COVID-19 UPDATES

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WHAT IS COVID-19

As many of you have heard by now, the world is being gripped by COVID-19 (otherwise known as “Coronavirus”). According to the World Health Organization (W.H.O.), Coronaviruses (CoV) is a large family of viruses ranging from the common cold to more severe diseases.

Coronavirus disease (COVID-19) is a new strain that was discovered in 2019 and has not been previously identified in humans. Common signs of infection include respiratory symptoms, fever, cough, shortness of breath and breathing difficulties. In more severe cases, infection can cause pneumonia, severe acute respiratory syndrome, kidney failure and even death. Standard recommendations to prevent infection spread include regular hand washing, covering mouth and nose when coughing and sneezing, thoroughly cooking meat and eggs. Avoid close contact with anyone showing symptoms of respiratory illness such as coughing and sneezing.

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FINANCIAL EFFECTS

Since being labeled a pandemic per the World Health Organization (W.H.O.), the effects of COVID-19 have begun to ripple through the world’s economy – including Canada – and causing a number of different effects. To help keep you up to date on what is going on financially, we have compiled a list of recent announcements by the Ministry of Finance, the Bank of Canada, and OSFI:

  • Minister Morneau announced a new Business Credit Availability Program, adding $10 billion of additional support financing, through Business Development Bank of Canada and Export Development Canada, to support Canadian Businesses. Click here for more.
  • The Bank of Canada lowered the overnight rate from 125 to 75 bps, to reduce the interest cost burden for businesses and consumers alike. The bank also increased its Government of Canada bond buyback program. Click here for more.
  • OSFI reduced the Domestic Stability Buffer from 2.25% to 1%, thereby freeing up $300 Billion additional lending capacity for Domestic Systemically Important Banks (D-SIBS). Click here for more.
March 6Bank of Canada rate cut and subsequent Canadian mortgage rate drop
March 9Global Markets in Turmoil as Oil Plunges, Propelling Yields to Record Lows
March 13Tour De Force: BoC Cuts Again, OSFI Eases, More ComingCheck out the related CTV Interview here.
March 16Stock and Bond Yields Plunge after Sunday Fed Cut
HOMEOWNER NEED TO KNOW

This can be a difficult time for a homeowner as many families are self-isolating or are in quarantine due to the virus. This can result in loss of monthly income and financial instability, which can cause stress and concern about your home and mortgage. Dominion Lending Centres understands this and we are making it our number one priority to be here for you.

We have compiled the following information from our partners to keep you informed as to some of the recent developments surrounding mortgages, as well as what lenders are doing to help mitigate financial strain during this difficult time.

Here are a few important considerations for homeowners and potential homeowners to keep in mind during this time:

  • Mortgage application turnaround time may be an upwards of 15 days in some cases given the current climate and growing developments.
  • If you require an appraisal, there can be issues that could delay or prevent access of the appraiser into the home. Lenders are being proactive and exploring policy options to help circumvent this as best they can.
  • Don’t forget this situation is new to our mortgage brokers and lenders as well as the rest of us, so they are being cautious yet innovating to overcome any issues.
  • Rush transactions will be met with challenges.

The Stress Test

In light of this growing situation, OSFI has announced that it is suspending all consultations, including those regarding changes to the proposed B-20 benchmark rate. In addition, the Minister of Finance postponed the announced April 6th qualification change for insured mortgages. In short, until further notice, the Bank of Canada posted a 5-year rate will continue to be used for mortgage qualification.
WHAT LENDERS
 ARE DOING

We understand that the COVID-19 outbreak is taking a toll on families across the country with many parents being out of work or quarantined. As an industry built on homeowners, many of our major lenders have pulled together to provide you beneficial options during this time and help alleviate some of the financial stress.

Depending on your lender, there may be options available to you during this time such as:

  • Deferral of Payments
  • Re-amortization of the loan
  • Capitalizartion of Outstanding Interest & Costs
  • Special Payment Arrangements

The Big Banks

Big banks including Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD), Bank of Nova Scotia (Scotiabank), Bank of Montreal (BMO), Canadian Imperial Bank of Commerce (CIBC) and National Bank of Canada have opted to provide coordinated relief for their customers.

These banks will be working with personal and small business clients to cope with the economic fallout of the virus. Effective immediately, all six are introducing mortgage payment deferrals of up to (6) months and are also offering relief on other credit products for those families who are facing hardship during this situation.

MOrtgage Insurers

In addition to the big banks, mortgage insurers including CMHC, Genworth & Canada Guaranty are working to help homeowners who have been financially impacted by the COVID-19 outbreak. Starting now, they have increased their flexibility and are allowing payment deferral of up to 6 months for home-owners who, primarily but not exclusively, purchased with less than 20% down.

WHAT DOES THIS MEAN FOR CLOSINGS?

If you are currently in the process of purchasing or selling a home, we have taken the liberty of gathering information surrounding real estate transactions during this COVID-19 situation.

Land Registry Offices Remaining Open
For Now

Currently, there are no plans to close the LROs. This may change, but currently, LROs may be working with reduced staff and will likely prioritize services required for closings (over-rides, pre-approvals, PIN corrections, etc.).

Banks Are Remaining Open  
For Now

All of Canada’s major banks have indicated an intention to remain open. Similar to other businesses, the banks may be working with reduced staff or locations and there may be delays in processing requests.

WHAT CAN YOU DO?

If you find yourself facing financial difficulties as a result of job loss or income reduction during this time, it can be overwhelming and may leave you feeling stressed and unsure of what the next steps are.

To make it easy, we have put together three simple steps you can do to help resolve your financial difficulties and ensure you can focus on more important things such as your family and your health.