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Summary of Mortgage Rule Changes
Happy New Year !
I wanted to take this opportunity to say thank you for your business and your help in making 2016 a successful year.Your supportmeans the world to me. I look forward to 2017 being another great year of helping people find their perfect mortgages!
As I am sure you are aware, there were a lot of unexpected mortgage policy changes in 2016.I am going to do my best to keep you up to date in 2017 with regular postings regardingpolicy, product and market changes that may impact you. You can find these updates on my facebook page, website, twitter and my blog. Please see links below.
With all these rule changes it is more important than ever to ensure you have someone experienced working for you! Let me put my 20+ years to work for you!
Below is a summary of the changes that came into effect in 2016.I havealso included some valuable information regarding the recently announced B.C. Home Owner Mortgage and Equity Partnership program, also known as theFirst Time Home Buyers Interest Free Loan program. There are still a number of questions to be answered regarding this program and I will keep you updated as we get the most recent news.
Summary of the New Rules and Down Payment Program
On October 17th, new housing policies came into effect and have left many Canadians unsureabout how these have impacted them. Outlined below is a very clear and concise summation of howyou have been affected.
How do the changes affect you?
High Ratio Mortgages
For home buyers with less than 20% down payment, mortgage qualification will be based on the Bank of Canada posted rate. This is to stress test borrowers, as Bank of Canada rates are higher than the rates offered by banks and lenders.
Low Ratio Mortgages
All remains the same for home buyers with a down payment of 20% or more. Specifically, borrowers with down payments of 20% or more will still be able to qualify for mortgages using the contract rate - unless the mortgage has a term of 4 years or less and/or is a variable rate mortgage, which are subject to the new Mortgage Qualifying Rate.
Understanding Key Mortgage Terms:
High Ratio Mortgage-A mortgage in which the borrower has a down payment of less than 20% of the purchase price.
Low Ratio Mortgage-A mortgage in which the borrower has a down payment equivalent to 20% or more of the purchase price.
Mortgage Qualifying Rate-The Bank of Canada conventional 5 year fixed posted rate. On average, 2% higher than rates offered by lenders.
BC HOME Partnership Down Payment Program
Last week the BC government announced the Home Owner Mortgage and Equity (HOME) Partnership. This program will provide down payment assistance to home buyers with less than 20% down.
Through the B.C. HOME Partnership program, the province is helping first-time home buyers by contributing to the amount they have already saved for a down payment with a loan that is interest-free and payment-free for the first five years.
The brief details about the program are as follows:
The B.C. HOME Partnership program will meet the buyers contribution up to 5% of the homes purchase price, to a maximum purchase price of $750,000.
After 5 years, buyers can either repay their loan or enter into monthly payments at current interest rates.
Loans through the program must be paid off in 25 years - the same length as most mortgages.
The program is set to start on January 16, 2017.
To be eligible for the program, eligible first time buyers must meet the following conditions:
Have been a Canadian citizen or permanent resident for at least five years.
Have resided in British Columbia for at least one year immediately preceding the date of application.
Be a first-time buyer who has not owned an interest in a residence anywhere in the world at anytime.
Use the property as their principal residence for the first five years.
Purchase a home that has a purchase price of $750,000 or less (excluding taxes and fees).
Obtain a high-ratio insured first mortgage on the property for at least 80% of the purchase price. Down payment of 5-19%
Have a combined, gross household income of all individuals on title not exceeding $150,000.
Have saved a down payment amount at least equal to the loan amount for which the buyer applied.
The B.C. Government will start accepting applications for the Down Payment program on January 16, 2017.
If you have any questions regarding the mortgage rule changes, downpayment program or your situation in general, please call or email me anytime. I can answer all your questions about the process, run you through your options, and make sure you get expert advice.
Jacquie Claggett | Bayfield Mortgage Professionals | 604-302-1502 | email@example.com|http://www.valleymortgages.ca/
BOC maintains overnight rate target at 1/2 per cent; projects moderate growth in Q2
The Bank of Canada is maintaining its target for the overnight rate at 1/2 per cent. The Bank Rate is correspondingly 3/4 per cent and the deposit rate is 1/4 per cent.
Inflation is broadly in line with the Banks projection in its April Monetary Policy Report (MPR). Food prices continue to decline, mainly because of intense retail competition, pushing inflation temporarily lower. The Banks three measures of core inflation remain below two per cent and wage growth is still subdued, consistent with ongoing excess capacity in the economy. The global economy continues to gain traction and recent developments reinforce the Banks view that growth will gradually strengthen and broaden over the projection horizon. As anticipated, growth in the United States during the first quarter was weak, reflecting mostly temporary factors. Recent data point to a rebound in the second quarter. The uncertainties outlined in the April MPR continue to cloud the global and Canadian outlooks.
The Canadian economys adjustment to lower oil prices is largely complete and recent economic data have been encouraging, including indicators of business investment. Consumer spending and the housing sector continue to be robust on the back of an improving labour market, and these are becoming more broadly based across regions. Macroprudential and other policy measures, while contributing to more sustainable debt profiles, have yet to have a substantial cooling effect on housing markets. Meanwhile, export growth remains subdued, as anticipated in the April MPR, in the face of ongoing competitiveness challenges. The Banks monitoring of the economic data suggests that very strong growth in the first quarter will be followed by some moderation in the second quarter.
All things considered, Governing Council judges that the current degree of monetary stimulus is appropriate at present, and maintains the target for the overnight rate at 1/2 per cent.
Canadian home sales drop in April
According to statistics released today by The Canadian Real Estate Association (CREA), national home sales declined in April 2017.
National home sales fell 1.7% from March to April.
Actual (not seasonally adjusted) activity in April was down 7.5% from a year earlier.
The number of newly listed homes jumped 10% from March to April.
The MLS Home Price Index (HPI) was up 19.8% year-over-year (y-o-y) in April 2017.
The national average sale price rose 10.4% y-o-y in April.
Home sales over Canadian MLS Systems fell by 1.7% in April 2017 from the all-time record set in March. April sales were down from the previous month in close to two-thirds of all local markets, led by the Greater Toronto Area (GTA) and offset by gains in Greater Vancouver and the Fraser Valley.
Actual (not seasonally adjusted) activity was down 7.5% year-over-year, with declines in close to 70% of all local markets. Sales were down most in the Lower Mainland of British Columbia, where activity continues to run well below last years record-levels. The GTA also factored in the decline, with faded activity compared to record levels set in April last year.
Sales in Vancouver are down from record levels in the first half of last year but the gap has started to close, CREA President Andrew Peck. Meanwhile, sales are up in Calgary and Edmonton from last years lows and trending higher in Ottawa and Montreal. All real estate is local, and REALTORS remain your best source for information about sales and listings where you live or might like to.
Homebuyers and sellers both reacted to the recent Ontario government policy announcement aimed at cooling housing markets in and around Toronto, said Gregory Klump, CREAs Chief Economist. The number of new listings in April spiked to record levels in the GTA, Oakville-Milton, Hamilton-Burlington and Kitchener-Waterloo, where there had been a severe supply shortage. And with only ten days to go between the announcement and the end of the month, sales in each of these markets were down from the previous month. It suggests these housing markets have started to cool. Policy makers will no doubt continue to keep a close eye on the combined effect of federal and provincial measures aimed at cooling housing markets of particular concern, while avoiding further regulatory changes that risk producing collateral damage in communities where the housing market is well balanced or already favours buyers.