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February 16, 2010
Flaherty tightens mortgage taps
By CBC News CBC News
Finance Minister Jim Flaherty has announced new rules aimed at preventing homebuyers from getting into financial difficulty when mortgage rates rise.
Federal finance Minister Jim Flaherty announced new rules Tuesday aimed at preventing homebuyers from getting into financial difficulty when mortgage rates rise.
After consulting with major Canadian lenders, Flaherty outlined the latest weapons at Ottawa's disposal aimed at removing some of the speculative froth in the housing market.
"There is no evidence of a housing bubble, but we're taking prudent steps today to prevent one," he said at a news conference in Ottawa. "If some lenders aren't willing to act themselves, we will act."
Broadly speaking, the plan unveiled has three components.
First, Ottawa will require that all borrowers meet the standards for a five-year fixed-rate mortgage, even if they choose a variable mortgage with a lower rate or a shorter term.
"This will guard against higher rates in the future," Flaherty said.
Second, the rules would lower the maximum Canadians can withdraw when refinancing their mortgages to 90 per cent of the value of their home, from 95 per cent.
And finally, Ottawa will now require a minimum 20 per cent down payment to qualify for CMHC insurance for non-owner-occupied properties purchased as an investment.
The last rule is aimed at reining in would-be real estate speculators who own multiple properties beyond their primary residence.
"We want to discourage the tendency some people have to use a home as an ATM, or buy three or four condos on speculation," Flaherty said.
Minimum down payment unchanged
There had been speculation the Department of Finance might implement legislation raising the minimum down payment from five to 10 per cent of a home's value, or reduce the maximum amortization period from 35 years to 30 years.
Those measures were not part of Flaherty's announcement Tuesday, but all options are still on the table should circumstances change, Flaherty said.
The adjustments to the mortgage insurance guarantee framework, to be implemented as of April 19, 2010, are not likely to revolutionize the industry. Indeed, current policies at some large Canadian lenders are similar to the first peg of Flaherty's plan.
After Tuesday's announcement, the Bank of Montreal noted that it already requires its high-ratio borrowers to be able to qualify using the five-year rate. And all banks currently test all mortgage applicants on a three-year fixed-rate mortgage rule, Toronto-Dominion bank says.
"While we do not believe that Canada faces a housing bubble, we fully support the minister's actions," Bank of Montreal said in a release. "Given the prospect of higher interest rates and the recent run-up in housing prices in some markets across Canada, the measures announced today are prudent."
"This is a little bit late in telling Canadians we need to be more cautious in taking out a mortgage," RBC Global Asset Management chief economist Patricia Croft said in reaction to Flaherty's announcement.
Though she stopped short of calling Canadian real estate in bubble territory already, she said the April 19 date for implementation is actually likely to cause more short-term stimulation of the market, as people scramble to get in under the deadline.
"If you wanted to buy a house, wouldn't you now do it before April?" Croft asked. "It's even more evidence that house prices are going to cool down later this year."
In terms of the impact on real estate buyers, the policy change will have an effect on a large portion of new buyers, TD Bank deputy chief economist Craig Alexander said in a report Tuesday. "Perhaps a quarter of all new mortgage originations might be influenced," he said.
The requirement that all buyers are held to the five-year fixed-rate standards will be particularly important, Alexander said. Based on the average home price of $337,000, a buyer with only five per cent down would require roughly $9,200 more in annual income to qualify under the new rules, he estimated.
For its part, the Canadian Association of Accredited Mortgage Professionals says it supports the amendments, calling them preventative measures against possible future risk.
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Monday, April 19, 2010
NEW RENTAL RULES MAY PUSH FIRST TIME HOMEBUYERS!
New rules for rental properties could squeeze first-time homebuyers
Sat Apr 3, 11:17 AM
Derek Scott, The Canadian Press
Email StoryIM StoryPrintable View.By Derek Scott, The Canadian Press
VANCOUVER, B.C. - Buying a house in the hot housing markets of Vancouver, Toronto and other major cities in recent years has been a possible dream for some first-time homebuyers only because many of those houses had suites they could rent out.
But new rules coming into effect April 19 will all but wipe out that advantage in the eyes of banks handing out mortgages. "It makes it much more difficult for people with rental properties to qualify for their own mortgage on their personal residence," said Vancouver mortgage specialist Patrick Mulhern.
