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CMHC Premium Refunds for Energy Efficient Homes: Eco Program

 

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CMHC Eco Program

 

CMHC has introduced their Eco Program: providing premium refunds for energy efficient homes are for clients who are buying a home deemed “energy efficient”.  Clients could be eligible for a 25% refund of their CMHC Insurance Premium!  For some perspective; on a purchase price of $850,000 with minimum down payment of $60,000 the CMHC insurance premium is $31,600. Clients who buy a qualifying property, are eligible for a refund of up to $7900.  For homeowners who are doing renovations that increase energy efficiency, there are also refunds available.

CMHC recently introduced new eligibility criteria for this program, including an updated and expanded list of energy efficiency certifications, and energy efficiency targets based not only on total Energy consumption but also Greenhouse Gas Emissions.  Building codes are progressing toward net-zero ready standards, eligibility criteria continues to be adjusted.

New Construction

To be deemed an energy efficient new build, properties must have been awarded an eligible certificate–there are multiple eligible certifications including BC Energy Step Code, Built Green Canada, Canadian Home Builders Association to name a few.  However, if a new-build doesn’t come with the certification, clients can get their home assessed by a Natural Resources Canada (NRCan) qualified energy advisor.

How does someone apply?

After closing your mortgage, eligible borrowers have up to 2 years to submit the refund request, directly to CMHC through their Eco Program with supporting documentation.  The homeowner applies through CMHC’s website, uploading their supporting documentation. Once approved, CMHC mails a cheque directly to the client. The funds can be used for any purpose, they do not have to be applied to the mortgage.

Required documents will include:

Final Energy Efficient Certificate from the list of  Eligible Third-Party Certifications and/or

Energuide label for Energuide renovation upgrade report for existing homes

These supporting documents are ‘good’ for up to 5 years. Meaning, if the house sells within 5 years, the new buyer can also apply for the CMHC refund.  Even if it was already applied for by the previous owner.  Yes it’s double dipping that is allowed and encouraged by CMHC for this program.

Renovate for Energy Efficiency

If you have an insured mortgage with CMHC, and you’re spending at least $20,000 in energy efficient renovations, the program is available for you.  This applies to both single family dwellings and condos.  Buyers can use the Purchase Plus Improvements Program through CMHC, to get the money needed for the updates. See the following link: https://www.32degreesbuilding.com.au/how-to-make-your-home-energy-efficient/

Energy Costs are getting higher and the cheapest energy is the energy you don’t use.

Paul Pettipas – Nova Scotia Home Builders Association

To be Eligible:

  • Be a homeowner with CMHC Insured financing
  • Allocate a minimum $20,000 for energy-efficient improvements that fall within any of these 3 categories
  1. Building Envelope (insulation, windows, doors, roof, attic, air tightness & foundation).
  2. Mechanical systems (HVAC- Heating, Ventilation and Air Conditioning, heat pump systems).
  3. Renewable energy systems (solar, wind, geothermal).

CMHC has made the program user friendly and beneficial for the homeowner, putting money back in their pocket is always a positive.

 

If you would like more information or have questions, please ask! Call us at 250-753-2242 or apply here: Online Application

https://www.cmhc-schl.gc.ca/en/professionals/project-funding-and-mortgage-financing/funding-programs/all-funding-programs/canada-greener-homes
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Locally owned and operated since 1985.

“The name friends recommend”
Mid Island Mortgage & Savings Ltd, #12 – 327 Prideaux Street, Nanaimo, BC V9V 1C8, Canada, 250 753 2242

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Mortgage Renewal and Educating Yourself

We believe Informed Consumers Make Better decisions

 

Educate Yourself

 

Mortgage renewal and educating yourself, there are so many questions. There is information overload and it can be daunting. Where is the economy at and where is it going? We don’t have a crystal ball, but here are some tips if you have a mortgage renewal coming up.

 

Why education matters; we believe that informed consumers make better decisions.

  • Do I have to requalify?
  • Variable rate or fixed rate?
  • What term should I take?
  • How much are my payments going to increase?

Five things to consider when renewing your mortgage:

What the economists are saying:

 

Benjamin Tal, CIBC Economist:

“Things are moving in the right direction, but not good enough – therefore, we keep the option to raise again open”, “They’re not going to commit to not raising interest rates anymore. [That’s] no big surprise – they don’t want to be seen as relaxed about inflation.” “The short answer is, we don’t know. It’s really 50/50.”

