Thursday, February 13, 2020

First-Time Home Buyer Incentive

The First-Time Home Buyer Incentive helps people across Canada purchase their first home. The program offers 5 or 10% of the home’s purchase price to put toward a down payment. This addition to your down payment lowers your mortgage carrying costs, making home ownership more affordable.

Thursday, February 06, 2020

Why Canadians Really Need To Change Lenders At Mortgage Renewal Time, Especially Now

"A great number of people don't do any comparison shopping whatsoever and the banks take advantage of those people by offering higher rates at renewal."
Some advice on what to do if you can’t afford a mortgage rate hike. You're likelier to get a better mortgage rate if you switch lenders at renewal time.
How you can benefit from working with a Mortgage Broker - when renewal time comes around, we can help find you better rates in the marketplace and save you money. Read More...  #StratfordMortgageBroker

Canadians racked up $100 billion in credit card debt for first time ever and they're not done adding to it

Brace yourself for more debt and delinquencies next year — particularly in the Western provinces.
Canadians will likely see a slight increase in debt and delinquencies next year, particularly in Western provinces hit by downturns in the oil and farming industries, according to a new report by a consumer credit reporting agency.
The average Canadian’s non-mortgage debt may increase by 1 per cent to $31,531 by the end of 2020, New York Stock Exchange-listed TransUnion Co. forecast. Delinquency rates may fall to 5.41 per cent this year from 5.54 per cent at the end of September before increasing to 5.44 per cent by the end of next year, the data showed. Read entire article...

Does an increase in interest rates lead to more mortgage defaults in Canada?

The prevalent belief among policymakers — and basic economic theory — would seem to suggest that it should. But a recent study that took a look at data on consumer borrowing and spending in Canada is raising some questions about that relationship.
Fears that rising interest rates could make it harder for Canadian to make their mortgage payments was one of the motivations behind the tightening of mortgage regulations in Canada. The changes included, among others, the stress test, shortening of the amortization period and new taxes on foreign homebuyers. Policymakers in Canada were no doubt influenced by the experience in the United States, where a boom in subprime mortgages contributed significantly to the Great Recession in 2008. Read entire article...

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Can You Qualify For A Mortgage After A Consumer Proposal?

After you file a consumer proposal, the last thing on your mind might be a new mortgage, but you may be a lot closer than you think.

Maybe you wish to buy a home, or you own a home and are interested in refinancing your mortgage. Let’s first talk about purchasing a home.

When Can You Buy A Home After A Consumer Proposal? Read more...

Canadians’ New Year’s Resolution: Pay Down that Debt

It’s that time of year again, when we vow to kick bad habits and set a healthier or more positive course for the new year ahead. Improving our finances usually tops the list, and this year is no exception.

For the 10th straight year, the top financial priority for Canadians in 2020 is to pay off their debtsperhaps not surprising given that the average person dropped about $1,600 on holiday shopping last month. Read more...



Thursday, November 17, 2016

New Mortgage Rules will affect first-time buyers

OTTAWA – Canada’s first-time home buyers may have to shelve their dream house fantasies due to lending changes announced this week by the federal government, mortgage brokers say.
Ottawa moved this week to tighten mortgage lending rules that will limit the amount many Canadians can borrow to help ensure that when interest rates rise, they’ll still be able to make their payments.
Mortgage broker Frank Napolitano says that means the size of mortgage many buyers will be able to qualify for will be less once the rules take effect on Oct. 17.
“First-time homebuyers will probably have to probably scale down the type of home that they may have planned to buy,” said Napolitano, managing partner at Mortgage Brokers Ottawa.

Under the new rules, a stress test that had only applied to borrowers who opted for variable rate mortgages or fixed rate mortgages with terms less than five years will now be used for all home buyers with less than a 20 per cent down payment.