The new regulations are designed to prevent speculation in the market, said Jack Aubrey, of the Canada Mortgage and Housing Corporation. But Vancouver mortgage agent Mike Averbach said the new rules will do little to prevent investors from gambling in the housing market.
"They haven't decreased risk," he said. "They're just not allowing you to use the income."
Currently, landlords can use 80 per cent of their rental income to offset monthly mortgage payments. That means, if they receive $1,000 per month in rental income, they can use $800 to offset a $1,200 mortgage payment, leaving only $400 to be debt financed.
But under the new rule, only 50 per cent of a landlord's rental income will be used. Even then, that money will not be used to offset their monthly mortgage payment. It will be added to their total income, forcing them to qualify for the entire monthly mortgage.
For instance, a person earning $100,000 per year in regular income plus $12,000 per year in rental income will have a total income of $106,000 with which to qualify for a mortgage on their own home.
Rental income is essential for many of his clients, Averbach said.
In cities like Vancouver, where the average home price in February was more than $662,000, rental offset is the only way many people can qualify for a mortgage and the new rules will keep many of his clients in condos rather than houses, he said. "Putting a renter in your basement is not speculative, it's reality," he said. "It helps you pay your mortgage."
The rule changes also make it more difficult for people to buy a property separate property to use as a revenue generator.
CMHC will no longer offer high-ratio financing on rental property not lived in by the owner. That means someone looking to buy a house as a rental investment will have to come up with a 20-per-cent down payment on the property, as opposed to five per cent before the rules changed.
The changes haven't worried groups advocating for tenants.
Jeordie Dent, of the Federation of Metro Tenants' Association in Toronto, where vacancy and availability rates have dropped over the last year, said he doesn't see a negative impact on renters.
Instead, he said his group welcomes the changes.
Dent said too many people become landlords without the financial or intellectual wherewithal to properly manage their properties.
"Anything that strengthens mortgage rules, from our perspective, is a good thing."
Sat Apr 3, 11:17 AM
Derek Scott, The Canadian Press
Email StoryIM StoryPrintable View.By Derek Scott, The Canadian Press
VANCOUVER, B.C. - Buying a house in the hot housing markets of Vancouver, Toronto and other major cities in recent years has been a possible dream for some first-time homebuyers only because many of those houses had suites they could rent out.
But new rules coming into effect April 19 will all but wipe out that advantage in the eyes of banks handing out mortgages. "It makes it much more difficult for people with rental properties to qualify for their own mortgage on their personal residence," said Vancouver mortgage specialist Patrick Mulhern.
The new regulations are designed to prevent speculation in the market, said Jack Aubrey, of the Canada Mortgage and Housing Corporation. But Vancouver mortgage agent Mike Averbach said the new rules will do little to prevent investors from gambling in the housing market.
"They haven't decreased risk," he said. "They're just not allowing you to use the income."
Currently, landlords can use 80 per cent of their rental income to offset monthly mortgage payments. That means, if they receive $1,000 per month in rental income, they can use $800 to offset a $1,200 mortgage payment, leaving only $400 to be debt financed.
But under the new rule, only 50 per cent of a landlord's rental income will be used. Even then, that money will not be used to offset their monthly mortgage payment. It will be added to their total income, forcing them to qualify for the entire monthly mortgage.
For instance, a person earning $100,000 per year in regular income plus $12,000 per year in rental income will have a total income of $106,000 with which to qualify for a mortgage on their own home.
Rental income is essential for many of his clients, Averbach said.
In cities like Vancouver, where the average home price in February was more than $662,000, rental offset is the only way many people can qualify for a mortgage and the new rules will keep many of his clients in condos rather than houses, he said. "Putting a renter in your basement is not speculative, it's reality," he said. "It helps you pay your mortgage."
The rule changes also make it more difficult for people to buy a property separate property to use as a revenue generator.
CMHC will no longer offer high-ratio financing on rental property not lived in by the owner. That means someone looking to buy a house as a rental investment will have to come up with a 20-per-cent down payment on the property, as opposed to five per cent before the rules changed.
The changes haven't worried groups advocating for tenants.
Jeordie Dent, of the Federation of Metro Tenants' Association in Toronto, where vacancy and availability rates have dropped over the last year, said he doesn't see a negative impact on renters.
Instead, he said his group welcomes the changes.
