Kelowna Mortgage and CMHC Housing Update

02. March 2012 · Write a comment · Categories: Mortgage Market

Kelowna Mortgage Update

The Kelowna housing market is trending towards balanced market conditions. The market still favours the buyer with plenty of inventory on the market and home prices lower than where they were a year ago. But the Canadian Mortgage and Housing Corporation (CMHC) is predicting total housing starts in Kelowna to slightly increase this year and next. They are also forecasting average MLS® home prices to mildly increase to $409,000 in 2012 and $417,000 by next year. Although these averages are still below the May 2010 peak of $501,746. The Canadian agency also expects MLS sales to increase by 8% this year and followed by a big 14% jump in 2013.

Date

MLS® Avg Price

% change (y/y)

MLS Sales
2011

$404,756

-

3300
2012 (Forecast)

$409,000

+1.0%

3600
2013 (Forecast)

$417,000

+1.9%

4100

 

Kelowna Mortgage Rates

BC mortgage rates are hovering near record lows and it is a good time to enter the housing market to take advantage of low financing costs. Fixed rates are particularly attractive given the small spread right now between them and variable rates, which come with the risk of fluctuation with market interest rates.

The appeal to enter the housing market is also compounded by the fact that there is a possibility of mortgage lending rules tightening soon. Recently, the CMHC announced that they were approaching their $600 billion mortgage insurance ceiling. Mortgage insurance is mandatory in Canada if you are purchasing a home with anything less than a 20% down payment.

How does this affect you?

As CMHC approaches their limit, they will start to find ways to curb the amount of mortgage insurance they issue in the future. That means finding new ways to restrict the amount of people taking on CMHC mortgage insurance. Currently, there is speculation on which borrowers are likely to be affected, and it looks like the self-employed and new immigrants could face stricter requirements soon.  [Find out more details here].

There is even talk of mortgage tightening for condo buyers. Right now lenders only count 50% of condo fees to calculate debt-to-income ratio for mortgage applicants. Raising that number to 100% could affect the affordability for some applicants.

With that in mind, those looking to purchase the twenty new condo and townhouse developments slated to hit Kelowna in the near future might want to consider acting on it sooner rather than later.

To understand your financial situation, it’s best to speak with a mortgage professional before making any decisions. If you’d like to learn about your options, click here.

 

Brennan Valenzuela is writer for Ratehub.ca, a source for Canadians to compare mortgage rates. The site also includes a comprehensive education centre geared toward addressing common mortgage questions.

Don’t forget to follow Ratehub on Twitter and ‘Like’ them on Facebook

Finance Minister Flaherty not worried about slumping markets, tougher mortgage rules

18. September 2010 · Write a comment · Categories: Mortgage Market

Finance Minister Jim Flaherty speaks in Calgary, Sept. 16, 2010.

Finance Minister Jim Flaherty speaks in Calgary, Sept. 16, 2010.

Photograph by: Grant Black, Calgary Herald

Federal Finance Minister Jim Flaherty said Thursday he is not concerned about slumping housing sales in some Canadian markets and has no plans to reverse mortgage restrictions imposed earlier this year.

Housing sales plunged dramatically last month in cities such as Calgary, Victoria and Greater Vancouver compared with one year ago.

But Flaherty, in Calgary to deliver a speech on Ottawa’s proposal for a national securities regulator, said he believes the housing slowdown is a sign that consumers are being more careful about financial risk-taking. He hinted the federal government wouldn’t shy away from additional mortgage restrictions, if needed.

“I, for one, am not particularly concerned about the softening we’ve seen in some markets in Canada in residential real estate,” Flaherty told reporters, noting that Ottawa has twice tightened mortgage rules.

The most recent changes, which took effect in April, made it more difficult for some Canadians to qualify for a mortgage.

“This is entirely intentional, to tighten the market, so that we avoid the excesses that we’ve seen in other countries,” Flaherty said. “If we have to do more, we’ll do more.”

Housing foreclosures have plagued the U.S. and its financial sector, while Canada’s banking system has for the most part weathered the recession.

In his speech to the Calgary Chamber of Commerce, Flaherty said Canada’s banking system is a model for the world, except for one “signifi-cant weakness”: the country’s patchwork of 13 securities regulators.

“A Canadian securities regulator would provide better protection for investors, more efficient regulation and lower costs for firms,” Flaherty said. “We need to provide better protection for retirees, families and whole communities in Alberta, and elsewhere in Canada, against abuses such as Ponzi schemes and insider trading.”

While the federal government’s plan to create a single securities watchdog has support in several provinces, Alberta and Quebec have joined forces to oppose the initiative. Flaherty said Canada’s system for regulating securities is broken, too cumbersome, and scaring off some foreign investors.

Alberta and Ottawa are also at odds over possible changes to the pension system. Flaherty said the federal government is concerned that some Canadians aren’t saving enough for retirement, but he doesn’t expect pension reform ideas will be ironed out by the time he meets with his provincial counterparts in December.

Source: Finance Minister Flaherty not worried about slumping markets, tougher mortgage rules.

