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POW ERED BY
GREEN MORTGAGE TEAM QU ARTERLY
INDUSTRY UPDATE
2020: A Year We Will Never Forget By Kyle Green
APPRAISALS IN THE TIME OF COVID-19 What you need to know By Adam Lawrenson
IN THIS ISSUE: BANK OF CANADA PUTS THE ECONOMY ON LIFE SUPPORT Ar ticle by Dr. Sherr y Cooper
THIS MONTH’S RATE UPDATE
Get the latest updates on fixed and variable rates in Canada
Follow us on instagram & facebook to get the latest updates!
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IN THIS ISSUE Upcoming Events / Catch The Green Mortgage Team At These Events 04
Kyle Green Owner
Max Jurock Industry Update / 2020 - A Year We Will Never Forget 06
General Manager
Ami Arandi Green Mortgage Team Recognized Nation-Wide / Canadian Mortgage Professional 09
Commercial and Private Lending Underwriter
Jason Cattermole Bank Of Canada Puts The Economy On Life Support / by Dr. Sherry Cooper 10
Residential Underwriter
Tasha McKenzie Underwriter
This Month’s Rate Updates / by The Green Mortgage Team 12
Michael Browne Account Manager
Appraisals In The Time Of COVID-19 / by Adam Lawrenson 14 What The Health / by Darcie Klatt 16
Robin MacDonald Account Manager
Quinn Berry Documents Manager
Book Of The Month / Rest: Why You Get More Done When You Work Less 18
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UPCOMING EVENTS
CATCH THE GREEN MORTGAGE TEAM AT THESE UPCOMING EVENTS: REAL ESTATE ACTION GROUP MONTHLY MEET-UP*
May 11
REAL ESTATE INVESTMENT NETWORK BC*
May 11
REAL ESTATE INVESTMENT NETWORK BC ACRE*
May 22 & 23
REAL ESTATE ACTION GROUP MONTHLY MEET-UP*
June 8
REAL ESTATE INVESTMENT NETWORK BC*
June 11
KEYSPIRE SUMMIT NIAGARA FALLS
July 10 - 12
*This event will be held remotely via live video call.
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INDUSTRY UPDATE 2020: A Year We Will Never Forget I must say, I was expecting to beP OWER talking about how robust ED BY the spring market has been and how the real estate market is finally recovering. Instead, COVID-19 has 90% of Vancouver shut down. Despite the current situation, we had a record month in April and it’s expected to be even bigger in May. We are expecting a slowdown in closings from June to August this year. The number of new inquiries for purchases is around 30% of what we would normally expect during this time of year. I recently came across an interesting poll. It is from the US; however, it is in line with what I am currently seeing in BC.
• A lower appetite for financing investors with 5+ properties, especially those with portfolios in Alberta; • One lender is not allowing down payment funds for a rental to come from a Home Equity Line of Credit (we have been told this is a COVID-19 measure and will be allowed again once the pandemic subsides); • Appraisers not going into homes to conduct appraisals (see our guest column by Adlaw Appraisals in this issue for more on this topic);
It is important to note that financing has tightened for many lenders. Before a lender starts working on any file, they will ask if the buyer is still working. If a buyer is self-employed, the question of how COVID-19 has affected their business comes up. With some lenders, all self-employed applicants are reviewed by head office before issuing an approval. Nonetheless, we continue to see deals getting approved. Here are some of the changes we have seen in the past few weeks: 6
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• Lawyers are being allowed to sign documents remotely with certain lenders; • Overall, loans with “B” lenders and private lenders are being cut back by 5-10%; • Extremely long turnaround times for refinances – up to six weeks in some cases; and • Commercial lending has really tightened up.
Consulting Program Our new consulting program will be launching in mid-May. This program will be tailored to helping real estate investors grow their portfolio. It is going to be a game-changer. If you are interested in learning more about this, send us a note to info@greenmortgageteam.ca and we will put you on the waiting list. We will only be taking on a certain number of clients per month. I look forward to working oneon-one with real estate investors to take their portfolios to the next level.
