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Monday, 25 June 2012

Affordability attractive in Alberta

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According to RBC's Housing Trends and Affordability report for May, housing affordability continued to be attractive in Alberta for the first quarter of 2012.
"The levels of Alberta's measures remained among the lower, if not, the lowest, among the provinces," stated the report. "With such attractive affordability and a provincial economy that is ramping up considerably, it is not surprising to see home re-sale activity taking off recently."

 Re-sales in Alberta were up 11.5 per cent year-over-year.
"As Alberta continues to lead the country in economic growth this year, we expect brisk housing activity to persist," stated the report.
Alberta's neighbouring prairie market Saskatchewan saw home re-sales surging to record high levels in the first quarter of 2012 while there was little change in Manitoba's numbers.
According to CREB, the average price of a home in Calgary for the month of May (from the first to press time) was $445.120, an increase of 3.03 per cent compared to the same time last year.
At a national leve, according to the RBC report, Vancouver continues to rank as one of the most unaffordable markets in Canada while Alberta and Atlantic Canada ranking at the more affordable end.

Thursday, 21 June 2012

New Mortgage Rules put simple

The Government of Canada has announced changes to government backed insured mortgages, effective July 9th 2012.

The New Rules are as follows:

  1. Amortization period is REDUCED to 25 years for high ratio applications. Banks can continue to offer 30 year amortization on LTV’s 80% or less.
  2. Refinancing is REDUCED from 85% LTV to 80%.
  3. Limit GDS to 39% and TDS to 44%.
  4. Maximum purchase price for government backed mortgage insurance is $1 million. Homes above $1 million must have 20% down payment.

Although these adjustments are in force July 9th, exceptions have been allowed on binding Purchase & Sale financing & refinancing agreements where the application is made prior to July 9th.

Any mortgage insurance application received after June 21st and before July 9th, that does NOT conform to the new guidelines must fund by December 31st, 2012.

To review this morning's Globe and Mail article click here.
To review the government press release and backgrounders click here.
To contact Minister Flaherty or your local MP CLICK HERE.
If you would like to talk to a mortgage PROFFESSIONAL click here.

Government new mortgage restrictions

AKA we tell you what is good for you, got it?
Today there was an announcement by the federal government to change the mortgage rules that can affect you if  you are planning on buying and have been holding off. If you want to know more information on this contact Zoltan at MortgagePRO  by email or phone to get more details on what you must do to get the 30 yr term. 
OTTAWA — The federal government is moving once again to tighten mortgage-lending rules amid lingering concerns about an overheated housing market and household debt levels.
In a move called for by some of the big banks, Finance Minister Jim Flaherty announced Thursday the federal government is reducing the maximum amortization period for a government-insured mortgage to 25 years from 30 years.
Zoltan M. Padar
MortgagePRO Ltd.
It's the third time the government has reduced the maximum amortization period in the last four years, ratcheting it back from 40 years to 35 in 2008, and then further reduced to 30 years in 2011. Banks will still be allowed to offer 30-year amortization periods on low-ratio mortgages that include a downpayment of 20 per cent or more.
The changes will also see the government lower the maximum Canadians can borrow against their home to 80 per cent of its value, from 85 per cent, in an effort to encourage them to keep more equity in their homes.
As well, under the new rules, to qualify for a mortgage loan Canadians can spend a maximum of 39 per cent of their household income on home expenses such as mortgage, property taxes and heating.
Flaherty said Ottawa will limit government-backed insured mortgages to home purchases of less than $1 million. A downpayment of at least 20 per cent will be required on mortgage loans for homes priced at or above $1 million.
Reducing the amortization period will increase monthly payments, but reduce the amount of total interest paid on a mortgage. Ottawa expects the change from a 30-year to 25-year amortization will, on a $350,000 mortgage loan at four per cent, increase the monthly payment $177 but reduce total interest costs by nearly $47,000.
The government believes less than five per cent of home buyers will be affected by the clampdown.
The new rules take effect July 9, 2012.
"We watch carefully, we monitor the market carefully. I remain concerned about parts of the Canadian residential real estate market, particularly in Toronto, but not only in Toronto, so that is why we are intervening once again," Flaherty told reporters in Ottawa.
"It's our job to try to be ahead of things and act in a measured way, listening to the market. And I have been listening to the market, and quite frankly, I don't like what I hear, particularly in the condo market."
Flaherty said the government's moves are part of an effort to "moderate behaviour" among Canadian homeowners and make them reflect before jumping into the housing market at the high end.
Canada's largest city is seeing continuous home building because of persistent demand, he noted, which is accelerating prices and eroding affordability.
"This concerns me because it's distorting the market, quite frankly," the minister added. "My judgment is that we need to calm particularly the condo market in a few Canadian cities."
Flaherty and some of the country's leading economists have for months been warning they remain worried about Canada's housing market and rising household debt.
In March, prior to delivering the federal budget, Flaherty met with 13 private-sector economists for his traditional pre-budget consultation to get their assessment of the Canadian economy.
Some of the big banks suggested at the time that the federal government consider implementing "measured actions," such as reducing the maximum amortization period for government-insured mortgages back to the traditional 25 years.

