January 20, 2017
Mortgage Insurance Premiums Are Going Up. When will that happen? And what will this cost borrowers?
CMHC (Canada Mortgage Housing Corporation) & now Genworth have both raised their default insurance premiums on all loan to value financing. This is the 3rd time in three years! When & why do they need to do this and how much will it cost borrowers? Check out the full article from MortgageBrokerNews.ca for the answer to these questions along with a chart to show you the exact increases:
"CMHC announced early Tuesday it is increasing its loan insurance premiums effective March 17."
“We do not expect the higher premiums to have a significant impact on the ability of Canadians to buy a home,” said Steven Mennill, Senior Vice-President, Insurance. “Overall, the changes will preserve competition in the mortgage loan insurance industry and contribute to financial stability.”
According to the Crown Corporation, the average homebuyer will see a $5 increase to their monthly mortgage payment as a result. That $5 certainly adds up, however, to a total of $1,500 over the course of a 25 year mortgage.
The increase is the result of last year’s mortgage rule changes, CMHC claims.
“Capital requirements are an important factor in determining mortgage insurance premiums. The changes reflect OSFI's new capital requirements that came into effect on January 1st of this year that require mortgage insurers to hold additional capital,” it said in a release.
“Capital holdings create a buffer against potential losses, helping to ensure the long term stability of the financial system.”
See the table below for the exact premium increases:
310-328 West Hastings Street
January 20, 2017
5 Tips for Getting Your Home Ready for the Spring Real Estate Market
Even though it’s the middle of the winter season, before you know it, spring will be here. Historically in most real estate markets, the spring is when it really begins to heat up. The spring real estate market generally yields the highest prices for those selling their home. This is only possible though if the proper preparations are taken before spring is upon us!
If you’re thinking of selling your home in the spring, you must know that even though you may receive top dollar for your home, the competition will also be the strongest. This means it’s absolutely critical that you’re prepared for the spring real estate market so you can knock out your competition. Check out these tips so that you’re prepared.
Begin Interviewing Prospective REALTORS®
It doesn’t matter what time of year you decide to sell your home, it’s critical that when selling a home, you know how to interview REALTORS® when selling a home. As spring continues to approach, the top producing REALTORS® will only continue to get busier. Make sure you start reaching out to the agents you think would be a great representative to sell your home sooner rather than later.
Know What Your Plan Is
One huge mistake sellers make is not knowing what their plan is once they sell their home. Are you planning on buying another home once your home sells? Do you have the option to move in with family? Can you rent, if need be? Can you buy non-contingent? These are things you should think about and know the answers to before the spring real estate market hits. It’s a great idea to discuss your financing options with a local lender before you list your home for sale. If you can get pre-approved to purchase a home non-contingent, if need be, it can give you a huge advantage over any seller who is selling their home subject to finding a suitable property to purchase.
Consider Having a Pre-List Inspection
One of the biggest reasons a home sale gets derailed is due to the home inspection. Most buyers will opt to have their offer contingent on an acceptable home inspection. Some buyers can even get alarmed and scared by the smallest home inspection finding. It can be easy to avoid this possibility and have your home inspected by a professional before listing it. Having a pre-list inspection is one of the top things to do before listing a home for sale.
Know Your Local Spring Real Estate Market
Every real estate community and market is different. Some spring real estate markets begin in late February/early March and others begin in the middle of April. It’s important that you truly understand your local real estate market. The best way to know your local real estate market is by hiring a top REALTOR®. Your REALTOR® should be able to advise you on current, past, and projected market conditions and also give you advice as to when you should list your home.
The time you choose to list your home for sale is critical in the spring market. If you wait too long, it’s possible you can miss that prime selling time frame. There are some REALTORS® who will even suggest beating the spring market competition and that it can be beneficial to list a home now and not wait until spring.
Clean & Organize
I know it’s cliché but it’s imperative to give your home a thorough “spring cleaning.” This doesn’t mean wait until spring though. Be proactive and start cleaning now; you’ll be glad you didn’t wait. A huge turnoff for prospective buyers are foul odors. Things such as smoke odors and pet odors can kill home sales.
Here are just a few things to make sure you clean before listing your home:
- Wash your windows
- Dust your blinds
- Dust baseboard trims
- Clean appliances
- Clean shower(s) & toilet(s)
- Clean inside cabinets
When selling a home, it’s important that you de-clutter and organize your home, too. A great way to achieve this is by packing. It may sound silly seeing as you haven’t listed your home for sale yet, but you will need to pack at some point anyways, so why not do it now! Clean out closets and pack away anything that you don’t have a necessity for. It is incredible how much better a home will show and how much quicker it will sell if it’s organized and de-cluttered.
January 13, 2017
Vancouver housing prices may see 'near double-digit' correction in 2017, report says
A new report from Royal LePage is calling for an 8.5 per cent depreciation of home prices in Greater Vancouver in 2017.
Despite a 25.6 per cent year-over-year increase in aggregate home prices in the fourth quarter of 2016, the real estate firm expects prices to drop as a result of "eroded affordability" and "bruised consumer confidence."
"It is expected that Greater Vancouver will experience a near double-digit correction in the new year, as sanity returns to the marketplace, causing the region to give back much of the appreciation witnessed in the first half of 2016," said Royal LePage general manager Randy Ryalls in a release.
Becoming a buyer's market
Royal LePage says that, despite new government policies such as the foreign buyer tax, the main factor affecting house prices in the region is a lack of affordable inventory.
"Market characteristics have melded to create a perfect storm where prospective homeowners are unable to find adequate affordable property due to an extreme lack of supply, and have thus refrained from putting their own homes on the market," the report reads.
In other words, the report says, the region is slowly shifting from a seller's market to a buyer's market.
Though the report identifies inventory as the main driver of the predicted depreciation, Royal LePage also expects foreign investment in Vancouver real estate to decrease as a result of both the foreign buyer tax and stricter currency conversion rules in China.
