Mortgage Rule Changes Canada

MORTGAGE RULE CHANGES for CANADA

new mortgage rule changes 2016

Important mortgage rule changes for Canada took effect on October 17, 2016. These government mandated changes make it harder for buyers who have less than 20% down payment to qualify. Some of the changes include:

  • only apply to buyers with less than 20% per cent down
  • only applies to purchases (not re-financing)
  • must now qualify at the Bank of Canada rate – currently 4.64%, which is significantly higher than the posted, or contract rates
  • Canadian government is branding this as a “Mortgage Rate Stress Test”
  • existing mortgage commitments are grandfathered into the previous scheme, although closings must take place before March 1, 2017
  • applies for all three Canadian mortgage insurers – CMHC, Genworth Financial, Canada Guaranty Mortgage Insurance
  • additional changes include certain low ratio mortgages with 20% down payment will still require mortgage insurance, and will now need to qualify at the higher rates
  • Canadian citizens will now be required to disclose the sale of their “primary” residence on the income tax forms. Even though now tax may be payable, the sale must still be disclosed
  • no changes yet for foreign resident buyers, although there is a distinct possibility that there may be substantial changes here as well

Effect on Real Estate

There has been a lot of discussion on the internet regarding these mortgage rule changes. Here is one video which goes into some detail regarding the October 17 changes:

There is a complete transcript of the video which provides a pretty good summary of the changes.

Slowing Down the Market

So you can see, the Government of Canada is making some radical moves to slow the real estate market in this country. Short of raising interest rates, they are doing everything they can to slow the market, with intent to dampen the price rises in primary cities such as Toronto and Vancouver. It remains to be seen how effective these strategies will be, but we watch them with interest going forward.

 

Market Predictions for Mississauga

Market Predictions for Mississauga – Bull Market Continues

The local Canadian real estate market for 2015 performed exceedingly well, and ended up being the second best year in history. We review the City of Mississauga, a large and diverse suburb of some 760,000 people, located just west of Toronto, and provide a forecast for 2016.

Mississauga is a relatively new area abutting the western edge of Toronto. The City of Mississauga was in fact only created in the 1970’s, when several small villages were incorporated into a new amalgamation. Since that time, Mississauga has grown tremendously, and has become a magnet for people from all over the world, due to its attractive lifestyle, dynamic economy, and welcoming diversity. The real estate market has mirrored that success. During 2015, the market rose 9.5%  in prices for freehold properties – i.e. detached properties, semi-detached homes, and freehold townhomes. The condo market, specifically centered around the Square One shopping mall in Mississauga, showed a 6.5% percent increase, still a very substantial rise when you take into account the flood of new condo construction in the area.

Continuing 2015’s Success into 2016

Early signs point to a continuation of last year’s impressive market due to three factors:

– low interest rates
– robust economy in southern Ontario
– tradition of strong immigration into the area

Local Sutton Group realtor Randy Selzer provides an explanation of the principles at play here:

There is reason to believe that the three pillars that he talks about are as good an explanation as any, when attempting to understand the strength in the local market. What began as a cyclical bull market in 1996, has surpassed even the most positive market predictions of industry observers, as the real estate market goes from strength to strength. Canada seems to be a magnet for immigration, in spite of its climate, and local real estate markets have benefited from that popularity. Local pundits, having watched the dust settle on 2015, are looking ahead, and they like what they see.

Real Estate Board 2016 Outlook

Real Estate Board 2016 Outlook

The Toronto Real Estate Board has published, for the first time, a comprehensive review of 2015 market activity, with an outlook for 2016, covering all aspects of the GTA (Greater Toronto Area) real estate market.

Watch John DiMichele, president of TREB, as he explains the inaugural Market Year in Review & Outlook report. There is a lot of data available in their publication, with forecasts for everything from suburban resale homes, to downtown condos. Two versions exist, one for realtors, and one for the public. Both were released on January 18, 2016.

Report Highlights

The report provides information on the following:

– after a record setting 2015, 2016 is predicted to be  a strong real estate market going forward

– house prices will continue to trend upward in 2016

– over 12% of the Greater Toronto Area population are planning on purchasing a home in the next 12 months

– a majority of buyers are planning on putting 10% per cent down or more on their purchase

– includes an extensive section on new home construction

– between 96,500 and 105, 000 home sales are expected to be reported through TREB’s MLS system in 2016.

– indepth analysis of the overall competitiveness of the Greater Toronto Area, and also the Golden Horseshoe Area, are provided

You can access the full report in PDF format, by clicking here.