Big news on the wire for Canadians today. If your looking to get a mortgage or refinance your home this is a must read.
As always if you have any questions please feel free to give me a call at 519-579-4110 or email email@example.com
CTV News Staff:
Finance Minister Jim Flaherty announced new rules for Canadian mortgages on Monday that he said will “protect the stability of the economy.”
Flaherty’s announcement comes on the heels of a recent warning from the Bank of Canada that Canadians’ domestic debt burden is the highest on record.
The Monday announcement included three new rules for the mortgage industry that will come into effect March 18:
- Mortgage amortization periods will be reduced from 35 years to 30 years.
- The maximum amount Canadians can borrow to refinance their mortgages will be lowered from 90 per cent to 85 per cent of the value of their homes.
- The government will withdraw its insurance backing on lines of credit secured on homes, such as home equity lines of credit.
“Taxpayers should not bear any risk related to consumer debt products unrelated to house purchases. Those risks should be managed by the financial institutions that originate and offer these practices,” Flaherty said Monday.
It is the third time in three years that Flaherty has tightened credit rules while interest rates remain historically low.
The new restrictions are intended to ensure that Canadians don’t slip into unmanageable debt, which could throw the economic recovery off the rails, he said.
“Today’s measures are about our government continuing to protect the stability of the economy by ensuring lenders’ practices are sustainable, which will in turn ensure Canadian families have increasingly secure and sustainable home ownership.”
Flaherty targeted home-equity loans and lines of credit because some Canadians were using the money on consumer goods rather than to build equity into their homes, he said.
“They are used to buy boats and cars and big-screen TVs, and that’s not the business mortgage insurance was designed for,” he said. “Our measures will help improve the financial situation of households in Canada.”
The Bank of Canada announced earlier this month that Canadians’ domestic debt burdens had hit the highest levels on record. The bank said the ratio of household debt to disposable income has reached 148 per cent — which is higher than in the United States.
The International Monetary Fund also recently warned that household debt is the number one risk to the Canadian economy. Canadian household debt is now at $1.4 trillion, while mortgage delay payments have increased by 50 per cent.
However, Flaherty maintained that Canada is not facing a debt crisis.
“We are responding to a situation that could develop,” he told reporters.
“It’s obvious we could have gone farther. We have not touched down-payment requirements, for example. This is intentional. We are trying to strike the right balance so that we do not create any sort of shock in the market, or any sort of dramatic pressure in the market.”
The measures are equivalent to boosting interest rates by half a percent but are more specific, according to Douglas Porter, deputy chief economist at The Bank of Montreal.
“This is way a way of not affecting a lot of innocent bystanders, including the manufacturing and the tourism sector, by putting more upward pressure on the Canadian dollar,” Porter told The Canadian Press.
Meanwhile Avery Shenfeld, chief economist at CIBC, said the new rules will have only a “marginal” effect on mortgage lending.
“It’s the difference between somebody borrowing $200,000 and $180,000 or 190,000,” he said. “More dramatic would have been to raise the down payment, which would have a larger impact on people’s ability to finance their first home.”
BNN’s Michael Kane said Flaherty is clearly concerned that Canada’s low lending rates have inspired people to borrow more than they would normally.
“What he is saying, and he reiterated this two or three times, is we see Canadians borrowing to the max at record low interest rates, and what he is afraid of is that when interest rates to start to rise…then you can get into a dangerous situation where you can’t pay down your mortgage,” Kane told CTV’s Canada AM.
With files from The Canadian Press and CTV news staff.
January 17, 2011 | Categories: Buyers, Local Kitchener Waterloo, Sellers, Uncategorized | Tags: Bank of Canada, first time home buyer, home buying, inventory levels, kevin baker, Kitchener waterloo, kwrealestatelife, market update, Mortgage News, real estate, Remax, tanglewood | Leave a comment
$200,000 granted to Options for Homes for first-of-its-kind home ownership assistance in Kitchener
Funding available for residents looking to make a new start in the New Year
(Kitchener, January xx, 2011) For many, the purchase of a new home is the single largest financial decision made in one’s lifetime. This is especially true for first-time buyers.
At such a time, it is easy to let excitement cloud the magnitude of costs that go into purchasing a home. Taking the next step into home ownership can seem overwhelming when considering a mortgage and/or condo fees, not to mention saving for the initial down payment.
Options for Homes is proud to announce that it has secured access to $200,000 loan financing to assist individuals looking to purchase their first home. The loans are provided by Home Ownership Alternatives Non-Profit Corporation, a mortgage brokerage licensed with the province. This is the first time in Kitchener that such a program has been offered.
Up to $10,000 per applicant is available in a loan to use towards the required down payment of a new property. The loan requires no payments until the unit is re-sold sometime in the future.
The program does not provide 100% of the required down payment. Successful applicants must have some personal funds to contribute to the initial purchase. For example, a prospective home buyer can approach Options for Homes with a as little as a $1000 down payment and apply to the fund to secure the balance of the 5% required.
“With 80% of Tanglewood purchasers being first-time buyers, there is a need to support individuals to make home ownership possible,” says Jan Ciuciura of Options for Homes. “We have found that mortgage payments are not the largest deterrent in the decision to buy, but rather saving for the initial down payments. Thanks to Home Ownership Alternatives, we now have a tool that works to help first-time buyers to make their dreams come true.”
The loans are available to be used at Options for Homes’ 120 units Tanglewood Condominium project, located in the community of Laurentian Hills in the southwest corner of Kitchener. These multi-generation units, ranging from Bachelor to Three Bedroom apartments, cost between $120,000 and $260,000.
January 5, 2011 | Categories: Buyers, Local Kitchener Waterloo | Tags: first time home buyer, home buying, kevin baker, Kitchener waterloo, kwrealestatelife, lofts in kitchener, market update, real estate, real estate investing, tanglewood | 1 Comment
For as little as $100 to reserve your unit, tanglewood can get you into home ownership for a very affordable price.
November 16, 2010 | Categories: Buyers, Local Kitchener Waterloo, Uncategorized | Tags: condo, condo in kitchener, condos in kitchener, kevin baker, Kitchener waterloo, kwrealestatelife, loft, loft style, lofts in kitchener, real estate, real estate investing, Remax, tanglewood | 1 Comment
October 27, 2010 | Categories: Buyers, Local Kitchener Waterloo, Sellers, Video Blogs | Tags: first time home buyer, home buying, kevin baker, Kitchener waterloo, kwhometeam, kwrealestatelife, lofts, lofts in kitchener, options for homes, real estate, real estate investing, Remax, tanglewood, tanglewood condo, tanglewood condos | 2 Comments