The Mortgage Centre – BC Direct Mortgages

In today’s news release by CBC, CMHC’s chief economist, Bob Dugan, has said that the increased demand for new homes across Canada is as a result of the strong pace of sales of existing homes as seen for the most part of 2009, along with continued low mortgage rates.

This is great news for all those in the construction trades, I’m sure! Let’s all hope this trend continues, especially the low mortgage rates!

By the way, the Bank of Canada also announced today that there will not be any change to their lending rate at this time.

three changes to a high-ratio, insured mortgage effective April 19th, 2010.

Here is the impact for each of the three changes to be implemented:

1. The first change is that qualifying for a new mortgage will be calculated using the higher five year fixed rate term instead of the three year fixed rate term. You can still choose a lower interest rate or a shorter term but qualifying will be on the higher five year fixed rate term.

2. The second change is that the maximum one can withdraw in refinancing their mortgage will be reduced to 90% from the current 95% of the value of one’s home.

3. The third change is that for non-owner occupied properties, a minimum down payment of 20% will be required instead of only 5%. Borrowers purchasing an owner-occupied property with a rental unit attached (ie duplex) will still be able to qualify with a 5% down payment.

warns Finance Minister, Jim Flaherty. In a recent Globe and Mail article (Report on Business), the federal government has suggested that mortgage amortizations may be reduced and/or the minimum downpayment requirement may be increased. Either way, this is definitely not good news for those still saving for a downpayment or have a particular home price range in mind.

Let’s for example say that you are presently pre-approved to purchase a home for $400,000 with a 5% downpayment. Considering the maximum amortization of 35 years, and a current 5 year fixed rate of 3.89%, your monthly payment (excluding property taxes) will be $1,702.51. This is based on a mortgage of $391,970 with CMHC fees added on. If the amortization was reduced only 5 years, the impact on your mortgage is a reduction of $29,203 that would not be available to you (if the lender and CMHC had previously pre-approved you for the maximum based on a 35 year amortization and monthly payments needed to be the same). A reduction of amortization to 25 years has the impact of $64,610 in our example! That’s $64,610 less of a home to qualify for! Never mind if they also change the downpayment requirement from 5% to 10%. You’ll now need an additional $20,000 to save up for your purchase!

Unfortunately, being pre-approved doesn’t really help either as this is mainly a “rate hold” guarantee and not an approval for a  future mortgage. Once you have an accepted offer, the lender will only at that time be able to obtain CMHC insurance, and be within guidelines imposed at that time. So, if the amortization needs to be reduced or CMHC now requires a larger downpayment, your approval will be based on the new guidelines.

In any event, let’s all hope that Mr. Flaherty is not forced to take any drastic measures, as he has suggested, as no doubt these changes would have a major impact for many future home buyers.

Need someone with mortgage lending experience to help you in your refinance or purchase?  Let my 30 plus years in this industry work for you! You can reach me, Ed Kolisnyk, an Accredited Mortgage Professional, locally in Kelowna and area at 250-808-9000 or for out-of-towners you can reach me toll free at 1-888-877-3535.

Want to learn more about mortgages and would like to have a better understanding of your credit bureau report? The Financial Consumer Agency of Canada has a great website  to answer these questions and much more. If you have any questions about your own situation and mortgage eligibility, please give me, Ed Kolisnyk (Accredited Mortgage Professional),  a call toll free at 1-888-877-3535 or, for Kelowna/West Kelowna residents, you can call me direct at 250-808-9000.

In addition, existing home sales are forecasted to rise 13.3%, according to The Canadian Real Estate Association (CREA) in a recent article by CBC News.

Interestingly, the average home price increase would be $17,300 and the slight drop predicted for 2011 would be $5,100. That’s still approx. $12,000 more in the average Canadian home price from now to the end of 2011! Perhaps that is one reason, along with higher interest rate forecasts, why they are predicting a new annual record of home sales to reach 527,300 for this year.

instead of going to the traditional bank branch according to a recent study by Maritz Research on behalf of CAAMP. In British Columbia, 27% of all mortgage activity is originated by mortgage brokers.

As an Accredited Mortgage Professional, my clients appreciate the knowledge and experience I bring to the table (I have over 30 years of mortgage lending experience!) and keeping them fully informed of the process from start to finish. Because of this, the majority of our clients are “repeat” and “word of mouth”. I truly enjoy finding my clients the best rate and mortgage solution which means more money in your pocket and not the bank’s! So, if you recently paid a visit to your bank and want to see if their deal for you was really the best out there, just give me a call toll free at 1-888-877-3535 or for Kelowna/West Kelowna residents you can reach me at 250-808-9000.

most Canadians are bracing for this according to a recent survey of mortgage consumers conducted by CAAMP in the fall of 2009. It was reported that for those who had purchased a home during the past 12 months, 80% of consumers took out fixed rate mortgages, and of those, 70% chose terms of 5 years or longer.