At the beginning of this pandemic, our team put together a COVID-19 Financial Primer. You can read and download it on our website here. Our comprehensive COVID-19 Financial Primer helps you financially prepare, adapt and thrive during this time of uncertainty. I highly recommend that you give it a read. Depending on your situation, here are a few things for you to consider at this time: • If you need money, refinance now and don’t wait. Appraisals are coming in lower week by week, so if you need to max out up to 80% of the value of the property, you should not be waiting.
BY KYLE GREEN
Owner of the Green Mortgage Team
• If your business is short of cash, consider the $100,000 BDC online application (more information in our COVID-19 Financial Primer on this). It’s a quick way to get access to cash. •. If you lost your job, do not qualify and need money, you may still qualify with a private lender if you have a lot of equity in your home (20%+). Contact us to see if this is an option for you. • If you have a presale completing in 2020 or 2021, it may be a good time to get an approval and a long-term rate hold set up. You can learn more about this by reaching out to us. GREENMORTGAGETEAM.CA
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Helping you navigate and thrive during this time Download our COVID-19 Financial Primer here
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#25 Mortgage Brokerage in Canada Last month, Canadian Mortgage Professional announced the top mortgage brokerages across Canada for 2019. We are proud to be recognized as the No. 25 mortgage brokerage in the country! Overall, the Top 75 mortgage brokers in Canada increased their funded volume by $15 million over 2018. We would like to congratulate these individuals and teams for all their hard work in turning their client’s dreams of owning a home, investing in real estate or building a dream development a reality!
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BANK OF CANADA PUTS THE ECONOMY ON LIFE SUPPORT
On the heels of a devastating decline in the Canadian economy, the Bank of Canada is taking unprecedented actions. With record job losses, plunging confidence and a shutdown of most businesses, this month’s newly released Monetary Policy Report (MPR) is a portrait of extreme financial stress and a sharp and sudden contraction across the globe. COVID-19 and the collapse in oil prices are having a never-before-seen economic impact and policy response. The Bank’s MPR says, “Until the outbreak is contained, a substantial proportion of economic activity will be affected. The suddenness of these effects has created shockwaves in financial markets, leading to a general flight to safety, a sharp repricing of risky assets and a breakdown in the functioning of many markets.” It goes on to state, “While the global and Canadian economies are expected to rebound once the medical emergency ends, the timing and strength of the recovery will depend heavily on how the pandemic unfolds and what measures are required to contain it. The recovery will also depend on how households and businesses behave in response.
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None of these can be forecast with any degree of confidence.” “The Canadian economy was in a solid position ahead of the COVID-19 outbreak but has since been hit by widespread shutdowns and lower oil prices. One early measure of the extent of the damage was an unprecedented drop in employment in March, with more than one million jobs lost across Canada. Many more workers reported shorter hours, and by early April, some six million Canadians had applied for the Canada Emergency Response Benefit.” “The sudden halt in global activity will be followed by regional recoveries at different times, depending on the duration and severity of the outbreak in each region. This means that the global economic recovery, when it comes, could be protracted and uneven.” Today’s MPR breaks with tradition. It does not provide a detailed economic forecast. Such forecasts are useless given the degree of uncertainty and the lack of former relevant precedents.
However, Bank analysis of alternative scenarios suggests the level of real activity was down 1%-to-3% in the first quarter of this year and will be 15%-to-30% lower in the second quarter than in Q4 of 2019. Inflation is forecast at 0%, mainly owing to the fall in gasoline prices.
of Canada securities per week in the secondary market. It will increase the level of purchases as required to maintain the proper functioning of the government bond market. Also, the Bank is temporarily increasing the amount of Treasury Bills it acquires at auctions to up to 40%, effective immediately.