Stephen Brown, Capital Economics:

“The Bank of Canada accompanied its decision to leave interest rates unchanged with a pledge to hike again if needed, but we doubt it will need to follow through. With recession risks rising and labour market conditions loosening, we continue to think that the bank’s next move will be a rate cut, in early 2024”

Earl Davis, head of fixed income and money markets at BMO Global Asset Management:

“We didn’t anticipate a hike today [Sept 6th] there’s two more meetings before the end of the year, we anticipate they’re going to hike it once minimum.”

Changes to Consider

Lender

Switch/Transfer your mortgage to a new lender (at their cost).  Most lenders will help pay the costs associated with moving your mortgage at renewal. To be eligible for a transfer program, you cannot increase your mortgage amount at this time. Everything is the same except the lender.

Refinance your mortgage

Now is the time to consider any of those upcoming changes that may require money in the coming years. Does it make sense to take equity out of your home?

Extend you amortization

Increasing your amortization period helps provide payment relief by spreading payments out over a longer timeframe.

Type of mortgage

Should you consider a fixed or variable mortgage? Would you want to look at removing co-signers who may not be needed any longer?

Look at the big picture

What is coming up in the next five years?

  • downsizing
  • expanding your family
  • moving closer to family
  • major renovation
  • kids education
  • help adult kids with housing
  • buy rental property/vacation property
  • dream vacation

Avoid Payment Shock

Get an idea of what your payments will be at renewal. You could start practicing making higher payments now, to relieve some pain at renewal!  Why not get the budget book out.  If you have the funds to make a lump sum payment, this will help reduce interest paid, and monthly payments. You could also consider paying off some debt to free up monthly cashflow. Whatever you do don’t take on any new payments.

Interest Rates

Bank of Canada (BOC) sets its policy interest rate (overnight rate) to control inflation. They raised rates 10x since March 2022 (+4.75%) this impacts variable interest rate products. The last meeting on September 6, 2023 the rate was held at 5%. The BOC’s next meeting is October 25, 2023.

Fixed mortgage interest rates are not directly linked to Bank of Canada Rates. The fixed rates follow bond yield. Fixed rates increased roughly 2.25% since March 2022.

 

Requalifying 101

You can refinance up to 80% of the value of your home.

Income qualification – documents and questions will be required (no blood sample required).  Stress Test – you will qualify at 2% above your mortgage interest rate. A Lawyer/Notary could be needed and an appraisal is likely.

Renewing with you lender

  • If you’ve made all your payments on time, your existing lender will generally give you the option to renew your mortgage.
  • Avoid requalifying – if you are not increasing your mortgage amount, amortization, or making a change to who’s on the mortgage.
  • No cost – there shouldn’t be any legal fees, appraisals, or income documents to provide.
  • Can be as easy as signing the dotted line. There is a bit more involved, but the most straight forward option.

Options

Terms – Lenders usually automatically offer a 5 year fixed term. Consider a shorter term or a variable rate.

Early Renewal – Most lenders offer early renewal options – up to six months early

Rate Holds – Inquire with your lender about how long they will honour a rate hold.

We believe that informed consumers make better decisions. To discuss your upcoming renewal,  or any mortgage situation call Kevin, Jason or Blaire today!

 

 

 

The Million Dollar Question…

Moneydoesgrowontrees

The bank of Canada has just raised their rate to a 22 year high at 5.0%. This move has us all pondering : What are interest rates going to do?  Whether you’re a Mortgage Broker, a Realtor, a homeowner, a consumer, or an investor – everyone wants to know what interest rates are going to do. This proves to be a challenging question.  Below are some of the latest opinions of reputable economists.

What the economists think

The economists are divided on predictions for not only the next BOC meeting, but also the strategy that will unfold in the coming months.

RBC Economics – Claire Fan:

“We continue to expect the full impact of rate hikes to date to come through gradually, slow spending over the second half of this year and for that to push the central bank back on the sidelines with no additional interest rate hikes this year.” 

Desjardins’ Senior Director of Economics Randall Bartlett:

“Given that the Bank even considered pausing at this month’s meeting, the better-than-expected inflation outcome reinforces our forecast for the overnight rate to be maintained at 5% for the remainder of the year,” he noted.