Dent said too many people become landlords without the financial or intellectual wherewithal to properly manage their properties.
"Anything that strengthens mortgage rules, from our perspective, is a good thing."
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Tuesday, April 13, 2010
Staples Business Depot coming to Kemptville!
Well folks it is happening right in front of our eyes. Kemptville has been rumored to feature some new big box stores, and expansion. With the loss of WalMart last year we as residents of Kemptville felt we were not going to be seeing what was promised. Well now it has started. The folks at Drummonds have been working for the last few weeks on building our very own Kemptville Staples Business Depot. This is a great addition to our town. Staples is not only going to provide us with more options for office supplies and such but offer the residents jobs. I believe this is a great addition to our community. Rumor has it that WalMart should be starting there construction by July 2010. That will be awesome in my opinion.
For more information on staples you can logon to http://www.staples.ca/
Mortgage rates rise from Royal Bank.
Hey everyone...
My mortgage Broker Jamie Blades just informed me that Royal Bank has raised there rates 25 base points. If you are looking to buy or sell your property and purchase again or refinance now is the time to do it. With Royal Bank uping there rates other banks will likely follow suit.
Although we are not in worry yet of having Mortgage Rates that were like 4 yrs ago it is still good to make sure you take advantage of the lowest rates possible while you can. If you are a first time home buyer this is very important to your future.
If you have any questions or comments please do email me : joeyvanbenthem@royallepage.ca
My mortgage Broker Jamie Blades just informed me that Royal Bank has raised there rates 25 base points. If you are looking to buy or sell your property and purchase again or refinance now is the time to do it. With Royal Bank uping there rates other banks will likely follow suit.
Although we are not in worry yet of having Mortgage Rates that were like 4 yrs ago it is still good to make sure you take advantage of the lowest rates possible while you can. If you are a first time home buyer this is very important to your future.
If you have any questions or comments please do email me : joeyvanbenthem@royallepage.ca
Friday, April 9, 2010
Ottawa home bidding wars!
Buyers face off over properties
Pressure to close home purchase deals rising along with mortgage rates
By Bert Hill, The Ottawa CitizenApril 9, 2010 7:57 AMBe the first to post a comment
With mortgage rates rising, Ottawa homebuyers increasingly are fighting over available properties.
"We are seeing first-time buyers taking advantage of interest rates while they are still low,'' said John Rogan, broker and manager of Royal LePage Performance Realty of Ottawa.
"Approximately three out of five listings are getting multiple offers and, on average, properties are selling above the asking price. We are in a seller's market.''
A Royal Lepage national survey said that Ottawa housing price growth kept pace with strong national markets in the first quarter.
Prices rose in a range of nine per cent and 11 per cent, depending on house classes, as strong demand and rising mortgage rates created the hot market. Standard condominiums had the largest Ottawa price increase, climbing 11.1 per cent year-over-year to $231,000 from $207,833. Two-storey houses experienced an 8.9-per-cent increase to an average of $346,833 from $318,500. Prices for detached bungalows rose year-over-year by eight per cent to $342,833 from $317,500.
"The market is very active and that creates challenges for inventory. Inventory is down 30 per cent because of the high volume of unit sales," Rogan said.
"This time last year, an average house was on the market for 46 days and now the average is down to 38 days."
Ottawa house prices kept pace with increases across Canada. The national average price of a detached bungalow in Canada rose 11 per cent to $329,209 in the first quarter year-over-year, while standard two-storey homes rose 10.3 per cent to $365,141 and standard condominiums increased 10.9 per cent to $228,963.
The Ottawa condominium market is more complicated than the Royal numbers suggest. There have been huge increases in both prices and sales volumes of condominium apartments but significantly weaker results for condominium townhouses.
The Ottawa Real Estate Board results show that apartment prices jumped 26 per cent in the first quarter as sales volumes doubled from a year ago.
By comparison, townhouse prices rose 8.6 per cent as volumes rose just 11 per cent.
Phil Soper, president and chief executive, Royal LePage Real Estate Services, said the national market is highly volatile.
"In Vancouver and Toronto, for instance, the dramatic unit sales fluctuations exhibit a significant degree of market irrationality: inordinately fearful when faced with poorer markets; and overly enthusiastic when the tables turned. Montreal is an example of a city where the market has been much more stable and homeowners there seem quite happy with the relatively slow pace of change."
