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Stress Testing Now Required For All Canadian Mortgages
Stressed About the Mortgage Stress Test? It is not new news anymore, but it is a topic that should be explored by anyone with a mortgage or planning to apply for one. Last Octobers Government rule changes decreased borrowing amounts for consumers putting less than 20% down payment toward their home purchases (these applicants requiring mortgage insurance). Over the year we have seen increased interest rates and limited competition in the market for many types of loans. The end result of these changes is that, YOU - the consumer, has been greatly affected. With a year since the implementation of the Stress Test, the Federal Government being pleased with the result of this policy change, is now requiring Stress Testing for all uninsured mortgage loans as well (mortgages with down payments greater than 20% of the purchase price). This change being used to assist in further curbing Canadian households indebtedness, as well as cooling some of the real estate markets in Canada. The Stress Test is used in qualifying for your mortgage before you buy but what happens when your current mortgage comes to term. what options do you have? Do you renew with your current lender or are you able to move to a lower rate at a new lender? Mortgage rates are on their way up from our record lows in 2016 early planning for a new purchase or renewal could save you thousands of dollars in the future! It has never been a better time to work with an Accredited Mortgage Professional - our ability to provide choice, guidance, and support will help you make informed borrowing decisions.
Vancouver the main driver of the Composite in December
Vancouver the main driver of the Composite in December says Teranet and National Bank of Canada Without Vancouver, the Composite index would have declined for a fourth month in a row. The strength of Vancouver’s index is consistent with continued tight home resale market conditions. Toronto’s index declined for a fifth consecutive month, but the unsmoothed index (see note on methodology on next page) rose for a second month in a row (middle chart). Unless the unsmoothed index relapses in January, the sequence of declines in the smoothed index should then be interrupted. However this improvement is likely to prove temporary, as it might have resulted from buyers rushing to avoid the new bylaws on qualification for an uninsured mortgage (implemented in January 2018). This view is supported by the increase in Toronto home sales in November and December compared to previous months (bottom chart). Therefore, a resumption of the downward price trend early this year cannot be excluded. Please click on the link below to access the full report: 201712 TNB monthly commentary
Bank of Canada increases overnight rate target to 1 1/4 per cent
The Bank of Canada today increased its target for the overnight rate to 1 1/4 per cent. The Bank Rate is correspondingly 1 1/2 per cent and the deposit rate is 1 per cent. Recent data have been strong, inflation is close to target, and the economy is operating roughly at capacity. However, uncertainty surrounding the future of the North American Free Trade Agreement (NAFTA) is clouding the economic outlook. The global economy continues to strengthen, with growth expected to average 3 1/2 per cent over the projection horizon. Growth in advanced economies is projected to be stronger than in the Banks October Monetary Policy Report(MPR). In particular, there are signs of increasing momentum in the US economy, which will be boosted further by recent tax changes. Global commodity prices are higher, although the benefits to Canada are being diluted by wider spreads between benchmark world and Canadian oil prices. In Canada, real GDP growth is expected to slow to 2.2 per cent in 2018 and 1.6 per cent in 2019, following an estimated 3.0 per cent in 2017. Growth is expected to remain above potential through the first quarter of 2018 and then slow to a rate close to potential for the rest of the projection horizon.