Markets vary wildly across the country
The report notes that conditions are very different elsewhere in Canada.
"The disparity in home price appreciation between Canadian regions has never been greater than that seen in 2016, with rates ranging from double-digit extremes in some cities to negative growth in others," said Royal LePage president and CEO Phil Soper in a release.
The report notes that prices are rising steadily in the Greater Toronto Area, as well as Quebec, Alberta and Atlantic Canada, and the report expects those trends to continue.
The report says the differing markets make it hard for policymakers to address issues with sweeping regulation changes.
In a release, Soper spoke critically about various governments' attempts to address the situation through taxes and regulations rather than addressing the low supply.
"Too many new taxes and regulations, by too many levels of government, introduced within such a short timeline and with perceivably little research and consultation, have caused confusion and triggered drops in consumer confidence," Soper said.
January 13, 2017
The BC Government Home Partnership Loan Starts Next Week; Here's What You Need to Know
You have likely read about the new initiative from the BC Government to provide down payment assistance.
A handful of mortgage lenders have already decided to take part in the program but there are also a number of them that will not take part.
The program starts next week on Jan 16th and a first time home buyer will need to qualify for the mortgage + the loan for part of the down payment.
The qualifications for debt servicing is to take the loan amount at the current Benchmark rate of 4.64% over 20 years (the amortization for the loan is 25 years but there are no payments nor interest for the first 5 so 20 years needs to be used).
Max. loan amount for down payment is $37,500 and they will only match what one has in their own funds for down payment.
So even at the max loan amount amortized over 20 years impact a borrower's debt ratios to much.
We will likely see more lenders jump on board but it may take some time.
As always if you have any questions around this or any other home financing please feel free to email/text or call me anytime.
310-328 West Hastings Street
January 6, 2017
What makes a good credit score and how important is it in getting a mortgage?
A recent article featured in the Globe and Mail discussed the importance of having a “stellar” credit rating when wanting approval for mortgage financing.
While your credit history is very important in the approval process it’s not everything and there are definitely lenders with specific mortgage programs to help people who might not have “stellar” credit ratings.
Here’s the link to the article below which details, among other things, the breakdown of the importance of such things as making payments on time and balances owing on existing credit.
The following article is from Canadian Real Estate Wealth Magazine.
When you begin shopping around for a mortgage the importance of your credit history and score becomes evident.
Your credit score is an important item that will determine what interest your mortgage agent will be able to offer you. It should be a priority because it can save you thousands of dollars. If you take care of your credit, your credit will take care of you! Whether you have had credit for a long time or are completely new and just beginning, the reality is that you will have to at some time or another prove that you are a low enough risk for lenders to lend to.
If you are just beginning to build credit a good way is by using a credit card.
What is a credit report?
A credit report is a quick look into your credit history. If you have taken a loan or used a credit card you will have a credit history. Financial institutions, trust companies, credit companies and grantors that give you credit may send information about whether or not you make your payments on time to a credit-reporting agency/bureau.
Credit bureaus collect information about you and how long it takes you to pay back money you have borrowed. This is is called your credit history.
Credit lenders rely on a credit bureau to analyze an applicant’s current and past credit history in order to determine the likelihood of future repayment. This provides a fairly accurate indication of future repayment trends.
The two most popular credit bureau agencies operating in Canada are Equifax and Transunion. You can request your credit report by mail for free but your score is not included. If you request your credit report online a fee is charged and your credit score is included.
You are the only person who can see your credit report. No one else can access the information in your report unless you allow it. Generally you would allow credit checks to organizations you are applying to for credit. Usually you sign documentation allowing them to do so.
What’s in your credit report?
Personal information such as:
- your name
- current and previous addresses
- S.I.N., phone number
- date of birth
- previous employer/s
Financial information such as:
- credit cards
- lines of credit
- loans and mortgages
- bankruptcies, court judgements and backed secured loans which are considered public records and debt that was referred to a collection agency for payment.
A list of credit report inquiries: You, your lender, or any other authorized agent is also included which is usually used to determine if you are a credit seeker: someone who applies for a lot of credit.
How are you rated?
The credit agency describes your credit history by rating it. A scale of 1 to 9 is used with 1 meaning that you pay your bills within 30 days and 9 meaning you have bad debt, never pay your bills, have been placed for collection or claimed bankruptcy.
In front of the number there is a letter. The letter stands for the type of credit you are using. R means you have revolving credit such as a credit card, O means you have open credit such as a line of credit and I means you credit has been given on an instalment basis.
Your credit score is a numerical representation of the your current and past credit. It can range between 300 representing the lowest and 900 representing the best rating.
The breakdown that is used to determine your credit score is the following:
35 per cent – Payment history
30 per cent – Amounts owed
15 per cent – Length of credit history
10 per cent – New credit
10 per cent – Types of credit
If you contact Equifax or Transunion and find that the information on your credit report is incorrect, you may request that a correction be made. You will have to contact the institution that reported the activity and submit documentation proving financial resolution has been made to the credit bureau and they will remove it. Good luck! Equifax Canada Credit Bureau, Tel: 1-800-465-7166, Fax: 514-355-8502. TransUnion Canada Credit Bureau, Tel: 1-866-525-0262 (except in Quebec), Tel: 1-877-713-3393 (Quebec residents)
TOP TIPS ON KEEPING A GOOD CREDIT SCORE
1.) Make your payments in the correct amount on or before the due date! This will have a positive effect on your credit score. Missing or late payments and judgements, bankruptcies, collections or other public records will have an unfavourable impact on a credit score.
2.) Keep your balance considerably lower than the available credit limit provided. If you have several accounts with high balances relative to your available credit, this may indicate that you are relying greatly on credit to meet your daily needs.
