July 2018 - Real Estate Update

Is It Time For Caution?

On Wednesday the Bank of Canada raised its overnight rate by .25% and the banks have followed by increasing the prime lending rate to 3.70%. It now takes nearly 90% of pretax income to own a home in Greater Vancouver and the mortgage rate increases will only make it worse. 

Lending remains very constrained and if your taxable income is less than $100k per annum, you will find it very difficult to purchase any type of property in Greater Vancouver with a prime rate mortgage. Higher interest rates, Increasing taxes and the high cost of property does not bode well for the real estate market.  June sales decreased almost 38% over the same period last year.  Buyers now have more choice with a 40% increase in the amount of properties listed for sale compared to same period last year.  I believe it is time to be cautious with spending and refrain from listing your home for sale unless you need to sell it. 

Although the prime lending rate has increased to 3.70%, mortgage rates are still attractive.   Some lenders are offering Variable rates as low as 2.70% and a 5 year fixed at 3.34%.  Did you know that you now can get a variable rate mortgage with an option of ‘interest only’ monthly payments?  

May 2018 - Real Estate Update

Mortgage rules take a bite. 

It appears the new mortgage rules introduced at the beginning of the year is having the intended impact on housing.  Last month home sales have declined by over twenty seven percent and listings have increased by near the same amount from same month last year.  CMHC also says the annual pace of housing starts in April was lower compared to the previous month.  “The seasonally adjusted annual rate of new home construction, which is seen as a measure of the health of the housing market, fell to 214,379 units in April compared with 225,459 in March.” 

Home prices have been resilient and prices continue to be higher over the same period last year, even more so for condos and townhomes which has been the darling of our market.  Unfortunately prices often lag and we could see softening very soon. On top of this, mortgage interest rates have also increased making it yet again more difficult for buyers and borrowers.  I think it is safe to say that market conditions are changing and homeowners need to be ready to adjust their selling strategies if they are planning to sell anytime soon. 

The good news in all of this is that buyers will have more opportunities to find the right home.  And although mortgage lending is currently very constrained, there are still great deals to be had.  Variable rate mortgages are being offered as low as Prime minus 1% and a five year fixed rate can be offered as low as 3.34%.  For the past few years many borrowers were not given the choice and had to settle for a 5 year fixed rate.  Now if borrowers qualify for a 5 year fixed, they qualify for the other product choices such as 2 or 3 year terms and variable rate mortgages.  

A huge bulk of mortgages across the province and country will be coming up for renewal this year.  Borrowers often make choices based on fear and I caution you not to be fooled into accepting a high fixed term rate.  Talk to an experienced mortgage broker.  We can help guide you to the right solution. Click here to contact us.

March 2018 - Real Estate Update

Spring Is Here!

The new mortgage rules have now been in place for only a few months and it’s already impacted housing across the country.  Canada’s national average home price was down 5 percent and sales volume was down 17 percent in February from a year earlier.  There was also near a 7 percent decline in the amount of transactions between January and February this year.  This is the second month-over-month decline and the lowest reading in nearly five years. 

The number of sales in BC has also plummeted since new federal mortgage rules took effect at the beginning of the year, however; it did not stop prices from rising.  Average prices were up almost 9 percent in February from a year earlier.  Sales of condominiums were impacted far less. The average price of a condo in Greater Vancouver rose over 27 percent from February last year.  It may only be a matter of time before the prices of condos moderates but don’t hold your breath as the average prices rose almost 3 percent from the beginning of the year.

Mortgage Rate Updates

Mortgage rates have remained primarily stable over the past few months and the Bank of Canada meets again to set the rate on April 18th.   I’m predicting the bank will not make any change to the rate.  In fact we may see some downward pressure on mortgage rates.  The uncertainty of trade relations, the impact of the new mortgage rules and the introduction of new housing policies have taken the steam out of rising rates.  That being said, the US Fed raised rates on Wednesday and signals that more hikes are coming this year. 

Qualifying today for a prime rate mortgage from a bank has never been harder but some of our lenders have relaxed lending criteria which can really make a difference in getting that approval.  If your bank said ‘no’, then give me a click: tony@tonyiannetti.ca

It’s of no surprise, but the demand for private money has increased significantly over the past year.  Rates for 2nd mortgages can be as low as 8.45% with only an appraisal being required.  Taking a 2nd mortgage may be the ideal solution to access equity because it will allow you to preserve and keep the existing 1st mortgage in place.   Have a question or need a rate quote: click here: tony@tonyiannetti.ca

Some best rates to mention:

• 5 year fixed – insured: 3.34%
• 5 year variable – insured: 2.50% (Prime - .95%)
• 5 year fixed – conventional: 3.59%
• 5 year variable – conventional: 2.90% (Prime -.55%)

February 2018 - Real Estate Update

It’s all about condos

There’s no lack of news on our local real estate markets and as much as there is some softness in certain market places, it’s the condo market that remains ‘on fire’. Buyers looking to purchase a modest priced condo are challenged with competing in multiple cash offers. This is not new news to any of us living in lower mainland but it’s a trend that seems to defy gravity. 

Some noteworthy stats to mention:

• Downtown condo prices are up 40% since January 2017.
• Port Coquitlam condo prices are up 25% since January 2017
• South Surrey/White Rock detached home prices are DOWN 13% since January 2017
• Cloverdale detached home prices are up 25% since January 2017

The rate environment is changing

Most borrowers are now aware of the changes in the mortgage world. Our government once again introduced new rules designed to make it harder to qualify for bank type mortgages.  On top of this fixed mortgage rates have increased along with a recent increase in the bank rate.  Many clients now require financing solutions outside of a qualified bank mortgage. I have plenty of private lenders looking to lend and help you get the money you need regardless of the reason. 

Best qualified rates:

• 5 year fixed: 3.25%*
• 5 year variable:  2.50%*

Certain conditions apply.

September 2017 - Real Estate Update

Prepare for more tightening
 

The Government is expecting to once again tighten mortgage lending rules with one of the biggest changes yet.  The Office of the Superintendent of Financial Institutions plans to mandate that banks will have to qualify borrowers using a new stress test.  Borrowers will have to qualify based on a rate two hundred basis points higher than their contracted rate.  A similar change occurred last year but it only applied to ‘insured mortgages’ and it negatively affected millions of people.   On top of this, fixed and variable mortgage rates have increased.   It will likely be very difficult for many borrowers to access prime rates and/or borrow money in the near future.   I cannot stress enough how important it is for customers to review their debt position and act now to refinance or purchase before it’s too late.  Even if you don’t need money, then consider setting up a line of credit for when you do need money. 

Current rates:

-        Best 5 year fixed 3.24% (non-insured)
-        Best 5 year fixed 3.24% (insured)
-        Best Variable rate at 2.60%
-        Best Line of Credit rate at 3.50%       

Need a rate hold of up to 120 days? Click here.

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