Mortgage lending will never be the same
Last week our Finance Minister introduced new mortgage lending rules for mortgages offered from insured lenders. To name only a few: First National, MCap and Merix financial are the type of lenders affected. One of the new rules particularly impacts the qualifying rate used to obtain an approval. Borrowers will now need to qualify using a published rate which is much higher than the contract rate. Another change reduces the maximum amortization from thirty to twenty-five years. The bottom line: as of Oct 17th it will be much more difficult to obtain a mortgage likely resulting in higher mortgage rates, less product options and competition. First time home buyers will be further constrained and some real estate markets will be damaged. I personally fail to see how these new regulations are in the public’s best interest but I encourage all mortgage borrowers to review their financial position and act to refinance/renew sooner than later. Rates remain very low with the best 5 year fixed at 2.29% and best variable at 2.20%.
Easing the upward pressure on home prices
Real Estate has also been a target with many new Provincial Government regulations introduced over the past few months along with the Federal Government as of recently and unless it’s just coincidence, it seems to be having an impact. The number of sales has declined over the past few months down twenty to forty percent depending on the type of property. At the same time inventory levels have increased in many regions particularly with detached homes. These current conditions are making it easier to help people buy. I’m not confident that these conditions will last long but the new mortgage rules announced last week may also have a negative impact on market conditions; but it is too soon to tell.
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