On Thursday, the banks largely welcomed the measures.
"Overall we see (Thursday's) announcement as a much better substitute to interest rate hikes since the moves are aimed with almost surgical precision at the margins of the mortgage market," Benjamin Tal with CIBC World Markets said in a research note.
"The combined impact of the four changes will not be large enough to derail the housing market, but are clearly significant enough to soften activity, and at the margin will act as a negative for house prices —mainly at the mid-range segment of the market."
Frank Techar, president of personal and commercial banking at BMO Financial Group, called the changes "prudent, measured, responsible, timely."
"Minister Flaherty has tapped the brakes at precisely the right time and his actions should help ensure Canada's housing market experiences a soft landing," Techar said in a statement.

Read more....

Thursday, 7 June 2012

Good news; start spending again

How to get the most stubburn debt eliminated and to repair your credit to the point when you can save on interest. People with good credit get the best rate, resulting in lower monthly payments, better cash position and less stress. We are experts to repair credit, eliminate debt and get your life back, worry free.
It appears Canadians are more responsible borrowers than some at the federal level would have us believe. A couple of recent reports indicate the stereo-type of the fiscally conservative and responsible Canuck still has legs. One of our big banks sponsored a survey that suggests debt management is a top-of-mind issue for Canadians. It went beyond mortgages to report that 72% of respondents have debt and nearly half of them, 49%, have made an extra, lump sum payment in an effort to knock down their principal.

The spring report from the Canadian Association of Accredited Mortgage Professionals backs up the bank survey and indicates it’s nothing new. CAAMP shows that, since 1990, between 10% and 20% of mortgage holders have made lump sum payments while 20% to 25% have voluntarily increased the amount of their monthly payment. Thirty percent of those who have renewed their mortgages in the past 18 months have opted for higher payments. Minorities, yes, but certainly statistically significant minorities.

Tuesday, 5 June 2012

Brokers: BoC decision may embolden OSFI

By Vernon Clement Jones | 04/06/2012 8:00:00 PM  comments
The Bank of Canada left the overnight rate unchanged at 1 per cent Tuesday, in the process suggesting a hike may not come anytime soon – something that could strengthen OSFI’s hand.
With specific reference to a weakened global economy, the bank review argues "risks remain skewed to the downside,” although the national outlook remains largely unchanged from earlier largely positive projections.
Calgary $30 mill.
It also stepped back from its warnings about household debt levels and the urgent need to bring that under control.
That move in particular lends weight to the idea that the bank will hold off on any rise in its key overnight rate, say analysts, suggesting the central bank may delay until sometime next year.
Still, some brokers are concerned the absence of any rate tightening will strengthen OSFI’s demands for substantive changes to lender underwriting guidelines.
Those exhaustive changes promise to hold lenders more accountable for their lending decisions, but also threaten, charge some brokers, to compromise homeownership for many current borrowers.
Those changes are expected to be released later this month, with CAAMP and other broker players already having submitted analysis on the proposed guideline changes.

Friday, 1 June 2012

Debt poll challenges OSFI proposals

By Vernon Clement Jones | 27/05/2012 7:00:00 PM | comments
Canadians are using their extra cash to more quickly chip away at credit card and lines of credit debt, according to a new bank survey, backing up broker concerns about the dangers of unsecured credit.
“Among Canadians with debt, 49 per cent have made at least one lump sum payment to their debt sometime in the last year,” according to CIBC’s latest consumer debt poll, released Monday.

And while 62 per cent of those making extra payments directed those funds to credit card balances, followed by 46 per cent for line of credit, only 22 per cent of respondents used that extra money to speed up the pace of mortgage repayment.

That kind of priority list backs up broker concerns about credit card debt and the challenge it poses Canadian households. They worry the federal banking regulator has erred in focusing on mortgage lending rules instead of tightening up underwriting standards for credit card lending.

Last week the Official Opposition joined mortgage broker associations in voicing concerns around key aspects of OSFI’s proposed guideline, specifically re-qualifying requirements for renewing mortgagors.
"We just need to make sure that people are protected in some of these temporary situations (where they may have lost a job),” said Peggy Nash, the federal NDP’s finance critic, “if they have a good credit record and have never had a problem making their payment."
OSFI has floated the idea of forcing mortgage-holders to re-qualify at renewal, although exactly what that involves remains unclear.
Broker, and their professional associations,were among the first to balk at the suggestion, arguing it could create the kind of market crisis the proposals aim to overt.
Nash appears to agree, with her party most worried Canadians temporarily out of work could possibly lose their homes. She’s asking the Harper government to back off.
OSFI has suggested it has little intention of backing down, Its manager of policy developing expressing concern about the country’s ability to meet a significant housing correction head on.
“Are the banks equipped to handle a 40 percent drop (in property values)?” writes Vlasios Melessanakis, the manager of policy development for the Office of the Superintendent of Financial Institutions, in an internal document responding to broker Rob McLister and an article posted to his website in March.
"Canada is not immune. Just because nothing happened in Canada in 2008 (a U.S.-centered crisis), does not mean that Canada is not vulnerable to a housing correction now.”