Tracy Scimeca, Mortgage Agent, Oriana Financial

03/22/2019

A major item from this week’s federal budget will further reduce, rather than enhance, affordability for first-time homebuyers.

The First-Time Home Buyer Incentive—in which the Canada Mortgage and Housing Corporation will provide up to 10% on the purchase price of a new build and 5% on a resale—caps household income at $120,000. The policy further states that “participants’ insured mortgage and the incentive amount cannot be greater than four times the participants’ annual household incomes.”

First-time buyers who think the incentive raises their qualifying power are in for a surprise. According to Ratehub.ca, under current qualifying criteria, including the stress test, buyers qualify for homes that are 4.5-4.7% their household income. By using the First-Time Home Buyer Incentive, they would reduce their qualification amount by 15%.

“The total a first-time homebuyer gets between their mortgage and the incentive they receive from the government can’t exceed four times their household income,” said James Laird, Ratehub.ca’s co-founder and president of CanWise Financial. “This qualifying criteria is actually stricter than the regular qualifying criteria that exists today. I was surprised the policy itself was launched like this since that section of the budget is called ‘Affordability’ and it actually reduces affordability.”

According to calculations provided by Ratehub.ca, a household with $100,000 of income that puts a 5% down payment on a home, totalling $23,994, qualifies for a $479,888 home. However, with CMHC insurance, that amount declines to $474,129 with a monthly mortgage payment of $2,265.

If the same household participating in the First-Time Home Buyer Incentive uses the maximum purchase price, it qualifies for $404,858. If it uses the minimum down payment of 5% at $20,242, the total mortgage amount becomes $400,000 with a $1,911 monthly mortgage payment.

“The number one issue facing first-time homebuyers is how much they qualify for, not the monthly payment after the home closes, and that’s what this is aimed at,” continued Laird. “They qualify for less if they use this program.”

That might not be the only problem with the First-Time Home Buyer Incentive. A similar program launched by British Columbia’s Liberal government was axed last March by the NDP after it was revealed that only around 3,000 homebuyers used it—far fewer than the expected 42,000.

“Given the evidence provided through one of the largest provinces in the country trying a program that didn’t work, I’m not sure what the federal government thinks will be different,” said Laird, adding that housing measures in the budget were spare on details.

“I was amazed that one of the key parts of their budget hadn’t been properly thought through and didn’t contain detail. I expect that before this program actually goes live, one, we’ll get more detail, and two, it will be amended to take care of this issue.”

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03/20/2019

The 2019 federal budget includes a tantalizing pitch for prospective first-time home buyers — one that could see Canada's housing agency contribute up to 10 per cent of the purchase price of a home and bring down the mortgage load for borrowers.

12/13/2018

Rate update

Just a few months ago economists were predicting that the Bank of Canada would take a bullish stance on interest rates following its talk of ‘normalization’ of the interest rate environment.

Since then several things have changed. Despite some positive economic data and employment stats, issues such as the discounting of Canadian oil, slowing housing market, and the planned closure of the GM Oshawa plant, are all weighing on forecasts.

The economists at the British Columbia Real Estate Association have issued their latest outlook for interest rates and say that, all things considered, they don’t see more than two rate hikes in 2019 with a single rise being the most likely scenario.

Specifically on mortgage rates, BCREA Economics says that lenders have been hesitant to raise their 5-year qualifying rate amid the slowest pace for mortgage book growth in 17 years, exacerbated by the tighter regulations.

Its outlook is that the 5-year qualifying rate of 5.34% in Q4 2018 will rise to 5.54% by Q2 2019 and remain there for the rest of the year. The 5-year average discounted rate is forecast to dip slightly from 3.74% in Q4 2018 to 3.64% in Q1 2019 before returning to 3.74% for the remainder of 2019.

11/15/2018

Ted Rechtshaffen: The government has effectively decided to support home buyers who do not necessarily have the funds to buy a house

10/03/2018

https://betterdwelling.com/canadian-real-estate-price-growth-is-climbing-again/

Canadian real estate prices are just off of all-time highs. Canadian Real Estate Association (CREA) numbers show prices fell on a monthly basis in August, but were still positive from last year. The most interesting takeaway is the price growth deceleration across Canada, as interest rates rise. The...

05/14/2018

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05/03/2018

Supported McHappy day !! Great cause

03/22/2018

Housing policies don’t just have an impact on the housing market, they also affect the wider economy.

That is a key message from the Toronto Real Estate Board which this week held the first of two Regional Economic Summits, in Durham. The second is in York next month.

With data from the Altus Group showing that every real estate transaction adds $68,275 in spin-off expenditure, TREB says that any measure that slows activity in the housing market means less economic activity.

“The importance of the housing sector to the regional economies of the GTA is clear. All levels of government must be mindful of the potential impact of housing policies on the market, from the perspective of economic growth, jobs and government revenues,” said TREB President Tim Syrianos.

With a provincial election ahead, TREB is encouraging all candidates to make their housing policy direction clear so that it may be debated.

“It will be especially important to hear policy directions related to the supply of housing in the GTA – an issue which has yet to be addressed with any concrete policy moves from any level of government,” added Syrianos.

TREB’s updated outlook reveals that the psychological impact of the Ontario Fair Housing Plan and the OSFI mortgage stress tests have made a dent in demand for homes in the GTA.

“The fundamentals underlying the demand for ownership housing will remain sound in 2018. Population growth will continue to be driven by immigration and job growth and will be sustained across a diversity of economic sectors. However, we must be cognizant of the fact that, in the short term, higher borrowing costs and the effects of federal and provincial policy decisions will act as a drag on demand for ownership housing, particularly in the first half of 2018,” said Jason Mercer, TREB’s Director of Market Analysis and Service Channels.

03/13/2018

Quote for the day from a fellow mortgage broker I read this and thought I should share ..with family and friend and clients 🙂

There’s a lot of negative press and people get sucked into it,” said Furlong. “I think it’s important for people to understand, especially when using a broker, that they still have options. The sky isn’t falling. People say they’re stuck, but a broker has all kinds of options for these clients. They can still use credit unions, for example. They don’t have to stay with their old lender if they don’t qualify—we can get around it. I think banks and some realtors are saying the new rules just stopped everything, but there are a lot of options out there, and I think it’s important that our Canadians client base knows that.”

10/15/2017

Shop around – and not just for the lowest rate!

I was reading an article this morning and I have been saying this to my clients for years

Prepayment privileges: As interest rates rise, a bigger chunk of your mortgage payments will go toward interest rather than the principal. That’s why it’s important to get a mortgage that will allow you to make large lump-sum contributions and increase your monthly payments if you decide to pay down your debt faster. Non-bank lenders might both lower rates and offer more generous prepayment privileges than the big banks, noted Cooper. “Non-traditional lenders with a solid track record are worth considering, especially if it means paying down your mortgage sooner,”

Penalties: What would happen if you were to break your mortgage? That’s a question every mortgage applicant should ask herself

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08/23/2017

Despite a report urging Ottawa to look at ways of boosting support for first time buyers, the Finance Minister ruled out any new measures along...