30 Jun

Canada’s Economy Plunged 11.6% in April – Dr. Sherry Cooper


Posted by: Peter Paley & Associates

Canada’s Economy Plunged 11.6% in April


The pandemic shutdown put every sector of the economy into a medically induced coma, so it was no surprise that the first full month of lockdown would be ugly. Indeed, consensus estimates were worse than the 11.6% drop in economic activity reported this morning by Statistics Canada (see chart below). April’s contraction followed the March decline of 7.5%. All 20 industrial sectors of the economy were depressed, producing the largest monthly slump since the series started in 1961.

Services-producing sectors recorded a 9.7% drop, led by retail trade and transportation. Goods-producing industries saw a 17% decline in output. The economy at the end of April was 18.2% lower than its February level, the month before the COVID-19 measures began.

Nothing like this has ever happened in our lifetimes; we are in uncharted territory, and the virus will determine the future course of the economy. Policymakers in Canada have done a commendable job in cushioning the blow of the lockdown and its lasting impact on the economy. Importantly, Canada has posted a sustained decline in the number of cases owing to the enforced lockdown measures. Canada’s success is in direct contrast to the disastrous surge in COVID cases in roughly 20 US states where the economy opened prematurely, and public health initiatives were grossly mismanaged. It is crucial, however, that we not assume the worst is over and let down our guard. The World Health Organization said yesterday that “the worst was yet to come.” Moreover, the timing of a vaccine is unknown, and Canada remains susceptible to contamination from incoming American truckers, travellers and virus spread if we open too quickly.

Highlights of the economic contraction in April were:

  • Air transportation plummeted 93.7%, reflecting the reduced movement of both goods and passengers.
  • Accommodation and food services dropped 42.4%, following a 37.1% decline in March. The sector was down a whopping 64% from its level of activity in February.
  • Real estate declined 3.5% in April following a 1.2% decline in March. Activity at the offices of real estate agents and brokers plunged 57.2% in April, as home resale activity in nearly all major urban centres came to a standstill.
  • Personal and laundry services (provided by hair salons, beauty parlours, funeral homes, dry cleaners, etc.) dropped 39.3%, while private household services offered by maids, cooks, gardeners, etc. fell more than one-third.

The good news is that StatsCan said today that preliminary information indicates an approximate 3.0% increase in real GDP for May. Output across several industrial sectors–including manufacturing, retail and wholesale as well as the public sector (health, education and public administration)–increased in May, as activities gradually resumed in phases in different regions of the country.



Consumer Providing Support 

On a more positive note, the economists at Royal Bank reported yesterday that personal spending had rebounded sharply since early April, judging by debit and credit card purchases (see chart below). Overall card volumes were near year-earlier levels by June 16th, down 2% year-over-year. Reopening across the country spurred spending at clothing stores and on personal services such as haircuts and massages. Early indications suggest online shopping remains popular despite the opening of bricks and mortar stores.

The reopening of the economy, along with federal government income support, has boosted consumer confidence and spending. The Canadian Emergency Response Benefit program (CERB) provides eligible consumers who had stopped working because of COVID $2,000 per four-week period. Trudeau recently extended the CERB from 16 weeks to 20 weeks.

Consumer confidence has climbed for nine straight weeks according to the Bloomberg Nanos Canadian Confidence Index, a weekly composite measure of financial health and economic expectations. The index currently stands at 46. That’s up nearly 10 points from early May and is slowly nearing the 50-point mark, above which views are considered to be net positive.

One unintended problem, however, is that the CERB is becoming a disincentive to work. If a recipient earns more than $1,000 per month, he or she loses the full $2,000 payment. Also, for some, the CERB allotment is more than they earned at their previous job, so they are reluctant to return to work when their businesses open. The stipend is now making it difficult for restaurants, retail stores, cleaning services and trades to get their workers back. The government needs to start winding down direct cash support, but instead, it extended the payments until the end of August.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

4 Jun



Posted by: Peter Paley & Associates

Underwriting guidelines are changing again.  In many mortgage professionals to the detriment of the economy and recovery.   I agree with this analysys.

Please see CMHC’s release below.


