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Category Archives: Market Trends

Banking Regulator sees potential risks; Current home values are stabilizing in most regions



Banking regulator sees potential risks in high home prices, debt loads.

The Office of the Superintendent of Financial Institutions (OSFI) is set to finalize changes to residential lending guidelines (B-20) by the end of this month. They are proposing changes that will see a ‘stress test’ applied to those borrowers buying a home with a down payment of 20 per cent or more. The intent is to provide the same assurance as insured mortgages that should interest rates rise, borrowers will still be able to carry the debt. Also in the plans for change is a prohibition of co-lending arrangements. These are instances where borrowers are securing traditional lending up to 80 per cent of the house value, and seeking secondary financing beyond that, effectively allowing a borrower to bypass default insurance and still put less than 20 per cent down. If these regulations are put into place at the end of this month, we should see them come into force two or three months afterward.

This may be to much change to fast, hurting home buyers in the process.

Currently, home values are stabilizing in most regions of Ontario and Canada. We are in a balanced real estate market. Gradual home price appreciation is good for borrowers and lenders, since an improvement in one’s net work is positive!

‘Stress testing” those borrowers who have more than 20 per cent as a down payment or equity in their homes is unnecessary because the chances of default are extremely low.

When we look at these changes from our side of the fence, it always begs the discussion as to what debt is actually the problem in our households. Mortgages can actually be the safest form of borrowing as they are collateralized against the home and the lending guidelines are already quite meticulous. Our real focus should be on why people are accumulating consumer debt. Unsecured debt is among the easiest to acquire and boasts the highest interest rates while also being the most volatile. For every dollar of household disposable income in Canada there is $1.68 in credit market debt. Incomes haven’t kept up with the general costs of living and most families are only surviving on two incomes, few are thriving.

At the end of the day, regulators will make changes as they see fit and we will be here to guide our clients through every step of the way! If you have any questions or concerns about changing landscapes, or would like to get pre-approved or refinance before the new changes are in place, call me anytime!

Sandra Lastovic || 519.763.3900 ext 1001

Economic Growth; The OECD has raised expectations for Canada. Should we expect interest rates to continue to rise?

The Organization for Economic Co-operation and Development has raised its expectations for economic growth in Canada this year compared with a June forecast. The Paris-based economic think tank says it now expects the Canadian economy to grow by 3.2 per cent this year, best in the G7. That is up from its forecast in June… Read More

Changes to Canada’s Housing Rules

Over the last few days, I’ve fielded calls from concerned clients who are buying a house and want to know the impact of the recent regulatory changes to Canada’s Housing Rules that come in to effect in late October. I’m sharing a statement provided to me yesterday from our industry lobby group Mortgage Professionals Canada. Also,… Read More

What can we expect in the housing market for the rest of 2016?

Is Guelph and surrounding area in a housing bubble? The general definition we use to describe a housing bubble is two to three consecutive years of unsustainable price appreciation. Unsustainable price growth would include a 10% or more price increase year-over-year. According to The Guelph and District Realtor’s Association (GDAR) as of September 9, 2016… Read More

Negotiating a better mortgage rate

Everyone who needs a mortgage wants the best rate. However a good rate is only one way to save money on a mortgage. Adjusting payment schedules, creating flexibility on the amortization or paying-out consumer debt are cost-saving strategies often overlooked by most people. Focusing only on the mortgage rate and finding a rate that’s “too-good-to-be-true”,… Read More

Housing Market Outlook 2015 and projection for 2016

New Home Market In the Kitchener-Cambridge-Waterloo (KCW) and Guelph areas, housing starts will be lower in 2016 and 2017 compared to 2015. There will be a greater decline in apartment starts (both condominium and rental) in KCW however, single-detached starts will increase slightly as the demand will remain strong and more land will become available… Read More

More money down required if you’re buying a home…but only if it’s more than $500K

If you’re buying a house for more than $500,000 you’ll need to have more money saved for a down payment. Outside of Toronto and Vancouver, most first-time home buyers can purchase a nice home for less than this. However, lenders are likely to pass future costs for mortgages down to consumers, find out more from… Read More

Trends in 2016 which will impact mortgage borrowers

Trends in mortgage financing that have impacted buyers and sellers in 2015 The overall sentiment of mortgage lenders, be it bank’s or wholesale banks, is more restrictions to lending money and this will continue for 2016. However, if you know these key factors you can use them to your advantage. Working with a seasoned mortgage… Read More