Bank of Canada backs off housing bubble talk

11. January 2010 · Write a comment · Categories: Mortgage Market

Says raising interest rates could hurt entire economy

The Bank of Canada backed away Monday from its recent warnings about a real estate bubble in Canada.

In a speech in Edmonton, bank official David Wolf ruled out increasing interest rates to discourage mortgage lending.

Wolf, an adviser to bank governor Mark Carney, said that in the central bank’s view it is premature to be talking about a housing bubble in Canada.

“We see the housing market requiring vigilance, not alarm,” he said.

He added that even if the bank was convinced housing prices were getting out of hand, raising interest rates would be too blunt an instrument, since it would mean cooling off all economic activity.

“We would, in essence, be dousing the entire Canadian economy with cold water, just as it emerges from recession,” he said in a speech delivered on behalf of deputy governor Timothy Lane, who could not travel to the Alberta capital for personal reasons.

“As a result, it would take longer for economic growth to return to potential and for inflation to get back to target,” he added.

Wolf said the bank considers the current hot market to be a phenomenon based on temporary factors, such as pent-up demand from the recession, and low mortgage rates. Moreover, he noted with starts below long-term demographic requirements, the number of houses on the market is still declining.

Better ways to cool market

Wolf, a former chief economist with Merrill Lynch Canada, said there are better ways to cool the housing market.

Finance Minister Jim Flaherty has also mused about such measures, including raising the minimum down payment requirement above five per cent, or reducing the maximum length a house can be amortized from the current 35 years.

The bank has been highlighting for months the danger of Canadians getting in over their heads in purchasing homes, warning that buyers should ensure they don’t take on too much debt.

The bank’s worry is that homeowners with large mortgages that are manageable now with interest rates at record lows won’t be able to afford their monthly payments once interest rates start rising, as is expected later this year.

On the economy as a whole, Wolf said the bank believes the economic recovery is still dependent on government support and that “growth drive by the private sector has yet to materialize.”

Notes from the speech were posted on the bank’s website.

Source: http://www.cbc.ca/canada/story/2010/01/11/bank-of-canada-housing-bubble-david-wolf.html

Five banks raise mortgage rates

02. June 2009 · 1 comment · Categories: Mortgage Market · Tags: , , , , ,
Jun 02, 2009 05:21 PM
Comments on this story (11)

RITA TRICHUR

BUSINESS REPORTER

Canada’s biggest banks are hiking key mortgage rates at time when the bond market is worried about risk and the longer-term threat of inflation.

Royal Bank of Canada, Bank of Montreal, Toronto-Dominion Bank, the Bank of Nova Scotia and Canadian Imperial Bank of Commerce are all increasing their posted rates on five-year, fixed-rate mortgages by 0.2 per cent to 5.45 per cent. The changes at RBC and BMO take effect today, while new rates at TD, Scotiabank and CIBC will be available as of tomorrow.

RBC, BMO and Scotiabank, however, also have “special offers” on five-year closed mortgages at 4.15 per cent. Those promotional rates, subject to change without notice, also reflect a 0.2 per cent increase.

Paula Roberts, a mortgage broker with Mortgage Intelligence, says rates are rising from “abnormally low” levels. Consumers, she added, still have plenty of opportunity to take advantage of lower borrowing costs because not all lenders have re-priced those loans.

“Even lenders that we were told were going to increase still haven’t,” Roberts said. “On a quick close (within 30 days) we can still get 3.69 (per cent). On a 120-day rate hold, we can still get 3.79 (per cent).”

Five-year, fixed-rate mortgages are traditionally the most popular option for homeowners. Borrowing costs on the bond market largely influence consumer rates.

Yields on longer-term bonds have soared in recent weeks, driving up the cost of borrowing for lenders. Experts say yields are rising because the bond market is focusing on risk and the future prospects for inflation.

Central banks usually try to control inflation by raising interest rates. The Bank of Canada’s overnight rate is currently sitting at 0.25 per cent and it has signalled plans to hold it there into 2010 depending on inflation.

The bond market, though, sees a risk that interest rates may change down the road, said TD economist Grant Bishop. “Certainly there is the recognition that interest rates are going to have to go up both because of the need to rein some of this monetary stimulus in once the economy gains traction and the level of debt that is being issued by governments.”

Yields are also climbing because the market is “a little less pessimistic” about the economic outlook, said David Power, a vice-president in RBC’s corporate treasury department. If bond yields continue to rise, that will impact the industry’s pricing of both mortgages and deposits, he said.

Statistics Canada, meanwhile, reported yesterday that household demand for credit dropped in the first quarter from the previous quarter. “Despite the decrease in the five-year mortgage rate, net new mortgage borrowing also contracted during the first three months of 2009, as investment in residential construction and activity in the resale housing market continued to decline,” its report said.

Bank of Canada data, meanwhile, suggests that household credit rose by 1.1 per cent in April over March, mostly because of growth in mortgages and lines of credit. “Even through these uncertain economic times, falling house prices and favourable mortgage rates appear to have successful attracted new homebuyers,” said a recent TD report.

Source: TheStar.com

 

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