Agent Blogs

Over the holiday season, this article came out and I want to make sure everyone is aware of the
possible changes that could effect our mortgage and real estate market.

Please see the attached Globe and Mail article from Dec 21st for your review...

http://www.theglobeandmail.com/report-on-business/flaherty-warns-on-mortgage-rules/article1407223/

It talks about the possible changes to...
1) Increase down payment above the current 5% down payment level,
2) and further reducing mortgage amortizations, resulting in higher mortgage payments.

***They have already moved from...
0% down and 40 year amortizations,
to 5% down and 35 year amortization,
and their is speculation that....
10% down payments and 25 year amortization may be coming.

At first I thought this would not be reasonable, however here are my thoughts from over the last 2 weeks.....

This would be a way for the government to slow down the continued housing growth, without broadcasting to the world that Canada is hiking PRIME rate. Also by producing a warning article like this, I believe in the next 4-6 months we will see a spree of renters trying to get into home ownership prior to the changes, driving year-over-year results higher for the first half of 2010, which will fuel the support for this type of drastic action. Unfortunately what I think may be miss understood by the policy makers, is that the effect that going from 5% down, to lets say 10% down, will be a much more dramatic effect then the 2008 0% down -> 5% down payment change, as we will be eliminating many of the down payment programs that are in existence. Interesting enough, last September the Canada-Ontario Affordable Housing Program, acknowledge that their program that provides down payments to approved applicants, increased their down payment offering from 5% to 10%. At the time I could not understand why they would offer the increased 10%, but perhaps the organization had some insight as to the future of Canadian down payment requirements.

NOTE:
Our US partner increased their homeownership down payment from 3% to 3.5% in 2009
I have also heard of more drastic changes in other common wealth countries from immigrating clients.


So now the question is buy now, or buy later? If I were renting, I would consult a mortgage professional, to see how quick I could become a home owner. With the current flexible payment options, and the ability to use a Free Down Payment Mortgage Program, buying now might save me years of paying rent. Even if the above speculations come true, and they result in house price volatility, I would still feel I made the best choice in getting out of a rental situation, and taking advantage of historically low interest rates.

Cory Kline, AMP
Mortgage Agent
FSCO Agent Lic. M09001239
Neighbourhood Dominion Lending Centres
FSCO Lic. 11764
Email: cory@ndlc.ca |Website: www.MortgageAndLifestyle.com

39 Collier St., Suite 300, Barrie, Ontario, L4M1G5
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