is paid.

For investors conditioned to eye the bottom line, there is another important financial consideration to make: If your agent won’t be negotiating on your behalf, should they be paid the same amount as if they were truly and fully representing their client’s financial interests? Shouldn’t the standard contracts for representation include a fee reduction in the event of dual agency, accounting for the reduction in essential services provided? An educated consumer will always ask their agent for this simple amendment to the standard contract.

Paying for a service that isn’t delivered is bad enough, but things can get much worse. What if your agent ignores the law – essentially doing you a favour – and gives you advice on the price and/or terms of the offer in spite of being caught in a dual agency? That would not only be a breach of contract law, it would also be a breach of agency law. Penalties could include fines and/or the rescission of an otherwise firm, and potentially lucrative, deal.

The fine print
So how can you be sure that an agent will actually have your back? Before signing anything, read your contract for representation. Every word of it. Then have your lawyer review the agreement. (You’re going to use a lawyer to transfer title anyway; it shouldn’t cost you anything for this extra service. Most lawyers will gladly throw it in with no charge.)

Ask for your lawyer to explain the implications of dual agency. Then get a referral to a brokerage that will guarantee single agency. The costs of dual agency are simply too high to take a chance that it might happen to you.


Housing and mortgage markets are on the upswing

Real Estate DAZADA DIAMOND 13 Jul

Housing and mortgage markets are on the upswing

Calgary’s housing market saw a huge uptick in activity in June.

Many of the builders’ new showhomes were closed in the early days of COVID-19, but most have reopened and some are offering private showhome tours by appointment.

Realtors have instigated heightened safety measures for open houses, and online enquiries about homes listed for sale in Alberta on are higher than last year at this time.

The Calgary Real Estate Board reports sales in June were pretty much on par with last year (see facing page) and Mark Herman, a broker with Mortgage Alliance, says business is brisk.

“We are working through three months of COVID-induced mortgage backlog right now,” says Herman. “In March, we were on our way to our fourth best year in the last 16 years. COVID put the brakes on that quickly but the heat has picked right back up. Banks and brokers are very busy, with all four areas of mortgage business hitting at full steam right now.”

The market is firmly in buyers’ territory, says Herman.

“New buyers to the market are taking advantage of all-time, low rates and a great selection of homes at great prices,” he says. “There are a lot of gems coming on the market that are not normally for sale. Some, unfortunately, are places that people can’t carry anymore, or the risk of carrying them is high, such as many AirBnB properties. Without travel, places that were renting out for three times more than market value are now vacant.”

Other buyers are on the move up.

“Move-up buyers are selling in the $300,000 to $500,000 range at prices that are down about 10 percent from what they bought at and are trading up to the $500,000 to $800,000 range,” says Herman. “Prices in this range are often about 20 percent less than they were two or three years ago so this is a great move for those who have had steady income through the COVID slowdown.”

Refinancing and renewals are keeping brokers busy.

“Refinances are way up as banks are not budging on better rates as quickly as broker lenders are and we are able to do some fancy math to see if it is worth paying the penalty to get into a better mortgage,” says Herman. “For renewing and refinancing mortgages, there are some great strategies that allow a low rate now, and then lock into what are expected to be very low rates still to come.”

The world of mortgages has seen a lot of changes, says James Laird, co-founder of and president of CanWise Financial mortgage brokerage.

“Canada’s mortgage and housing markets have seen a lot of activity during COVID-19, from mortgage rate drops to policy changes to payment relief options for mortgage holders,” says Laird, who offers his insights on what he expects will be the new normal for the mortgage and housing markets.

Mortgage rates

“Canadians can expect fixed and variable rates to stay at their current historic low until the Canadian and world economies are close to fully recovered. When we start seeing good economic news and good news related to COVID-19, consumers should expect mortgage rates to start to rise.”

Shopping for a mortgage

“COVID-19 has forced Canadians to try new ways of doing most things. With bank branches closed, getting a mortgage is no exception. Pre-COVID, Canadians were already shifting to online sources to research mortgage rates and educate themselves. However, many still preferred in-person interaction before closing their mortgage. COVID-19 has forced Canadians to complete the process without that in-person appointment. Most have been surprised and impressed with the efficiency and level of service available without requiring an in-person meeting.”