3.) Multiple credit inquiries can lower your credit score, so reduce the number of credit applications you make.
4.) Always maintain a credit history. You can use a credit card to build a good history.
5.) The best mix of credit is a combination of a store credit card and a major credit card such as a VISA or MasterCard. It is important not to have too many credit cards or store cards as that may negatively impact a credit score.
310-328 West Hastings Street
January 6, 2017
REBGV December Stats
A heated year for Metro Vancouver real estate draws to a close
VANCOUVER, BC – January 4, 2017 – The Metro Vancouver* housing market had its third highest selling year on record in 2016, behind only 2015 and 2005.
Sales of detached, attached and apartment properties in the region reached 39,943 in 2016, a 5.6 per cent decrease from the 42,326 sales recorded in 2015, and a 20.6 per cent increase over the 33,116 residential sales in 2014.
“It was an eventful year for real estate in Metro Vancouver. Escalating prices caused by low supply and strong home buyer demand brought more attention to the market than ever before,” Dan Morrison, Real Estate Board of Greater Vancouver (REBGV) president said.
“As prices rose in the first half of the year, public debate waged about what was fuelling demand and what should be done to stop it. This led to multiple government interventions into the market. The long-term effects of these actions won’t be fully understood for some time.”
Residential properties listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver reached 57,596 in 2016. This is an increase of 0.6 per cent compared to the 57,249 properties listed in 2015 and a 2.6 per cent increase compared to the 56,066 properties listed in 2014.
“The supply of homes for sale couldn't keep up with home buyer demand for much of 2016. This allowed home sellers to raise their asking price. It wasn’t until the last half of the year that prices began to show modest declines.”
The MLS® Home Price Index (HPI) composite benchmark price for all residential properties in Metro Vancouver ends the year at $897,600. This represents a 2.2 per cent decrease over the past six months and a 17.8 per cent increase compared to December 2015.
Residential property sales in the region totalled 1,714 in December 2016, a decrease of 39.4 per cent from the 2,827 sales recorded in December 2015 and a decrease of 22.6 per cent compared to November 2016 when 2,214 homes sold.
Last month’s sales were 8.1 per cent below the 10-year sales average for the month.
New listings for detached, attached and apartment properties in Metro Vancouver totalled 1,312 in December 2016. This represents a decrease of 35.1 per cent compared to the 2,021 units listed in December 2015 and a 58.3 per cent decrease compared to November 2016 when 3,147 properties were listed.
The total number of properties currently listed for sale on the MLS® in Metro Vancouver is 6,345, a 5.3 per cent increase compared to December 2015 (6,024) and a 24.3 per cent decrease compared to November 2016 (8,385).
Sales of detached properties in December 2016 reached 541, a decrease of 52.4 per cent from the 1,136 detached sales recorded in December 2015. The benchmark price for detached properties is $1,483,500. This represents an 18.6 per cent increase compared to December 2015 and a 1.8 per cent decrease compared to November 2016.
Sales of apartment properties reached 915 in December 2016, a decrease of 25.3 per cent compared to the 1,225 sales in December 2015.The benchmark price of an apartment property is $510,300. This represents a 17.3 per cent increase compared to December 2015 and a 0.3 per cent decrease compared to November 2016.
Attached property sales in December 2016 totalled 258, a decrease of 44.6 per cent compared to the 466 sales in December 2015. The benchmark price of an attached unit is $661,800. This represents a 20.4 per cent increase compared to December 2015 and a 0.8 per cent decrease compared to November 2016.
*Editor’s Note: Areas covered by the Real Estate Board of Greater Vancouver include: Whistler, Sunshine Coast, Squamish, West Vancouver, North Vancouver, Vancouver, Burnaby, New Westminster, Richmond, Port Moody, Port Coquitlam, Coquitlam, Pitt Meadows, Maple Ridge, and South Delta.
Full Stats Package>
December 30, 2016
Real estate up, down or flat? 5 factors that could affect home prices in 2017.
Whether you are looking to buy or deciding if this is the year to sell, the question on many minds both at home and abroad is, "Will Canadian real estate keep booming?" For years now, predictions that house prices would stop climbing, or even crash, have repeatedly proven false. Could 2017 be the year?
Here's a look at five factors that could affect Canadian real estate in 2017.
1. U.S. Federal Reserve's interest rates
Although the Canadian and American central banks set their interest rates independently, the rate set by U.S. Federal Reserve Chair Janet Yellen has a huge impact on Canadian mortgage rates. That's because mortgage lenders take their cue from global bond rates set in New York. Why lend to homebuyers at less than you could get on the same money in safe bonds?
When she increased rates by a quarter of a percentage point in December, Yellen implied there would be three more rate rises in 2017. That means prospective Canadian homebuyers should expect mortgage rates to get more expensive in the coming year, though many market commentators have expressed doubts that Yellen will move that fast.
2. Canadian economy
If Canadians feel real estate prices are going to stay strong, a small rise in interest rates won't necessarily put them off buying a family home. But rising rates plus a weakening Canadian economy could conspire to reduce the total number of domestic buyers and put downward pressure on the market.
Predictions for the Canadian economy have been all over the map as analysts balance a resurgence in oil and gas, rising manufacturing and a weaker loonie against fears for trade in a Donald Trump-dominated North America. Last week, a British think-tank, the Centre for Economics and Business Research, predicted Canadian growth would stall at two per cent as the economy slips from 10th place to 12th, behind Indonesia and South Korea.
3. Foreign buyers
The Canadian Press news agency declared the "foreign investor" Canada's business newsmaker of the year. And while many have scoffed at the impact of foreign buyers on the domestic real estate market, there is little question that a sudden decline of outside buyers, especially from China, could have a slowing effect on Canadian house prices.
The importance of the investment from China is its absolute size. Not only the wealthy, but millions of middle-class investors are looking for places to stash money as the Chinese currency falls. So far the Chinese government has failed to stop the flood of money out of the country, but that could change.