The COVID-19 pandemic is affecting all sectors of Canada’s economy, including housing. Job losses, business closures and a drop in immigration are adversely impacting Canada’s housing markets, and CMHC foresees a 9% to 18% decrease in house prices over the next 12 months. In order to protect future home buyers and reduce risk, CMHC is changing its underwriting policies for insured mortgages.

Effective July 1, the following changes will apply for new applications for homeowner transactional and portfolio mortgage insurance:

    • Limiting the Gross/Total Debt Servicing (GDS/TDS) ratios to our standard requirements of 35/42;
    • Establish minimum credit score of 680 for at least one borrower; and
    • Non-traditional sources of down payment that increase indebtedness will no longer be treated as equity for insurance purposes.

To further manage the risk to our insurance business, and ultimately taxpayers, during this uncertain time, we have also suspended refinancing for multi-unit mortgage insurance except when the funds are used for repairs or reinvestment in housing. Consultations have begun on the repositioning of our multi-unit mortgage insurance products.

“COVID-19 has exposed long-standing vulnerabilities in our financial markets, and we must act now to protect the economic futures of Canadians,” said Evan Siddall, CMHC’s President and CEO. “These actions will protect home buyers, reduce government and taxpayer risk and support the stability of housing markets while curtailing excessive demand and unsustainable house price growth.”

These decisions are within CMHC’s authorities under the National Housing Act and are in anticipation of potential house price adjustment. We will continue to monitor market conditions and work with our federal colleagues on potential macro-prudential policy options.

CMHC supports the housing market and financial system stability by providing support for Canadians in housing need, and by offering housing research and advice to all levels of Canadian government, consumers and the housing industry.

For more information, follow us on TwitterYouTubeLinkedInFacebook and Instagram.

For information on this release:

Leonard Catling
Media Relations
Canada Mortgage and Housing Corporation

14 May



Posted by: Peter Paley & Associates


We have the best mortgage app in the country.   Our clients and REALTOR partners love it.  However, some of you are asking for some tutorials to help with some of its features.

The Compare Side By Side Tool Is a very powerful to help calculate interest savings.

Compare different
– Mortgage Terms
– Interest Rates
– Payment Frequency
– Mortgage Amortizations
– Calculate Interest Savings
– Calculate Extra Princple Paid
– Calculate Payment Savings.

Today’s video will show you how quick and easy it is to compare different mortgage options side-by-side.
Please download our app & enjoy the video.  Please share with friends, family and clients!

30 Apr



Posted by: Peter Paley & Associates


We have the best mortgage app in the country.   Our clients and REALTOR partners love it.  However, some of you are asking for some tutorials to help with some of its features.

You asked and we delivered.

Today’s video tutorial is how to generate a pre-qualification certificate.

Please download our app & enjoy the video.  Please share with friends, family and clients!




If you have any clients looking for a mortgage pre-approval or mortgage advice please have them visit our website at www.MainstreamMortgages.Ca or call Peter at 204.227.2744.

14 Apr

Mortgage Advice – Covid – 19


Posted by: Peter Paley & Associates

As the world pandemic continues, Canada and especially Manitoba are leading in flattening the curve.  However, the slowing of the economy has been felt in the number of businesses closed and people filing for employment insurance.

This is leaving many mortgage holders and first time homebuyers in the lurch.  Should they defer payments, refinance, sell their home, buy a new home, or continue with their pre-approvals.

The devil is in the details.  Every person and family are going to have a very unique set of circumstances and knowing their numbers is the key.   Not only do they need to know their numbers, but we need to formulate back up plans as some banks and credit unions are being very cruel when it comes to offering assistance.

As an advisory based mortgage brokerage team we are happy to speak to your clients and see what the best course of action may be for them.  Please watch our video below and subscribe to our YouTube Channel.



6 Apr



Posted by: Peter Paley & Associates

Why Are Mortgage Rates Rising?

Over the past month, the Bank of Canada has lowered its overnight rate by a whopping 1.5 percentage points to a mere 0.25%. Many people expected mortgage rates to fall equivalently. The banks have reduced prime rates by the full 150 basis points (bps). But, since the second Bank of Canada rate cut on March 13, banks and other lenders have hiked mortgage rates for fixed- and variable-rate loans. That’s not what happens typically when the Bank cuts its overnight rate. But these are extraordinary times.