Whatever your decision is, fixed versus variable, allow me to go over the numbers with you and to ensure you receive the best possible rate available in today’s marketplace. There is absolutely no charge to you for this confidential review. Why not take advantage of my thirty plus years in the mortgage industry, so give me, Ed Kolisnyk (Accredited Mortgage Professional),  a call toll free at 1-888-877-3535 or, for Kelowna/West Kelowna residents, please call me direct at 250-808-9000.

for whatever reason, this past December continued on like previous months for those requiring mortgages for their home purchase or refinancing their existing mortgage for home renovations, consolidating debts, investment purposes, etc.

One main factor may well have been the extraordinary low mortgage rates we continue to enjoy (ie – the best 5 year fixed rate is currently at 3.79% and best 5 year variable rate is at Prime minus 0.10%).  With the Prime lending rate currently at 2.25%, it is easy to see why many have chosen to act now.  It is believed that later this year the Bank of Canada may begin raising the bank rate in order to curb inflation.

Another factor for the recent activity may also be that the economists have said that the recession was finally over this past summer and that we are now in a recovery mode.  This may well have induced more confidence in the economy than what was witnessed earlier on.  Interestingly, the latest Ipsos Reid survey suggests that 73% of Canadians are optimistic that 2010 will be a good year for creating jobs and getting people back to work.

Whatever your current situation is, I look forward to discussing your particular mortgage needs and assisting you with your decision making process in order to provide you with the best available mortgage option (and lowest rate too!!!) in the Canadian mortgage market place.  Please feel free to return to my website often so that you can be kept current on today’s best interest rates along with any newsworthy mortgage events to take place.  If you have any mortgage questions at all or would like to proceed with an application, you can call me, Ed Kolisnyk, directly at 250-762-2070 for the Kelowna and surrounding area or toll-free at 1-888-877-3535.

From CBC News Online:

Ottawa is considering new measures to tighten mortgage standards and prevent would-be homebuyers from taking on more debt than they can afford.

Finance Minister Jim Flaherty said in an interview with CTV he’s worried about people piling up debt while interest rates are low and then getting into trouble when interest rates rise, as they inevitably must.

As a result, the Conservative government is considering increasing the minimum down payment from five per cent “to a higher figure,” he said, and Ottawa may also reduce the amortization period from a maximum of 35 years “to something less.”

Twenty-five-year mortgages used to be the norm, until lenders started making 30-, 35- and 40-year mortgages available to stimulate demand. In mid-2008, the Department of Finance moved to trim the maximum paydown period to 35 years and to require a minimum five per cent down payment for new federally insured mortgages.

Even so, 18 per cent of Canadian mortgages are for terms longer than 25 years, and 10 per cent are amortized over 35 or 40 years, a recent Scotiabank report estimated.

The average price of a resale home in Canada hit $337,231 in November, the Canadian Real Estate Association said last week. That’s 19 per cent higher than the depressed levels of a year earlier.

Flaherty’s comments echo Bank of Canada governor Mark Carney, who last week urged consumers to get their financial houses in order to prepare for when the central bank inevitably raises its key policy rate from its current emergency record low of 0.25 per cent.

Proceed with caution: CIBC

Word that Ottawa might step further into the red-hot real estate market had housing watchers buzzing Monday.

“You could basically shut down 25 per cent of the market,” CIBC economist Benjamin Tal told CBC’s The Lang and O’Leary Exchange. “It’s going to be significant because we’re talking about a lot of money that took advantage of those rates.”

“What the Bank of Canada and Finance Department are saying is that people are abusing these rates, but they need to be careful not to risk this fragile recovery.”

Though he admits more lending caution would be prudent, he advocates Ottawa be wary of anything as drastic as a hard cap of 30-year amortizations, or minimum 10 per cent down payments, for example.

“If you want to do it, do it in a gradual way that you do not kill housing [because] housing is the only thing ticking in this market,” he said. “The timing is tricky.”

Found this great article from Castanet in Kelowna: 

The housing market’s gradual upswing will continue throughout the fall and into the new year, says Kelowna’s Paul Fabri of the Canada Mortgage and Housing Corporation.

Read the article here…