It used to be said that land prices could never fall because "they ain't makin' any more of it." Now that a major part of the real estate market is not just suburban building lots but highrise condos, that is no longer strictly true.
So far, there has been no shortage of real estate developments in Canada's priciest cities. Nor has there been any shortage of buyers to snap up newly constructed flats. The government's Canada Mortgage and Housing Corporation and real estate analysts will be watching carefully to see whether construction and potential buyers stay in balance.
5. Government regulation
A wild card in the housing market is how governments react to changes in real estate prices. No matter how strong their stated commitment to market forces, as we've seen at both the federal and provincial levels, governments are willing to meddle when they get blamed for prices that are unaffordable.
The trouble is a sudden change in rules, such as the tax on foreign buyers in Vancouver, can cause equally sudden distortions in the expected path of house prices. If prices were to begin to fall, inevitably governments could become worried about the impact on the wider economy, in which real estate has become a reliable driver of jobs and growth.
December 30, 2016
Details of the Down Payment Loan from the BC Government
Who is eligible for the new down payment loan? And is this offering a good idea?
Recently the BC Government announced they are now offering a loan for a portion of the down payment to help people in BC buy a property. Some economists think it's a good idea, some don't. In fact some think it's just another way the current Liberal government is trying to stay in power; we do have an election coming up this spring.
I personally think this loan could work well for some buyers/borrowers but not all.
There are, of course, many details of what the offer is and who exactly is eligible. See the full press release from the Government of BC website for all the details below:
Note: a bit of important info that's not included in the release below is that you have to be a citizen of Canada or a permanent resident for at least 5 years and also be a resident of BC for at least 1 year.
From middle-class families to young professionals, first-time home buyers are looking to invest in a secure and stable future.
For many British Columbians dreaming of buying their first home, the hardest step is saving for a downpayment. That is why the Province is partnering with British Columbians to help make that dream come true, through the B.C. Home Owner Mortgage and Equity (HOME Partnership program.
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 downpayment with a loan that is interest-free and payment-free for the first five years.
Here is how it works:
- The B.C. HOME Partnership program will meet the buyer’s contribution up to 5% of the home’s purchase price, to a maximum purchase price of $750,000.
- After five years, buyers can either repay their loan or enter into monthly payments at current interest rates.
- Loans through the program become due after 25 years – the same length as most mortgages.
For more information on this program and how B.C. is working to keep housing affordable for you at http://housingaction.gov.bc.ca/
The B.C. HOME Partnership program will start accepting applications Jan. 16, 2017. To apply visit BC Housing.
310-328 West Hastings Street
December 22, 2016
2016 Year in Review
What a year 2016 has been, from the many mortgage rule changes in Canada that created great confusion and questions to the most interesting US elections and now rising interest rates in the US.
The US Federal reserve recently pushed interest rates up by just .25% and they project three additional increases in 2017. This could set a trend for rising interest rates in Canada. However, the growth in the US economy has outpaced that of Canada which might somewhat delay the Bank of Canada from raising its benchmark rate right away but interest rates rising in the US will undoubtable spill over into Canada over time. In fact, some Canadian banks have already increased their five-year fixed rate mortgages.
Are rising mortgage rates a trend? Many think they are. Higher interest rates affect the amount of mortgage homebuyers can qualify for and therefore have an impact on home prices. We could inevitably see lenders increase rates for other loans such as car loans and lines of credit as well.
If you know someone whose mortgage is renewing in the next while or is looking to purchase a first or second home, introduce me so I could provide options that could protect them from rising rates.
2016 is coming to an end and most of us have family and friends not mortgages on our minds. I want to wish you and your family a wonderful holiday season and a prosperous 2017.
310-328 West Hastings Street
December 22, 2016
6 hip, last-minute holiday decor ideas (that don't cost much)
If you've been hauling out the same bedraggled tinsel garlands and hand-painted Santa Claus figurines since the early '80s, it might be time to rethink your approach.
Even those who've managed to delay decorating until this week can have a Pinterest-worthy home for the holidays — provided they consult these tips from Saint John-based pro interior designer Kim Jacobsen.
Best of all? They're simple and cheap — or, in some cases, free.
1. Au naturel
The great thing about living in a province that's still 85 per cent forest is the ease with which aspiring interior decorators can forage for natural Christmas greenery.
The best boughs are cedar, fire and hemlock. Spruce — identifiable by its needles attached individually to the branches, as opposed to in bunches — is something you "probably don't want in your house," Jacobsen said, since the cut boughs tend to have an odour.
Boughs have a life of 10 days to two weeks indoors — so time your gathering appropriately, or keep their ends submerged in in water, à la cut flowers, in the garage.
You can also scrap the greenery in favour of "a nice birch tree to [desired] height and then hang a few of your favourite ornaments on it," said Jacobsen, who suggests standing the sapling in a garden-centre-issue 10-gallon pot stabilized with sand, rocks or craft store spray-foam.
Another free, made-in-New-Brunswick decor option? Bright-red mountain ash berries, which grow wild throughout the province and are "great for outdoor decorating," she said.
2. Heavy metal
It seems Silver and Gold is a classic Christmas track for a reason. This season, Jacobsen said, try a mix of metallic tones, including (but not limited to) silver, gold, copper and platinum.
"You think you can't mix metals — but if it's done properly, you don't have to choose," said Jacobsen, who suggests spray-painting or repurposing old Christmas bulbs throughout the house.
Many of her clients are also asking for black-and-white and other non-traditional colour schemes.
"The traditional red is not such a popular thing," Jacobsen said.
3. Seasonal chic
Good news for last-minute decorators: with a little bit of planning, it won't be necessary to rush out and take down the decorations while nursing a Boxing Day Bailey's hangover/emerging from the annual turkey coma.
