2020 has been a year of demonstrating resilience, with the global pandemic of COVID 19 still unconquered. There has been government intervention, record unemployment, mortgage payment deferrals, record low-interest rates as a result. However, the statistics have showcased continued growth in the housing market. 

As we transition into 2021, let’s extrapolate what would be feasible for the housing industry.

Low interest rates

According to the Bank of Canada, interest rates are not only low, but we can also expect them to stay low for the near future. “Interest rates are very low, and they are going to be there for a long time. Canadians and Canadian businesses are facing an unusual amount of uncertainty, so we have been unusually clear about the future path for interest rates.” However, with low interest rates, increased scrutiny on all mortgage applications is most likely in the cards.

More scrutiny on mortgage applications

Though insurer or lender guidelines are not expected to change, we can safely assume that lenders will perform stricter checks before handing out loans in the post-COVID uncertain situation. It has already proven harder to get mortgage financing as every application undergoes more scrutiny before it is passed. Additional documentation is regularly being requested and in general, lenders are being cautious about where they are placing their trust.

People who are self-employed or rely on overtime, bonuses, or picking up additional shifts to make ends meet might find it more difficult to secure a mortgage.

For people who have taken a hit to their income in 2020, the impact will be visible even more in 2021. Any non-guaranteed income will be scrutinized more.

In case the pandemic created situations where one had to defer payments, that will come under question. One should expect to explain the delay in payments and justify why they are in a better financial position currently.

Moving to 2021, you can expect mortgage financing to become even more document-intensive than it already is.

Have a plan in place

In case your mortgage is up for renewal, or you’d like to refinance, or you’re planning on buying a new property, the best thing to do is to plan ahead and get started immediately. Getting your documents sorted and together will take time. So, it’s recommended to get started and determine all of your options. 

For any questions related to mortgage, contact Ashab Khan.

Contact number: (416) 757-4224

Email: akhan@oakparkmortgage.com