This morning I received this informative newsletter from Paula Siemens -AMPINVIS - SIEMENS GROUP…I thought it was so good I am posting it as a blog for you to read!
This morning the Bank of Canada lowered its overnight rate to 2 1/4 % which is another .25% reduction. This should cause the lenders to adjust their prime rate another .25% , however, we may not see the lenders make this adjustment immediately.
Many lenders only adjust their prime rate on the 1st of each month to assist with interest adjustments that line up nicely for those on monthly payment options.
We will know where each lender sits after November 1, 2008.
The Bank of Canada cited its reasons for making this further adjustment:
- We are entering into a mild global recession
- Our commodities will be impacted and therefore we will see a marginal growth in our Gross Domestic Product (GDP) of only .06% for 2008 and 2009 and then increasing to 3.4% in 2010
One of the most significant changes in the past few weeks is the use of rental income. Many lenders have changed their policies around using rental income for qualification. In the past we have been able to offset up to 100% of the rental income. Now most lenders have adjusted this policy to taking 50% and adding it to the borrowers income which has a much lessor affect than the offsetting policy. We do still have a few lenders who will offset but the list is definitely diminishing vs. growing. If you have a client looking to qualify based on using rental income it is important that they revisit their qualification with their lender.
Enjoy your day!