With the Covid-19 virus in full swing there has been a wild ride in the mortgage market of late. This has included mortgage qualification rules tightening along the way.
Changes are happening on almost a daily basis. We saw Prime Rate drop 3 times in a month and then lenders get rid of their discounts on variable rate mortgages. This meant that a fair bit of the prime rate drop did not get passed along to consumers. We also saw fixed rates drop and then go up almost 3/4% of a percent in under a month.
In addition to this lenders have tightened mortgage qualification rules as they worry about clients not being able to make their payments. Lenders are calling businesses and checking online to make sure employers are still fully open as a precaution. Some lenders are requesting all income documents up front as well as income documents again one week prior to the closing of a mortgage.
Clients that work in industries that are deemed non-essential are getting their applications heavily scrutinized as lenders worry that they may close at any time. This means that what was once easy to qualify for a month ago may be tougher at this time.
Given this information and social distancing guidelines we have seen less sales in the market in the last few weeks. Prices may come down accordingly depending on how long this lasts for. If at this time you are considering to refinance your home now is the time to seriously look at it. If you get laid off temporarily and go on Employment Insurance (EI), lenders won’t consider your income in qualifying for a mortgage. Also refinances are limited to 80% of the value of your home so if prices drop this may reduce what you can borrow as well.
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