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Leon Blackman Mortgage Agent level 1, PnnChh Inc Brokerage #12389, 216-320 Matheson Boulevard West, Mississauga, ON (2026)

11/07/2024

Under new rules announced in September, Canadians will be able to put smaller down payments on pricier homes and first-time buyers will be able to stretch out their payments over 30 years instead of 25 years, effective mid-December.

The policies are aimed at helping younger buyers get into the housing market where the average home price is $670,000 across the nation and more than $1-million in Toronto and Vancouver.

Increasing the $1 million price cap for insured mortgages to $1.5 million, effective December 15, 2024, to reflect current housing market realities and help more Canadians qualify for a mortgage with a downpayment below 20 per cent. Increasing the insured-mortgage cap—which has not been adjusted since 2012—to $1.5 million will help more Canadians buy a home.

Expanding eligibility for 30 year mortgage amortizations to all first-time homebuyers and to all buyers of new builds, effective December 15, 2024, to reduce the cost of monthly mortgage payments and help more Canadians buy a home.

By helping Canadians buy new builds, including condos, the government is announcing yet another measure to incentivize more new housing construction and tackle the housing shortage. This builds on the Budget 2024 commitment, which came into effect on August 1, 2024, permitting 30 year mortgage amortizations for first-time homebuyers purchasing new builds, including condos.

These new measures build on the strengthened Canadian Mortgage Charter¸ announced in Budget 2024, which allows all insured mortgage holders to switch lenders at renewal without being subject to another mortgage stress test. Not having to requalify when renewing with a different lender increases mortgage competition and enables more Canadians, with insured mortgages, to switch to the best, cheapest deal.

08/21/2024

7 Signs That You’re Ready To Buy a House in 2024

1)You have a stable income and employment history.
2)You’ve paid down your debt.
3)You have great or excellent credit.
4)You’ve saved enough for a down payment. 5)You understand your mortgage options.
6)You plan on putting down roots for a while.
7)You’re preapproved for a mortgage.

The Bottom Line

Buying a house is a huge financial decision. The sooner you buy a house, the sooner you can start building equity, but owning a house comes with a lot of financial responsibilities that can drain your savings if you’re not careful.

If you want to hold out for lower mortgage rates and you’re looking in a market that is less sensitive to price fluctuations, waiting until mid-2024 to buy a house may pay off. However, to make the best decision for your finances and your peace of mind, it’s important to consider working with a mortgage professional who understands both the home buying process and the market.

06/20/2024

Interest rates may slowly start to be easing around the world, but they won’t be returning to pandemic levels and borrowers will need to adjust accordingly.

That’s according to Bank of Canada governor Tiff Macklem, who made the remarks during a Montreal speech last week.

“Interest rates may be easing in many economies, but global interest rates are unlikely to return to pre-pandemic levels,” he said. “The new normal won’t be the old normal. And if we’re not going back, we’ll all need to adjust.”

He also acknowledged that there were policy errors made by the Bank of Canada during the pandemic.

“[Compared to the 1970s] our track record on inflation control combined with our forceful monetary response brought inflation back down at much lower economic cost. But public trust and central bank credibility have been dented by the post-pandemic inflation,” he noted.

“To keep the trust we have and to restore what trust we’ve lost, we need to continue delivering for our citizens. And we need to communicate clearly and broadly.”

06/06/2024

The Bank of Canada has lowered its key interest rate by a quarter of a percentage point to 4.75%, the first cut in more than four years. Here’s what it could mean for your finances.

What Does It Mean For Consumers And Prime Rates?
The Bank of Canada’s benchmark rate affects borrowing costs for banks, which means they’re able, but not forced, to lower their own lending rates.

Banks are generally very quick to move their prime rate higher in tandem with Bank of Canada hikes. They’ve been less consistent on the way down.

By Wednesday afternoon though, most banks had lowered their prime rates to 6.95% from 7.2%, effective June 6, matching the drop from the central bank.

Canadian banks have more flexibility in deciding to cut than they used to. Banks choose how much interest they add to the Bank of Canada rate, and that buffer has widened over the past couple of decades.

From the mid-1990s to 2008, the added margin averaged around 1.5%. It rose to 1.75% until around 2015, and since then has stood at around two per cent added to the bank rate.

What Does It Mean For My Mortgage?
Banks lowering their prime rates will have an immediate effect on borrowers with variable-rate mortgages, just as they’ve felt the brunt of rising rates.

Those with a fixed-rate mortgage will not see their payments change until it comes time to renew their loans.

Fixed-mortgage rates are determined by what happens to the bond market, which, while also affected by Bank of Canada rate decisions, is based on overall investor confidence. The market had already largely priced in the rate cut.

How Much Savings On A Mortgage Can Be Expected
From The Rate Cut?

A quarter percentage point cut doesn’t translate into a major change in monthly mortgage payments. Someone with a $600,000 mortgage, 25-year amortization and a six per cent interest rate would save about $88 a month if the rate was 5.75%.

Bank of Canada governor Tiff Macklem did say it’s “reasonable” to expect further cuts, but that the bank is making its interest rate decisions one at a time.

TD is predicting the central bank will cut rates two more times by the end of the year to bring the benchmark to 4.25%, while CIBC and RBC are predicting three more cuts which would bring the key rate to an even four per cent. A full percentage point off the $600,000 mortgage would translate into about $349 a month in savings.

What Does It Mean For Lines Of Credit And Credit Cards?
Lines of credit are generally tied to bank prime rates, so borrowers should see some savings as banks reduce their prime rates.

Credit card rates are more fixed, so consumers shouldn’t expect much of a break there.

What Does It Mean For My Savings Account Rate And Guaranteed Investment Certificates?

Savings accounts and GICs have seen higher returns as rates rose, and could see that reverse if prime rates go down in line with the Bank of Canada.

The relationship between borrowing costs for financial institutions and savings rates isn’t strictly linear though, said Shannon Terrell, a personal finance expert at NerdWallet. But banks generally move down savings rates to compensate for the lower lending rates they’re offering.

She said customers could see rates start to go down on savings products in the coming days or weeks, with most following suit once one has.

Overall, she said it can be a good time to comparison shop as smaller banks, digital banks and credit unions may keep savings rates higher in an effort to lure customers.

06/03/2024

OSFI Mortgage Rule Changes In 2025
The Globe & Mail Reported That Per Anonymous Sources At OSFI Key Changes At Set To Take Effect In Early 2025.

These rules aim to limit the number of mortgages that banks can offer where the loan amount exceeds 4.5 times the borrower’s income. This move is framed as a preemptive measure to safeguard against over-leveraged borrowers, particularly in anticipation of potential decreases in interest rates in the future.

Why Make These Changes?
For many homebuyers, the impact of these changes may not be immediately apparent. However, understanding the rationale behind these regulations sheds light on their significance. During periods of low interest rates, such as those experienced amid the COVID-19 pandemic in 2020-2021, borrowers were able to qualify for mortgages of up to approximately 5.25 times their household income. This increased borrowing capacity was facilitated by lower interest rates, allowing borrowers to stretch their finances further.

Now, with interest rates on the rise, borrowers are finding themselves limited to roughly 4 times their income when seeking mortgage approval. However, the concern lies in the potential for interest rates to decline again in the future, thereby enabling borrowers to qualify for higher levels of debt. By implementing stricter regulations now, regulators aim to mitigate the risks associated with excessive borrowing, safeguarding both borrowers and lenders against potential financial instability down the line.

What These OSFI Mortgage Rule Changes Mean
It’s important to note that these changes won’t necessarily prevent banks from lending to borrowers whose mortgage exceeds the four and a half times income threshold. Instead, banks will be required to impose stricter criteria and limit the number of borrowers they accept above this threshold. This approach aims to strike a balance between maintaining access to credit while reducing the likelihood of borrowers becoming overextended.

