The mortgage world has definitely changed over the last year with what seemed like new mortgage rules coming out monthly.
In January, the Canadian Mortgage and Housing Corporation (CMHC) announced new increases to the insurance premium charged on mortgages it insures. This new change will take effect March 17th. Steven Mennill, Senior Vice-President at CMHC states “Overall, the changes will preserve competition in the mortgage loan industry and contribute to financial stability”. The insurance premium in the case of a borrower with 5% down payment for example, will increase to 4% of the amount borrowed as opposed to the current 3.6%. Since these premiums are typically added to the mortgage amount, this will also slightly increase your mortgage payment.
With the addition of the new mortgage rules that are implemented in the later part of 2016, this year could be more of a challenge in securing the mortgage you want especially for first-time homebuyers. Many first time homebuyers many have to step back a bit and reevaluate what they can qualify for, Some might even postpone the purchase of their first home.
The government’s concern with the risk associated with the pace of escalating real estate prices, particularly in Vancouver and Toronto, and the affordability of homeownership seem to be the catalyst for these most recent changes. B.C has already seen a reduction in overall real estate activity since some of the provincial and federal changes came into effect in the fall of 2016.
The Trump Factor
Some of the initial policies that the new US government is thinking about implementing could have the effect of rising US bond yields which could partly contribute to rising mortgage rates in Canada. It can be argued that this has already started.
Because of this, it is imporant to get pre-approved now to be protected from rising interest rates. This could easily save thousands over the term of a mortgages regardless of this being a first mortgage, second home or a mortgage renewal in 2017.
I have access to many traditional and non-traditional lenders and I know how all these changes will affect homeowners so I can take the stress out of getting the right mortgage.
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