CIBC Economist Benjamin Tal:

“This is opening the door for another move in September,” Tal said. “Our official call is now that the Bank of Canada is going to move again, unfortunately, in September by 25 basis points, and that maybe will be the end of it.”

“We have to realize that we are already in a process of, in my opinion, overshooting – maybe by design by the Bank of Canada,” he said. “But it also means that if you overshoot, you accelerate the process of cutting.”

“We have to realize that this is an asymmetrical game, namely a situation in which the Bank of Canada is getting mixed signals from the economy,” he explained. “Some signals suggest that the economy is strong, some suggest that the economy is reacting to higher interest rates and slowing down, especially the housing market.”  

So, now what?

While interest rates play a major part in our clients decisions, the basic need of housing is universal and is not going away.  Fixed interest rates may be around 5-6% range, making home ownership more costly than Rent is astronomical and not doing anything to build clients networth.  

At the end of the day, you have to live somewhere! Real Estate is always a good long-term investment.

If you have questions, we are here to help. 250-753-2242

Contact Us

Interested in more?

https://www.mpamag.com/ca/mortgage-industry/market-updates/another-bank-of-canada-rate-hike-likely-in-september-cibcs-tal/452614

Did someone say “Second Home” ?

 

University will start in the Fall. For some of our kids that means seeking accommodation options.  Perhaps your looking to buy a second home to reside in for commuting purposes, or want to buy a vacation property to enjoy.  Others might want to purchase a property to move a family member closer.  Canadians are allowed to purchase a second home with minimum down payment as long as the use of the home meets certain requirements.   

 

The kids may have graduated high school, but that doesn’t always mean providing for them is done.  High rent amounts and cost of living make it challenging for young adults to get ahead.  Even with full time jobs.  Challenging stressful times await these young adults, going to school, having limited time to work to pay bills, living on their own for the first time and studying to achieve their education goals to secure their future employment. Having housing in place is a monumental difference maker and a stress relief, allowing them to concentrate on schooling.  The second home program can help.

 

The caveat to this program is that the home must be occupied by an immediate family member. Buying property for a child in University is a great example. Helping a child with housing in that way not only gives them shelter, but provides them the life lesson of homeownership.  They will learn how real estate can produce wealth, and how getting your money to work for you can be a life changer. Help your kids save on rent, while you invest in Real Estate and their future.   University is a massive expense–maybe the real estate you purchase increases in value while they are in school, offsetting the cost of their education.  The return will be worth it! 

 

The fast ferry is making its maiden voyage in Nanaimo.  With Vancouverites being able to commute to Nanaimo with a short sail across the ocean, housing in Nanaimo will be that much more desirable. More people who already commute that “hour plus” drive in Vancouver to their job can look at purchasing a property in Nanaimo. They could buy a home in Nanaimo as a second property.  Mortgages are possible!

 

Summer weather comes with heat, and the desire to be by the water. While travelling around during the summer months you might find that special spot you and the family fall in love with. You can look at purchasing a property in that area, creating family memories for generations. That summer cabin can be bought with minimum down, and you can start making your own family memories this year.  

Do you have that family member living far away who has a desire to live closer to you? Help them relocate by purchasing a property with the minimum downpayment: get the family together again. 

With as little as 5% down on the first $500,000 and 10% on the balance, a mortgage for a second home can be achieved.  Applicants are required to qualify for the mortgage without rental income on the new property.  The property has to be for your own, or a close family member’s, use.  This is not the program for a rental purchase.  

 

For clients in any of these categories, Kevin, Jason and Blaire would be happy to explore options.  Call 250-753-2242 or apply now or email: 

 

info@midislandmortgage.com

kevin@midislandmortgage.com

jason@midislandmortgage.com

blaire@midislandmortgage.com 

“The wise young man or wage earner of today invests his money in real estate.” -Andrew Carnegie

Mortgage Options for Self Employed

Self Employed : Mortgages

Woman working hard at her business

Business Owner? There are options for mortgage financing.

Being self employed has many advantages, like setting your own schedule and being your own boss.  You also have the advantage to write off items to decrease your taxable income.  This is great when it comes time to pay the Government, but can create challenges when you are planning on borrowing.  There is a major advantage to working with a broker who is well versed in Business for Self (BFS) programs available.