That means borrowers must be able to qualify for their mortgage using a higher interest rate than they will actually be paying on their mortgage.
The advertised special offer rates for a five-year fixed rate mortgage at Canada’s big banks are around 2.5 per cent. However, the Bank of Canada-posted rate used in the stress test is 4.64 per cent based on the posted rate at the big banks.
“You’re not paying more, but you’re going to be able to buy less house,” Napolitano said.
wait.” New Mortgage Rules will affect first-time home buyers

First-time home buyers to get $4,000 land transfer rebate

Thursday, November 26, 2015

The perils of having no credit

I've seen it too many times.
Young people come into my office looking for a mortgage. Through hard work and discipline they have saved between $50,000 and $100,000 for a down payment and I cannot give them a mortgage.
Why? Because they have no credit score. It's not that they have poor credit, it's that they don't have any at all. They thought they were doing all the right things (and they were). They lived within their means, only bought items (even cars) when they had the money and don't owe anyone anything. But it's time to purchase their first home and the banks won't give them money.  Click here for entire article

Wednesday, February 13, 2013

Tax-Free Savings Account (TFSA)

The government brochure announcing the introduction of the TFSA calls it “the single most important personal savings vehicle since the introduction of the Registered Retirement Savings Plan (RRSP)”. Unlike the usual hyperbole, the government is probably understating the importance that TFSAs are likely to play in the savings plans of all Canadians. Read more...

Wednesday, January 09, 2013

Canadian Housing Starts to Moderate, Resales Stable in 2013

OTTAWA, November 5, 2012 — Canada’s new home market is expected to continue to moderate in the last quarter of 2012 and into 2013. Meanwhile, activity in the existing home market is expected to hold steady, leading to house price growth in line with or slightly below inflation, according to Canada Mortgage and Housing Corporation’s (CMHC) fourth quarter 2012 Housing Market Outlook, Canada Edition.

“A weaker outlook for global economic conditions and the waning of the effect of pre-sales from late 2010 and early 2011, which contributed to support multi-family starts this year, will bring moderation in housing starts next year. Nevertheless, employment growth and net migration will help support housing starts activity going forward,” said Mathieu Laberge, Deputy Chief Economist for CMHC.

On an annual basis, housing starts will be in the range of 210,800 to 216,600 units in 2012, with a point forecast of 213,700 units. In 2013, housing starts will be in the range of 177,300 to 209,900 units, with a point forecast of 193,600 units.

Existing home sales will be in the range of 449,200 to 465,600 units in 2012, with a point forecast of 457,400 units. In 2013, MLS®2 sales are expected to move up in the range of 433,300 to 489,700 units, with a point forecast of 461,500 units.

The average MLS® price is forecast to be between $363,200 and $367,000 in 2012 and between $363,100 and $377,900 in 2013. CMHC’s point forecast for the average MLS® price calls for a 0.2 per cent gain to $365,100 for 2012 and a 1.5 per cent gain to $370,500 for 2013.
As Canada's national housing agency, CMHC draws on more than 65 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable housing solutions. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions.

Thursday, November 22, 2012

Dunning: Mortgage Rules (Round 4) Were Overkill

“...The changes to mortgage insurance criteria are unnecessarily jeopardizing the health of Canada’s housing markets and the broader economy.”

That’s the conclusion from economist Will Dunning in CAAMP’s just-released State of the Residential Mortgage Market report. (Link)

Dunning says his research suggests the Finance Department has created “a policy-induced housing market downturn” that could reinforce existing weakness.

He calculates that the most recent (July 2012) rule changes will knock 11% of potential high-ratio homebuyers out of the market—that is, until they can come up with more net income or a bigger down payment.

He lays out the following arguments:

Jobs underpin the market…

“Job creation is the key driver of housing demand” writes Dunning.

“The ‘housing wealth’ effect (the increased confidence, and willingness to spend and invest, that results from rising house prices) is the single most important driver of job creation”

What’s more, in the prior five years, 18% of job creation in Canada has originated from housing and mortgage activity.

If mortgage rule tightening drives down home prices, job creation will suffer and it could trigger a negative “feedback” loop between the housing market and the economy.

Price risk…

Dunning writes: “Experience around the world has shown that once house prices start to fall, the outcome is unpredictable, and can turn into a downward spiral that wreaks substantial economic damage.”

He adds: “It can happen that the loss of jobs affects housing demand, leading to further price drops and a vicious downward spiral.”

There is growing evidence to suggest that the combined mortgage rule changes of the past four years may now be “significant enough to substantially reduce housing activity.”

What’s happened so far…

The government has handed down four sets of insured mortgage restrictions since July 2008. Dunning summarizes them in the list below:

(Source: Will Dunning)

He says the cumulative effect of these four sets of changes “have resulted in a massive contraction in credit availability.”

From August to October, home sales were 7.8% lower than the prior year.