The Covid-19 pandemic has disrupted everything, shutting down the entire global economy and damaging business and consumer confidence. No one knows when it will end. This degree of uncertainty and the risk to our health is profoundly unnerving.

Most businesses have ground to a halt, so unemployment has surged. Hourly workers and many of the self-employed have found themselves with no income for an indeterminate period. All but essential workers are staying at home, including vast numbers of students and pre-school children. Nothing like this has happened in the past century. The societal and emotional toll is enormous, and governments at all levels are introducing income support programs for individuals and businesses, but so far, no cheques are in the mail.

In consequence, the economy hasn’t just slowed; it has frozen in place and is rapidly contracting. Travel has stopped. Trade and transport have stopped. Manufacturing and commerce have stopped. And this is happening all over the world.

What’s more, the Saudis and Russians took advantage of the disruption to escalate oil production and drive down prices in a thinly veiled attempt to drive marginal producers in the US and Canada out of business. This has compounded the negative impact on our economy and dramatically intensified the plunge in our stock market.

Many Canadians are now forced to live off their savings or go into debt until employment insurance and other government assistance kicks in, and even when it does, it will not cover 100% of the income loss. The majority of the population has very little savings, so people are resort to drawing on their home equity lines of credit (HELOCs), other credit lines or adding to credit card debt. Businesses are doing the same.

The good news is that people and businesses that already have loans tied to the prime rate are enjoying a significant reduction in their monthly payments. All of the major banks have reduced their prime rates from 3.95% to 2.45%. So people or businesses with floating-rate loans, be they mortgages or HELOCs or commercial lines of credit, have seen their monthly borrowing costs fall by 1.5 percentage points. That helps to reduce the burden of dipping into this source of funds to replace income.

So Why Are Mortgage Rates For New Loans Rising?

These disruptive forces of Covid-19 have markedly reduced the earnings of banks and other lenders and dramatically increased their risk. That is why the stock prices of banks and other publically-traded lenders have fallen very sharply, causing their dividend yields to rise to levels well above government bond yields. As an example, Royal Bank’s stock price has fallen 22% year-to-date (ytd), increasing its annual dividend yield to 5.31%. For CIBC, it has been even worse. Its stock price has fallen 30%, driving its dividend yield to 7.66%. To put this into perspective, the 10-year Government of Canada bond yield is only 0.64%. The gap is a reflection of the investor perception of the risk confronting Canadian banks.

Thus, the cost of funds for banks and other lenders has risen sharply despite the cut in the Bank of Canada’s overnight rate. The cheapest source of funding is short-term deposits–especially savings and chequing accounts. Still, unemployed consumers and shut-down businesses are withdrawing these deposits to pay the rent and put food on the table.

Longer-term deposits called GICs, which stands for Guaranteed Investment Certificates, are a more expensive source of funds. Still, owing to their hefty penalties for early withdrawal, they become a more reliable funding source at a time like this. As noted by Rob Carrick, consumer finance reporter for the Globe and Mail, “GIC rates should be in the toilet right now because that’s what rates broadly do in times of economic stress. But GIC rates follow a similar path to mortgage rates, which have risen lately as lenders price rising default risk into borrowing costs.”

To attract funds, some of the smaller banks have increased their savings and GIC rates. For example, EQ Bank is paying 2.45% on its High-Interest Savings Account and 2.55% on its 5-year GIC. Other small banks are also hiking GIC rates, raising their cost of funds. Rob McLister noted that “The likes of Home Capital, Equitable Bank and Canadian Western Bank have lifted their 1-year GIC rates over 65 bps in the last few weeks, according to data from noted housing analyst Ben Rabidoux.”

The banks are having to set aside funds to cover rising loan loss reserves, which exacerbates their earnings decline. An unusually large component of Canadian bank loan losses is coming from the oil sector. Still, default risk is rising sharply for almost every business, small and large–think airlines, shipping companies, manufacturers, auto dealers, department stores, etc.