The Gold Standard for Self Employed

The most universal method to calculating self employed individuals income is by taking a 2 year average.  To achieve ideal interest rates, a 2-year average of your NET income is used.  That means your gross income is not the amount being used to calculate your capacity for a mortgage.  All write-offs and deductions are used to calculate your Net Income.  If your Net income has been declining, the lower amount is used for qualification purposes.  In an ideal world, real estate transactions would be planned a few years in advance–allowing for pre-planning with your accountant.

Traditional Lending – New to BFS

There are programs available through traditional lenders for clients who have less than 2 years self employed.  The requirements include having to have worked in the same industry as before they became self employed.  The client needs to be able to show that they have a history in the industry to qualify for this program.

Subprime Lenders

Subprime lenders offer solutions to a variety of self employed individuals.  Clients could be new to their industry, or well established but their past years net income isn’t an accurate reflection of current income.  Regardless, there are Subprime lenders who might be able to help.  Subprime lenders will complete a review of your business bank statements for the past 6-12 months. Lenders review deposits and deduct expenses to arrive at an income amount that will be used for qualification.  Having flexibility in income qualification does come with additional costs.  Interest rates are generally 1-2% higher than a traditional lender, plus there is a lender fee.

Why use a Mortgage Broker

Mortgage Brokers have access to a variety of programs and options for self-employed individuals.  If you’re working with clients who are BFS it’s important they know what’s available.  Brokers have access to multiple programs and lenders, and can ensure that client’s buying power is at it’s full potential.  This gives the client an advantage; providing them with multiple possible solutions.

For more information please call Kevin, Jason or Blaire today 250-753-2242

Fill out our Online Mortgage Application

Subprime vs Traditional Lending

 

Coming from a traditional lending background, I’ve often thought of mortgage lending as a puzzle. In order to help the client, every single piece is necessary to get them what they need.  Credit has to be solid, the income both consistent and sufficient, the security (house) had to be in a good location in a decent condition.  All this is required. Without every piece in place, the puzzle just wont work!  The thing is–people’s lives can be complicated, messy even. Puzzle pieces go missing, and some don’t QUITE fit.  

Traditional Lending

Lets explain; Banks, Credit Union’s, and Monoline Lenders (companies regulated by the bank act who offer single products, in this case mortgages) all have to adhere to specific rules set by the Government.  Within those rules, the companies themselves can work with their board, risk management and shareholders to ensure that their best practices are within those rules.  They may decide to assume more risk in one area but less in another. Offering products or programs that target specific audiences. Acting within the letter of the law and their internal policies and practices.  For the most part, doing the same puzzle, with the same pieces.  

Subprime

Subprime, or “B” Lenders, do not have to adhere to the same rules as big banks.  Privately owned, operated and regulated they offer their own unique pieces to the puzzle.  These lenders offer assistance to borrowers who aren’t a fit for the major lenders, so credit issues, self-employment or lack of sufficient income fits for them.  They have more flexibility in how they lend and who they lend to. 

Of course, guidelines are still in place, they merely have more of a landing pad for the “unbankable”.  Anytime a lender is taking on higher risk mortgages, there is a premium for that, and with subprime lenders it translates to higher interest rates than other lenders, and sometimes lender fees.  It would be easy for a person to sit back and form opinions based on the idea that they are charging what they are. Some might say that the people seeking money from these companies “shouldn’t even be borrowing”.

Self Employed

For our self-employed clients, the general rule of thumb is that lenders want to see the last two year’s income tax returns (T1 Generals).  For a self-employed individual, this may not be the most current and accurate version of their finances.  Subprime lenders offer Business for Self programs such as stated income that require the last 6 months of business bank statements to support the cash flowing into the company.

Credit Issues

If you go bankrupt or file a consumer proposal you’ll generally be waiting 2 years from your date of discharge in order to be a candidate for a mortgage at a bank or Credit Union.  With subprime lenders, they consider you right away.  Their minimum credit requirements are significantly lower.  Many people may think that once their mortgage is placed with a Subprime lender that they’re going to be with them forever. This is not true.  Often clients will work with their Mortgage Broker to make a plan to make their way back to an A lender.  This could mean a variety of things. A hyper focus on paying bills on time, to earning additional income.  Whatever it may be, you won’t be alone, our Brokers will work with you to set a plan and will continue to check in to help keep you on track.