Wintry, as opposed to Christmas-y, decorations like greenery or a tasteful glass vase filled with white LED lights can stay part of your decor well into February. "Use what you've already got," she suggests.
To make the transition into 2017, "just take the Christmas bulbs down," Jacobsen said, "and keep the rest of the decorations up."
4. Lit up
Lighting is probably the most dramatic way to take a space from flat to festive. Fortunately for those of us still sorting out the tangled knots of Christmases past, "you don't need to have an extension cord taped across the floor anymore," Jacobsen said.
Not all bulbs, however, are created equal. LED lights are energy-efficient and often come equipped with battery packs that "allow you to escape ugly cords altogether," she said.
Those who have Clark Griswold-like luck with Christmas lights, take note: putting a string of LEDS in chic vases interspersed with Christmas bulbs, with a bit of greenery around the base, can be just as festive as immaculate lines that take hours to hang.
Folks are increasingly eschewing a tree altogether, opting instead for whimsical, sculptural takes on the traditional tannenbaum that are a) hypoallergenic and b) won't shed needles all over the carpet.
Jacobsen points to this futuristic anti-tree created by fellow designer Geof Ramsay, created by suspending monochromatic bulbs from clear fishing line in a Christmas tree outline.
"People are making them out of driftwood or books stacked in a tree formation with lights around it," she said. "It could even just be a decal on a wall."
Non-trees can be "more work upfront," she said, "but that can be a fun challenge, to spend the day making it — and also making great memories together."
6. Less is more
Here's one that folks who have accumulated a lot of Christmas decorations over the years can forget.
"If you have one really nice piece, don't put garlands all over it," Jacobsen said.
A home dripping with decorations might have the heartwarming kitsch factor, but "your eye doesn't know where to look," said Jacobsen, "and that can detract from that one, beautiful piece. So don't overdo it."
If you want to decorate every room in the house, she suggested "picking one thing to focus on in each room, instead of saturating every wall."
The bottom line? Don't feel trammelled by tradition. Christmas decor "can now go in whatever direction you want," Jacobsen said. "Whatever your beliefs, or your tastes are, it's however you want your Christmas to be."
December 14, 2016
B.C first-time homebuyers loan program sparks debate, concern.
VICTORIA — First-time homebuyers struggling to cobble together a down payment for a home could soon get an interest-free loan from the B.C. government, a move some experts say undermines Ottawa’s attempts to curtail risky mortgages to overstretched buyers.
Premier Christy Clark announced Thursday that a new provincially backed loan program would match the amount a first-time buyer has saved for a down payment — up to $37,500, or five per cent of the home’s purchase price.
Clark painted the move as an attempt to help middle-class British Columbians overcome the hurdle of saving for expensive down payments. Not everyone has a parent they can borrow money from to get into the housing market, and some need government’s help, she said.
But down-payment requirements, set by Ottawa to curb risky lending, exist to weed out buyers who might overextend themselves on properties they can’t afford if interest rates increase.
“I hate it. To be very clear, I think it’s really bad economics,” said Tom Davidoff of the University of B.C.’s Sauder School of Business.
“Big picture, it’s a step in the wrong direction. We have too much demand chasing too little supply.”
Davidoff said the move could be an attempt by government to prop up a real estate market that is at risk of a sharp decline in 2017.
The new loan program was greeted with praise by developers, the real estate industry, mortgage brokers and some housing analysts who argued it will help those who would already qualify for mortgages speed their entry into the market.
“What we know is for many first-time homebuyers, qualifying for a mortgage is hard, but getting past that down payment and scraping together the $25,000 or $50,000 you might need to be able to get into your first home is just impossible,” said Clark.
“So we want to be there to help first-time homebuyers get over that hump.”
The new loans — called the B.C. Home Owner Mortgage and Equity Partnership program — would be granted to Canadian citizens or permanent residents who have never previously owned a property and only apply to homes worth less than $750,000. A buyer must be able to pre-qualify for a mortgage and have a gross household income of less than $150,000. Applications open Jan. 16, and the program ends March 31, 2020.
The government would put a second mortgage on a property to reflect the amount it loaned, but not require any interest payments or payments on the principal for the first five years. After that, the 20-year repayment plan would be set at the prime lending rate plus 0.5 per cent, leaving the homeowner to pay back both the original mortgage and the down-payment loan at the same time.
The loans are available for condos, townhouses or detached homes. On a property worth $600,000, the government loan could help a buyer meet or exceed the federally-set minimum down payment of $35,000. In one example, provided by B.C. Housing, a person who saved $30,000 could apply to get an additional $30,000 from the province, giving the buyer a $60,000 down payment.
“The fact is it does help first-time homebuyers and relieves the pressure on the bank of mom and dad,” said Neil Moody, CEO of the Canadian Home Builders Association of B.C.
“It keeps the housing continuum moving along. We need these first-time homebuyers. Anything that can be done to help them get into the market at that stage is a positive thing.”
Jill Oudil, president-elect of the Real Estate Board of Greater Vancouver, said the program will help first-time buyers overcome a “key obstacle” to home ownership.
December 12, 2016
A housing-affordability crisis? Not so fast
A recent article in the Globe & Mail debates the discussions around current housing affordability.
While prices seem out of reach there is a reason for this and it all comes down to the numbers.
It does take longer to save for a down payment, with prices where they are, but because of rates being so low it's keeping monthly payments doable but more interesting, for the first time, and what is pointed out in this article, is the fact that there's the same or more being paid down on the balance owing in the first five years as there is interest.
That's never happened before!
See the full article below for a more detailed explanation of these observations:
It is widely accepted that in Canada the affordability of home ownership has deteriorated sharply in recent times. That is just partly true.
There are two ways that we should look at affordability: first, how much of a down payment is required, and second, how much does it cost to live in an owner-occupied home?