Lenders have also been swamped by thousands of applications to defer mortgage payments.

Hence, confronted with rising costs and falling revenues, the banks are tightening their belts. They slashed their prime rates but eliminated the discounts to prime for new variable-rate mortgage loans. Some lenders will no doubt start charging prime plus a premium for such mortgage loans. Banks have also raised fixed-rate mortgage rates as these myriad pressures reducing bank earnings are causing investors to insist banks pay more for the funds they need to remain liquid.

An additional concern is that financial markets have become less and less liquid–sellers cannot find buyers at reasonable prices. The ‘bid-ask’ spreads are widening. That’s why the central bank and CMHC are buying mortgage-backed securities in enormous volumes. That is also why the Bank of Canada has started large-scale weekly buying of government securities and commercial paper. These government entities have become the buyer of last resort, providing liquidity to the mortgage and bond markets.

These markets are crucial to the financial stability of Canada. Large-scale purchases of securities are called “quantitative easing” and have never been used before by the Bank of Canada. It was used extensively by the Fed and other central banks during the 2008-10 financial crisis. When business and consumer confidence is so low that nothing the central bank can do will spur investment and spending, they resort to quantitative easing to keep financial markets functioning. In today’s world, businesses and consumers are locked down, and no one knows when it will end. With so much uncertainty, confidence about the future diminishes. The natural tendency is for people to cancel major expenditures and hunker down.

We are living through an unprecedented period. When the health emergency has passed, we will celebrate a return to a new normal. In the meantime, seemingly odd things will continue to happen in financial markets.

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.

6 Apr



Posted by: Peter Paley & Associates

What To Do In Today’s Mortgage Market

For the past few weeks we have been trying to give tips and advice to navigate the global pandemic.
The most important thing is safety. Please stay home, please wash your hands, please wear a mask when going out of your house. Designate one grocery shopper. Call the Mainstream Team for any mortgage advice or potential deals.
We have had our head office help us with the graphic included in this message and offer it as general advice.
Many of our clients are switching their mortgages, paying their penalties for lower rates. However, many clients are facing more difficult challenges including employment layoffs, reduced income or worse.

For clients who need to sell their homes. Please contact us. We will need to get a new credit application, find out what your mortgage penalty would be should you need to change lenders and what your future income/employment status will be.

For first time buyers. Your employment status has become the most important factor for lenders. Please note that if you become layed-off between the time you release your financing condition and your possession date, your mortgage MAY NOT FUND! We need to figure out back up plans or include extra precautions in your offer to purchase.

Lenders are now under a lot of stress and application queues are forming. Please allow 5 days for financing and allow an additional 4 weeks for closing.

For existing mortgage holders. Contact us directly for advice. If you have equity in your house you may want to tap into it. A full mortgage and financial review is always complimentary and we are happy to do so free of charge.
We apologize there is no video this week as we had a few technical difficulties.

29 Mar



Posted by: Peter Paley & Associates

All-in-one mortgages are an amazing tools for people who like to pay their mortgage down fast and save tens of $1,000s of dollars in interest.

  1. Manulife One lets you consolidate your debts to reduce your borrowing costs.

Your Manulife One account allows you to consolidate all of your debts (loans, credit cards, etc. – up to your borrowing limit) at a competitive, low interest rate. By repaying your higher-cost debt from your Manulife One account, you could reduce your interest costs and become debt-free sooner.

  1. Manulife One uses your income and savings to reduce your borrowing costs even further.

The best way to lower your borrowing costs is to pay down the principal that you borrowed. When you transfer your savings and/or short term investments into your Manulife One account, they go immediately towards paying down your borrowings. The same applies to your income. Every deposit that you make into the account reduces your debt, saving you interest costs until you need to withdraw funds again to pay for your monthly living expenses. Over time, what you save in interest will likely be more than what you would have earned.

  1. Manulife One simplifies your banking by bringing your income and debt together.

With a Manulife One account, your income and your debt are all together. So you don’t need to write cheques or transfer funds from one account to another. This way you never need to worry about missing a mortgage payment. Plus, your Manulife One account lets you:

  • Pay bills by cheque or online (including pre-authorized bill payments)
  • Pay for store purchases with a debit card (including getting cash back)
  • Withdraw or deposit funds at ABMs
  • Plus much more.

