So I, Chris Steeves, Ottawa’s Realtor, am joining you in scratching my head at the new mortgage rules in this country. Everything seems to be designed to make it harder for both buyers and sellers to make money and succeed with their real estate dreams.
Here’s a rough outline of what’s happening in Canada with it’s new mortgage rules:
– tightened regulations are expected to reduce the ability for many first-time homebuyers to qualify for a mortgage (aren’t these the people that they were supposed to be helping?)
– new regulations will increase the capital costs for lenders, leading to increases in interest rates (again, how will increased costs help the people?)
– Canadian average home prices are forecasted to decrease approximately 2.8% in 2017 (this clearly hurts homeowner’s equity, which results in a loss if they sell)
And here’s an interesting situation that I still can’t quite wrap my head around. For those who are putting down 20% or more for their home purchase, will have to pay higher interest than if they do a smaller down payment (5% or 10%). I’m told this is due to governments ban on insuring various mortgages, ie. refinances, 25+ year amortizations, & higher value properties.
In 2017, the Canadian government will increase mortgage insurer’s capital requirements. This means that privately insured mortgages (on mortgages less than 80% LTV) will have to raise their rates to borrowers (ie. borrowers putting 20% or more down). Essentially, the govt is encouraging borrowers to put less down, and take on higher risk loans. Sounds highly questionable from my standpoint.
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