“Fiscal programs, designed to expand according to the magnitude of the shock, will help individuals and businesses weather this shutdown phase of the pandemic, and support incomes and confidence leading into the recovery. These programs have been complemented by actions taken by other federal agencies and provincial governments.”
The Bank announced new measures to provide additional support for Canada’s financial system. It will commence a new Provincial Bond Purchase Program of up to $50 billion, to supplement its Provincial Money Market Purchase Program. Further, the Bank is announcing a new Corporate Bond Purchase Program, in which the Bank will acquire up to a total of $10 billion in investmentgrade corporate bonds in the secondary market. Both of these programs will be put in place in the coming weeks. Finally, the Bank is further enhancing its term repo facility to permit funding for up to 24 months. The Bank will support all Canadian financial markets, with the exception of the stock market, and it “stands ready to adjust the scale or duration of its programs if necessary. All the Bank’s actions are aimed at helping to bridge the current period of containment and create the conditions for a sustainable recovery and achievement of the inflation target over time.”
The Bank of Canada, along with all other central banks, have taken measures to support the functioning of core financial markets and provide liquidity to financial institutions, including making large-scale asset purchases and sharply lowering interest rates. The Bank reduced overnight interest rates in three steps last month by 150 basis points to 0.25%, which the Bank considers its “effective lower bound”. It did not cut this policy rate again today, as promised, believing that negative interest rates are not the appropriate policy response. The Bank has also conducted lending operations to financial institutions and asset purchases in core funding markets, amounting to around $200 billion. “These actions have served to ease market dysfunction and help keep credit channels open, although they remain strained. The next challenge for markets will be managing increased demand for near-term financing by federal and provincial governments, and businesses and households. The situation calls for special actions by the central bank.” The Bank of Canada, in its efforts to provide liquidity to all strained financial markets, has, in essence, become the buyer of last resort. Under its previously-announced program, the Bank will continue to purchase at least $5 billion in Government
This is exactly what the central bank needs to do to instill confidence that Canadian financial markets will remain viable. These measures are a warranted offset to panic selling. Too many investors are prone to panic in times like these, which has a snowball effect that must be avoided. As long as people are confident that the Bank of Canada is a backstop, panic can be mitigated. The Bank of Canada deserves high marks for responding effectively to this crisis and remaining on guard. Governor Poloz and the Governing Council saw it early for what it is, a Black Swan of enormous proportions. As a result, Canada will not only weather the pandemic storm better than many other countries, but we will come out of this economic and financial tsunami in better condition.
BY DR. SHERRY COOPER Chief Economist, Dominion Lending Centres Sherry is an award-winning authority on finance and economics with over 30 years of bringing economic insights and clarity to Canadians.
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THIS MONTH’S RATE UPDATES Fixed Rates
DROPPING
INCREASING
The past two months have been quite a bumpy ride for rates. Fixed rates dropped in early March, and then rebounded quickly from their lows only about a week later. Here is how fixed rates are determined, and why they went down quickly and then rebounded:
The spreads over bonds jumped up due to liquidity issues in the market, as well as, a higher risk premium being associated with lending. It is obviously much riskier lending to someone who may be looking to skip their very first payment. We expect that this spread will decrease as COVID-19 becomes less of a factor in our everyday lives, and that this spread will decrease faster than bond yields will increase as we recover (bond yields are likely to increase through the recovery). We believe this will result in lower fixed rates in 2-6 months.
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Variable Rates
DROPPING
Lock-In Metre
INCREASING
We were expecting the Prime rate to drop, just not this much! COVID-19 sure did flip the script and pushed monetary policy around the world towards lower rates.
DROPPING
INCREASING
Currently, there is downward pressure on fixed rates, so unless you are nervous about a rebound, we recommend staying put for now. Check back in a few weeks or a few months to see where things are at, as we may bottom out again soon, at which point it may be worth locking in the rate. If you are in a Prime rate minus 0.4% or better, it may just make sense to ride out the variable for the long term as well.
