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March 23, 2020 | Implications for Canadian real estate as layoffs surge

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel (www.venablepark.com) Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog: www.jugglingdynamite.com

As I have noted many times, the seeds of financial crisis and panicked liquidation have been sown through the last decade of reckless lending, borrowing and price-indiscriminate asset-buying.  Highly indebted companies, households and speculators were already cash-strapped before the coronavirus shutdown.

This clip from BC real estate analyst Steve Saretsky notes some key impacts moving from COVID-19 to Canadian unemployment, mortgage rates, loan approval, refinancing and real estate. As the government rolls out payment deferrals (that compound interest on amounts deferred) and emergency loans, it is important to understand that, for the masses, this is a cash flow problem–not something that more credit can solve.  And for many highly levered private lenders and owners, missed income is the end of the road.

Few things to watch for next week. Mortgage rates are going up (25-30bps), and lenders will begin scrutinizing the viability of your job. In other words, its going to be tough to get approved for a mortgage in many cases. Refinances are also likely to be slowed considerably or even outright halted.  Here is a direct video link.

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March 23rd, 2020

Posted In: Juggling Dynamite

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