Term         Best Rate   

1 year Fixed      2.74%

2 year Fixed      2.59% 

Canadian Mortgage Market Update July 2012 - Update on mortgage rules changes

   

No movement on the overnight rate by the BOC in their July meeting due to deteriorating global economics in the past few months.  Next meeting is September 17th.  

CMHC changes took effect July 9th, reducing max amortization to 25 years. Most lenders left the amortization unchanged for conventional financing.  

OSFI changes must be in effect by Oct 31, 2012 for the major banks. HELOC, Stated Income, and Cashback mortgages will be effected.  

If you've locked in your rate at these 'bottom of the barrel' levels, don't sit there and be content. Plan ahead as rates WILL increase in the future. Here's a video outlining a mortgage strategy everyone should be following. .

     Click here: There's Money in Your Mortgage

I know most of your are aware of the recent changes that came into effect on July 9th, which were communicated by the Department of Finance. These changes were for insured mortgages only. Here's a summer of the insured changes:

• Maximum 25 year amortizations
• Maximum debt ratios (39% gds and 44% tds)
• Maximum Equity Take Out or refinance reduced to 80%  of the value of your home
• And maximum insured property value of $1 million.

These changes were legislated in a document produced by OSFI (Office of the Superintendent of Financial Institutions ) and affect all FRFI's (Federally Regulated Financial Institutions). This includes the national banks and trust companies. The document is referred to as B 20.  

There are more changes coming that were part of B 20 but haven't taken affect yet. This is mainly due to allowing lenders time to update their systems. The changes must be in effect by Oct 31, 2012 or possibly sooner depending on the lender. This is a summary of the further changes:  

1. Home Equity Lines of Credit (HELOC's) - will be capped at 65% of the homes value. This is a reduction from the previous limit of 80%. 
2. Qualifying rates on conventional will be the benchmark rate for terms less than 5 yrs or for VRM's. Today, the benchmark qualifying rate is 5.24%.
3. Elimination of the Cashback and/or Free Down Payment mortgages where the 5% cash back can be used for the down payment.
4. Business for Self / Stated income financing will be eliminated. Banks will be moving towards fully qualified applications. It's difficult to determine how the banks will proceed, but it's no doubt that is will be much tougher to qualify self employed applicants that show a lower taxable income.  

There is good news with all of these proposed changes! The new rules apply to the national banks and trust companies. It is likely that provincially regulated credit unions and mortgage lenders, will be able to offer some innovative products that aren't affected by the OSFI changes. So if clients can't get what they are looking for through the major banks, there may be some other options.  

As always, I will pass along more information as the dust settles.    

I have recently introduced the Canadian Home Buyers Academy. If you are considering purchasing a home, this is simply your best resource for all the information you need to make the home buying process simple and straight forward.  

Plus, through the process, as a Member of the Canadian Home Buyer's Academy you will be eligible to receive up to $2000 Cash Back towards the purchase of your new home.  

What's the catch? There isn't one! You still get the very best mortgage I can arrange for you, and receive the cash back as an added incentive.  

This offer is available to you, your friends and your family! For more details, click on the following link..........  

 Canadian Home Buyers Academy