It might seem strange to have the variable metre in the middle here, but the reason for this is that in the short term, the Prime rate is unlikely to go any lower as this would push Canada into negative interest rates which seems highly unlikely.
We will be sending out more information to our clients when we think it may be a good time to lock into a fixed rate mortgage, for those of you who are more comfortable with that product.
As of now, the Prime rate at 2.45% is unlikely to change for about 9-18 months to let the economy recover. If you are in a variable, congratulations! You probably have a rate at or under 2%. However, for borrowers looking to take a variable today, things are much different. Variable discounts shrunk considerably with the effects of coronavirus coming into full force, and the spreads that we saw on fixed rates were about the same. Overnight, we had lenders move from Prime rate minus 0.6-0.7%, all the way to just Prime rate or Prime rate plus 0.2%. It was quite the shock. We were able to help secure discounted variable rates for a number of our clients before things changed. The going rates have now changed dramatically. Our advice is still to consider a variable rate, and look at maybe locking into a fixed mortgage in a few months as per our fixed rates section.
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APPRAISALS IN THE TIME OF COVID-19
The COVID-19 pandemic has brought on some changes to the appraisal industry. These changes allow for appraisals to continue at this time. Following direction from both the Government of Canada and the Appraisal Institute of Canada, and to ensure the safety of both appraisers and occupants, appraisers are no longer able to complete interior inspections of homes. Most banks and lenders have also adjusted their lending criteria to include appraisals based on the exterior inspection only; however, there are four important caveats to keep in mind: 1. An appraisal inspection time must be made, as done before COVID-19. This ensures most of the interior of the home is visible from the outside and any animals are placed inside while the appraiser completes an exterior inspection (front and back). To assist the appraiser, occupants or realtors should have all blinds open and lights turned on for maximum visibility of the interior of the home. 2. The appraiser must inspect the full exterior of the property, including taking photos of the street, front exterior, rear exterior and rear yard. The appraiser may also take up to 4 pictures of the interior through the windows. 3. Appraisers are to collect photos from the occupant or realtor. These photos must be taken with the Timestamp Camera App (free for iPhone and Android users) and sent directly to the appraiser. Photos must be taken within 48 hours of the appointment date to be used and relied upon in an appraisal report. 4. In some cases, lenders may require that the appraiser and occupant conduct an interior inspection through a video call. In these cases, the occupant or realtor must arrange a time when they can be available to walk the full interior of the home while on a video call with the appraiser.
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Although adjusting to this “new normal” may seem ominous, it is not as daunting as one might imagine. Most people have smart phones and are familiar with camera and app functions, so these new instructions should feel rather straightforward. If, for some reason, the homeowner or realtor has trouble following these instructions, we have the means of cross-referencing photo capture dates and geo-location to ensure the accuracy and reliability of the provided interior photos so that all stakeholders’ interests are protected. Above all, we believe that this is a time when we can all demonstrate our resolve and work together to achieve a common goal, despite these challenging times; and we are always happy to help. Wishing you all a happy and healthy Spring 2020!
BY ADAM LAWRENSON info@adlawappraisals.com www.adlawappraisals.com 604-809-8506 At Adlaw Appraisals, we conduct residential and commercial appraisals for many purposes, including mortgage financing.
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WHAT THE HEALTH?
Does anyone else wake up in the morning and for a split-second forget about the new world we are in? Routines, healthy habits, exercise and diets personalized to our needs take years to build. All of a sudden, we have been asked to break our everyday patterns and stay at home. The COVID-19 pandemic has spared no one when it comes to disrupting our routines. When it comes to our health, what do we do about this new world we living in? The need for social distancing certainly complicates our daily routines: our workout routines are changed because we can’t go to the gym and our diet needs to be adjusted because we are being asked to only grocery shop when necessary, and not daily for fresh produce. The uncertainty and anxiety in the world today is definitely not helping our sleep. I am a gym owner, personal trainer, nutrition specialist and avid athlete, and this pandemic has turned my world upside down. Over a month ago, I had to temporarily close my doors and join in the effort to flatten the curve. This made me look at things from a new perspective, innovate and most importantly, re-create my routine that I had spent years building. I would like to share with you what has helped me these past few weeks stay healthy and feel good about myself:
First off, make a new routine Mental health is a huge concern at this time, not having purpose or control can lead to some anxious moments. In order to quell those moments and quiet your mind, create a new schedule or routine that involves the following:
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Workout
Meditation/ Self-care
Endorphins, oxytocin, serotonin and dopamine are all hormones that can be released or stimulated by physical activity.
