Hello Everyone,
As some of you may have heard, the Minister of Finance has recently announced some changes to Government backed mortgages. As with any government announcement, there are a lot of questions left to be answered. I have been asked by many people lately as to what they all mean. I will try to clarify as best I can.
1. Buyers now need to be qualified on the 5 year fixed rate regardless of what rate they are going to eventually take. Right now, you can get a variable rate mortgage for 1.95%, but you still have to be able to afford the 5 year rate. I think that this is a good move to protect the possibility of predatory lending in the marketplace, even though most financial institutions were already qualifying on at least the 3 year rate.
2. Existing homeowners will only be able to refiance their home to a maximum of 90% of the home's value. The current maximum is 95%. Not a significant change, but a good one.
3. Non-Owner-Occupied properties now require 20% downpayment. This is the biggest change that I think will have an impact in the market. I have quite a few clients who will likely be impacted by this change. Currently, you can purchase a rental property for 5% down. This will likely take out a few of the buyers in the market. While I think that this last one is a little severe, it will be a good thing in the long run for the market. Investors will need to be a little bit more sophisticated to be able to build a rental portfolio.
While these changes will no doubt have an impact in the market across Canada, I do not believe that they will have much impact here in Winnipeg. We still enjoy a very strong sellers market right now with upward pressure on housing prices due to strong immigration policies, a diverse economy, and affordable house prices.
As always, these rules can change at a moments notice. Please feel free to email or call me if you have any questions or require any further clarification.
Robin Menaar
Realty Executives First Choice
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