Some analysts downplay the effects of past mortgage rule changes, pointing to the subsequent sales rebounds that took place.

Dunning notes that those rebounds coincided with falling mortgage rates. “It appears that the movements of mortgage rates were more important than the changes in the mortgage insurance criteria,” he says.

The effects…

“16.9% of high-ratio mortgages that were funded in 2010 could not have been funded under the revised criteria.”

“…The final set of changes that was announced in June 2012 and took effect in July will have had the most significant consequences, accounting for about 65% of the impact (11.0% out of 16.9%).”

Time for young buyers to save up…

“…Simulations indicate that on average (based on 2010 real mortgage data), the additional down payment required is about $25,000, 7% of the purchase price." That's what it takes to offset the mortgage rule effect.

"If we assume that these households can devote 10% of their pre-tax incomes to enlarging their down payments, on average it will take 3.5 years to re-qualify – and this assumes that house prices and interest rates do not increase.

(10% may be optimistic. Doug Porter recently estimated that the median family saves only 4%, or $2,800 a year.)

What happens next…

55% of buyers need high-ratio mortgages, according to Maritz. “If 16.9% of potential high ratio buyers are removed from the market, this would reduce total home sales by about 9%,” Dunning states.

“…It will become more difficult for people who want to move-up in the market to sell their current home. In consequence, over time, we should expect to see reduced activity in upper segments of the market.”

“…Declines in activity will be partly (and gradually) mitigated, as some of the affected potential buyers save additional down payments and can return to the housing market.”

“…It now appears that the 2010 changes had a lasting negative effect (on home sales).”

“…the negative effects on housing activity will be quite prolonged…the damage is not yet fully developed.”

Was it necessary?

“The average resale house price in Canada had been essentially flat since early 2011,” Dunning says. On top of that we faced (and still face) material risks from the U.S., Europe and from domestic budget tightening.

“There was no need to further cool the housing market,” he concludes.


Stricter mortgage rules will be a drag on demand until the market has time to adjust. Let's just hope the new rules aren't coupled with an economic slowdown or a natural cyclical home price correction. In that case, the latest rule changes could prove to be very bad timing.

Of course, low rates could always save the day once again—or delay an inevitable correction if you want to look at it that way. We could also see buyers get off the sidelines and purchase on dips—i.e., buy if home prices drop 10% or so. Both of those factors could pad a fall, at least somewhat.

Tuesday, November 20, 2012

New guidelines coming for mortgage insurers


The Globe and Mail

Published Monday, Nov. 19 2012, 6:30 AM EST

Canada’s financial regulator will release new guidelines for mortgage insurers early next year, including the government’s Canada Mortgage and Housing Corp. – but they won’t drag down the housing market as much as the guidelines for banks have, says the country’s banking watchdog.

The Office of the Superintendent of Financial Institutions will outline what standards it expects the country’s three mortgage insurers to follow when they underwrite a policy on a home. Ottawa has just recently given OSFI the job of overseeing CMHC, a federal Crown corporation that is the largest player in the industry; it was already regulating two private-sector rivals, Genworth MI Canada and Canada Guaranty.

The mortgage guidelines that OSFI released for banks this summer are believed to have played a role in the decline in national home sales for the second half of this year. The new rules pushed lenders to be more cautious in areas such as background and credit checks on borrowers, document verification, and appraisals. The biggest impact is believed to have come from one particular rule that capped the amount that any individual can borrow on a home equity line of credit at 65 per cent of the home’s value.

“I would not expect the same impact” from the rules that OSFI intends to create for mortgage insurers in the new year, Julie Dickson, the regulator’s superintendent, said in an interview.

The final guidelines for banks came out in June. That was shortly before Finance Minister Jim Flaherty tightened up mortgage insurance rules, including cutting the maximum length of insured mortgages to 25 years, in an effort to stem the growth of consumer debt levels and house prices.

While Mr. Flaherty is focused on the risks to the broader economy, Ms. Dickson is responsible for ensuring that the country’s banks, insurers and mortgage insurers remain financially sound. Unlike Mr. Flaherty’s changes, the guidelines that she will release are more likely to focus on the things that mortgage insurers must do behind the scenes to assure that they are not taking on too much risk when they insure homeowners’ mortgages.

“We are in a market where there is a lot of growth in household debt, some froth, and I think whenever you see that you have to act early and try to ensure that people aren’t forgetting sound practices,” Ms. Dickson said.

