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To Defer or Not

To Defer or Not to Defer                   With Canada’s major Mortgage Finance Companies (MFC’s) and all six big banks offering mortgage deferrals of up to 6 months, as well as case-by-case options from credit unions, one of the major questions currently facing Canadians amid COVID-19 is do you defer your mortgage? To help you with this decision, we have gathered some important information on what it means to defer and the benefits (or side-effects) from doing so. For anyone who is unsure, a mortgage payment deferral means that customers are not required to make regular payments (principal, interest and property tax, if applicable) on their mortgage. In the case of COVID-19, this deferral period can be up to six months. As much as you may be keen on taking advantage of deferring your mortgage, it is essential to remember that this is …
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10 Things you CAN do right now – #COVID19

1. It is irresponsible for us to guess at how long the COVID-19 pandemic will be with us.  What we do know for certain is that until there is a vaccine developed it is going to be an issue and until there is an anti-viral treatment we will be in self-isolation. This is emotionally and mentally draining for people and it is ok, it is allowed to be. I truly feel it is important in order to ensure that a few things are taken care of while we are still able, in order to assist in reducing the stresses that you will feel: -Consolidate Debts to improve cashflow -Place a Secured Line of Credit on a property when available to help with any emergency situations that might come up -Take out equity if you feel you need some additional money set aside 2. If you have found your income negatively …
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Recent Mortgage News

    CMHC commits additional $100bn to Insured Mortgage Purchase Program The agency expands its mortgage-buying program from the initial $50bn… Hundreds of thousands of homeowners seek mortgage payment deferral Canada’s big six banks report higher volumes of mortgage-related calls since relief plan was introduced…. A third of Canadians fear not meeting housing expenses due to COVID-19 Survey also says more than 40% lost their jobs or live with someone who has… Iqaluit condo owners see sharp rise in commercial insurance premiums Insurance companies being scared out of the city largely contributes to the increase…

Houses rising

Why Are Mortgage Rates Rising?

Over the past month, the Bank of Canada has lowered its overnight rate by a whopping 1.5 percentage points to a mere 0.25%. Many people expected mortgage rates to fall equivalently. The banks have reduced prime rates by the full 150 basis points (bps). But, since the second Bank of Canada rate cut on March 13, banks and other lenders have hiked mortgage rates for fixed- and variable-rate loans. That’s not what happens typically when the Bank cuts its overnight rate. But these are extraordinary times. The Covid-19 pandemic has disrupted everything, shutting down the entire global economy and damaging business and consumer confidence. No one knows when it will end. This degree of uncertainty and the risk to our health is profoundly unnerving.   Most businesses have ground to a halt, so unemployment has surged. Hourly workers and many of the self-employed have found themselves with no income for an …
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5 Ways to Rewire Your Brain to Deal With Coronavirus Stress – from Psychology Today

Staying mindful and connected to loved ones can help you calm down – from Psychology Today   The novel coronavirus epidemic has hit the world with a vengeance, creating widespread illness, fear, panic, uncertainty, and death. In many ways, it is the perfect storm of conditions to trigger automatic, primitive brain reactions to danger. It is life-threatening, invisible, unfamiliar, and unpredictable. These are all the conditions likely to stir up your brain’s threat detection system.   How Your Brain Responds to a Threat When your brain perceives a threat, a structure called the amygdala hijacks the brain into emergency mode. The thinking centers of your brain, located in your prefrontal cortex, go partially or fully offline, and the primitive, emotional brain takes over. The primitive, emotional centers of your brain are hardwired to create a “fight, flight, or freeze” response when they perceive a threat to your survival.   Adrenaline and cortisol flood the nervous system, …
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Fed Cuts Overnight Rate One Percentage Point But Markets Plummet

In an unprecedented Sunday afternoon meeting, the US Federal Reserve cut their key policy rate by 100 basis points (bps) to a level of 0%-to-0.25% (see chart below). Also, the Committee announced increased access to the discount window where the Fed makes loans to banks. The Fed is the lender-of-last-resort and is signalling that it will provide liquidity wherever needed. As well, with interest rates already so low, the Fed is well aware that rate cuts can only do so much. Thus, they are returning to quantitative easing–the buying of large volumes of U.S. government Treasury bills and bonds as well as mortgage-backed securities (MBS), to inject liquidity into the financial system. The Treasury and US MBS markets are usually the deepest, most liquid markets in the world. But over the past two weeks, liquidity has dried up. Financial instability has risen sharply with the high level of volatility. Banks …
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Extraordinary Coordinated Policy Actions To Ease the Economic Impact of Pandemic In Canada

Prime Minister Justin Trudeau said Canada would introduce a “significant” fiscal stimulus package, as part of a coordinated effort with other Group of Seven countries to counter the virus-driven global economic slowdown and calm markets. In an exceptional press conference held at 2 pm today, Finance Minister Morneau sat at the side of the Governor of the Bank of Canada, and the head of the Office of the Superintendent of Financial Institutions (OSFI) to announce measures to soothe financial markets, boost confidence and support the Canadian economy. Only nine days after the Bank of Canada cut the overnight policy rate by 50 basis points to 1.25%, Governor Poloz announced another 50 bps reduction in the policy rate to a level of 0.75%. Here is the Bank of Canada’s official statement: “The Bank of Canada today lowered its target for the overnight rate by 50 basis points to ¾%. The Bank Rate is correspondingly …
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Global Markets in Turmoil, Oil Prices Plunge Along With Yields

    Markets shuddered in the face of a price war for oil and the economic fallout from the growing outbreak of coronavirus. Frightened investors poured into haven assets sending yields to unprecedented lows. Oil prices tumbled 30% after Saudi Arabia said it would cut most of its oil prices and boost output when Russia refused to join OPEC in propping up prices (see chart below). Foreign exchange markets convulsed, as the steep drops in oil and share prices overnight sparked a flight from commodity-linked currencies into the perceived safety of the Japanese yen and the US dollar. The Canadian dollar fell to 0.7362 as of this writing. The Government of Canada 5-year bond yield was as low as 0.284% overnight but has since recovered roughly 0.535%, still well below Friday’s closing level of approximately 0.65% (second chart below). Stock prices have fallen very sharply in the first hour of …
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Home Sales Slip A Bit In January As Supply Tightens Pushing Up Prices

  Statistics released today by the Canadian Real Estate Association (CREA) show that national existing-home sales dipped between December and January owing to a dearth of new listings, especially in the GTA. As the CREA chart below shows, the pace of monthly home resales nevertheless remained strong.  Home sales recorded over Canadian MLS® Systems declined by 2.9% in January 2020, although they remain among the stronger monthly readings of the last few years.  Transactions were down in a little over half of all local markets in January, with the national result most impacted by a slowdown of more than 18% in the Lower Mainland of British Columbia. According to CREA, “While there were few notable gains in January, it should be noted that many of the weaker results have come alongside a shortage of new supply in markets where inventories are already very tight.” Actual (not seasonally adjusted) sales activity was …
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Canadian 5-year Yield Fell To Lowest Level Since October

Global investors are selling stocks and piling into the safety of bonds in response to fears that the Wuhan coronavirus could disrupt global economic activity. Gold prices, another haven, have also risen. The Government of Canada 5-year bond yield traded this morning at roughly 1.35%, well below its nearly 1.70% level one month ago. The 5-year yield leads fixed mortgage rates, so if this trend persists, we might see widely available fixed-5-year rates in the 2.50% range once again in February.    ____________________________________________ Bank of Canada Now Buying 10-year CMBs   The Bank of Canada announced yesterday that effective immediately, the Bank will expand the Canada Mortgage-Backed securities (CMBs, which are government-guaranteed) it can purchase in the primary market to include 10-year fixed-rate bond issues. In 2018, The Bank expanded the assets it acquires to 5-year fixed and floating CMBs. The Bank held $517 million of these 5-year CMBs as of …
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