|
Read about Mike
in the News!
|
Find out how to get a $200 VISA Gift Card!
|
|
|
Apply Now! |
 |
|
Dear ,
Wow!
What can we say? THANK YOU! Because of you, we have been recognized by
our lenders,
underwriters and peers as providing the best possible customer service
to our
clients. We take incredible pride in winning this award and we owe it
all to
you!
Here is a picture of Justin
and me in Toronto last Friday night with our
award.
If you haven't yet met Justin, he's the more pale complexioned of the two of us (on the right). This year, as usual, Justin is going to try and get outside more. This time he might actually make it, because we
are hiring our first assistant. To Justin's credit, he is Scottish.
Enough celebrating! Onto
the news.
In this month's newsletter, we will give you more information about the new rental offset rules, as well as an update on why we think Canada's lowest-ever variable mortgage rates could soon be a fond
memory.
Sincerely,
Mike Averbach and Justin Blacklock
PS ... Please join us on our Face Book Fan Page! Ask questions and make comments. We look forward to hearing from you.
|
Rental Offsets -- Under the New CMHC Rules
As many of you know, CMHC
implemented the new rule changes on April 19, 2010. We have a summary of the rule changes for you in our February Newsletter.
However, what was not highly publicized was the rule about
rental
offset. Rental offsets are the the way income from a
rental suite within one's
own house (or a separate rental property) are used to qualify for a
new
mortgage.
To most, this is a confusing rule change, so we've come up with a clear
example
of how it could affect YOU.
Before the rule change, landlords could use 80 per cent of
their
rental income to offset monthly mortgage payments. If they
received
$1,000 per month in rental income, they could use $800 to offset a $1,200
mortgage payment, leaving only $400 to be debt financed.
Under the
new
rules, only 50 per cent of a landlord's rental income can be used. Even
then, that money will not be used to offset monthly mortgage
payments. It
will be added to their total income, forcing them to qualify for the
entire
monthly mortgage.
For instance, applicants earning a combined
$100,000 per
year in regular income plus $12,000 per year in rental income will have a
total
income of $106,000 which can be used to qualify for a mortgage.
Income: $100,000
Rental Offset: $12,000 rent x 50% = $6000.
Total qualifying income = $106,000.
Since buyers now have to qualify for a $1200 a month mortgage instead of a $400 a month mortgage, this new rule will negatively impact many potential home buyers.
We were interviewed for for an article on the new rental offset rules by Derek Scott of the
Canadian Press. This article, which appeared in dozens of newspapers, spurred all sorts of inquiries as well as additional interview
requests.
I was out of town when CTV came calling but was happy to
oblige when CBC's
"The National" asked me to comment and bring forward a couple of
our clients who needed this rental offset and just made it in under the
April
19th deadline.
We did an interview outside their new Main
Street
area home which aired on April 19th. Once we have the video
copy direct
from CBC, we will post it on our site and on our Facebook Fan Page.
Give us a call at 604-736-1855 if you have ANY questions about how the new rules affect you.
Mike Averbach, AMP
Mortgage Planner
|
The Predictions
Canada's lowest-ever variable mortgage rates could soon
be a fond
memory...quicker than some thought!
Eleven out of 12 analysts polled by Reuters now predict a June 1st rate
hike. This just goes to show that minds are changing quickly. Before the Bank of Canada's April 20th announcement,
it was only 3 out of 12.
Swap traders--who bet millions on interest rate direction--are
pricing in a
93% chance that the central bank lifts rates on June 1st.
Here's what analysts are now saying about the Bank of Canada
announcement and future interest rates:
"Removing the conditional
commitment ...
(is) as good as cementing a June 1 hike...That leaves open the debate
over whether 25 basis points or 50 basis points is likely." --
Derek
Holt, VP of Economics, Scotia Capital (Montreal Gazette)
"We anticipate gradual 25-basis
point
increases at each of the next five Bank of Canada fixed rate
announcements
through 2010." -- TD economist, Diana Petramala. (Globe & Mail)
"This statement marks a dramatic
change in
tone by the bank, and doesn't rule out possible 50 basis point
moves."
-- Douglas Porter, Deputy Chief Economist, BMO Capital Markets. (CTV)
A "moderate growth track [will]
allow the
BoC to stick with only 25 basis point moves and to take a pause on
rate
hikes after October." - CIBC Chief Economist, Avery Shenfeld.
(Vancouver Sun)
The same analysts polled by Reuters also predict a 100 to 175
basis
point jump in the overnight rate by year end. This suggests a 3.25% to
4.00% prime rate by New Years.
In other news, effective April 25th, the benchmark qualifying rate for insured high-ratio
mortgages
jumps from 5.85% to 6.10%. This means it's now a bit harder to get approved for a variable-rate
or a 1- to 4-year fixed term if you're putting down less than 20%.
Home buyers choosing those terms will have to prove they can afford
monthly
payments based on a 6.10% interest rate. Some lenders, including the big banks, are also applying the new
qualifying
rate to conventional mortgages with variable and 1-4 year terms.
Some experts predict that this decision will cost banks market
share. We work with many
of the banks' smaller competitors (ING, MCAP, Merix)
who are
still using the same qualifying rates on conventional mortgages that
they were using
before the April 19 rule change. This makes it easier for borrowers with
20%
down to meet debt service guidelines, and get approved.
We know that understanding the "new rules" vs the old rules ... and how it all applies to YOU can be puzzling. That's why we do what we do ...
We simplify the mortgage application process and provide YOU with options that work!
Mike and Justin
Averbach Mortgages
604-736-1855
|
|
April's Market Update
Every month we get a market update from
our friends at Macdonald Realty; Simon Clayton, Kristie Marsden, Jason
Low, Sandra Ens, Jason Feinstadt and Jenny Stephanson.
In April's update: Increasing interest rates, the HST and product selection are three factors that make NOW a better time to buy.
|
|
|
|
Averbach Mortgages
604-736-1855
We save you time. We save you money. We get you the you the best mortgage terms at the best interest rates possible.
If you are:
- purchasing your first home
- refinancing
- renewing an existing mortgage
- investing in real estate
- consolidating your debts
- experiencing current or past credit issues
We have the solutions that work for you.
|
Mike Averbach
Averbach Mortgages |
|
|
