Tougher Lending in Canada
Effective March 18, 2011, it will become harder to buy a new home or consolidate debt into your mortgage.
That's due to three new changes announced today by Finance Minister Jim Flaherty:
Here is the full press release:http://www.fin.gc.ca/n11/11-003-eng.asp
How will this affect the market and you?
It should stabilize prices and further prevent an over lending disaster like in the US. It will keep more highly leveraged speculators out of the market. It should keep rates lower because if rates increase and 30 year amortizations are all Buyers are allowed with less than 20% down, affordability for Canadians will become an issue.
Personally I am in favor of tougher lending laws as it protects home owners against a price crash and it protects Buyers from prices soaring beyond reason.
I believe strongly in the appreciation of the Vancouver Real Estate Market and fear Vancouverites will get priced out of the armlet as investors prey on lucrative rent/vacancy rates. I think lower monthly payments can be beneficial to first timers and locals, so I would encourage Buyers to make their move before the new law so they at least have the option of a 35 year amortization. Any Accepted and Firm offer dated before March 18th 2011 will still be eligible for 35 years amortizations.
The Canadian Real Estate Market is already very leverage today, hence the all time high prices, so slightly less leveraged prices should be good for the overall economics of the Real Estate Market.
Write stu@stubell.com with all questions, or call me anytime at 604.562.0532.
That's due to three new changes announced today by Finance Minister Jim Flaherty:
- A 30-year maximum amortization on insured mortgages over 80% LTV
- An 85% LTV limit on insured refinances
- Elimination of government insurance on secured lines of credit (aka., HELOCs)
Here is the full press release:http://www.fin.gc.ca/n11/11-003-eng.asp
How will this affect the market and you?
It should stabilize prices and further prevent an over lending disaster like in the US. It will keep more highly leveraged speculators out of the market. It should keep rates lower because if rates increase and 30 year amortizations are all Buyers are allowed with less than 20% down, affordability for Canadians will become an issue.
Personally I am in favor of tougher lending laws as it protects home owners against a price crash and it protects Buyers from prices soaring beyond reason.
I believe strongly in the appreciation of the Vancouver Real Estate Market and fear Vancouverites will get priced out of the armlet as investors prey on lucrative rent/vacancy rates. I think lower monthly payments can be beneficial to first timers and locals, so I would encourage Buyers to make their move before the new law so they at least have the option of a 35 year amortization. Any Accepted and Firm offer dated before March 18th 2011 will still be eligible for 35 years amortizations.
The Canadian Real Estate Market is already very leverage today, hence the all time high prices, so slightly less leveraged prices should be good for the overall economics of the Real Estate Market.
Write stu@stubell.com with all questions, or call me anytime at 604.562.0532.
