COVID-19 Financial Questions and Answers

Published: April 17, 2020 Last updated: July 12, 2022 at 22:53 pm

Some of The Most Common COVID-19 Questions We Are Being Asked in ASKROSS Social Media

Wednesday, May 20, 2020, Update

What Impact Has COVID-19 Had On The GTA Rental Market?

Toronto Storeys reports there is downward pressure on rental rates in the GTA market.

There have been two to three years of rapid rental increases, says Altus’s Norman. “This recession will halt the upward movement on rents.”

Urbanation’s Lierman would not be surprised to see average rents down about 5% in 2020.

Saturday, May 16 2020 Update

What Impact Has COVID-19 Had On Canadian Real Estate?

Last week, Real Estate Boards across Canada released their April 2020 results, and there are no real surprises, all things considered. Toronto Storeys reports National Home Sales overall declined 56.8% from March to April, 2020.

Given real estate markets across Canada effectively became frozen in mid-March, it’s not surprising the number of completed sales was down. April’s data confirmed what we were all expecting, namely that the pandemic drove sales to historically depressed levels.

Not only did buyers retreat to the sidelines in record numbers, so too did sellers. This meant markets actually remained in balanced territory overall.

TD Bank’s Senior Economist Brian DePratto, weighed in last week:

  • The impact was felt evenly across the country as nearly all provinces saw sales activity fall between 40% and 60% month-on-month. The steepest drops were generally in the largest markets: Ontario (-60.6%), Quebec (-63.4%), and B.C. (-55.4%) all saw sales activity more than halved last month.
  • Just as sales fell, so too did listings, down 55.7% month-on-month in April, with the drop-off mapping similarly on a regional basis.

Canadian Mortgage Trends published a breakdown of different markets across Canada.

Pessimists like to point out GTA April 2020 average sales prices are on average 11.8% lower than just one month previously. That is true, but much of the March data was skewed by insane multi-offer bidding wars and record-high prices. Thankfully, this is no longer the case.

TD Bank’s DePratto expects sales to remain depressed for a few months longer as job markets slowly improve and buyers remain cautious, but a normalization process is likely already underway.

Monday, May 11, 2020, Update

Is it Harder to Qualify For a Mortgage with COVID-19?

If your employment and income have been negatively affected by the pandemic, it will be much harder to qualify for a mortgage until you are back working. But borrowers still gainfully employed are qualifying as before – perhaps though with a level of scrutiny they might be surprised at. Employment is being checked and rechecked right up till the closing day.

If you are a business owner, lenders will want assurance your business is open and operating – either because you run an essential business, or because you are able to effectively run your business from home.

Right now, mortgage lenders are happiest when their borrowers have a reserve of funds – rainy day money – the last thing lenders want is to approve a large new mortgage only to find the borrowers need to defer their payments shortly thereafter.

If you are working with B-lenders and looking to refinance your mortgage, you will find the ceiling is now 75% of the appraised value of your home – two months ago it was 80%.

Related Article: COVID19 Having An Impact On Mortgage Refinances

Monday, May 04, 2020, Update

What Will Happen If I Incorrectly Receive CERB Payments?

It can happen for many reasons. It could be accidental, or it could be you needed the money and you are hoping you don’t get found out. Think wisely on this though.

Check this CBC article on the topic of CERB overpayments. CRA acknowledges this could well happen and now have a place on their website you can proactively get in front of this issue NOW and not wait for the dreaded audit next year and a perpetual black mark beside your name.

Thursday, April 30, 2020 Update

The Ultimate Financial Guide to COVID-19: How to Protect Your Finances During the Coronavirus Crisis

We are always ready to give credit where credit is due. These folks have done a great job of presenting at a glance some high-level information in re your personal finances during and after the COVID-19 crisis. Worth bookmarking. You can find the article here.

Tuesday, April 28, 2020 Update

How Much Income Tax Will I Owe On CERB Payments?

This is a really good question. The $2,000 payments feel great when they hit your bank account, but they ARE taxable income! This means you could well have to pay some of it back next Spring when you file your 2020 income tax return.

If you have very little income in 2020, perhaps you will have no tax liability. But if your resume working at your normal rate, then the tax hit may be a significant percentage of the CERB relief payments. We know times are tough, but if you can, please set aside in a DO-NOT-SPEND account around 25% of every CERB payment. This is an approximation – you personally may owe more or less than that.

Jamie Glombek in The Financial Post breaks down how much tax you may have to pay.

Wednesday, April 22, Update

Will The Government Increase Child Tax Benefits because of the COVID-19 crisis?.

Yes – terrific news – families can receive a one-time payment in May 2020 for as much as $300 per eligible child. You will automatically receive this as long as you have filed your 2018 income tax returns.

You will receive the payment increase automatically the same way you receive your regular CCB payment (direct deposit or cheque)

Full details can be found at the Government of Canada website

Sunday, April 19, 2020 Update

How Do I Allocate My Limited Financial Resources?

The folks at MOGO came up with a useful financial plan for managing your money when there’s not much coming in. Worth checking this article out.

It’s called Be As Ready As You Can Be. The premise is most of us do not have a stash or emergency fund, despite all the experts always telling us to have 3 to 6 months’ savings on the side. This article shows us ways to start to build our own personal financial buffer, even though money is very tight. For example, they talk about ways you can even cut down on the cost of essentials like mortgage, rent, utilities, food etc.

Friday, April 17, 2020 Update

Can I Defer Mortgage Payments If I Am Still Employed?

Regina called last night, upset because her employer just laid off some staff for the second time in one month. She survived this go around but is very concerned her time is coming. She wants to stockpile as much cash reserves as possible in the case that happens. She asked me if her lender would allow her to defer her mortgage payments for two, ideally six months. This is a really good question.