Housing prices varied wildly across the country.
In Vancouver, bungalow prices surged 21.8 per cent to an average of $906,045.
In Calgary bungalow prices averaged $382,000 but the price movement ranged from two per cent to 16 per cent depending on parts of the city.
Toronto bungalow prices soared 13 per cent to $459,107 and Montreal bungalow prices rose 7.2 per cent to $249,172.
Pressure to close home purchase deals rising along with mortgage rates
By Bert Hill, The Ottawa CitizenApril 9, 2010 7:57 AMBe the first to post a comment
With mortgage rates rising, Ottawa homebuyers increasingly are fighting over available properties.
"We are seeing first-time buyers taking advantage of interest rates while they are still low,'' said John Rogan, broker and manager of Royal LePage Performance Realty of Ottawa.
"Approximately three out of five listings are getting multiple offers and, on average, properties are selling above the asking price. We are in a seller's market.''
A Royal Lepage national survey said that Ottawa housing price growth kept pace with strong national markets in the first quarter.
Prices rose in a range of nine per cent and 11 per cent, depending on house classes, as strong demand and rising mortgage rates created the hot market. Standard condominiums had the largest Ottawa price increase, climbing 11.1 per cent year-over-year to $231,000 from $207,833. Two-storey houses experienced an 8.9-per-cent increase to an average of $346,833 from $318,500. Prices for detached bungalows rose year-over-year by eight per cent to $342,833 from $317,500.
"The market is very active and that creates challenges for inventory. Inventory is down 30 per cent because of the high volume of unit sales," Rogan said.
"This time last year, an average house was on the market for 46 days and now the average is down to 38 days."
Ottawa house prices kept pace with increases across Canada. The national average price of a detached bungalow in Canada rose 11 per cent to $329,209 in the first quarter year-over-year, while standard two-storey homes rose 10.3 per cent to $365,141 and standard condominiums increased 10.9 per cent to $228,963.
The Ottawa condominium market is more complicated than the Royal numbers suggest. There have been huge increases in both prices and sales volumes of condominium apartments but significantly weaker results for condominium townhouses.
The Ottawa Real Estate Board results show that apartment prices jumped 26 per cent in the first quarter as sales volumes doubled from a year ago.
By comparison, townhouse prices rose 8.6 per cent as volumes rose just 11 per cent.
Phil Soper, president and chief executive, Royal LePage Real Estate Services, said the national market is highly volatile.
"In Vancouver and Toronto, for instance, the dramatic unit sales fluctuations exhibit a significant degree of market irrationality: inordinately fearful when faced with poorer markets; and overly enthusiastic when the tables turned. Montreal is an example of a city where the market has been much more stable and homeowners there seem quite happy with the relatively slow pace of change."
Housing prices varied wildly across the country.
In Vancouver, bungalow prices surged 21.8 per cent to an average of $906,045.
In Calgary bungalow prices averaged $382,000 but the price movement ranged from two per cent to 16 per cent depending on parts of the city.
Toronto bungalow prices soared 13 per cent to $459,107 and Montreal bungalow prices rose 7.2 per cent to $249,172.
Thursday, April 8, 2010
Royal Lepage releases market summary!
Royal LePage warns of real estate 'irrationality'
Prices up more than 10% across Canada in 1st quarter: survey
Last Updated: Thursday, April 8, 2010
12:27 PM ET Comments155Recommend86The Canadian Press
There are signs that some of Canada's major house markets have become overheated, although most other markets have shown a more healthy rate of moderate growth, according to a national real-estate sales organization.
Across Canada, the price of a standard two-storey home rose 10.3 per cent, to about $365,000 during the first quarter of 2010, Royal LePage said Thursday. (Canadian Press)
Prices for all key housing types were up more than 10 per cent across Canada in the first quarter on a national basis, according to the Royal LePage survey released Thursday.
But Vancouver and Toronto prices rose much more dramatically — about 20 per cent in some cases — and the head of Royal LePage Real Estate Services suggested they may have risen too far in those local markets.
"House sale data from the past two-year period shows tremendous variances in terms of how different cities reacted to the recession," said Phil Soper, president and chief executive, Royal LePage Real Estate Services
"In Vancouver and Toronto, for instance, the dramatic unit sales fluctuations exhibit a significant degree of market irrationality: inordinately fearful when faced with poorer markets; and overly enthusiastic when the tables turned."
The Royal LePage survey found the average price of detached bungalows in Toronto climbed to $459,107 in the first quarter, up 13.3 per cent from a year ago.
Standard two-storey homes in Toronto were up 13.2 per cent, rising to $562,150 while condo prices rose a more moderate 10 per cent to $317,579.
In the Vancouver area, detached bungalows climbed an eye-popping 21.8 per cent to $906,045 while two-storey homes were up 19.2 per cent to $987,500 and standard condos were up 15.7 per cent from early 2009, rising to $470,000.
Montreal: a 'more stable' market
In contrast, Soper described Montreal as "an example of a city where the market has been much more stable and homeowners there seem quite happy with the relatively slow pace of change."
The average price of a bungalow in Montreal climbed by 7.2 per cent to $249,172, the price of a standard two-storey house increased by 7.6 per cent year over year to reach $355,109, while the average price of a condominium increased by 7.6 per cent, to $222,244, Royal LePage said.
The survey found that on a national basis, the average price of a detached bungalow in Canada rose to just over $329,000 in the first three months of this year — up 11 per cent from the first quarter of 2009.
Standard two-storey homes rose 10.3 per cent, to about $365,000, while condominium units increased by 10.9 per cent to just under $229,000.
MARKET Avg. two-storey house price
Canada $365,000
Vancouver $987,500
Toronto $562,150
Montreal $355,109
© The Canadian Press, 2010
Read more: http://www.cbc.ca/money/story/2010/04/08/real-estate-royal-lepage.html?ref=rss#ixzz0kWkmhz79
Prices up more than 10% across Canada in 1st quarter: survey
Last Updated: Thursday, April 8, 2010
12:27 PM ET Comments155Recommend86The Canadian Press
There are signs that some of Canada's major house markets have become overheated, although most other markets have shown a more healthy rate of moderate growth, according to a national real-estate sales organization.
Across Canada, the price of a standard two-storey home rose 10.3 per cent, to about $365,000 during the first quarter of 2010, Royal LePage said Thursday. (Canadian Press)
Prices for all key housing types were up more than 10 per cent across Canada in the first quarter on a national basis, according to the Royal LePage survey released Thursday.
But Vancouver and Toronto prices rose much more dramatically — about 20 per cent in some cases — and the head of Royal LePage Real Estate Services suggested they may have risen too far in those local markets.
"House sale data from the past two-year period shows tremendous variances in terms of how different cities reacted to the recession," said Phil Soper, president and chief executive, Royal LePage Real Estate Services
"In Vancouver and Toronto, for instance, the dramatic unit sales fluctuations exhibit a significant degree of market irrationality: inordinately fearful when faced with poorer markets; and overly enthusiastic when the tables turned."
The Royal LePage survey found the average price of detached bungalows in Toronto climbed to $459,107 in the first quarter, up 13.3 per cent from a year ago.
Standard two-storey homes in Toronto were up 13.2 per cent, rising to $562,150 while condo prices rose a more moderate 10 per cent to $317,579.
In the Vancouver area, detached bungalows climbed an eye-popping 21.8 per cent to $906,045 while two-storey homes were up 19.2 per cent to $987,500 and standard condos were up 15.7 per cent from early 2009, rising to $470,000.
Montreal: a 'more stable' market
In contrast, Soper described Montreal as "an example of a city where the market has been much more stable and homeowners there seem quite happy with the relatively slow pace of change."
The average price of a bungalow in Montreal climbed by 7.2 per cent to $249,172, the price of a standard two-storey house increased by 7.6 per cent year over year to reach $355,109, while the average price of a condominium increased by 7.6 per cent, to $222,244, Royal LePage said.
The survey found that on a national basis, the average price of a detached bungalow in Canada rose to just over $329,000 in the first three months of this year — up 11 per cent from the first quarter of 2009.
Standard two-storey homes rose 10.3 per cent, to about $365,000, while condominium units increased by 10.9 per cent to just under $229,000.
MARKET Avg. two-storey house price
Canada $365,000
Vancouver $987,500
Toronto $562,150
Montreal $355,109
© The Canadian Press, 2010
Read more: http://www.cbc.ca/money/story/2010/04/08/real-estate-royal-lepage.html?ref=rss#ixzz0kWkmhz79
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