You will not believe it! New possible mortgage rules changes are being discussed!
First of all let us take a look at what has had an impact on markets recently.
Vancouver’s 15% sales tax
Implemented in August, the province announced a tax on foreign buyers in a bid to protect the country’s hottest housing market. The result has been a drops in both sales and value.
Department of Finance mortgage changes
On October 3, the Department of Finance announced sweeping mortgage changes that included a mortgage rate stress test for all insured mortgages. Another major change, which is expected to have an impact on investors, is that all portfolio insured mortgages for single unit properties must be owner-occupied.
First-time homebuyer tax break
Aspiring buyers in Ontario were given a break in the form of a larger rebate on land-transfer taxes. The province doubled the eligible amount to $4,000 – making it slightly easier for long-time renters to finally take the ownership plunge.
Lenders raise their rates
Earlier this month TD announced it was hiking its mortgage prime rate to 2.8%.
RBC followed suit Tuesday by announcing it was raising its special offer for a five-year fixed rate mortgage to 2.94 per cent, an increase of 30 basis points.
The lender also said it's raising its special offer for a four-year fixed rate mortgage to 2.79 per cent and three-year fixed rate mortgage to 2.69 per cent, increases of 30 and 25 basis points, respectively.
But they think it is not enough.
So, what else is being discussed?
Raising the minimum down payment
The head of Canada's federal housing agency(CMHC) says regulators should explore the possibility of raising the minimum down payment required on a home as a way of easing affordability and reducing risk to the financial system.
Siddall said in a speech at the Bank of England's offices in London that increasing the minimum down payment even further could help offset the effects of rock-bottom interest rates, which have encouraged borrowers to take on excessive mortgage debt.
New limits for loan to income
He added that regulators should also explore the possibility of imposing a loan-to-income limit as Ireland, the U.K. and a few others have done.
The Central Bank of Ireland announced the introduction of new mortgage regulations in January 2015. The measures introduced proportionate limits for loan to income measurements for primary dwelling houses (PDH). Loan to Income for PDH mortgage loans are now subject to a limit of 3.5 times loan to gross income.
For Toronto market it would mean that you should make about $340,000 a year to be able to afford to own a house.
The new measures have a ways to go before actual policy is implemented, however.
Are you looking to buy a property? If you like, I can tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much I could save you right now if you have an existing mortgage.
Until next time,
Your mortgage expert Evgeny Kamenskiy