Stigma

There tends to be a real stigma out there about the Subprime lending world. In a situation where you may lose the house because of lack of income, an illness, a bad relationship or business venture that left you in a tough spot–There are options for you.  Of course the ideal lending situation is to be able to have a mortgage through a major bank, or monoline company. The interest rates will be less and there will be less fees.  No one is disputing that. 

However, in my decade and a half in the finance world to confidently say that there are many of us who “do not make the mark” set by banks.  I feel fortunate to be able to offer people solutions that fit their situation, to meet them where they are.  In many cases the solutions will help them maintain or improve their housing situation, and help their financial situation.

Being a mortgage underwriter at a traditional financial institution for many years, my experience with lending was limited to our own products and services. Helping people to have access to the Subprime lenders gives me the ability to help people work with what they have.  Putting their puzzles together in a way that works for them! 

I am grateful and appreciative of the opportunity to offer mortgage and financing solutions for our clients.  Interested in learning more, or have questions about your own ability to qualify for a mortgage please call or email us.  If you’re buying, renewing, refinancing we would be more than happy to help work with you to figure out your options.

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HOW SOME YOUNG PEOPLE CAN AFFORD A HOME

– HOW SOME YOUNG PEOPLE CAN AFFORD A HOME –

By: Edward Trapunski

We were recently very flattered to be invited to dinner by a young couple that we know. It was the first time that we visited their home and we were overwhelmed by how beautiful it is. Home for them and their two pre-schoolers is on an attractive street in one of the most desirable enclaves in the city.

He’s on leave from his job while he pursues more education so that he can better himself. She has a good job but, as yet, she has no security. It’s scary.

It’s very hard for young people to buy a house, according to what you read and hear. Still, here’s a young couple who own a beautiful five-bedroom, four-bathroom house near a ravine for which they paid $1.2 million. It’s not out of line for Toronto.

Here’s how they managed to do it:

The house they owned previously wasn’t in a nice neighborhood. It was a fixer-upper and they spent the money to have the work done. It was a good investment because they were able to sell their modest first house for considerably more than they bought it for. It helped that housing prices were escalating and the area they were leaving had yuppified.

So it was the first house that gave them the leverage. They had saved up for it. My young friend is a family guy and the prospect of a household full of children was a stronger motivator for him than travelling. He still enjoyed his good seats watching the Blue Jays but he came straight home right after the game. The nest egg my friend and his wife accumulated by being homebodies showed the lenders enough that they were responsible and had no problem shopping for a favorable mortgage.

For that first house they also took advantage of the Home Buyers’ Plan (HBP). The Canadian government allows first-time home buyers to borrow up to $35,000 tax free from their RRSP. If you’re purchasing with someone who’s also a first-time homebuyer, you can both access the $35,000 for a total of $60,000. If you have a down payment of at least 20% of the purchase price of the home, the savings can be significant, and you won’t have to buy mortgage default insurance. Married couples and common-law partners both qualify. However, since the HBP is considered a loan, it must be repaid within 15 years at the rate of at least 1/15 of the loan every year.

My friends also accessed what is colloquially known as the Bank of Mom and Dad. They were lucky enough that both sides of the family were prepared to help them out with the down payment. This isn’t as rare as you think any more. In the 1960s, people usually lived until they were 65 or 70. When they passed away, they’d leave enough in their estate for their children—who were 30 or 35 years younger than them—to use to buy a house. Now that people are living longer, they’re giving their adult children the money while they’re still alive to help them get into the housing market.

Many parents these days are prepared to help their children settle down faster than they could do on their own. Also, with interest rates at such historically low levels, it makes sense to help your children take advantage of a situation that may never come again. Provided it doesn’t jeopardize their own finances or retirement plans, many parents feel a sense of personal satisfaction in making a difference in their adult children’s lives. They also want to ensure that they’ll see the rewards of having a stable life for their grandchildren before they’re gone.

My young friends began with a starter home, as I did. Now they plan to live in their lovely home for the rest of their lives — and they can — so they see it as an important investment for themselves and for their children. That’s why they’re glad they did it.

Have more mortgage questions or concerns? Call our office today at 250 753 2242 and we can help with all of your mortgage questions!

“LIKE” our Facebook page or “SHARE” this post to be entered into our quarterly draw for a $150.00 gift card!!!

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We thrive off of your continued support and client referrals. Let us reward you for helping us get our name out into the community! Please mention who referred you or how you heard from us, when filling out your mortgage application. The name you give us will also be entered into the same draw for coming in to see us!

