News, Views and Trends!
February home sales were down slightly in Canada… about 1.5% from January to February 2010… Vancouver saw the biggest drop but this is being attributed to the Winter Olympics….
MLS listings up to over 73,000.. highest level since October 2008…
Average home price up 18% to $335,000….
Source .. a report by CBC.ca.
Here’s an interesting statistic… 5 years ago, a 5 year fixed rate mortgage was around 4.35%… and the maximum amortization was 25 years…. a $250,000 mortgage would cost you $1363/mth.
Today, a 5 year fixed rate mortgage can be found at 3.89% (and lower)… and the payment is $1300/mth….. let’s increase the mortgage to $300,000 and use the new maximum amortization of 35 years… new monthly payment is $1303/mth….
Affordability is better than ever… these historical low rates will not be here forever.. make sure you are taking full advantage…. talk with your Mortgage Broker for full details…
We received an update from the Independent Mortgage Brokers Association informing us that they are still unclear about the effects of HST on the housing and mortgage market….. that it was still somewhat confusing…so they have engaged a consultant to get some answers… watch for our updates on this.
I was sent this interesting link the other day…. http://www.unfairtaxgrab.com/home.html. It’s a site with the Provincial NDP leader sharing her thoughts on the impact of the HST for Ontarians…. A sobering message but one worth reading……
It’s official… CMHC just announced further changes to their mortgage rules along with more details of the rule changes announced February 16.
-Qualifying mortgage rates…..up til now, borrowers were qualified on the contract rate of the mortgage or the 3 year rate ….on April 19, that will change to qualifying at the posted rate of the chartered banks …..Effectively, the govt has increased the rate without increasing the rate….quite a magic act…
Let’s think about this for one minute… we have been hearing about the devastating affect to consumers and the housing market should interest rates increase by 1.00% or more… well, the new qualifying rate is 5.39% as of today vs. 3.79% or 3.89% for a 5 year fixed contract rate…. but there’s more.. read on..
-Business for Self individuals will now have to qualify with traditional income validation if you are in business for more than 3 years… the logic is that the majority of self employed individuals can provide traditional income documents and that the business for self programs were for a small segment of the population…
This new change really leaves me scratching my head…. With 20 years experience in the Financial Services industry, I can tell you that the trend is for more Canadians to become self employed.. more contractual workers, less ‘Employees of a company’… And one of the benefits of being self employed is that there are certain tax advantages that are not available to employees…resulting in a lower net income…
A lower net income will mean you better be able to come up with a 20% down payment because you won’t qualify under these new Mortgage rules that will be administered by CMHC…. I can only hope that the govt will be able to act just as quickly if they see the housing market slow down…
Watching the Olympics the past few weeks meant I had to endure watching tons of RBC commercials… I normally reach for the clicker and change channels but gave up after they kept popping up every 10 mins.
One commercial in particular really bugged me… have you seen this one? The young couple are looking at a house with an old kitchen. And then their RBC Mobile Mortgage Specialist suggests they split their mortgage … “part variable and part fixed… to save money.”
Ok, can anyone tell me what that means? ‘…To save money'”. So splitting your mortgage will save you money? Really? How? Who says? Show me statistical data to support such a claim…
I remember that when these split mortgages became available at the TD Bank (I worked there in the 90’s), it was great idea to reduce how much business would leave the banks… Ask anyone that has been in a split mortgage what happened when it came time to renew the 2 split portions…you lose your leverage to negotiate the rate because you cannot transfer your mortgage out until both maturities match….
The result….you get whatever rate the Bank wants to offer at maturity…. BEWARE…. this is bank Kool-aid again… I don’t drink it…
Here’s another recent article about Bank commercials from Ellen Roseman of The Star. This ties in with the bank ads portraying many of us idiots…
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