Summary of Mortgage Changes

20 02 2010
Paul Vieira, Financial Post Published: Tuesday, February 16, 2010 

 On Tuesday, the Department of Finance announced three changes to the standards governing government-backed mortgages, that come into force April 19. Here are a summary of the changes.

QUALIFYING FOR A FIVE-YEAR RATE
The adjustments to the mortgage framework will require mortgage insurers to ensure that new borrowers qualify for a five-year fixed rate mortgage when calculating the gross debt service and total debt service ratios. The measure is intended to protect Canadians by providing them with additional flexibility to support mortgage payments at higher interest rates in the future.

LIMIT THE MAXIMUM REFINANCING
Borrowers seeking financial flexibility can currently refinance their mortgage and
increase the amount they are borrowing on the security of their home up to a limit of 95% of the value of the property. The adjustment will lower the maximum amount of the mortgage loan in a refinancing of a government-backed high-ratio mortgage loan to 90% of the value of the property, consistent with the principle that home ownership is a tool for savings.

DISCOURAGING SPECULATION
This measure will require a minimum down payment of 20% for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation. At present, borrowers may purchase a residential property with a 5% down payment. The change will require a 20% down payment for small non-owner-occupied residential rental properties. Borrowers purchasing owner-occupied residential properties which also include some rental units (such as a duplex) will still be able to access government-backed mortgage insurance with a 5% down payment.





Ottawa Housing Market Still Going Strong

6 02 2010

Fourth month of double-digit gains for Ottawa resale market in January

 Ottawa’s resale housing market got off to a strong start in January 2010, with total sales rising 34.8 per cent to 713 units, according to numbers released Wednesday by the Ottawa Real Estate Board.

“These numbers are more in line with what we might expect for a typical January, whereas 2009 started off abnormally slow due to uncertain financial and market conditions worldwide,” said board president Pierre de Varennes in a statement.

Sales of freehold units fuelled much of the overall increase, with  unit numbers jumping 38.9 per cent to 557 units.
Still, condominium sales played a significant role as well, with the category recording a 21.9-per-cent gain to 156 units.

While the sales increase was a little less dramatic than in the previous couple of months, it continues a recent streak of double-digit gains, as the local housing market recovers from the effects of the market downturn in the fall of 2008.

Mr. de Varennes added: “Although listing inventory remains low, we expect that will change as we head into the spring market and interest rates remain low.”

The average price of a resale home across all categories rose 11.4 per cent to $320,966 in January, mostly because of a big spike in the selling prices of condominiums.

That category posted a 22.5-per-cent increase year-over-year, with condominium units selling for an average of $259,273.

The typically more expensive freehold market saw an 8.2-per-cent increase in average selling prices, to $338,244, the report noted.

Ottawa Business JournalReal EstateResidential
Published on Febuary 3rd, 2010
Published on Febuary 3rd, 2010
Krystle Chow
Ottawa Business Journal