“Having buttoned-down mortgage underwriting policies does slow things down a bit, so that if mortgages are presented that are outside the policy, [the financial institution] is going to have to take more time to consider it; that does have an impact.”

OSFI is taking action in this area after the Financial Stability Board, an international body made up of regulators and banking experts around the world, suggested that all countries review their rules for banks and mortgage insurers.

The board is chaired by Bank of Canada governor Mark Carney. It suggested, among other things, that mortgage insurers be regulated. Mr. Flaherty moved to put CMHC, which dominates the mortgage insurance business in Canada, under OSFI’s authority earlier this year.

Friday, November 09, 2012

The hidden costs of home ownership

By Gail Johnson Read Here

Kelly Gardiner In his three decades as a real-estate agent in North Vancouver, B.C., Kelly Gardiner has seen a lot of different reactions from people buying a house for the first time. Usually, they're excited, nervous and overwhelmed. But there's another feeling that sometimes pops up -- utter shock -- not from the purchase itself, but because of all the associated costs people never even thought of.

"For people who haven't moved that often, a lot of expenses can come as a surprise (money mistakes)," Gardiner says. "Or they're so focused on just signing the papers that they never stop to think about everything that's involved in owning a home and moving into one."

So, if owning property is a new endeavour, here are some of the hidden costs to budget for before you close the deal:

Legal fees

Fees and disbursements usually cost around $1,000. You can hire a lawyer or a notary, but it's best to deal with someone who specializes in real-estate transactions.

Property transfer tax

This land-registration tax must be paid when you register changes to a certificate of title at the land title office. It varies from province to province. In B.C., for example, the tax is 1 per cent on the first $200,000 and 2 per cent on the balance.

Provincial sales tax

Again, this amount varies across the country, but is charged on new condos, townhouses and homes. For example, new homes or properties that have undergone a substantial renovation, are subject to 13 per cent HST in Ontario. For a home with a purchase price of $310,000, you'll be required to pay $40,300 in HST. Ouch! But, depending on the purchase price of your home, buyers may be eligible for a new home rebate, which will help to alleviate some, or all, of the HST sticker shock.

Home inspection

You can spend anywhere from approximately $200 to close to $1,000 for a qualified inspector to see what's lurking behind the cosmetic upgrades. Find an inspector with a solid reputation and have them spell out exactly what services they'll provide. (ie: some inspectors offer a checklist; others take photos and provide a detailed report). It's best not to skimp on this one.

Land survey

Most mortgage lenders will require a survey of the property done by an accredited land surveyor to determine whether the home sits within its specified legal boundaries and complies with local bylaws. This usually costs about $500 but can be much more in complicated cases.

Closing adjustments

This cost includes any adjustments between you and the seller for things like property taxes and utilities that were paid in advance. Your lawyer or notary can calculate these charges.

Mortgage insurance

If your mortgage is more than 75 per cent of the home's selling price, it's considered high-ratio and you must buy insurance from the Canada Mortgage and Housing Corporation. The amount is calculated based on the ratio of mortgage to home value.

Property taxes

If you've never owned your own place before, you've never had the joy of paying this monthly expense. This is on top of monthly strata fees if you're in a condo.


At its most basic, there's the cost of hiring a company to haul all of your worldly possessions to your new digs; then there's the potential expense of having someone pack all of your things for you too. Costs vary widely and depend on how far you're going.

Ask in advance whether the movers charge for travel time to get to you in the first place.

If you have to be out of your old place before you can move into your new place, you'll have storage costs as well.


These may or may not come with the home, so you may find yourself shopping for a washer and dryer or even a fridge, oven and dishwasher.

Window coverings

Again, these aren't necessarily automatically included. Be clear about this in your offer so you're not left doing an emergency run for blinds or curtains.

Connection fees

Telephone, cable, Internet and alarm-system companies will ding you a connection fee. Then there are charges to set up heat, water, gas and electricity. However, some of these charges may be negotiable if you're staying with the same service provider. It never hurts to ask what the company can do to retain you as a loyal customer.


As a proud new homeowner, you may need to invest in items like a lawn mower, sprinklers, garden tools, hoses, shovels, a ladder, a freezer, basic tools and the like. It all adds up. Best to start saving now.

Thursday, November 08, 2012