Meditation is a simple practice available to all. It has been proven to reduce stress, increase calmness and clarity, and promote happiness. I suggest downloading an app on your phone and try 5 minutes if you are new to meditation (such as the 10% Happier app). There are also tons of helpful YouTube channels offering guided meditations. If you are rehabilitating an injury, now is the perfect moment for you to take the time you need to follow your physiotherapist’s or doctor’s recommendations or exercises. Too often we are too busy to take care of ourselves. Consider this time as a gift rather than a curse, embrace the slow moments and take advantage of this time because it will not always be this way.
Get Outside The weather has been nothing short of amazing these past few weeks and even though we are recommended to stay indoors for the most part, we are also being encouraged to make it outside at least once per day for a short walk or jog if you are not under a full lockdown. Even sitting in your yard absorbing the Vitamin D from the sun can lift the spirit and lighten the day. Kyle takes things to another level, “My girlfriend and I take our yoga mats and phones to the grass outside, and do our live Zoom workout with Darcie in the morning. That way I can make sure I get a bit of fresh air and a workout in before I head to the office for the rest of the day.”
Social Hour Working out from home has never been easier. There are so many trainers and coaches that are providing live daily workouts of every variation and fitness level. Most workouts use body weight only, which means you don’t have to have any equipment at home. If you need or want a more personalized approach, I recommend reaching out to your trainer or gym and ask if they are offering classes or personal online sessions. You can also check out @excelfitness on Instagram or Facebook for daily posted workouts. If you prefer a trainer to guide you through a workout, visit excelfitnes.as.me to sign up for an online class or a personalized session.
This is personally my favourite. Two or three times per week, I reach out to a friend or family member and set a date to meet virtually online. I have had coffee dates, happy hour and games night all from the comfort and safety of my own home. The beauty of this is it can be with anyone living anywhere: a friend from Australia or an aunt just down the street. Zoom is a great platform, as well as, Skype or WhatsApp are great options.
BY DARCIE KLATT Excel Fitness Inc. excelfitness.as.me darcieklatt@hotmail.com 604-417-7562 @excelfitnessinc
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BOOK OF THE MONTH REST
By Alex Soojung-Kim Pang There is a common misconception in our society today that the more we work, the more we will get done, the more successful we will be and the more money we will make. We don’t question the feeling of being overworked, we accept it as normal, in fact, we respect it as “a good thing”. Another common thought is that rest comes after everything else is done, but when was the last time you felt that “everything is done”? This book has us thinking about rest in a whole new way. Instead of seeing rest as something that “gets in the way of getting things done”, this book shows readers how to create a better fit between work and rest, and how rest can help us work more efficiently, effectively and creatively. It also dives into the different types of what the author calls “deliberate rest” (hint: lying on the couch and watching Netflix every night is not one of them). The author combines scientific research with highlighting writers, politicians, entrepreneurs and other well-known people to challenge our misconception about rest (hint: naps, walks, reading and sports are considered deliberate rest). Think of deliberate rest in this way: it’s the vigorous use of your idle time. Available on: Amazon, Indigo, and Audible.ca
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Rest convinces us that we need to relax more if we want to get more done, be healthier and enjoy our lives to the fullest.
WE ARE HERE FOR YOU We hope that all of you are healthy and safe. Among the many things that have been uncertain during this time – your mortgage and financing should not be. We are here to help you navigate your specific situation during this challenging time.
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