First-time home buyers

“The main thing for first-time home buyers to be concerned with is their income and employment. Job losses have disproportionately affected young people, so many who were planning on purchasing will not because of income loss. In order to buy a house, stable income is required. For any first-time home buyer whose income has been interrupted they will have to wait until their employment is stable before entering the market. The fortunate young Canadians with stable income can consider purchasing during COVID-19.

“The benefit of purchasing a home right now is that mortgage rates are at an all-time low and there are less bidding wars than you would typically see in a hot spring market.”

The housing market

“Nationally, home prices have been resilient so far, but it depends how long the economy stays depressed. If we are able to rebound from an employment perspective and an overall economic output perspective in the near term, that is, by the end of this year, then Canadians should expect current home values to remain stable. If unemployment remains high and the economy does not get back to its pre-COVID levels as 2021 unfolds, consumers can expect home prices to soften at some point.”

Mortgage deferral

“For those who have self-enrolled in the mortgage payment deferral program, their household debt is building month over month. However, if the vast majority are able to make their mortgage payment when they come due, this increased debt burden will be manageable. If a sizable percentage of consumers who have deferred their mortgages are not able to make their payments when they come due, the Canadian mortgage and housing market will be severely impacted.”


COVID-19 forcing millennials, Gen Z to delay home purchases – TransUnion

Real Estate DAZADA DIAMOND 2 Jul

COVID-19 forcing millennials, Gen Z to delay home purchases – TransUnion

COVID-19 forcing millennials, Gen Z to delay home purchases – TransUnionGen-Zers and millennials are the consumer cohorts most affected by COVID-19, with a recent TransUnion survey finding that 21% and 16%, respectively, have temporarily shelved their plans to enter homeownership.

For perspective, the coronavirus outbreak stymied the purchases of only 8% of Gen-Xers and 6% of boomers. Across all age groups, around 12% of Canadians have delayed their new home transactions.

A separate TransUnion analysis in late April indicated that 57% of Canadians suffered income declines due to the pandemic, with another 10% bracing themselves for further decreases over the next few months.

A KPMG poll earlier this year found that 46% of Canadian millennials are already in financial despair, with the disillusionment stemming from mounting personal debt and stagnant salaries.

TD Economics reported last month that the pandemic will devastate more jobs held by younger Canadians as they heavily rely upon the service and sales industries. These sectors are among the most affected by coronavirus-impelled labour losses.

“The shock to income comes at a time when many are swimming in debt to a greater extent than the generations that came before them,” TD said. “Economic research shows that entering the job market during an economic downturn has lasting effects on lifetime earnings, with gaps in income relative to luckier cohorts lasting for up to a decade.”


Household debt growth outstripping all other debt types

Credit & Debt DAZADA DIAMOND 29 Jun

Household debt growth outstripping all other debt types

Household debt growth outstripping all other debt typesOver the last few decades, household debt growth accelerated faster than every other debt class, according to real estate information portal Better Dwelling.

Citing data from the Bank of Canada, the analysis said that the trend “makes Canadian households [among] the most vulnerable” globally.

“In 2000, household debt was just 58% of GDP. By the end of 2019 Q4, that number has hit 100% of GDP,” Better Dwelling said. “This is amongst the highest of advanced economies.”

BoC numbers indicated that national household debt hit a peak of $2.28 trillion in March, increasing by 0.44% from February and 4.6% from March 2019. Outstanding mortgages accounted for $1.64 trillion of this sum, rising by 0.49% monthly and 5.3% annually.

The impact on monthly budgets was inevitable: Even before the COVID-19 pandemic took hold, Canada’s insolvency incidence was already at 11,575 filings as of February, which was the highest level since 2010.

The Office of the Superintendent of Bankruptcy Canada said that this volume was 9% higher on an annual basis. Ontario posted the greatest increase during that month, at 3,837 filings (up 16.8% year over year), with Quebec’s 3,770 filings (up 1.9% annually) coming in at a close second.

“[These figures] underscore how vulnerable Canadian households are to income interruption. Over the next few months we’ll likely see an unfolding of two crises: the global pandemic and the bursting of the Canadian consumer debt bubble,” MNP LTD president Grant Bazian said. “Many households were already limited in their ability to face any kind of financial disruption. Now, all Canadians are feeling the effects on their paycheques, pocketbooks and stock portfolios. Those who were already saddled with a lot of debt are in economic survival mode.”