Why you may want to consider applying for a mortgage or refinancing your existing one before New Year?
If you are considering conventional uninsured mortgage in the next 4-5 months for either purchasing a property, refinancing, or switching lenders, it might be crucial to get approval before Jan 1, 2018.
Due to a new rule for uninsured mortgages after New Year you may qualify for $100,000-$150,000 less then you expected. That could be a problem or even a deal breaker for some people.
Assuming you have an annual income of $100,000, you do not have any liabilities (0 debts) and the property you trying to finance/refinance is in GTA or area with similar property taxes and maintenance fees, the maximum mortgage loan you qualify now for a conventional 3.39% 5 year fixed 25y amortization is about $541,000. After New Year the max amount you will qualify for the same one will be approx. $442,000 or $99,000 less. Lets see another case - if your annual income is $150,000 for the same situation the numbers are respectively $870,000 before Jan 1st and $711,000 after, so you will qualify for $159,000 less.
Again, this is only for conventional uninsured 5 year fixed rate mortgages with Loan-To-Value 80% or less. All others has been already affected by the Qualifying Stress rule introduced last year.
Also, this includes refinancing or switching an existing mortgage to a new lender.
Straight mortgage renewals are not supposed to be affected, but at the moment there is no clarity on this and most likely will depend on your lender, or the institution behind your lender, so you might be surprised even at renewal.
A mortgage approval before the end of the year will let you qualify for a bigger loan and most of the mortgages have 120 days hold period, so my advice is take advantage of this opportunity, if applicable to you.
Employment continues to rebound in July
From February to April, 5.5 million Canadian workers were affected by the COVID-19 economic shutdown. This included a drop in employment of 3.0 million and a COVID-related increase in absences from work of 2.5 million.
Employment rose by 419,000 (+2.4%) in July, compared with 953,000 (+5.8%) in June. Combined with gains of 290,000 in May, this brought employment to within 1.3 million (-7.0%) of its pre-COVID February level.
The number of Canadians who were employed but worked less than half their usual hours for reasons likely related to COVID-19 dropped by 412,000 (-18.8%) in July. Combined with declines recorded in May and June, this left COVID-related absences from work at just under 1 million (+972,000; +120.3%) above February levels.
By the week of July 12 to July 18, the total number of affected workers stood at 2.3 million, a reduction since April of 58.0%.
Canadian home sales and new listings up again in June
Home sales recorded over Canadian MLS Systems in June 2020 rebounded by a further 63%, returning them to normal levels for the month some 150% above where they were in April.
Transactions were once again up on a m-o-m basis across the country. Among Canadas largest markets, sales rose 83.8% in the Greater Toronto Area (GTA), 75.1% in Montreal, 60.3% in Greater Vancouver, 99.7% in the Fraser Valley, 54.9% in Calgary, 59% in Edmonton, 22.5% in Winnipeg, 34.8% in Hamilton-Burlington, 67.9% in London and St. Thomas, 55.6% in Ottawa and 43.6% in Quebec City.
Actual (not seasonally adjusted) sales activity posted a 15.2% y-o-y gain in June.
REALTORS across Canada are increasingly seeing business pick back up, stated Costa Poulopoulos, Chair of CREA. With sellers and buyers returning to the market, we continue to make sure clients stay safe by complying with government and health officials directives and advice, increasingly using technology to list and show properties virtually while providing secure methods to complete required forms and contracts. As always, but maybe now more than ever, REALTORS remain the best source for information and guidance when negotiating the sale or purchase of a home, continued Poulopoulos.