There’s just one difference – whatever is left over in your Manulife One account at the end of the day goes directly towards reducing your borrowing costs. So all your money is working for you as hard as it can – 24/7/365.

  1. Manulife One lets you enjoy financial flexibility.

Some traditional mortgages make it difficult or inconvenient to repay your debt more quickly. But with Manulife One, the debt in your Main Account is automatically reduced any time you make a deposit to your account. And, when you have extra money to deposit, such as a gift, bonus, tax refund, etc. your debt is automatically reduced. This gives you the financial flexibility to pay down your debt on your terms, not on your bank’s terms.

Manulife One also gives you the financial flexibility you need to deal with unexpected expenses or take advantage of great buying opportunities when they come up; and you don’t have to jump through hoops to do it. You can access the equity you’ve built up in your home (up to your borrowing limit) at any time just by writing a cheque, making a debit purchase or transferring money electronically.

With Manulife One, you’ve got the flexibility to repay your debt more quickly when you have extra money available and also to conveniently access that money when a spending need arises.

Watch our video and like it on YouTube and refer to our BLOG Post to Download more information.  for more information.  Please feel free to share with your clients or anyone you know looking for a mortgage.

Click the link below for our YouTube video!

If you have any clients looking for a mortgage pre-approval or mortgage advice please have them visit our website or call Peter at 204.227.2744.

22 Mar



Posted by: Peter Paley & Associates



While we are all in disbelief, the world must go on.  Last week we fielded over 200 inquiries regarding mortgage options and deferred payments.  As usual,  everyone has jumped the gun.

The government, the banks, our lenders have all announced up to 6 month mortgage deferrals.   How does one qualify?  How many months is each lender allowing?  What are the criteria?….  At this point?  Nobody knows.

Lenders are being inundated with telephone calls up to 5000 calls per lender per day.  Wait time are up to 4 hours if the phone call even gets answered.  From what we have gathered so far, one must be directly affected by the Covid-19 crisis due to illness and/or employment layoff.   Each lender is looking at the borrowers individual situation on a case by case basis.

New purchasers need to be somewhat certain that their employment will continue beyond the crisis.  A layoff before possession could cause a lender not to fund your mortgage.  Realtors, you need to be aware of this fact when writing up offers to purchase.   How is Covid-19 going to affect sales contract?  That will be an ongoing question to be determined.

Existing mortgage holders.  Now is the time where you may want to refinance and pull out equity if you are able to and qualify.   We are recommending having access to 6-12 months of household income in had as we navigate through this global crisis.  Should there be enough equity to borrow against, we recommend trying to get a Home Equity Line Of Credit or simply refinancing your existing mortgage.

Finding updates or any information in the financial industry has been very frustrating.  Dominion Lending Centres has created an website dedicated to Covid-19 updates and information.  You can access the website through our website by clicking on the “Learn More” on the blue Covid-19 bar.

Please watch our YouTube video and stay safe.

Click the link below for our YouTube video!


15 Mar

Virtual Mortgage Appointments/Covid-19/Refinancing & Deferred Payments


Posted by: Peter Paley & Associates

Wow! What a couple of weeks. As covid-19 continues to spread throughout the world and the markets and economy are facing impending turmoil everyone is left wondering what’s going to happen and what is the best thing to do?
Unfortunately, we don’t have all of the answers. However, in an attempt to do our very best for our clients and business partners, we have started Virtual Mortgage Appointments where clients can book an appointment on our website and we can process their mortgage application through video conferencing.

Interest rates are dropping. You may want to consider a refinance or to get pre-approved for your next home.

As a result of Covid-19 Canadian Mortgage Insurers are rolling out a payment deferral program for up to 6mos to help ease any financial burdens. Health concerns are weighing heavily on the markets. We don’t have many details at this early juncture but will post updates as we learn more.

Watch our video and like it on YouTube and watch out for breaking updates. Please feel free to share and follow.

Click the link below for our YouTube video.

We wish everyone good health and should you have any questions please contact The Mainstream Mortgage Team.