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Current Mortgage Market Update – June 2020

Here is a review with some lending changes and a brief update with Amy Fleming a local TD Mobile Specialist serving Oxford County.  Some home owners are experiencing financial uncertainty and with the mortgage payments and possible lack of employment these past months  Amy has some helpful information to assist you with making your decisions with regards to how to navigate your options during this time. Please reach out to her direct for your more specific concerns about your own mortgage concerns.

Here is and update from Mobile Mortgage Specialist Amy Fleming :

A couple of good points with lending changes in general and with TD:

  • Bank of Canada Stress Test Qualifying Rate as dropped again. We now qualify all applications at a minimum of 4.94%. This helps put a little more buying power int the buyers’ hands.
  • We can now use some of the Canada Child Care Benefit (CCB) as part of an income source on applications provided the children are under the age of 13 and the annual amount does not exceed 15% of the annual employment income
  • Mortgage rates at all-time lows for both fixed and variable rate options

CMHC and federal government has requested we cautiously review all income and debt loads on all applications during COVID. Some temporary measures implemented include:

  • Confirmation of ongoing income or proof of return to work post-lay off by means of a recent paystub or letter of employment dated within the last 14 days
  • Cannot use EI/CERB income for those laid off or out of work due to COIVD-19
  • Extensive review for any clients who have currently utilized mortgage or loan deferrals
  • Review of profile sustainability with remaining savings after closing and existing debt loads. We need to show that the clients have something to fall back on should lockdown measures be re-instated.

TD COVID Changes:

  • All pre-approvals need to be requalified if completed prior to COVID-19 or if started in a retail branch or online channel. We requalify based on income and profile reasonability reviews mentioned above
  • All Purchase and pre-approval applications effective April 21st must be referred out to the Mobile Mortgage Specialist Channel
  • A continued review on the re-opening phases to see if we can ease restrictions for certain job sectors impacted heavily by COVID lockdown

A quick note about CMHC: At this point in time, despite rumours from a press conference where quotes were taken out of context, there are no plans for CMHC to discontinue 5% down payment mortgages. CMHC is carefully watching housing prices across Canada and household debt levels, currently hovering around $1.76 of debt for every $1.00 earned in income. If we see them climb into the $2.30 range and combined with a larger drop in home values/prices, they could review any and all options to reduce home owner risk. They will not immediately jump to removal of 5% down payment as they will then need to revamp the First Time Home Buyers Incentive program launched in 2019.