Once again we will be hosting a booth at the Calgary Home Show this weekend. We have very exciting HOME SHOW SPECIAL RATES, also free Equity Repositioning Analysis where we could help you save $2,000 in 2 minutes. Visit our booth, and CRACK the CODE for your chance of winning $50,000 in CASH.
Come and meet the Boomerang Team. Hope to see you there!
Here is a quick snapshot of what housing prices are doing across Canada. It’s interesting to see that what some may see as a potential housing bubble, many cities across Canada see as a housing market struggling to rebound.
Alberta seems to be one province that seems to be slower than others on the rebound, but keep in mind Alberta also had the largest increase in home prices in Canada not so long ago. With confidence levels increasing, and the price of oil increasing it wont be long before we start seeing the Alberta numbers increasing as well. I believe the slower rebound in Alberta makes this market more sustainable, and with the natural endowments of oil and gas most Albertans seem to be excited about what the future may hold.
Finance Minister Jim Flaherty
Today Federal Finance Minister Jim Flaherty announced three changes to mortgage insurance rules to come into force on April 19, 2010. Here are the changes:
Firstly, these changes really wont affect many homebuyers, especially first time homebuyers. The biggest impact would be on those purchasing a second property for investment purposes. Most lenders use a qualifying interest rate based on the rate and term the client takes, except for short term and variable mortgages, they use the 3 year posted interest rate. Therefore, by using the 5 year rate the impact will be very minimal.
Secondly, today qualifying for a 95% refinance is difficult. Most Canadians will refinance up to 95% if they really need the money, and some lenders will not even accept 95% refinance applications.
Lastly, the down payment for purchasing a rental or investment property will be 20%. This is a good thing, and I agree that this will help prevent a housing bubble. As said in an earlier post, housing bubbles are usually created from those who purchase multiple properties, creating an artificial demand. Then when the market cools the investment properties are put on the market creating an excess supply, and little demand.
We are hearing more and more everyday on if there is a housing bubble, will there be a housing bubble, and if the government should intervene. Lenders are being vocal on both sides of the coin some agree that by tightening lending rules would have a major negative impact on our economy. Others believe stricter rules would prevent a possible Canadian housing collapse.
I’m sure this debate will continue to heat up as we enter the historically “hot” spring housing market. There are rumors that if there are any changes in mortgage qualifying, chances it will be with those qualifying for a VIRM (Variable Interest Rate Mortgage). Today rates on a VIRM are under 2%, normally customers need to qualify based on a 3 year posted interest rate, and a 35 year amortization. However, lenders may be changing that qualifying criteria in anticipation of guaranteed future rate hikes.
Recently senior Canadian bankers have voiced their concerns of a “Housing Bubble”, and have encouraged the government to tighten mortgage lending rules.
Finance Minister Jim Flaherty has decided that no changes need to be made as there is currently no evidence of a bubble, although we are seeing surging home prices in several provinces.
The banks want tighter rules on mortgages so that buyers will need a larger down payment, as much as 10 per cent. They also want to reduce the maximum amortization period of a mortgage to 30 years from 35.
Tightening mortgage rules could create a negative effect on the value of Canadian homes, and the Canadian economy. Some economists who have studied housing bubbles believe that a bubble is created from people who are buying multiple properties as investments. When the housing market starts to cool down many would then try to sell their properties causing too much supply and little demand.
If one person is selling their principal residence, they are usually looking at replacing it with a new one. But for those who own multiple properties and trying to sell that investment are not replacing it. By tightening mortgage rules on a principle residence would just make it more difficult for Canadians to own a home, and just can’t be good for our economy.
Montgomery Place, Calgary Alberta
We are very excited to be moving to our new Head Office in Calgary. The build out is currently being completed as we speak..or type. This new store front corner location will be a great place for us to hold evening/weekend seminars and for all of our clients to visit for one on one mortgage consultations. Our new office is only 10 minutes from downtown located in the community of Montgomery in the North West near Market Mall and University of Calgary.
Click here for location and map.
Our projected grand opening will happen sometime at the beginning of April, but will be officially announced soon!
Mortgage rates are holding steady due to the continued economic uncertainty. We are starting to see a decrease in both fixed and variable rates. The prime interest rate remains unchanged however the discount on the prime rate continues to fall below 2%.
Visit our website for all updated interest rates and product information…
