Don’t Fix It If It Isn’t Broken
By now you have likely heard that more changes to your ability to get a mortgage are arriving soon. But so what? Should you care?
Short Version: Probably Not
Long Version: The five W’s below will help you answer the above questions and more
Who is affected?
Nobody simply renewing an existing mortgage. No changes for you.
Nobody buying with less than 20% down payment. No changes for you.
Group 1 – Current homeowners with more than 20% equity who want to access that equity.
Mind you we are still talking specifically about people wanting to borrow more than 80% of what they currently qualify for. Often there will still be a way: co-signers, alternative lenders, etc.
Group 2 – Buyers with 20%+ down payment who specifically planned on borrowing more than 80% of what they currently qualify for.
What does this mean for the market? Is meltdown imminent? Um. No.
Where?
These changes are unlikely to have a significant impact on the Vancouver or Toronto markets due primarily to higher than average household incomes and higher than average new worth of our parents if they live locally.
In small town Canada where average household incomes and average net worth numbers are lower, the impact of these changes could in fact be much more pronounced. Rather than a slight dip in specific price brackets and specific property types as might be seen in the GVA (Greater Vancouver Area), one might expect as much as a 10% drop in values in smaller communities.
When?
January 1, 2018
If you believe these mortgage changes may affect you, take action well before December 1, 2017. Lenders will be implementing the new rules early, they always do.
Why did the Government make more changes?
The Office of the Superintendent of Financial Institutions (OSFI) has a singular mandate. It’s not to calm prices, it’s not to protect consumers from themselves. OSFI’s mandate is purely to protect the stability of the CDN banking system.
Conclusion
We are at a point where for ten years running the government has made significant changes to the mortgage lending market every single year. I’d like to say hopefully they are not winding up for yet another hit. However, sadly all indications from the inside indicate that they are in fact winding up for yet another hit. More on that one, if and when it happens.
For the time being if you believe these changes may affect you, take action now. Contact Nathan and Steve from Client First Mortgage Solutions with your questions or concerns. They are well informed on these changes coming into effect on January 1, 2018, so don’t wait. Call us today! And while you are waiting to talk with them, be sure to check out their website which has a Home Buyers Report full of important information.
Original Aricle – Dominion Lending Centres – October 25, 2017
