By: Ephraim Vecina

Franco Greco, senior vice president of loan origination and business development at NewDay, pointed to the robust fundamentals that comes from eight years of industry experience as what helped him manage his company across the challenges of 2020 – which includes the impact of the ongoing COVID-19 pandemic.

Steering one of North America’s leading mortgage lenders focused on helping active military personnel, veterans, and their families is a tricky proposition in this troubled age – but Greco said that the company helpfully provided everything he needed to succeed in his mission so far.

“NewDay USA was my first experience working in the mortgage industry” Greco said. “Although I had no prior experience since I was a recent graduate [of Salisbury University], I learned everything I needed to know through the company’s training program. NewDay showed me an amazing opportunity and trained me from the ground up, teaching me everything I know today. My experiences have since exceeded my expectations.”

Greco said that a natural inclination towards continuous growth and learning is one of his most valuable characteristics.

“When it comes to business, I specialize in leadership development and recruiting. To ensure that I accomplish my goals, I read at least one book every two weeks. Every book I read, I want to find at least three to five takeaways to implement in my day-to-day life.”

Greco said that the ever-updated knowledge accumulated through voracious reading helped refine the approach that he and his company should take during this crisis.

“The most challenging period of my career has been the last few months of 2020, dealing with the COVID-19 pandemic,” Greco said. “We are looking to quadruple our production in six short months, which comes with plenty of challenges such as hiring enough sales and operations employees to handle the demand of work we have taken on. We refocused our technology and simplified our process to make closing loans more straightforward than ever.”

Source

By: Ephraim Vecina

While federal financial aid and mortgage deferrals have propelled some price growth recently, it will be only a matter of time before the full negative impact of the COVID-19 pandemic works its way through the housing market, according to a new report by Moody’s Analytics.

In its newest Canada Housing Market Outlook, Moody’s said that the housing market’s fundamentals will weaken in 2021 as mounting unemployment and lower purchasing power will keep a substantial number of consumers from entering the market.

“House prices are set to fall from their current levels,” Moody’s said. “However, the speed of the drop will vary considerably across provinces. All regions will experience price declines, but the Prairie provinces will register the most sizable peak-to-trough decline.”

Nationally, the average decline will be a little over 7% next year. Calgary and Edmonton will see the largest drops at roughly 10% each, with oil continuing to exhibit weakness on a global stage. Regina will have a 9% downturn, while Toronto will reach nearly the same decline. Vancouver prices are projected to decline by less than 7%.

“High unemployment and lower income will restrain buyers’ return to the market,” according to report author Abhilasha Singh. “So will affordability issues in Vancouver and Toronto. Further, slower in-migration flows to Canada due to COVID-19 disruptions will weigh on housing demand. Not even lower interest rates will be enough to save the housing market.”

Fortunately, all is not lost for the less-than-populous markets.

“We expect greater resilience in lower-density markets outside Canada’s large urban cores,” Moody’s said. “The pandemic has boosted demand for properties offering more space for working from home and fewer shared areas with neighbours. Smaller markets where such properties are more affordable will particularly benefit from this trend.”

By David Larock

Last Wednesday the Bank of Canada (BoC) announced that it would hold its policy rate steady, as was universally expected.

In its policy statement, the Bank offered an updated assessment of the state of our recovery, and, by association, indicated where our mortgage rates are likely headed over the short and medium term.

Let’s start with a quick review to explain why the BoC’s words and actions are important to anyone keeping an eye on rates.

Variable mortgage rates are priced on lender prime rates, which move in lockstep with the BoC’s policy rate. So when the Bank held its policy rate steady last week, that meant that variable mortgage rates didn’t move.

Fixed mortgage rates are priced on Government of Canada bond yields. These yields are typically determined by thousands of buy-and-sell orders in the open market and normally respond only indirectly to the BoC’s policy-rate actions and commentary. But the Bank is now buying $5 billion+ of bonds each week as part of its emergency response to the pandemic, using a monetary-policy tool referred to as quantitative easing (QE), and these purchases are helping to directly suppress our bond yields, and by association, our fixed mortgage rates.

Bluntly put, the BoC’s current interventionist policies mean that its actions are effectively setting and depressing the level of most Canadian interest rates today.

Now that we have established the Bank’s dominant role in determining today’s mortgage rates, here are five highlights from its latest policy statement:

1. The BoC expects that our economy’s response to the pandemic will play out in three phases: containment, reopening and recuperation.
   • The initial containment phase triggered an “exceptionally severe” recession, which the Bank called “the biggest global downturn since the Great Depression.”
   • The reopening stage, which we have now effectively just completed, was assessed as having been “stronger-than-expected.”
   • The final recuperation stage, which we have now begun, is expected to be “slow and choppy.” The Bank doesn’t expect “the strong rebound we’ve seen to continue at the same pace in the months ahead” and instead predicts that it will “take a long time to get [our economy] back to where it was at the end of 2019, before the pandemic.”
2. The Bank acknowledged that our stronger-than-expected reopening was “supported by government programs to replace incomes and subsidize wages.” But it didn’t acknowledge the recent data confirming that our federal government’s unprecedented fiscal-policy response did more than replace lost income. It raised average incomes by an average of 11% in the second quarter during “the biggest downturn since the great recession.” Whether you believe the government’s response was right or wrong, our policy makers should be more willing to acknowledge that their staggering stimulus programs did more than temporarily shield our economy from much of the pandemic’s real economic impact.
3. The BoC noted that the summer brought a sharp rebound in household spending led by “stronger-than-expected goods consumption and housing activity” while employment experienced a “large but uneven rebound.” Our export sales have recovered somewhat “but are still well below pre-pandemic levels.” Most importantly, and to no one’s surprise, “business confidence and investment remain subdued.” These data were already showing weakness before the pandemic started, and with all that has happened since, it’s no wonder that businesses remain cautious.
4. “CPI inflation is close to zero … and is expected to remain well below target in the near term.” The Bank’s sub-measures of core inflation are also all below 2%, “reflecting the large degree of economic slack … [with] services prices showing the weakest growth.” All of the BoC’s actions are ultimately geared toward maintaining target inflation, and the Bank is clearly more concerned about below-target inflation than above-target inflation.
5. The recuperation stage “will be heavily reliant on policy support”, and everything will depend on the “the path of the COVID-19 pandemic and the evolution of social distancing measures required to contain its spread.” School reopening was also highlighted as being critically important. Basically, everything depends on whether we will see a second wave of COVID. While we’re all hoping that won’t happen, every other pandemic in history has included a second wave, so hope may be with us but the odds are not.

To summarize, the BoC believes that the next phase of our recovery will be “slow and choppy” and it plans to continue its aggressive monetary-policy interventions until the recovery is “well underway.”

More specifically, the Bank will continue on its current path until today’s “large degree of economic slack … is absorbed” and until the Bank’s 2% inflation target is “sustainably achieved”.

Translation: Ultra-low mortgage rates are going to be around for a while yet.

The Bottom Line: The BoC held its policy rate steady last week.

Its accompanying commentary confirmed both its assessment that our recovery is still in the early innings and its commitment to keep rates at their ultra-low levels until said recovery is well underway.

Against that backdrop, I expect that our fixed and variable rates will either remain at their current levels, or more likely, continue to drift lower as the recuperation stage of our recovery plays out.

Source

But the crown corporation says it is well-placed to deal with the increase in insurance claims

By Steve Randall

by Ephraim Vecina

Real estate technology firm Properly is offering homeowners who are looking to change properties the opportunity to buy first, and then sell their old homes later at a guaranteed price.

The program, a cooperative venture with the Canadian Imperial Bank of Commerce, will be initially available only in Toronto, although an Ottawa roll-out is also in the works.

“The pandemic has made an already stressful home buying and selling process even more volatile,” said Anshul Ruparell, chief executive and co-founder of Properly. “The standard view is that you should sell before you buy or risk being left with two mortgages to carry. With Properly, you have the freedom to buy the home you love as soon as it hits the market.”

One of the main attractions is the capacity to list a home even after moving out, which is a valuable feature in the age of COVID-19.

“This eliminates the stress of living through staging, showings, and open houses – all inconveniences that have been exacerbated by the pandemic,” the company said in its announcement.

The offering will allow property owners to “substantially reduce risk,” Ruparell said. This will be largely achieved by Properly shouldering any mortgage costs associated with the previous property once a seller takes on a mortgage on their new home.

“We are comfortable covering this cost, which … wouldn’t be done in a traditional transaction,” Ruparell told The Financial Post.

With an average selling time of 17 days in Toronto, the company will not likely take undue hazard unto itself, Ruparell said.

Source