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Issue No. 2                    "Representing Your Best Interest!!" February 16, 2010
Finance Minister Announces changes to lending with CMHC!
As many of you are aware already, a news conference was  held this morning in Ottawa by the Federal Finance Minister Jim Flaherty.  He announced three major changes to mortgage insurance rules which will affect all government (CMHC)  backed insurance programs.

1. All borrowers will need to qualify at a five year rate regardless of whether they are choosing a shorter term or a variable rate mortgage.  It is unclear whether this rate will be the posted or discounted rate as we await clarity for this question.

2. Refinances will be limited to 90% LTV versus the current 95% limit.

3. Non-owner occupied properties  will require a down payment of 20%.

The good news is that rumours of a required 10% down for new home buyers on their principal residence and a reduction of amortization periods to 30 years are not currently being introduced.

These rule changes are scheduled to take place as of April 19, 2010. 
Please see my commentary on this and other proposals in the column across.
Rod Minnes
Managing Broker

Bond yields have recovered to a comfort level with the banks, and therefore rates have stabilized. Bank of Canada leaving their rate steady leaves us in a great position to get 2010 going on a good note!

Whilst many predicted, myself included the new year starting with fixed rate hikes, the markets rebounded to thwart the increases for now, but they are on the horizon once the economy picks up speed as predicted.
**Please note, we only advertise full service rates, not quick close products as we do not want to mislead those relying on our rate sheets.
Call us today!! 
Rod Minnes
Managing Broker

Rates as of Feb 16, 2010
Fixed Rate Mortgages    
6 month convertible            4.60%
1 year open                           6.50%
1 year closed                        2.35%
2 year closed                        2.95%
3 year closed                        3.50%
4 year closed                        3.89%
5 year closed                        3.79% 

Variable Rate Mortgages    
5 year closed - Prime* - .20%  ****
5 year open   - Prime* + .80%

Home Equity Line Of Credit

Please call for product availability and rates.

Information from sources deemed to be reliable. Product availability and borrower qualification apply.
*Prime = 2.25%
Rod Minnes
Global West Mortgage
Changes Ahead in Lending Guidelines and Mortgage Qualifications
Where there is smoke there is fire, I guess, as the much talked about changes to CMHC lending guidelines were passed down this morning. The three changes are noted across the way, and as such, represent a hit to 3 different types of mortgage financing; refinancing, revenue property purchases, and first time home buyers!
It is believed that the refinancing reduction to 90% will hit the hardest, as equity growth in the past few years has been minimal at best, if not negative, and this reduction in availability of funds from  the owner occupied home will all but eliminate those new buyers from obtaining any back up financing from their home.
To be honest, the second change will have little impact on most people, as I personally have not done a CMHC insured Revenue property mortgage in years! Most people are buying homes a "second homes", a product not touched yet by CMHC, and/or coming up with the 20% down to avoid CMHC. The CMHC premiums were expensive, and some of the guidelines, such as rental coverage, tough to make work in the current cost environment! This will have little or no effect on regular home buyers in my opinion, and is only put in place to stop investors, speculators from buying up a bunch of homes believing the market will increase suddenly here in the near future.
The third change, qualifying on a 5 year term versus the current 3 year term, will have a small impact, particularly on first time home buyers, in effect raising the qualifying rate from 3.50% currently to 3.89%! Whilst it will affect our qualifying ratios - it will do so only slightly.
Surprisingly, I would consider these changes minor under the current lending environment we operate under! However, what it does signal is a preparation in the near future for rates to be increased, and probably significantly, and it has the Government and Banking Institutions worried about the ramifications of this on an economy stalled right now in terms of growth and job creation.
I look to further changes down the road, and would not put it past the government to reduce the top lending tier to 90% from 95% if the housing markets continue to spiral upward, and the all important "AFFORDABILITY" index continues to show the average household is expending to much on housing alone!
Hopefully these small changes and interest rate hikes will accomplish the same thing without MAJOR decreases in availability for first time home buyers. I can see the return of 95% lending availability for ONLY first time home buyers, and the elimination of the 95% program for any repeat home owners.
Stay tuned, there is never a dull moment in the Real Estate Industry at the moment, so much of our economy rides on the stability of this market, the government is determined to get ahead of any disasters that might befall us like our neighbors to the south!