Month: May 2020

Investment professionals are tasked with the challenging duty of helping their clients navigate unchartered financial waters in the wake of the COVID-19 pandemic. With stock markets continuing to flip flop as we try to make our way out of the crisis, investors are looking for ways to protect their assets.

Investing in a MIC or private mortgage is a viable, defensive strategy that investors should consider when we see this instability and lack of confidence in the markets. A key benefit to investing in MICs or private mortgages is simply the fact that mortgage investments backed by real assets are by default a more safe and defensive investment vehicle compared to owning real estate. Something else to keep in mind is that CMI predominantly lends to residential homeowners.

“We lend to people who own homes and live in them, as well as property investors, so there’s a high incentive to pay,” said Bryan Jaskolka, chief operating officer at Canadian Mortgages Inc. (CMI). “There’s historical precedent for Canadians to make their mortgage payments and certainly, government supports are helping people to do that today as well.”

Traditionally, MICs and private lenders have been a practical option for investors who were looking for exposure to real estate investments and cash flow lending but aren’t particularly interested in the hassle that typically comes with property ownership.

“Capital preservation also plays a significant role for these investors who are looking at income generation, but specifically from an investment that’s backed by real security,” said CMI’s executive vice president, Elizabeth Wood.

Qualifying for a mortgage for an investment property, especially in this uncertain environment may not be the easiest feat. Jaskolka says these alternative investments don’t require qualification from an outside leverage provider. The MICs at CMI also consider investments anywhere from $5000, so first-time and retail investors all the way up to experienced and institutional investors can participate in one form of a mortgage investment or another. Another bonus with MICs specifically is that investors can use registered funds, essentially only paying tax on what you earn.

“If you use a dividend reinvestment plan (DRIP), there’s an opportunity to really grow that capital at a lower tax rate,” said Wood. With private mortgages, investors have the ability to use registered funds from their retirement savings or tax-free savings account (TFSA) to earn completely tax-free income.

MICs and private mortgages are a niche part of alternative investments, which have only started gaining popularity in recent years, but Jaskolka says the lack of awareness is not a reflection of quality. As more fund manager develop experience and knowledge to create more unique and stable funds, awareness continues to grow, and mortgage investments are being recognized as a safe, transparent way to invest, especially when run by a professional manager.

A big part of what makes a successful investment is already defined through due diligence and underwriting. CMI is one of Canada’s largest non-bank private lenders, servicing the mortgage brokerage industry and investors since 2005.

“Investors should be looking at the team behind the MIC. Look for underwriters with years of experience in market and investment analysis. They are the ones that ensure the opportunities are not only high quality, but that they’re suitable,” said Wood. She adds that when issues arise, having a dedicated servicing team with financial and legal backgrounds and experience is what protects investor capital and defines the outcome.

At the end of the day, Wood says mortgage investments are especially beneficial for anyone looking to diversify their portfolio, and in doing so, mitigate risk. “This is a place where they can turn and use their own personal capital and continue to grow it even through the bad times.”

To learn more about how mortgage investing can be beneficial and practical in today’s challenging economic climate, download this free whitepaper by CMI.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

The Ontario Real Estate Association (OREA) has published its latest guidelines on home purchase transactions in the era of COVID-19.

“The health and safety of our realtors and their clients is OREA’s top priority during this pandemic,” said Sean Morrison, president of OREA. “As Ontario’s economy reopens, many Ontarians are looking to get back into the real estate market. Realtors are here to help make home buyers and sellers feel comfortable and safe while they work to find their dream home. OREA’s guidelines have been informed by up-to-date information from public health, best practices from the industry and experiences in jurisdictions across North America.”

OREA was among the earliest organizations to have petitioned a shift to mostly online transactions once the coronavirus pandemic took hold in late March.

“Now that the Ontario government has announced stage one of its plan to re-open the economy and with many consumers looking to get back into the market, it is important that realtors continue to help their clients feel safe and secure and keep the virus at bay,” OREA said in a statement this week.

The association is mandating its agents to “continue [using] virtual tools, conduct virtual open houses and virtual showings to the greatest extent possible,” despite the restarting of the economy. This includes maximizing the use of phone, email, and video communications with clients, as well as processing all documents via electronic channels.

Agents should also “thoroughly disinfect surfaces, leave doors open and keep lights on at all times during in-person showings,” OREA said. “When interacting with clients, maintain physical distancing and use personal protective equipment when distancing is not possible.”

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Housing industry players are opposing Canada Mortgage and Housing Corporation’s dire forecast of an 18% decline in home prices over the next 12 months, claiming that demand remains elevated and inventories continue to hover near record lows.

