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Mortgage Rule Changes For Jan 2011
Easy to understand SlideShow on the new Canadian mortgage rules.
Mortgage Rule Changes for April 2010
As we had already reported last month, new mortgage rules are being put into effect from next April 19th, aimed at preventing home-buyers across Canada from getting into financial trouble once mortgage rates rise, as it has been anticipated.
Today, we are going to further elaborate on what are the implications of this new set of rules, and how they affect you, as the final customer.
Upcoming Change
INSURED MORTGAGES ONLY
The qualifying rate for any mortgage terms shorter than 5 years will now be the 5-year benchmark rate on the CMHC website.
Effective Date
April 19th, 2010
Reasoning
To protect borrowers from rising rates
Upcoming Change
Max 90% Loan-to-Value on Owner-Occupied refinances
Effective Date
April 19th, 2010
Reasoning
To prevent borrowers from losing their equity in the event their property value decreases. It also discourages borrowers from depending on their home equity to reduce personal debt.
Upcoming Change
INSURED MORTGAGES ONLY
Self-Employed borrowers with more than 3 years in the same business will be required to confirm their income and will not be eligible for “stated income” Self-Employed product.
Effective Date
April 9th, 2010
Reasoning
This product is intended for a small portion of borrowers who find it very difficult to document income- in particular, recently self-employed borrowers. It is assumed, individuals with longer time self-employed are able to confirm their income via a third party validation through financial statements, T4’s and other third party validations.
Upcoming Change
INSURED MORTGAGES ONLY
Maximum Loan-to-Value is 90% for purchase and 85% for refinances for Self-Employed borrowers unable to confirm their income via traditional third party sources
Effective Date
April 9th, 2010
Reasoning
As the associated risk is higher when the borrower cannot confirm income via a third party, a larger down-payment is required to mitigate the elevated risk.
Upcoming Change
Maximum 80% Loan-to-Value on Non-owner occupied rental properties
Effective Date
April 19th, 2010
Reasoning
To prevent investors from speculating about property values and to prevent a large influx of high-ratio financed non-owner occupied properties that may default if vacancy rates increase.
Upcoming Change
INSURED MORTGAGES ONLY
Where rental income is generated from the subject property, 50% of the gross rental income from the subject property may be added-back to the borrowers annual income
Effective Date
April 19th, 2010
Reasoning
To prevent investors from depending on rental income to qualify.
These new mortgage standards are primarily aimed at stopping housing speculators and ensuring homebuyers can adequately juggle their debts when interest rates inevitably rise.
The government has stressed that Canada’s real estate market is healthy, and that the new rules would only stop “negative trends” from development.
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For more information, please contact our team of mortgage brokers which are at your complete disposal. We are here to offer you the best mortgage rates, lowest prime rates, debt consolidation and Canadian housing assistance, and all other facets to help you achieve your dream home.
Twitter Weekly Updates for 2010-10-31
- #Twitter Weekly Updates for 2010-10-24: – #Twitter Weekly Updates for 2010-10-17: – #Twitter ?? http://goo.gl/fb/ETmxi #
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Twitter Weekly Updates for 2010-10-24
- #Twitter Weekly Updates for 2010-10-17: – #Twitter Weekly Updates for 2010-10-10: – #Twitter ?? http://goo.gl/fb/FMLwh #
- Non-residential building construction increases for the third consecutive quarter… http://goo.gl/fb/0MNAa #
- Bank of Canada maintains overnight rate target at 1%: As expected, the Bank of Canada… http://goo.gl/fb/OAimt #
- House Prices Record ‘Normal’ according to Royal LePage House Price Survey: The Royal LePage… http://goo.gl/fb/W4jZX #
- #Edmonton ??s housing market on steady ground: The Journal Business Staff of edmontonjournal… http://goo.gl/fb/IAqVC #
- Securing a #mortgage more complex for self-employed: by Helen Morris, National Post Securing… http://goo.gl/fb/3tYXv #
- Take advantage of Canadian dollar
http://www.financialpost.com/news/financials/take+advantage+high+Canadian+dollar+when/3697696/story.html # - How to take advantage of the high Canadian dollar when in the U.S. http://t.co/NuZbeRM via @Digg #
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Edmonton’s housing market on steady ground
The Journal Business Staff of edmontonjournal.com has put together an article designed to show how steady prices in Edmonton’s housing market have put to rest fears of a real estate bubble in the city.
Taking into consideration the latest data from the Royal LePage House Price Survey, that shows that at the end of July, August and September, detached bungalows in the Edmonton area rose an average of 0.9 per cent year-over-year to $311,429 while standard two-storey houses increased 3.4 per cent to $338,571, their conclusion is that the market is “stabilizing.”
“For most housing types, prices have increased slightly from where they were a year ago,” said Ken Shearer, a broker with Royal LePage Noralta Real Estate, in a release. “However, we are currently witnessing a levelling off of prices after the quick recovery that began in 2009 and continued through until the spring of this year. To put it in simple terms: prices fell last year, rose quickly through spring and summer of 2010, then dropped back down.”
Price differences varied by neighbourhood and home type. Clareview, for example, saw an average detached bungalow fall 9.1 per cent to $250,000 year-over-year but a standard two-storey increase by 22 per cent to $360,000.
In Clareview a standard condo dropped 11.1 per cent to $160,000. In Riverbend/Terwillegar, bungalows increased on average 15.8 per cent to $440,000 while the average two-storey rose 11 per cent to $390,000. Prices for all housing types remained flat in St. Albert.
Phil Soper, chief executive of Royal LePage Real Estate Services, said that while annual price growth was slightly lower than five per cent in the last quarter, it’s basically in line with that level when factoring in a lower rate of inflation.
In the early part of this year and latter part of 2009, double-digit price growth, year-to-year, was the norm. The Canadian Real Estate Association recorded a surge of more than 20 per cent in October 2009.
These strong gains, as the economy was rebounding from recession while enjoying historically low interest rates, had some fearing Canada was experiencing a housing bubble.
“A few weeks or a few months of unusually high period-over-period price increases after a recession is completely normal,” Soper said. “And it’s no bubble.”
The Royal LePage report is the latest showing the Canadian housing market in stable territory.
CREA recently reported home sales rising in September for the second straight month. Prices of homes sold through the Multiple Listing Service (MLS) were flat compared with a year earlier and ahead 1.9 per cent from August.
And Statistics Canada recently said that new-home prices in August were up 0.1 per cent, even as most economists expected a decline by as much.
However, despite the positive trends of the Canadian housing market, many analysts have warned against looking to housing as a primary, long-term investment strategy, and are instead recommending diversification.
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Read more:
http://www.edmontonjournal.com/