In the first sense, affordability has worsened. During the past 15 years, housing prices in Canada have increased twice as much as incomes. In general, therefore, it takes about twice as long to save a down payment as it did 15 years ago.
In the second sense, however, houses are still affordable across the country. Many readers will disagree with this statement. After all, they have been told repeatedly that mortgage costs are outpacing incomes.
But, there are two problems with the standard analysis of affordability.
The first problem is the analysts are using the wrong interest rate. They rely on the “posted rates” that are published by the Bank of Canada. These posted mortgage interest rates are set by lenders for administrative purposes. Virtually no mortgages are actually contracted at the posted rates.
The rates that are available in the market are much lower. Variable-rate mortgages are available at less than 2.5 per cent. For fixed-rate mortgages, with five-year terms, lenders are advertising rates well below 3 per cent. Interest rates are even lower for terms shorter than five years.
The posted rate that is used in the standard analysis is currently 4.64 per cent. The result is obvious: The costs of home ownership are being vastly overestimated and, therefore, actual affordability is much better than is being suggested.
Using the posted rate also gives a distorted picture of changes over time: For 2016, affordability is almost the worst ever. (Conditions were worse only during a period of overheating in 1989 and 1990.) For 2016, affordability is 22 per cent worse than the average since 1982.
But, if we use the actual interest rates that can be found in the market, the level of affordability was close to average during 2009 to 2015 and only got out of line this year. For 2016, the cost burden is 10 per cent above average.
Inconvenient? Yes. Catastrophic? No.
310-328 West Hastings Street
December 7, 2016
Home sales and listings just below 10-year average
Home buyer and seller activity remains near historical averages in the Metro Vancouver housing market.
Residential home sales in the region totalled 2,214 in November 2016, a decrease of 0.9 per cent from the 2,233 sales recorded in October 2016 and a decrease of 37.2 per cent compared to November 2015 when 3,524 homes sold.
Last month’s sales were 7.6 per cent below the 10-year sales average for the month.
“While 2016 has been anything but a normal year for the Metro Vancouver housing market, supply and demand totals have returned to more historically normal levels over the last few months,” said Dan Morrison, Real Estate Board of Greater Vancouver (REBGV) president.
New listings for detached, attached and apartment properties in Metro Vancouver totalled 3,147 in November 2016. This represents a decrease of 20.9 per cent compared to the 3,981 units listed in October 2016 and a 7.2 per cent decrease compared to November 2015 when 3,392 properties were listed.
Last month’s new listing count was 1.2 per cent below the region’s 10-year new listing average for the month.
The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 8,385, an 8.3 per cent decrease compared to October 2016 (9,143) and a 3.6 per cent increase compared to November 2015 (8,096).
The sales-to-active listings ratio for November 2016 is 26.4 per cent. This is up two per cent from last month (24.4 per cent).
Downward pressure on home prices can occur when the ratio dips below the 12 per cent mark for a sustained period, while home prices can experience upward pressure when it surpasses 20 per cent over several months.
“Demand, relative to supply, for detached homes is lower right now than demand for townhomes and apartments,” Morrison said. “This is causing prices to remain stable, or flat, for townhomes and apartments, while detached homes are seeing modest month-over-moth declines.”
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $908,300. This represents a 1.2 per cent decrease compared to last month and a 20.5 per cent increase compared to November 2015.
Sales of detached properties in November 2016 reached 638, a decrease of 2.1 per cent from the 652 detached sales recorded in October 2016 and a 52.2 per cent decline over November 2015. The benchmark price for detached properties is $1,511,100. This represents a 2.2 per cent decline compared to last month and a 23 per cent increase compared to November 2015.
Sales of apartment properties reached 1,200 in November 2016, an increase of 1.9 per cent compared to the 1,178 sales in October 2016 and a 22.7 per cent decrease compared to November 2015.The benchmark price of an apartment property is $512,100. This is unchanged from last month and is an 18 per cent increase compared to November 2015.
Attached property sales in November 2016 totalled 376, a decrease of 6.7 per cent compared to the 403 sales in October 2016 and a 40.9 per cent decline compared to November 2015. The benchmark price of an attached unit is $667,100. This represents a 0.3 per cent decrease compared to last month and a 23 per cent increase compared to November 2015.
Full Stats Package>
December 5, 2016
Bank of Canada Makes Rate Decision
As widely expected the Bank of Canada decided to leave it's key lending rate exactly where it is, at .50%. By moving this rate up or down would make variable rate mortgages either more or less expensive. The Fed Reserve in the U.S. is widely expected to raise theirs later this month. But what are current forecasts for our country and the Bank of Canada? Well read the full article attached below from MortgageBrokerNews.ca
"The Bank of Canada is holding its benchmark interest rate at 0.5 per cent as economic conditions move along largely in line with its expectations.
In making the scheduled announcement, the central bank says while the global economy has strengthened, international uncertainty has negatively affected business confidence and investment among Canada's trading partners.
The bank says Canada's growth performance has also been close to its expectations, including a strong rebound in the third quarter.
It says Canadian inflation, which it carefully analyzes when making rate decisions, is slightly below what it had anticipated in large part because of lower food prices.
The decision to maintain the rate was widely anticipated by experts and comes ahead of an announcement next week by the U.S. Federal Reserve, which is expected to raise its key interest rate.
In October, the Bank of Canada downgraded its growth outlook and governor Stephen Poloz said its governing council actively discussed cutting the trendsetting rate before deciding to keep it on hold."
