On JULY 9 the Canadian government kick-started the summer holidays by implementing it's 4th round of austerity measures since 2008, and further tightening the mortgage rules within the country:
- Reducing the maximum amortization period from 30 years to 25 years on insured mortgages
- Making the maximum refinance amount only up to 80% of the value of your home
- Placing a ban on mortgage insurance on properties valued over $1MM - meaning, you must have 20% down to buy a property worth over one million.
- Limiting the ratios used to qualify clients for a mortgage to 39% GDS & 44% TDS. (Currently GDS doesn't apply to qualified borrowers with excellent credit scores)
These changes are the most drastic to date and will make obtaining a mortgage even that much more difficult for anyone who finds themselves on the cusp of qualifying. While I don't necessarily agree with all of them, I do support that the government is committed to reducing the levels of debt the average Canadians have found themselves in.
The bottom line is that if you continue to be a prudent and a smart home buyer, than these changes shouldn't affect you too much as you are more likely to stay within your limits of purchasing.
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Bank of Canada held it's July meeting yesterday (5th of 8 scheduled for 2012) in which they discuss monetary policy and the status of the overnight rate target. In plain english, they discuss the status of Prime rate and the level at which it currently sits. They have once again decided to hold it steady; keeping their overnight rate target at 1 per cent.
This means consumer Prime rate for you and I will be staying put at 3.00% - the same level it has been at since September of 2010.
The expectation for the Prime rate to start rising is now set for March 2013, with a slow gradual increase over the following years. However, as you know by reading this, we've heard about rate increases coming for the past 2 years and the pattern continues to hold. And until some of the world economies can defibrillate themselves, we may be sitting pat a little while longer…
The best current 5 year fixed has been sitting idly at 3.09% for a little over a month now. There also continue to be some lower rates that can be attractive for the right situation, as these come with shorter terms than the aforementioned 5 year. Some lenders are offering good discounts if you opt for a 3 year or a 4 year fixed rate respectively. Call or email to inquire further!
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As always, I am available at anytime to discuss, plan, help, and listen to your questions, concerns, and feedback. And please forward any of my emails on to anyone who you know would be interested in receiving it, because your referrals of friends, family, and co-workers are the life blood of my business!