However, because her situation has not changed, and her employment has not actually been impacted by COVID-19, it is very unlikely her wish would be granted. There may be a skip-a-payment option that she can invoke, and she should ask her lender that, but it is highly unlikely she would be given a break on additional payments.

Note, Regina is the only name on the title and on her mortgage. If however, she was one of two borrowers, and the other borrower lost their job because of COVID-19, then her case would be much stronger, because then there WOULD be a change in circumstances upon which to base the decision.

Monday, April 13, 2020 Update

Are There Any Extra Wages or Benefits From Government For Those Still Working?

Ana Marie asked on our Facebook Business Page ” Hi Ross. I’m still working despite the situation coz the company needs me. We are making car parts. Only 8 of us stay, and the rest laid off. My concern is that those laid off receive more than us who are working because they applied CERB. My question is that is there any extra wages to those who are still working from the government?

Ross answered, “that is a really good question, Ana Marie. Right now, there is no such benefit. The reason is the CERB only lasts for 16 weeks, but as long as you are working you don’t have to worry your pay runs out. The intention of CERB is to cover your finances if you have a sudden shortage compared to how you usually live.

So many people are losing jobs, it may not feel this now, but you are one of the lucky ones because you are employed and collecting a regular paycheque.

CERB Program Update Will Now Include Reduced Wage Workers, Students, Volunteers Workers.

Important Update for those who are still working but are experiencing a significant wage reduction to their income! YOU NOW QUALIFY FOR THE CERB BENEFIT!

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What Is The Biggest Challenge Facing Private Mortgages Right Now?

Damian Sowa from Great Pacific Mortgage and Investments Ltd. says “We operate 2 MICs (Mortgage Investment Corporations), and our biggest challenge is identifying an exit strategy. We don’t want to lend without a clear one, and that is becoming very muddled these days.”

Chad Robinson from 360 Best Interest Mortgages concurs ” Fear is the issue. Still lots of lending but more income questions. Exit planning is obviously harder.”

Related Articles:

Sunday, April 12, 2020 Update

Will The Banks Defer My Credit Card Payments?

Yes we have heard several instances of banks allowing one or possibly two payment deferrals during these hard times. And also that they are prepared to reduce the interest charge on balances owing, often in half!

Bloomberg BNN reported last week that CIBC was cutting credit card rates to 10.99% for clients in financial hardship and that Royal Bank was cutting their rates in half. THese are not automatic – you have to apply and demonstrate hardship as a result of the COVID-19 crisis. But definitely worth asking if you think this might be you.

Related Article:

She Wants to Know If She Will Qualifies for CERB AND Employment Insurance Benefit

Constance reached out to us on our Facebook Business Page and wrote “Ross, I work as a PSW until late last year, I slowed down as per advice from my doctor because of my health condition; I am diabetic with high cholesterol and also high blood pressure, so this lessened my assignment and affected my income miserably.

I worry much now where to get to pay my medications, rent, bills and food. By the way, I am gonna retire in September, and my application was approved already. So my question is am I qualified to apply in this CERB program?”

Ross responded “Hello Constance, I am really sorry to hear of your health woes. The last thing you need is financial worries on top of that. You said your application was approved already, but you did not say for what. If it was for Employment Insurance, then no sorry, you will not be able to claim the CERB benefit too. It’s an either-or thing at this point.”

COVID-19 EI Benefits and CERB Updates — Q & A from Social Media

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Saturday, April 11, 2020 Update

How Can I Complete a Home Purchase Without a Proper Appraisal?

Today a client asked me if she should be worried about one of the conditions on their new mortgage. A full appraisal is required. They are buying a home with exactly a 20 percent down payment.

I answered as follows …. appraisal complexities today….first, values are coming in light because lenders have asked for conservatism. This means if the appraised value comes in less than your purchase price, you will need to come up with the shortfall yourself.

Therefore, if you don’t have extra funds you can tap into, you had better get the appraisal done BEFORE you lift your condition of financing.

Second, the appraisal process itself is restricted – they are not going inside people’s homes so they may end up relying on photos and videos by the owner or a virtual tour offered by the real estate agent.

Depending on its contents, you may even offer up an inspection report to assist but I would be leary of that since an inspection catches way more imperfections than an appraisal does. You don’t want your mortgage lender to needlessly fret.

Friday, April 10, 2020 Update

How will this event impact our economy and us as individuals (financially)? And how much longer can this quarantine go on without impacting our economy drastically? What will this do to our global economy?

This event is fast-tracking the Canadian AND the Global Economy into a recession. There can be no doubt. Yes, there is pressure in the USA and elsewhere to lighten the restrictions by the end of April, but the damage done already is huge.

And in my own view, it will last beyond April. Don’t be surprised if we are in economic hard times for most of this year, perhaps longer.

This does not at all bode well for the global economy. There are many opinions out there, and one of them will probably turn out to be right – by luck rather than design, as no one can say with any degree of certainty. As a conservative guy by nature, I gravitate towards realistic common sense forecasts as opposed to ones pronounced with wishful thinking while wearing rose coloured glasses.

Early in April, The Stanford School of Business put forth an essay suggesting the coming recession could rival THE GREAT DEPRESSION for intensity and duration. These are massive concerns. While they agree that the economy could start to bounce back a bit later this year, they say it will be a long, painful road back to where we were only two months ago. That it might take five years!

They stated, “economists at the Federal Reserve Bank of St. Louis have warned that 47 million people could be thrown out of work and that the unemployment rate could hit 32% by this summer or fall.”

All you can do is conserve your financial resources like never before. If you tend to be a spender, this is the time to stop that RIGHT NOW. Frugality is king, for the long, foreseeable future.

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