Great Mortgages. The Right Insurance. Expert Advice.
How Could the Recent Mortgage Policy Changes Impact You?
Your Outline Financial Team.
Call or email at any time:
What a week — As noted in a previous post, the Minister of Finance caught everyone off guard earlier this week with what could be the most significant changes to the real estate and financing market we’ve seen yet.
While we will continue to post updates on our website, should you have any questions please call or email at any time as our team is on standby to discuss how these changes may impact you and/or any opportunities that may still be available given we are at the lowest interest rate point in history.
What has changed?
We have included a list of key articles at the bottom of this email that describe the changes in detail, but in summary:
- October 17th – the maximum affordability for those with less than a 20% down payment will be reduced dramatically. As an example, someone that could have qualified for an $800,000 purchase on October 16th could see that shrink to $650,000 on October 17th.
- Impact for those with more than 20% down payment (or refinances) – While this area is still in flux, what we do know at this point is that the cost and restrictions for lenders to securitize their mortgages will be increasing – which will ultimately be reflected in higher rates and/or tighter mortgage restrictions for the consumer.
How Could This Impact You?
Depending on your current circumstances and/or goals, you may want to consider the following potential risks or opportunities:
- Qualification Impact – The potential for higher rates (actual and/or qualifying), shorter amortizations, and tougher qualifying guidelines could make it increasingly difficult to purchase at desired price levels or access existing equity in your home. If you have any plans to renovate, consolidate debts for a lower overall interest cost, purchase an investment property, or borrow to invest, it may be an opportune time to look at your options under existing lending rules.
- Rate Impact – to put it bluntly, rates have never been lower. Given the recently announced changes, combined with regulatory statements published earlier this year, we anticipate a steady upward pressure on mortgage rates over the coming weeks, months, and year. If you were/are planning on accessing any additional equity from your home, or would like us to review any opportunity to restructure your current mortgage/rate, we are happy to assist.
- Home Value Impact – consistently high demand and low supply has driven GTA average price increases into the double digits (on pace for 14%+ year over year growth in 2016). The recent changes should slow the demand side of the equation (move some buyers down in price, or out of the market completely) resulting in potential buying opportunities for qualified borrowers. On the flip side, if you are looking to sell or refinance, as the changes will take some time to work through the market this could signal a good opportunity to review your options.
Media Summary:
October 2016
- Link -> [CBC News: Ottawa tightens mortgage requirements and targets foreign money]
- Link -> [Financial Post: Federal government closes tax loophole used by foreign home buyers, hikes mortgage scrutiny]
- Link -> [Bloomberg: Canada Tightens Mortgage Eligibility, Closes Loophole]
- Link -> [The Globe and Mail: Four Major Changes to Canada’s Housing Rules]
September 2016
July 2016
- Link -> [The Globe and Mail: Banking regulator cracking down on mortgage lending as home prices surge]
December 2015
