Mortgage Minute 3: Canadian Mortgage Rates and COVID-19
Mortgage Rates continue to be in a state of flux with COVID-19. Here is my latest (March 27, 2020) explanation of what has been happening.
New and Improved Stress Test!
The Department of Finance announced Tuesday changes to the mortgage stress test. “The new benchmark rate will be the weekly median 5-year fixed insured mortgage rate from mortgage insurance applications, plus 2%.” This change is specific to insured mortgages (i.e. mortgages with a down payment of less than 20%) and takes affect on April 6.
PM Orders Review of Stress Test
If you’ve been having a hard time getting approved for a mortgage since the stress test was introduced in 2018, you aren’t alone. In fact, about 10% of buyers who would have been approved for a mortgage before the stress test find that they can no longer get into the home they were hoping for.
Bank of Canada Observes Country’s Economic Resilience
The Bank of Canada announced this morning that the overnight rate has remained unchanged. The rate has been sitting at 1.75% for the last 12 consecutive months.
When the Bank released it’s monetary report in July the financial outlook for the country was weak. In this month’s monetary report the outlook is even weaker.
Signs Alberta Economy Headed to Recovery
If you’re like most Albertans you’ve probably been feeling pretty pessimistic about our economy for the last few years. Thousands of people in the oil field have lost their jobs, the cost of gas has been attached to a yo-yo, and small business owners have struggled.
But at last week’s annual economic outlook meeting of Calgary Economic Development (CED), the reality of our many recent successes was made evident.
Global Uncertainty On the Horizon
In May it was pretty certain that the Bank of Canada would not be making any changes to the overnight rate any time soon and the same remains true this month after their recent announcement. In fact, economists are projecting that it may be 2021 before we see rates rise again and more and more speculators agree that we’re going to start seeing cuts to the overnight rate.