Welcome to my first blog of the year! I haven't been updating here nearly enough, so I am now re-dedicating myself to be more consistent.
I want to talk about the new mortgage rules and some of what I've been hearing within the real estate and mortgage community on how this may affect the market going forward.
The changes coming in effect for March 18th, 2011 include:
The new measures:
- Reduce the maximum amortization period to 30 years from 35 years for new government-backed insured mortgages with loan-to-value ratios of more than 80 per cent. This will significantly reduce the total interest payments Canadian families make on their mortgages, allow Canadian families to build up equity in their homes more quickly, and help Canadians pay off their mortgages before they retire.
- Lower the maximum amount Canadians can borrow in refinancing their mortgages to 85 per cent from 90 per cent of the value of their homes. This will promote saving through home ownership and limit the repackaging of consumer debt into mortgages guaranteed by taxpayers.
- Withdraw government insurance backing on lines of credit secured by homes, such as home equity lines of credit, or HELOCs. This will ensure that risks associated with consumer debt products used to borrow funds unrelated to house purchases are managed by the financial institutions and not borne by taxpayers.
So what happens now? I have heard that these measures will encourage many first time buyers to jump into the purchase of their first home before that date. This will have a similar but not likely as strong an effect on the prices of homes rising as the H.S.T. introduction did last spring. There is currently a lack of inventory of homes for sale in and around the GTA. Couple that with an influx of buyers looking to beat the changes, and you have another strong seller's market. We should see the appearance of more multiple offers and homes selling at or above asking price until at least the inventory expands.
How does this affect you? As a buyer, certainly have your ducks in a row. Be pre-approved for your mortgage and be prepared to move quickly on a home that you like. I have good success when it comes to getting the home that my clients want in a situation with multiple offers. If you'd like to know about that, get in touch.
As a seller, if you are thinking of moving this year, be sure to consider if listing as soon as possible is feasible for you. We are experiencing a strong late winter market and most professionals I have spoken with lately are expecting it to continue and/or strengthen as those motivated by the mortgage changes push competition higher.
Overall, all indications are for a strong and balanced market for the coming year. Either way you look at it, Real Estate has been good for a very long time and we should all be thankful for that.
Sincerely,
Darrin Maltais
Sales Representative
Keller Williams Realty Centres, Brokerage
Newmarket, Ontario
Be sure to visit www.DarrinMaltais.com for all of your Real Estate needs including a free search of thousands of homes online.
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