We are open Monday to Friday from 9 am to 5 pm. Kevin Decker can also be reached after hours at 250 619 2262 and Jason Barudin can be reached at 250 668 2203.

Lenders hike fixed rates yet again, bringing them closer to 4.5%

-Steve Huebl of Canadian Mortgage Trends-

 

Following a jump in bond yields last week, lenders across the country once again bumped up their fixed mortgage rates.

 

Big banks like RBC, TD and BMO hiked 5-year fixed rates by 20 to 25 basis points, with all three offering uninsured rates at 4.39%.

 

The move follows a nearly 10-bps jump in the Government of Canada 5-year bond yield, which leads 5-year fixed rates. The 5-year bond yield closed at an 11-year high of 2.88% on Friday. Since the beginning of the year, bond yields are up over 165 bps.

 

 

Among national lenders, the average uninsured 5-year fixed rate is now 4.37%, up from 3.92% a month ago, according to data tracked by Rob McLister, rate analyst and editor of Mortgage Logic. The average rate for an insured 5-year fixed mortgage, meaning that with a down payment of less than 20%, is now 4.14%, up from 3.78% a month ago.

 

That means fixed rates are now up roughly 40 bps in just the span of one month. For perspective, a 50-bps rate increase translates into a roughly $25 higher monthly payment per $100,000 of debt, based on a 25-year amortization.

 

While this doesn’t impact most borrowers with fixed rates, new borrowers and those renewing a mortgage are facing significantly higher rates compared to just several months ago, and potentially double for those renewing a mortgage.

 

As fixed rates march higher, variable rates are likely to jump again following the Bank of Canada’s next rate decision meeting on June 1, when it’s expected to hike interest rates another 50 bps. That could bring prime rate—the rate upon which variable rate mortgages and lines of credit are priced—up to 3.70%.

 

How rising rates will impact mortgage borrowers…

Aside from higher monthly payments, how will mortgage borrowers be impacted by these rising rates?

 

“As interest rates march higher—we expect the overnight rate to hit 2% by October, a projection that increasingly looks conservative—borrowing costs for Canadians will also rise, leaving the average Canadian household to spend almost $2,000 more in debt payments in 2023,” say economists from RBC Economics.

 

“This will erode spending power, especially for the lowest earning fifth of households which spend 22% of their after-tax income on debt servicing (including mortgage principal and interest payments),” they add.

 

On the other hand, RBC notes that the pandemic helped boost savings among Canadian households.

 

“The pandemic may have boosted debt, but it also left Canadian households sitting on $300 billion in savings,” the RBC economists wrote. “That’s a huge backstop—enough to cover about a year and a half of total Canadian household debt payments.”

 

How will rising rates impact home prices?

While the latest housing data showed home sales plummeting in April, house prices have so far held steady throughout most of the country outside of Ontario. In the Greater Toronto Area, average prices are so far down roughly 6%, but by as much as 22% depending on the housing type and specific region. Benchmark prices are often a lagging indicator, so further price declines are likely in the months ahead.

 

“…tomorrow’s homebuyers are going to have a much harder time paying today’s prices if they’re paying 5% on their mortgage compared to the low 2% range just a few months ago, and the high 1% range a year ago,” wrote real estate analyst John Pasalis, president of Realosophy Realty, in a recent post on move smartly.

 

Pasalis noted some have argued that this isn’t a concern, since many borrowers have been qualifying at a stress test rate of at least 5.25%, but he suggests that’s an oversimplification of the situation.

 

The mortgage stress test is currently used to qualify borrowers at the greater of the buyer’s actual mortgage rate plus 2% or the benchmark rate, which is currently 5.25%.

 

“As these are dynamic measures that will change as rates do, the stress test will also increase, which will reduce the amount of debt a buyer can take on,” Pasalis writes, adding that the contract rate influences how much mortgage debt the borrower is willing to take on.

 

“A buyer who qualifies for a $1M mortgage may be willing to take on that much debt when interest rates are 1.75%, but less so when rates are 4%, because under the higher rate their actual mortgage payment would be roughly $1,100 per month higher,” he wrote.

 

As a result, if interest rates continue to trend higher, Pasalis says he “would not be surprised if we see some downward pressure on home prices over the next 9 to 18 months due to homebuyers being unwilling or unable to pay today’s prices at tomorrow’s higher interest rates.”

