How Canadian Homebuyers are Being Supported During the Coronavirus Outbreak
Homeownership is a source of pride for those who have it, and something desired by those who are working towards it; it is a “life box” we all want to check, and understandably so. It is an investment that stands the test of time and is a major component of many retirement plans.
The pros of homeownership greatly outweigh the cons, but what happens when a novel coronavirus threatens the wellbeing and financial security of Canadian homeowners? The Government and financial institutions are reacting quickly to provide solutions during this unprecedented period in our history. As Canadian homebuyers, we are lucky to quickly have resources available to us. Below is a quick overview of measures put in place to help homeowners. As everyone’s situation is different, it is important that you speak to your mortgage representative or financial advisor to assist you with managing your finances and mortgage loan.
Insured Mortgage Purchase Program
The stability of the financial institutions impacts the stability of homeowners. The Government’s Insured Mortgage Purchase Program (IMPP)1 allows banks and mortgage lenders to continue to effectively lend to What this means for people looking to buy a home is that the barrier to entry is lower than usual, since banks have additional financial support from the government. In addition, portfolio insurance eligibility rules have been relaxed, which should play in favour of homebuyers. These revisions should allow financial institutions to help their clients navigate these difficult financial times with greater ease.
Interest Rate Cuts
Over the past several weeks, the Bank of Canada has reduced its overnight rate from 1.75 to just 0.25.2 Variable mortgage rates are based on the Bank of Canada’s overnight rate. This means that homebuyers can get a desirable interest rate on their variable rate mortgage loan. Paying less interest on your loan means more money in your pocket.
Delayed Mortgage Payments
Canada’s six largest banks are offering clients some financial relief by allowing mortgage payments to be delayed up to 6 months, as well as offering some relief on other credit products. These delayed payments would be added onto your existing mortgage term. At the end of the term, you would need to have the balance of the mortgage refinanced, renewed, or paid in full. If you are considering deferring your mortgage payments, ask your bank if these deferred payments will be interest free. Allowing a major expense for homeowners to be deferred will no doubt help Canadians remain on their feet during the outbreak.
The COVID-19 outbreak is causing mental, emotional, and financial stress on many Canadians, but thankfully, there are measures in place to help homeowners and homebuyers in their time of need. Everyone’s situation is different, so be sure to speak to your mortgage representative or financial advisor to assist you with managing your finances and mortgage loan.
Need help navigating the real estate market during the COVID-19 outbreak? Purplebricks can help.
If you need to sell your home or buy a home during the outbreak, rest assured that a REALTOR® can help you navigate these murky waters. Purplebricks is here to support Canadians by providing them full-service real estate while saving them thousands in commission when selling their home. As for homebuyers, we share the commission by giving buyers $2,000 in cash back* when they buy a home with us. Call 1-855-999-9740 for more information.
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1 CMHC Releases Additional Details on IMPP Purchase Offering (Canada Mortgage and Housing Corporation)
2 Bank of Canada lowers overnight rate target to ¼ percent (Bank of Canada)
3 Canada’s Six Biggest Banks Take Decisive Action to Help Customers Impacted by COVID-19 (Canadian Bankers Association)