“Assuming that demand continues its current course, Canadian real estate prices will likely remain relatively stable or experience a single-digit price correction at worst,” RE/MAX said, adding that its agents are still reporting multiple offers on a regular basis.

“CMHC doesn’t seem to understand the sheer number of sellers that would have to accept this kind of price reduction, in order for average housing prices to plummet to this degree in such a short time span,” said Christopher Alexander, executive vice president and regional director with RE/MAX of Ontario Atlantic Canada. “Sellers simply won’t accept that kind of discount on their listings. A statement of this nature is panic-inducing and irresponsible.”

Government agencies should instead focus on how the housing markets – and the Canadian financial system as a whole – could weather the unprecedented impact of the coronavirus, according to the C.D. Howe Institute.

“Ottawa and the provinces need to recommit to fiscal and monetary anchors in light of the unprecedented stimulus response provided by all levels of government and the Bank of Canada throughout the COVID-19 crisis,” C.D. Howe said. “Canada is emerging from the first wave of the pandemic with very high public and private debt loads and is increasingly dependent on domestic and foreign investors to finance them. With the loss of Canada’s fiscal anchor, maintaining investor confidence so that public and private debt can be carried at a reasonable cost is essential.”

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

While Canadian consumer confidence is steadily recovering, the same cannot be said about the public’s views towards the housing market, according to the latest Bloomberg Nanos Canadian Confidence Index.

Polling found that 48.54% of respondents are anticipating a decline in home prices within the next few months – a level approximately three times above the average for this metric, Nanos Research said.

“Even as sentiment has improved around the economic outlook and personal finances, expectations around real estate are weakening,” Nanos said.

The overall confidence index went up for the fourth consecutive week, reaching 39.3.

“While the index remains near its worst-ever readings recorded last month, the rise in confidence in recent weeks suggests negative sentiment may be finding a floor amid talk of reopening the economy,” Nanos said. “Regionally, the gains in sentiment have been mostly in Western Canada, aided by a recent rebound in oil prices and relatively fewer coronavirus cases.”

Overall confidence remained at near-record lows in Ontario and Quebec, however.

Sentiments toward personal finances over the past year have soured to 36.7%, from 42.3% last month.

There was less pessimism towards the economy, although the overall level was still quite high. Around 73% of respondents said that the economy will worsen within half a year, down from 80% last month.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

While Canadian consumer confidence is steadily recovering, the same cannot be said about the public’s views towards the housing market, according to the latest Bloomberg Nanos Canadian Confidence Index.

Polling found that 48.54% of respondents are anticipating a decline in home prices within the next few months – a level approximately three times above the average for this metric, Nanos Research said.

“Even as sentiment has improved around the economic outlook and personal finances, expectations around real estate are weakening,” Nanos said.

The overall confidence index went up for the fourth consecutive week, reaching 39.3.

“While the index remains near its worst-ever readings recorded last month, the rise in confidence in recent weeks suggests negative sentiment may be finding a floor amid talk of reopening the economy,” Nanos said. “Regionally, the gains in sentiment have been mostly in Western Canada, aided by a recent rebound in oil prices and relatively fewer coronavirus cases.”

Overall confidence remained at near-record lows in Ontario and Quebec, however.

Sentiments toward personal finances over the past year have soured to 36.7%, from 42.3% last month.

There was less pessimism towards the economy, although the overall level was still quite high. Around 73% of respondents said that the economy will worsen within half a year, down from 80% last month.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

The Ontario Real Estate Association (OREA) has published its latest guidelines on home purchase transactions in the era of COVID-19.

“The health and safety of our realtors and their clients is OREA’s top priority during this pandemic,” said Sean Morrison, president of OREA. “As Ontario’s economy reopens, many Ontarians are looking to get back into the real estate market. Realtors are here to help make home buyers and sellers feel comfortable and safe while they work to find their dream home. OREA’s guidelines have been informed by up-to-date information from public health, best practices from the industry and experiences in jurisdictions across North America.”

OREA was among the earliest organizations to have petitioned a shift to mostly online transactions once the coronavirus pandemic took hold in late March.

“Now that the Ontario government has announced stage one of its plan to re-open the economy and with many consumers looking to get back into the market, it is important that realtors continue to help their clients feel safe and secure and keep the virus at bay,” OREA said in a statement this week.

The association is mandating its agents to “continue [using] virtual tools, conduct virtual open houses and virtual showings to the greatest extent possible,” despite the restarting of the economy. This includes maximizing the use of phone, email, and video communications with clients, as well as processing all documents via electronic channels.

Agents should also “thoroughly disinfect surfaces, leave doors open and keep lights on at all times during in-person showings,” OREA said. “When interacting with clients, maintain physical distancing and use personal protective equipment when distancing is not possible.”

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate