View Full Version : Housing market Big changes!!!!
ironwill
16-02-2010, 11:18 AM
OTTAWA - Finance Minister Jim Flaherty is tightening mortgage rules to crack down on speculators and discourage homeowners from taking on too much debt.
He is responding to growing concerns that Canada's housing market is overheating, although he stresses that there is no bubble in Canada's real-estate market - yet.
"There's no compelling evidence of a housing bubble, but we're taking proactive, prudent, measured and cautious steps today to help prevent a housing bubble," Flaherty said Tuesday.
The finance minister says all borrowers will need to meet stiffer criteria to take out mortgages. In order to qualify for an insured mortgage, borrowers will have to meet the standards for a five-year fixed-rate mortgage - up from the current standard of three years.
He's also raising the downpayment that borrowers must pay for speculative investments. If prospective home buyers want to purchase a property where they will not be living, they will have to come up with a 20 per cent downpayment, Flaherty said.
"We're not aiming here at investment properties" such as rental units, he said. "What we're getting at is the speculation in multiple-condo markets, in particular."
And he's imposing tighter restrictions on how much money people can borrow against their houses. Instead of being able to borrow 95 per cent of the value of their property, the limit will now be 90 per cent.
"This will discourage the kind of mortgage refinancing that can create unsustainable debt levels as interest rates go up," Flaherty said.
"We are encouraging people to build equity over time, using home ownership as an effective way to save, rather than a vehicle for quick cash."
The new rules are expected to come into force on April 19.
Economists have advised the minister to be stricter on who can get new mortgages, but they've also warned the government not to put on the brakes too strongly, in order to preserve the fragile economic recovery.
"These measures may have some stabilizing effect on the housing market," Flaherty said. "Stability is a good thing for a consistent economic recovery."
The Bank of Canada has been warning for months that homeowners should ensure they can absorb an increase in their floating-rate mortgages once rates start rising, likely as early as this summer.
Dryvrgrl
16-02-2010, 11:57 AM
good time to have a fixed/ floating rate mtg.
daande
16-02-2010, 12:24 PM
This has me semi worried as I flip houses and the majority of people who buy houses off of me are first time home buyers.
RagingRandy
16-02-2010, 01:08 PM
This affects refinancing and not first time home buyers. First time home buyers can still get a 95% mortgage. They are also upping the downpayment % on speculators which will now need to put 20% down on homes they will not be living in.
ironwill
16-02-2010, 01:27 PM
This affects refinancing and not first time home buyers. First time home buyers can still get a 95% mortgage. They are also upping the downpayment % on speculators which will now need to put 20% down on homes they will not be living in.
Yes, true for now.....
daande
16-02-2010, 02:07 PM
Yes, true for now.....
I heard it will curb mortgages on first time home buyers by forcing them to pass some sort of criteria in order to get a mortgage.
ironwill
16-02-2010, 02:13 PM
I heard it will curb mortgages on first time home buyers by forcing them to pass some sort of criteria in order to get a mortgage.
It is getting tougher i can say that.....I have some friends that are getting mtges now and have a plus credit, and good jobs, they are going through the ringer right now.......
On our first home we bought it was done within a few hours, that was a few yrs ago, then we bought a second home in the last several months and are renting the first one, took a few days to get everything all approved and done up..........
I have heard that they are going to do away with 30-40 yr mtges also, which i think is a good move........I couldnt live with myself paying that much interest for the majority of my life....
Interest rates on the rise as well possibly, maybe 6-8 percent...or more.....
daande
16-02-2010, 02:16 PM
It is getting tougher i can say that.....I have some friends that are getting mtges now and have a plus credit, and good jobs, they are going through the ringer right now.......
On our first home we bought it was done within a few hours, that was a few yrs ago, then we bought a second home in the last several months and are renting the first one, took a few days to get everything all approved and done up..........
I have heard that they are going to do away with 30-40 yr mtges also, which i think is a good move........I couldnt live with myself paying that much interest for the majority of my life....
Interest rates on the rise as well possibly, maybe 6-8 percent...or more.....
I know 30+ year mortgages are going to be gone. You may still be able to get a 30 year one but not 35 or 40.
physique
16-02-2010, 03:02 PM
It is getting tougher i can say that.....I have some friends that are getting mtges now and have a plus credit, and good jobs, they are going through the ringer right now.......
On our first home we bought it was done within a few hours, that was a few yrs ago, then we bought a second home in the last several months and are renting the first one, took a few days to get everything all approved and done up..........
I have heard that they are going to do away with 30-40 yr mtges also, which i think is a good move........I couldnt live with myself paying that much interest for the majority of my life....
Interest rates on the rise as well possibly, maybe 6-8 percent...or more.....
do u honestly think the economy is strong enough to make mortage rates 6-8 percent up from what 2.25%. I cant see it. rates will rise, but that much i highly doubt it.
guest
16-02-2010, 03:13 PM
i just locked in in november. yay.
RagingRandy
16-02-2010, 03:15 PM
I locked in too. I locked in @ 5% for 10 years which is the remainder of the mortgage.
ironwill
16-02-2010, 03:33 PM
do u honestly think the economy is strong enough to make mortage rates 6-8 percent up from what 2.25%. I cant see it. rates will rise, but that much i highly doubt it.
A fixed rate at 3.75 is good right now, i can see it going up, But as far what i think the economy will do...I wish i knew, but the experts are saying its coming......Im definitely no expert, but i thought id share........Some of us are investors and i know a few guys are getting in to buy renter properties now for those that wont be able to get a home to purchase later....If that makes sense...
Bowlcut
16-02-2010, 06:41 PM
Canadian Home Mortgage Corp is a ticking timebomb that is going to saddle a generation with massive debts if things get ugly.
The Bank of Canada tries to "set" rates through open market operations and do not have the ability to maintain low long term rates while promoting "stable prices". Eventually investors are going to demand a higher interest rate to compensate for the inflation risk.
Home prices are going to have to come down because the average prices are way above their normal trend. It was reported to today the average home price is 5x the annual pretax salary when the historical average was 3.7. Sure there are lots of exogenous factors driving up home prices in certain markets, ie, immigration, but that fact that somebody in the lower mainland is paying 70% of their monthly income on a mortgage is not sustainable.
natenator
16-02-2010, 06:49 PM
Canadian Home Mortgage Corp is a ticking timebomb that is going to saddle a generation with massive debts if things get ugly.
The Bank of Canada tries to "set" rates through open market operations and do not have the ability to maintain low long term rates while promoting "stable prices". Eventually investors are going to demand a higher interest rate to compensate for the inflation risk.
Home prices are going to have to come down because the average prices are way above their normal trend. It was reported to today the average home price is 5x the annual pretax salary when the historical average was 3.7. Sure there are lots of exogenous factors driving up home prices in certain markets, ie, immigration, but that fact that somebody in the lower mainland is paying 70% of their monthly income on a mortgage is not sustainable.
Hey CanadianIron.... you paying attention? lol
CanadianIron
16-02-2010, 07:26 PM
Oui, and I agree to a degree, dont you see.
When you actually calculate up the costs of building a house today, with todays labor, materials and paperwork, you're paying 500,000/acre in Vancouver. This is pretty much to only thing you can expect to drop in price. Unless the economy tanks and we all become desperate for work and wages actually go down...
The lower mainland is "full".. the only way they can lower the price of land is if they loosen the rules regarding the agricultural land reserves.
If they crank the morgage rates, would I be royally screwed?... yes. I spend over 2G's a month on my 30 year morgage and a significant rate increase would put my in my parents garage.... me and many other people. Atleast when I go to buy again, I can pickup someone elses house for cheap.
I think the alternative to this situation is simply more inflation, in which case we can expect wages to continue to increase and the prices at which we are buying our houses at today will be reasonable in 10 years when we actually pay them off.
Bowlcut
16-02-2010, 08:24 PM
Oui, and I agree to a degree, dont you see.
When you actually calculate up the costs of building a house today, with todays labor, materials and paperwork, you're paying 500,000/acre in Vancouver. This is pretty much to only thing you can expect to drop in price. Unless the economy tanks and we all become desperate for work and wages actually go down...
The lower mainland is "full".. the only way they can lower the price of land is if they loosen the rules regarding the agricultural land reserves.
If they crank the morgage rates, would I be royally screwed?... yes. I spend over 2G's a month on my 30 year morgage and a significant rate increase would put my in my parents garage.... me and many other people. Atleast when I go to buy again, I can pickup someone elses house for cheap.
I think the alternative to this situation is simply more inflation, in which case we can expect wages to continue to increase and the prices at which we are buying our houses at today will be reasonable in 10 years when we actually pay them off.
Prices always rise faster than wages, and inflation discourages capital accumulation so capital to finance mortgages will become more scarce and therefore more expensive. If one fixes their rate for the next 10 years they will come ahead, but if somebody is on a short fixed they are going to see their payments or their amortization period increase when their rate resets.
A huge bear market in fixed income is coming where rates are going to rise substantially. Governments are running massive deficits and their borrowing needs will drive up interest costs for everyone.
The banks are profitable.Rates have been low for quite some time.If people start to lose their homes the sitting government can say goodbye.Whatever gov is in power.
vakker
16-02-2010, 11:21 PM
A fixed rate at 3.75 is good right now, i can see it going up, But as far what i think the economy will do...I wish i knew, but the experts are saying its coming......Im definitely no expert, but i thought id share........Some of us are investors and i know a few guys are getting in to buy renter properties now for those that wont be able to get a home to purchase later....If that makes sense...
raising the rate that high would cripple the market and the economy with it. no way that will happen. 3% MAYBE by next summer, 6-8% not in this lifetime.
Bowlcut
16-02-2010, 11:26 PM
raising the rate that high would cripple the market and the economy with it. no way that will happen. 3% MAYBE by next summer, 6-8% not in this lifetime.
Are you saying 6-8% on variable rate or for the interbank lending rate?
5.5-6% was the average variable rate a US mortgage from around 1994-2001, but I think you are referring to the interbank rate or Fed Funds in the USA.
CanadianIron
16-02-2010, 11:43 PM
raising the rate that high would cripple the market and the economy with it. no way that will happen. 3% MAYBE by next summer, 6-8% not in this lifetime.
^This is where I find my comfort. If they do raise the rates, everyone is screwed. Im 2 years into a 5 year fixed rate, im just prayin in 3 years the rates aren't way high.
faller
17-02-2010, 12:58 AM
This doesn't really effect the home owner at all,There are no changes to downpayment requirments or length of amoratizations for owner-occupied residences. The refi. is affected, the maximun one can refinance from their existing home is 90%, down from 95%, BFD!
If you need to refinance your existing home by more than 90% then you should seriously re-consider your current financial position.
The most crucial change is that everyone must qualify for a 5 year/fixed term. This ensures that people...especially first time home owner's aren't buying at the max of their capabilities and risking not being able to renew when the term is due. Although if they do qualify they can chose whatever term/rate options are available at the time.
Think about it, everytime there is an insured foreclosure we as tax payers are paying for it. Typical media fear mongering hype going on right now. What a ****ing surprize!!
faller
17-02-2010, 01:22 AM
but that fact that somebody in the lower mainland is paying 70% of their monthly income on a mortgage is not sustainable.
Obviously if someone is paying 70% of their gross income to service their mtg than we are not talking about conventional financing and not applicable in this case.
"The first affordability rule is that your monthly housing costs shouldn't be more than 32% of your gross household monthly income. Housing costs include monthly mortgage principal and interest, taxes and heating expenses."
"The second affordability rule is that your entire monthly debt load shouldn't be more than 40% of your gross monthly income. This includes housing costs and other debts, such as car loans and credit card payments."
Dryvrgrl
17-02-2010, 07:06 AM
Thankful to be in Backwards old Winnipeg!! lol... 1600 sq foot 100 year old victorian with new kitchen, electrical and garage... under 190k... raise the rates... no matter... and when other people start losing thier houses, Ill buy that shit up with my equity and become Super Slumlord!
ironwill
17-02-2010, 08:27 AM
raising the rate that high would cripple the market and the economy with it. no way that will happen. 3% MAYBE by next summer, 6-8% not in this lifetime.
Dont be surprised....The 80s saw 18 percent and higher bro, so yes in this lifetime......
ironwill
17-02-2010, 08:31 AM
Obviously if someone is paying 70% of their gross income to service their mtg than we are not talking about conventional financing and not applicable in this case.
"The first affordability rule is that your monthly housing costs shouldn't be more than 32% of your gross household monthly income. Housing costs include monthly mortgage principal and interest, taxes and heating expenses."
"The second affordability rule is that your entire monthly debt load shouldn't be more than 40% of your gross monthly income. This includes housing costs and other debts, such as car loans and credit card payments."
Yes, good post....Unfortunately the affordability rules are out weighed by keeping up with the Jones rule......Its not the same anymore, i dont know how some people sleep at night with a debt load we see today.....Wasnt the way i was raised, but its getting out of control....Didi you see the new sleds this yr....lolol....A little example, then folks get the fever, the bank gets them the money, etc., etc...A home 3 times bigger than one needs.....
ETC.....I fall into the to big of a home thing, but it took many yrs of saving etc...
Bowlcut
17-02-2010, 09:48 AM
Obviously if someone is paying 70% of their gross income to service their mtg than we are not talking about conventional financing and not applicable in this case.
"The first affordability rule is that your monthly housing costs shouldn't be more than 32% of your gross household monthly income. Housing costs include monthly mortgage principal and interest, taxes and heating expenses."
"The second affordability rule is that your entire monthly debt load shouldn't be more than 40% of your gross monthly income. This includes housing costs and other debts, such as car loans and credit card payments."
The CHMC and insured mortgages allow for people with higher DTI ratios (front end was the first you mentioned, and back end was the latte) can still qualify.
The 70% was a # that the Globe put out about 2 years ago.
The reality is everyone here thinks that the government and central banks control interest rates, when in fact the BoC sets a target rate and has to buy or sell securities to influence this. If the market wants higher interest rates it is going to force the matter.
As IW said the 80's saw extremely high rates because Paul Volcker essentially let the market take over. There was mass inflation in the late 70's so he made the choice between short term pain or long term gain and the money supply stopped growing for several years.
faller
17-02-2010, 11:06 AM
The CHMC and insured mortgages allow for people with higher DTI ratios (front end was the first you mentioned, and back end was the latte) can still qualify.
.
No they don't.. Those numbers are straight off the CMHC web site, hence the quatation's. The numbers man stray a percentage point or so, but for the most part they stay the course..
Am i missing something here Bowlcut?
pseclint
17-02-2010, 01:20 PM
http://www.theglobeandmail.com/globe-investor/personal-finance/why-jim-flahertys-mortgage-rules-wont-hurt-homebuyers/article1469927/
Bowlcut
17-02-2010, 02:41 PM
No they don't.. Those numbers are straight off the CMHC web site, hence the quatation's. The numbers man stray a percentage point or so, but for the most part they stay the course..
Am i missing something here Bowlcut?
I was thinking of USA Federal guidelines from the FHA which are a few points higher. My apologies. I sometimes slip up because in school we learned all USA stuff but obviously we are here in Canada.
However the reports came today home sales were up 58% over last year and price sup 20%. If that aint a bubble then I don't know what is.
http://www.theglobeandmail.com/report-on-business/economy/housing-market-strong-but-cooling/article1470946/
drdnj
17-02-2010, 03:03 PM
Dont be surprised....The 80s saw 18 percent and higher bro, so yes in this lifetime......
Exactly! I am scared shitless of this happening again. My ex-wife is a Dental Surgeon and left me with 250K of her unsecured school debt (long story), it isn't bad at todays bank prime...but at 8-18% things will get ugly!
D
vakker
17-02-2010, 06:50 PM
Dont be surprised....The 80s saw 18 percent and higher bro, so yes in this lifetime......
I'd have to disagree, I think that a different time required different measures but you can't argue the fact that if rates ever hit that high again, we would be in a worse mess than the USA.
smith701
19-12-2010, 04:15 AM
karen kazandjian gives expert advice on how to stage your house on a budget and sell it faster, especially in a tough real estate market.
john smith
**************
karen kazandjian gives expert advice on how to stage your house on a budget and sell it faster, especially in a tough real estate market.
john smith
**************
If interest rates get too high, just get someone to burn your house down when you are away on a vacation. Would work especially well if many people did it as it could just be blamed on a serial arsonist.
If interest rates get too high, just get someone to burn your house down when you are away on a vacation. Would work especially well if many people did it as it could just be blamed on a serial arsonist.
And BAM is of course just kidding in his usual style.
I think the real solution is to only allow people to profit from their primary residence.When the market is on the rise you have tons of people holding which creates artificial spikes.A lot of money would be freed up to circulate in the economy if people were not servicing such large mortgages.Pie in the sky with our present system...
tiramisu
19-12-2010, 01:09 PM
I kind of like the house burning approach\
Definate
19-12-2010, 07:35 PM
Flaherty is a jerk so is the entire government. Look at the problems he's dealing with now in his riding office with angry tax payers that don't want their CPP slashed they don't want to evacuate his office and are protesting under Sid Ryan's leadership.
Flaherty is a jerk so is the entire government. Look at the problems he's dealing with now in his riding office with angry tax payers that don't want their CPP slashed they don't want to evacuate his office and are protesting under Sid Ryan's leadership.
Don't you mean that they are protesting at the plan not being EXPANDED?
Powered by vBulletin® Version 4.2.1 Copyright © 2026 vBulletin Solutions, Inc. All rights reserved.