310-328 West Hastings Street
Mortgage Broker Vancouver, BC
cell: 604 505 7109 fax: 604 909 4666
December 2, 2016
Interest rates up and less choice for borrowers but let's keep things in perspective
Yesterday, December 1st, 2016 a bunch of new mortgage rules come into effect thanks to the Department of Finance and their tinkering of mortgage insurance. Yes, because of this rates have gone up and there is less choice and less competitiveness in the market place. As noted by the author in an article by Canadian Mortgage Trends called Ottawa's Gift to Lenders: Some Numbers, the review of these new rules and their affects on mortgage lenders and borrowers is a negative one. I have mixed feelings over this; first of all let's keep the rate increases in perspective; they've gone up from around 2.39% - 2.59% to 2.59% - 2.79% for most 5 year fixed rates. There are some better rates for people who have less than 20% down payment which does seem ludicrous; they should be the same. But some mortgage lenders have stopped offering conventional financing with 30 year amortisations resulting in less choice.
If interested, take a read of the article below for a deeper look into the numbers and the author's opinions.
As always, if you have any questions with regards to all these changes, please don't hesitate to give me a call or e-mail me anytime.
Ottawa’s Gift to Lenders: Some Numbers
Happily, it’s only taken six hours to update 183 rates and 25 lenders’ policies following today’s default insurance rule changes. I reckon I’ll be done combing through the rate sheets and policy updates by the weekend, just in time to question the grey matter of those responsible for this absurdity.
Here’s some of the results so far of the DoF’s mortgage insurance ban. These numbers are not exhaustive. They’re just from the banks, monolines and credit unions this author commonly uses:
- Typical new rate surcharge on refinances: 15 bps
- Number of broker lenders who have terminated prime refinances altogether: 6
- Typical new rate surcharge on amortizations over 25 years: 10 bps
- Number of lenders who have terminated amortizations over 25 years altogether: 7
- Typical new rate surcharge on single-unit rentals: 15-25 bps
- Number of lenders who have terminated rentals altogether: 6
- Typical new rate surcharge on properties over $1 million: 15-25 bps
- Number of lenders who have terminated lending on $1 million+ properties altogether: 5
Some of the lenders who pulled the plug on these products will be back in the game once they’ve arranged new funding. But they’ll be tacking on meaningful rate premiums, like almost every other lender.
But there’s more:
- Number of lenders who raised all their rates in the last week (and no, not because of bond yields), instead of just raising refi, long-amortization, rental and $1 million+ rates: 4
- Number of lenders with better rates on higher-defaulting low-equity insured mortgages than lower-defaulting 20%+ equity conventional mortgages: 18
- Number of borrowers with 20%+ equity who default on their mortgages: Less than 1 in 300
- Canadian taxpayer losses from a U.S.-style housing catastrophe: $0
- (Insurers’ capital would be drawn down ~$9 billion, says Moody’s. But that’s a fraction of their combined overall capital base, so a taxpayer bailout would be extraordinarily improbable.)
And that brings us to the most upsetting stat of all:
- Estimated number of mortgagors who will unjustifiably get their pockets picked by those behind this, one of the
most costly, reckless, ill-planned, non-consultative series of policy decisions in Canadian mortgage history: At
least 6 million (half of current borrowers)…and more to come.
December 2, 2016
Forecasts and foreclosures: What does newest Metro Vancouver real estate prediction mean?
When home prices are on the rise, there are few foreclosures. Owners not able to make mortgage payments can easily sell or refinance to get themselves out of a bind.
When prices fall, however, it’s a different story.
“Any drop in prices can lead to an increase in people defaulting (on their mortgages) because people who are stretched tightly don’t have an exit strategy,” said Andrew Bury, a Vancouver-based partner at Gowling WLG, who specializes in handling foreclosures for banks, mortgage investment companies and other lenders.
At the moment, mortgage default rates in B.C. are very low, Bury said. But looking back, he said, “in 2008, it didn’t take a huge decline in prices. In short order, there was double and then triple the number of defaults because of price declines.”
The concern comes as the B.C. Real Estate Association forecast this week that average home sale prices will fall by as much as 8.7 per cent in the Greater Vancouver area next year, from an average of $1,030,000 for 2016 to $940,000 for 2017. That marks a 13.8-per-cent drop from the association’s previous forecast for 2017, which it made in late August, and the first time in five years the industry association has forecast a year-over-year price decrease.
It’s not that falling prices lead directly to foreclosures. Ideally, it’s better to hang on to an asset that is declining in value and sell it later when prices rebound. However, if “something goes wrong, and in life, stuff goes wrong — you lose your job or you get a divorce,” said Bury, there isn’t the option to tap into a home’s equity for a lifeline when prices are declining. And for speculators who have taken equity out of one house to buy another, there is less to tap when it comes time for refinancing.
Andrey Pavlov, a professor of finance at SFU’s Beedie School of Business, said a decline in property prices could lead to a “significant risk” of foreclosures, especially in Vancouver, where the market has been overheated.
“I am concerned that anyone who over-extended themselves to buy a property at the top of the market is at risk,” Pavlov said.
And in B.C., where real estate and construction account for about a quarter of the province’s economy, Pavlov said, “a real estate decline, even if it’s just a decline in transactions, would put a lot of incomes at risk.”
BCREA chief economist Cameron Muir said the forecasts are based on economic and housing variables, including “data from sales, listings, new ones, active ones, pricing over different product types and areas” as well as populations growth, migration sets, job growth and, importantly, interest rates.
David Hutchinson, a Sutton realtor, monitors Vancouver market activity daily and has seen a number of “notable price corrections” recently. Listings show a house in east Vancouver’s Collingwood neighbourhood that was listed earlier this month for $1.6 million, was re-listed this week for $999,000 — a 38-per-cent reduction in the asking price in three weeks.
“It’s kind of a fickle market at the moment,” Hutchinson said. “The market is still up from 2015, it’s just not ridiculous anymore.”
November 25, 2016
Latest Update on Rates, the U.S. & Canadian Economy now that Trump's In
It is finally over. Donald Trump is set to become the 45th president of the United States. It is safe to say that this recent US election was one of the most polarizing and emotionally charged of our time.
