When the year started, forecasters didn't predict any major changes to mortgage financing or the real estate market. After several years of new qualifying regulations and government taxes to attempt to address skyrocketing property prices, 2020 should have been relatively stable and calm.
For the second year, BC homeowners in major urban areas were required to make a declaration about their property use for the Speculation and Vacancy Tax. While the provincial government expects 99% of British Columbians to be exempt from this tax, it's becoming part of the routine of home ownership.
At the federal government level, the finance minister announced positive changes for the mortgage qualifying stress test. The plan was to bring the minimum qualifying rate in line with market conditions by making it a dynamic value calculated from actual mortgage rates rather than the posted rates set by the major banks. This would have increased buying power by tens of thousands of dollars, which can make a huge difference in markets such as Victoria.
Early in the month, it became apparent that the novel coronavirus was going to have an impact on the Canadian economy and our everyday lives – although no one could have anticipated the extent of the effects. By mid-month, lenders were offering 6-month mortgage payment deferrals and phone lines were swamped as homeowners waited on hold to find out their options. By the end of the month, the Bank of Canada's overnight rate – which typically sets the standard for other interest rates – was slashed by more than 100 basis points to the low point of 0.25%.
A temporary ban on rent increases and evictions was brought into place in BC on March 30th, and landlords and tenants received more information – as well as access to an emergency rent supplement program – from the province.
Real estate sales slowed to a crawl in April as buyers and realtors were unable to enter properties for traditional viewings or open houses.
By May, the first wave of the virus had been flattened in BC and the provincial government began its restart plan, leading to a bit more normalcy in everyday life for British Columbians. We supported homeowners with solutions for any cash crunch they were facing as their work and financial situation came into focus.
The real estate market rebounded in a big way starting in June and continuing through the summer and fall. The number of properties sold exceeded the previous year each month, and from month-to-month the market saw either increases or steady holds in the number of transactions being completed.
Canada Mortgage and Housing Corporation, one of Canada's mortgage insurers, announced changes to how they would qualify insured and insurable mortgages, beginning July 1st. They issued new rules for minimum credit scores, debt ratios, and down payment sources. However, since none of the other mortgage insurers followed suit, home buyers have largely seen their purchasing power retained through the rest of the year.
Mortgage rates began to fall mid-summer, and have continued to hold around record lows through the remainder of the year.
During the second wave of the virus, additional health measures were announced and the real estate market slowed slightly again.
In its Fall Economic Statement, the federal government announced upcoming changes to the First-Time Home Buyer Incentive program. The expanded eligibility will mean that more first time home buyers in Victoria, Vancouver, and Toronto will be able to qualify for this interest-free government loan.
Are you planning to buy a property in 2021? You can read Kam's thoughts on what the new year will bring in this blog post.
As always, the Auxilium Team is here to assist you with your mortgage needs and find the right solution for your situation. We will continue to keep track of key developments relating to home ownership in order to provide you with updated information. Contact us for a free consultation with one of our mortgage specialists: call 250-590-6520 (toll-free 1-855-590-6520) to get started today or book a time that works for you. We can arrange a phone, video conference, or in-person appointment to work with you.
Auxilium Mortgage Corporation is based in Victoria, BC and works with clients locally and across Canada. The Auxilium team has over 100 years of combined financial experience and access to dozens of lenders to help you meet your goals.