The introduction of these new regulations also prompts reflection on their potential implications for the housing market. Past examples, such as the introduction of similar Loan-to-Income (LTI) metrics in Ireland in 2015, offer insights into potential outcomes. In Ireland’s case, the implementation of LTI metrics resulted in diminished borrowing capacity for homebuyers, ultimately contributing to the suppression of housing prices.

For Canadian homebuyers, these changes represent a shifting landscape in which navigating the path to homeownership may require greater vigilance and strategic planning. While the regulations are intended to promote financial stability and housing affordability, they also underscore the importance of prudent financial management and realistic expectations when entering the housing market.

In conclusion, the forthcoming changes in mortgage regulations set to be implemented in 2025 signal a proactive approach by regulators to mitigate risks associated with excessive borrowing in the face of potential fluctuations in interest rates. While these changes may introduce new challenges for homebuyers, they also underscore the importance of informed decision-making and prudent financial planning in achieving sustainable homeownership.

By staying abreast of these developments and seeking guidance from qualified professionals, homebuyers can navigate the evolving landscape of mortgage regulations with confidence and clarity.

05/24/2024

Understanding Credit Inquiries In Mortgage Applications

As mortgage professionals, it’s our duty to clarify and reassure clients about the realities of credit inquiries and the minimal impact they typically have.

Let’s dive into why borrowers shouldn’t worry excessively about their mortgage credit inquiry. To be clear, if someone wants a formal mortgage pre-approval or even a rate hold, then yes, absolutely, we have to pull a credit report.

Here’s the reality:

Minimal impact: A single credit inquiry usually has a very small effect on your credit score, potentially lowering it by just 5 to 8 points.

Credit score buffer: Most diligent credit users have a score buffer that more than compensates for the minor deductions caused by inquiries.

Purpose of building credit: Remember, a big reason for maintaining a good credit history is to utilize it when making significant decisions like buying or refinancing a home.

In essence, avoiding a credit check could hinder your ability to get pre-approved for a mortgage. It’s crucial to let your mortgage professional proceed with the necessary checks to ensure you’re on the right track to securing your home loan.

05/13/2024

The federal government has announced it will be discontinuing its First-Time Home Buyer Incentive (FTHBI) program as of March 21.

Introduced in 2019, the shared-equity program is administered by the Canada Mortgage and Housing Corporation (CMHC) and involves a government contribution of 5% to 10% towards the down payment for first-time homebuyers in exchange for a proportional share in the future increase or decrease in the home’s value.

Buyers aren’t required to make any monthly payments, but the loan has to be repaid—at current fair market valuation determined by CMHC using an independent appraisal—either after 25 years or upon the sale of the property.

Since its inception, the program has faced criticism and struggled with a participation rate far below initial government estimates.

When it was unveiled, the government earmarked $1.25 billion over three years with the goal of assisting 100,000 homebuyers to purchase homes. As of March 2022, CMHC received less than 16,000 applications worth about $285 million in shared equity mortgages.

Critics argued that the maximum purchase price of $505,000 permitted under the program wouldn’t do much to assist first-time buyers in the country’s largest markets where prices are significantly higher.

Five months into the program, CMHC responded by raising the maximum purchase price permitted under the FTHBI to about $722,000 for buyers in Toronto, Vancouver and Victoria.

CMHC said the program was initially expected to sunset by 2022, but was extended in that year’s budget to December 31, 2025.

“After a review of federal housing plans in light of the current housing situation, the federal government decided that the First Home Savings Account (FHSA) is a better tool to help first time homebuyers buy a home,” a spokesperson with CMHC told CMT.

It added that over 500,000 Canadians have already opened the new registered savings account—which is designed to help first-time buyers save for a home—since it was launched early last year.

“Refocusing this funding will also allow the government to focus on other impactful policy areas,” CMHC said, adding that the decision to discontinue the program will not impact homebuyers who were already approved

05/03/2024

Canada’s latest GDP figures may prompt Bank of Canada summer rate cut: Economists

Canada’s quarterly gross domestic product edged up 0.2% in February, according to Statistics Canada data published April 30, suggesting the Bank of Canada may have a reason to cut rates in the summer.

Statistics Canada says economic growth in February was fuelled by growth in transportation and warehousing industries thanks to a rebound in retail transportation rates following a cold snap in January across Western Canada. Meanwhile air transportation rose as some airlines boosted their flight capacity to Asia leading up to the Lunar New Year.

In Statistics Canada’s ‘flash’ estimate of March’s figures, it found real GDSP was essential unchanged, with increased growth in real estate and utilities offset by drops in manufacturing and retail trade. The official rate for March will be released on May 31.

So far, Statistics Canada says, the Canadian economy expanded a total of 2.5% annualized rate in 2024’s first quarter.

Economists largely concluded following the data release that the Bank of Canada is in a good position to begin slashing interest rates as soon as the summer, citing January and February’s economic growth as sluggish and relatively contained.

Benjamin Reitzes, managing director of Canadian rates for BMO and macro strategist for fixed income strategy, said the data for Q1 of 2024 will put additional pressure on the Bank of Canada to start cutting rates as soon as June. However, he noted that consumer price index data, as well as the economic situation in the US, may change matters.

“Unfortunately, persistently strong U.S. data are making things increasingly complicated for the Bank, as it appears that the Fed could be on hold for a while,” Reitzes wrote in a research note on April 30.

05/01/2024

Understanding The Landscape Of Second Mortgages In Ontario

Borrowing against the equity you've built can be a great solution for debt consolidation once the risk has been evaluated.

second mortgage is a financial tool that allows someone to borrow against the equity they’ve built up. These can be used to fund projects that will increase the value of a home, such as a renovation. However, because the lender is taking on more risk, the interest rates for second mortgages are usually higher.

A few factors to consider include heightened foreclosure or power of sale risk, the fees for taking out a second mortgage, and the fact that a homeowner is increasing their debt load.

Second mortgages in Ontario are a pathway to using a property's equity for significant expenses but must be considered from all angles. The best place to start is to understand the qualifications.

Exploring Eligibility Criteria for Second Mortgages in Ontario

Second mortgages are also an excellent tool to consolidate bills or buy a second property. If you're looking to get one of these loans from a traditional institution like a bank or credit union, the eligibility requirements include:

More than 25% of the equity that you have built up. Remember that equity is the portion of your property that equals the current value and subtracts any outstanding mortgage balances.
There is another factor used by A&B tier lenders.

This is how much you pay out to your debts versus your gross monthly income. Most lenders will look for one that's below 43%. Here's a formula to calculate your numbers. The Credit Score Is vital In Any Conventional A&B tier second mortgage.

Equifax has compiled an excellent infographic highlighting the top factors affecting your credit scores. Private lenders use equity when you're applying for a second mortgage.

They filter it through The Loan to Value (LTV) ratio formula to decide on approvals. This ratio between the requested mortgage and property value requires a home appraisal.

If you have low income or bad credit and cannot get accepted through a traditional bank, private lenders factor in the equity you have in your home to increase your chances of a positive result. They usually require more than 25% equity. Of course, other factors, including Ontario's market trends, come into play.

Legal Considerations And Property Laws Specific To Ontario

Private lenders usually require second mortgages with an LTV that does not go over 75%. They also typically want to see at least 25% of equity in any property. Applicants need to remember these get leveraged against a property with an existing mortgage loan.

Second mortgages are paid off after the primary or first mortgage balance is done. People take these second mortgages out for various reasons, including consolidating debts, benefiting from lower interest rates, and covering renovation costs.

Second mortgages involve appraisal fees and legal fees, as well as other possible closing costs. These are considered short-term loans, usually at most five years.

04/28/2024

Why The Smart Money Is Buying Single-Family Homes

Shortage of houses and surging population is setting up a big opportunity for those with financial means.

“Location, location, location” is what real estate agents preach like a broken record, and for good reason.

But there’s a new chant in town: “home type, home type, home type.” It doesn’t exactly roll off the tongue, but it’s about to sway home appreciation more than usual for the next few years.

Whether you think Canadian home prices will rocket like an artificial intelligence stock, crash like a meteor, or something in between, there’s little argument among experts that single-family houses should appreciate faster than multi-family homes.

Housing analyst Ben Rabidoux at Edge Realty Analytics notes that for every single-family home we’ve started building in the past year, Canada has added 20 people to the population. That’s just about as lopsided of a supply-demand relationship as you’ll see in real estate.

“Single-family housing starts don’t look set to improve any time soon,” Rabidoux says.

“Building permits are leading indicators for housing starts, and it’s notable that they remain at 40-year lows nationally.”

Sure, the spectre of housing risk looms large, with mortgage rates almost double their 10-year average. Yet, for qualified prospective home buyers, it may pay to look beyond the short-term gloom.

It’s no coincidence that most economists and real estate analysts are now projecting higher house prices in the next year despite record unaffordability. The deficit of single-family residences combined with rising incomes should lead to detached home price outperformance as rates ease.

Sideline syndrome

Thousands of hopeful Canadians are on the sidelines, waiting for lower rates to buy a house. For some, that might be a mistake.

Buying right

Location is still king, but sometimes, you’re better off buying a house or townhouse a bit further away from where you want to be than a more plentiful high-rise condo. You may also find value in a detached fixer-upper where you can build sweat equity. Much depends on supply and demand in your region and the upside and lifestyle you want.

When sizing up house location, eventual resale potential should be paramount. That hinges on buying in areas that check more than just one of these boxes:
Above-average population growth relative to home building Solid employment growth Proximity to amenities Access to nature A strong school district Scenic views Nearby public transportation Low crime rates An economy not tied to just one industry.

04/24/2024

Home Prices Not Reverting To Pre-Pandemic Levels On The Rise Again In 2024

The Canada Mortgage and Housing Corporation (CMHC) expects home prices to reach a bottom this year, but aren’t expected to fall below pre-pandemic levels.

That was the takeaway from the agency’s spring Housing Market Outlook, which said weaker growth and higher mortgage rates will continue to slow the housing market and overall economy throughout the year.

“We expect a price decline between 2022 and 2023, but the average price will not revert to pre-pandemic levels,” the report reads. “However, we expect this decline to bottom out sometime in 2023.”

In its latest baseline forecast, CMHC expects the average MLS home price to fall to $643,325 in 2023, a nearly 9% drop from the average price of $703,875 in 2022. In that scenario, prices will remain almost 14% above 2020 prices.

As economic growth and immigration levels continue to pick up, CMHC said it expects prices to start rising in 2024, reaching an average of $694,196 in 2024 and $746,410 in 2025.

In an alternative scenario, which accounts for a longer period of high inflation and interest rates remaining higher for longer, its average price forecasts come in about 5% lower.

04/22/2024

Highlights Of The Government’s Housing Plan

The release of the federal housing plan comes after the government unveiled new measures it says will help address housing affordability for first-time buyers. That included extending the maximum amortization period from 25 years to 30 years for insured mortgages on new builds and increasing the Home Buyers’ Plan limit to $60,000 from $35,000.

Additional Measures Unveiled As Part Of The Government’s Housing Plan Include:

A plan to build 3.87 million new homes by 2031, including 2 million net new homes in addition to the 1.87 million homes that the Canada Mortgage and Housing Corporation forecasts will be built by that year.

An additional $15 billion allocated to the Apartment Construction Loan Program to ensure the construction of at least 30,000 new rental apartments.

$10 million invested in the Skilled Trades Awareness and Readiness program to motivate high school students to pursue careers in the skilled trades.

$50 million directed to the Foreign Credential Recognition Program, specifically to support residential construction and assist skilled trades workers in building more homes.

Leon Blackman Mortgage Agent level 1, PnnChh Inc Brokerage #12389

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