Regardless of the diverse opinions, only time will tell how this will affect the average American, the US economy, and us Canadians since we are their largest trading partner with a closely linked economy.
Will there be a flood of Americans coming to buy up Canadian real estate? Most would agree that we probably shouldn’t be holding our breath for any large exodus out of the US. Will the new administration tear up NAFTA (North American Free Trade Agreement)? Many suggest that NAFTA would be renegotiated which might actually be a good thing for Canada.
Mr Trump had mentioned during his campaign his intentions to stimulate the US economy by spending on infrastructure and by other means. That would have an inflationary effect which has already led to rising bond prices causing the big banks to start raising fixed term mortgages since fixed term mortgages are tied to bond prices. Thankfully I have access to a variety of lenders other than the traditional banks.
With the recent mortgage rule changes combined with uncertainty in the bond markets, this could definitely have an effect on home prices and real estate activity over the short term. Now is the time to make sure you have the best mortgage strategies in place considering the uncertain market.
As your mortgage professional, I’m always looking at the changing mortgage environment and have the knowledge on what options exist. Call or email me today and let me help you make the right choices for you.
Tony Marchigiano310-328 West Hastings Street
Mortgage BrokerVancouver, BC
November 25, 2016
Preparing pets for a less stressful move
You and the kids aren't the only ones who are disrupted by moving to a new property — Iwona Ward of Royal LePage Real Estate Services in Toronto wants you to consider the impact it may have on your furrier family members.
Just like you, your pets have grown accustomed to the layout of your current home as well as the surroundings.
A cat or dog can lose its bearings when suddenly placed in a new setting, which can be stressful.
In fact, your pet may try to run away when suddenly introduced to a new house, so ensure they're wearing proper identification tags so that they can be found and returned.
If you have a cat crate, this may be the time to use it. Consider leaving your dog with a neighbour until you get settled in your new digs.
Try to ensure there aren't any strong odours from past pets in the new home, as this may seem threatening to your cat or dog.
They identify their territory using their sense of smell more than you do.
You may want to have the home cleaned professionally from top to bottom before you introduce them to the space.
Be patient with your pooch or kitty; it's a big deal for them to be uprooted from the family home.
Gently guide them around the new house and show them each room, just like you would a person.
Let them investigate the yard, but ensure they won't be able to slip away.
November 16, 2016
Worst Mistakes First Time Home Buyers Make & How To Avoid Them
A house is one of the biggest investments most Canadians ever make, so it's important to plan ahead, to think about what you need in a home and what you can afford.
Getting pre-approved for a mortgage is a great way to budget for a home and signal that you're a serious buyer. However, keep in mind that the amount for which you are approved is the maximum amount the lender feels you can afford based on your income and projected property expenses. That figure doesn't account for other expenses you may face, such as renovations or emergency home repair, as well as regular household costs.
You know best ... what your costs are, so my advice would be look at what your pay cheque is net, line up all those costs, including what you're being told on the calculator is affordable for you, and see what is left at the end of the month. "The last thing you want to do is hang yourself out to dry with [mortgage]payments that are simply too high to carry.
Here are some other mistakes first-time buyers make, and how to avoid them:
Not knowing your credit score
A credit rating is a record of your credit history and current financial situation. A good credit rating can improve your ability to get loans, so if your score is low, you may want to work on improving it before you apply for a mortgage.
Not budgeting for the costs of home ownership
Being a homeowner brings new expenses, including property taxes, higher insurance costs, regular upkeep and an emergency fund for repairs. Don't forget to factor in the cost of any renovations your new home may need.
Not researching down payment choices
Lenders typically require default mortgage loan insurance if you make a down payment of less than 20 per cent, and premiums for that insurance can be as high as 3.60 per cent of the value of the loan. Under the Home Buyers' Plan, first-time buyers can use up to $25,000 in RRSP savings ($50,000 for a couple) for a down payment. A higher down payment will save thousands of dollars in interest over the life of your mortgage.
Focusing too much on interest rates
First-time home buyers rush in to the market when interest rates are low. While rates are important, other things have a greater bearing on the overall cost of home ownership, including the cost of the house, the type of mortgage, the amortization period and payment options.
Not choosing your own payment schedule
Paying off your mortgage sooner saves you interest costs, while a longer amortization period reduces your regular payment and frees up cash flow. You can save thousands of dollars in interest by choosing a shorter amortization period, paying fortnightly instead of monthly, or increasing the amount of payments by even a small amount. Use an online mortgage calculator to run the numbers.
Forgetting about closing costs
When calculating closing costs, assume you will need an additional 1.5 to 2.5 per cent of the purchase price to cover such things as the home inspection, legal fees, land transfer tax, property tax, property insurance, utility hook-ups and moving costs.
Tony Marchigiano310-328 West Hastings Street
Mortgage BrokerVancouver, BC
November 15, 2016
City of Vancouver approves empty homes tax
Vancouver city council has voted to approve a tax on empty homes, the first of its kind in Canada.
Self-reporting owners will be assessed a one per cent tax on homes that are not principal residences or aren't rented out for at least six months of the year.
That means a $1-million home left vacant would be taxed $10,000.
The motion passed 8-3, with Vancouver Mayor Gregor Robertson and all Vision Vancouver councillors voting in favour.
Green Coun. Adrianne Carr supported the motion, while all three NPA councillors voted against it.
Addressing Vancouver's housing crisis
Robertson has said the tax is a way to combat what he called the housing crisis in Vancouver, and justified the measure as a "business tax" on owners he said were treating housing as an investment property.
Robertson has said the tax will improve Vancouver's rental vacancy rate, which is currently around 0.6 per cent, by persuading owners of thousands of empty apartments and houses to put them up for rent.
The city will conduct random audits to catch cheaters, and property owners who try to skirt the rules will face penalties.
The tax will be implemented in early 2017 with the first payments due in 2018.
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