 

Although, he adds that any price decline would “likely be a temporary one due to long-term fundamental factors that have been contributing to rising home prices in the Toronto area.”

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Supporting Ukraine…

Mortgage Professionals Canada | 2022

 

Mortgage Professionals Canada and the Mortgage Professionals Canada Foundation have partnered to raise and distribute humanitarian relief funds to Ukraine.

 

The MPC and MPC Foundation Boards of Directors have carefully selected two established charitable organizations for their outstanding efforts to provide much needed medicine, supplies, and shelter to vulnerable individuals coping with hardship in Ukraine.

 

With the urgency facing the people of Ukraine, we ask that mortgage professionals donate generously to this joint initiative to provide humanitarian relief through: The Canadian Red Cross, and Doctors Without Borders/ Médecins Sans Frontières (MSF). Funds will be collected by the MPC Foundation and distributed evenly between these two very capable organizations, each of which will provide support directly to those most impacted.

 

Mortgage Professionals Canada has already donated $10,000 to support this initiative.

 

Please join us. Any amount helps. Click here to donate… https://mpcfoundation.ca/donate/ukraine/

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Have more mortgage questions or concerns? Call our office today at 250 753 2242 and we can help with all of your mortgage questions!

 

“LIKE” our Facebook page or “SHARE” this post to be entered into our quarterly draw for a $150.00 gift card!!!

 

Facebook: www.facebook.com/midislandmortgagenanaimo

We thrive off of your continued support and client referrals. Let us reward you for helping us get our name out into the community! Please mention who referred you or how you heard from us, when filling out your mortgage application. The name you give us will also be entered into the same draw for coming in to see us!

 

We are open Monday to Friday from 9 am to 5 pm. Kevin Decker can also be reached after hours at 250 619 2262 and Jason Barudin can be reached at 250 668 2203.

Many BC homeowners reportedly planning to leave province soon – CMP – REMAX

-Many BC homeowners reportedly planning to leave province soon-

Pandemic impacts and affordability concerns rank high among the reasons for moving out…

A significant share of British Columbian homeowners are planning to leave the province within the next five years, raising the possibility of even more supply entering the red-hot market during that period, according to RE/MAX.

Citing data from Insights West, RE/MAX said that 17% of the province’s homeowners are thinking of selling their home in the next two years, while 29% are considering doing so in the next five years.

Of those planning to sell their homes, 10% are considering downsizing, 11% want to relocate somewhere else in BC, and 9% are planning to move to another province altogether in search of more affordable housing.

“The relentless climb of real-estate prices in BC, and in Metro Vancouver in particular, has resulted in many homeowners weighing their options for cashing out,” said Steve Mossop, president of Insights West. “The option to downsize or move to a different location… in order to take advantage of the equity in their existing home has many weighing the alternatives.”

For 36% of BC’s homeowners, a major driver of the decision to move out was the financial impact of the pandemic. Affordability concerns ranked high on the list as well, with 72% of respondents saying that housing prices will likely continue rising over the next 12 months and lasting well into the next two to five years.

Anxiety surrounding “the likelihood of higher interest rates is also prevalent among BC residents,” RE/MAX said.

Low Rates Help Borrowers Pay Mortgage at Record Pace – Canadian Mortgage Trends

Home prices may be astronomical in certain parts of the country, but historically low mortgage rates are allowing borrowers to pay off their mortgages faster than ever.

At today’s average rates, 61% of a new homebuyer’s very first mortgage payment is going towards principal repayment, according to data from Edge Realty Analytics.

In the early 2000s, that percentage was 26.5%. The change is even more drastic when looking back at the 1990s, where just 11.9% of a homebuyer’s first payment went towards paying down the principal, or the 1980s, when that percentage was a minuscule 4.6%.

The result is a much faster build-up of equity over a short period of time, so long as interest rates remain low.

After the first five years of mortgage payments, today’s homebuyers borrowing at today’s prevailing rates will have paid back more than a fifth of their mortgage (16.5%). Here’s a look at how that compares to past decades:

 

Mortgage payments

(Courtesy: Edge Realty Analytics)

 

“Homeownership represents a very aggressive forced saving program,” Mortgage Professionals Canada noted in its annual consumer report.

“As a result (and even before we consider the impact of price growth) housing equity is built very rapidly,” the report noted. “This excellent ