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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 | firstname.lastname@example.org|http://www.valleymortgages.ca/
Toronto index stopped trending down in January
In January the TeranetNational Bank National Composite House Price IndexTM rose 0.3% from the previous month, a tic higher than the historical average for January and a second consecutive monthly increase. However, only four of the 11 metropolitan markets surveyed showed gains the first time since January 2016 that a rise in the Composite Index has had so little breadth. It was due mainly to a second straight monthly jump of the index for the important Vancouver market (1.2% in January on the heels of 1.3% in December). The Toronto index rose 0.2%, the Victoria index 1.0% and the Montreal index edged up 0.1%. All the other component indexes were down on the month: Hamilton (0.2%), Ottawa-Gatineau ( 0.2%), Edmonton (0.3%), Calgary (0.3%), Halifax (-1.0%), Winnipeg (1.1%) and Quebec City (2.0%). For Montreal, it was a 13th monthly increase, and for Hamilton it was a fifth decrease in a row. The rise of the Toronto index was the first in six months. The raw (unsmoothed) Toronto index  on which it is based was up for a third consecutive month. The firming of the smoothed index is due entirely to condo dwellings. The smoothed index for non-condo units fell in January for a sixth straight month, bringing its cumulative decline to 9.6%.
Click here for full release. https://housepriceindex.ca/2018/02/toronto-index-stopped-trending-down-in-january/
2018 CMHC Prospective Home Buyers Survey
In October 2017, CMHC surveyed 2,507 prospective home buyers on-line. Respondents were all prime household decision-makers who intend to purchase a new home within the next two years, including approximately 1,500 First-Time Buyers, 500 current owners, and 500 previous owners.
The survey results highlight that:
First-Time Buyers and Previous Owners share the same top motivator to purchase a home: they want to stop renting. Improved accessibility (physical obstacles and barriers) and investment opportunity were also noted as top motivators across all groups. Changes to mortgage regulations and concerns about possible future interest rate increases were not among the top motivators.
Over four-in-ten First-Time Buyers and Previous Owners say they would delay their home purchase if they were not able to find their ideal home, with a fairly similar proportion saying they would be willing to compromise on the size of the home and location.
The majority of future home buyers intend to obtain a mortgage to finance their home purchase, with First-Time Buyers showing higher incidence compared to Previous Owners and Current Owners.
Across all future home buyers groups, more than six-in-ten say they are likely to have a financial buffer in case their expenses change in the future. Furthermore, the majority of future home buyers, especially Current Owners, agree that they feel confident they have the necessary tools and information to manage their mortgage and debt load.
Among all groups, the two most common actions completed one to two years prior to the purchase of a home were saving for a down payment and determining what type of home to buy. On the other hand, in the last three months before purchasing, about two-in ten of prospective buyers pre-qualify for a mortgage.
About one-in-four prospective home buyers stated that they would be very likely to consider delaying their purchase in the event of an increase in interest rates.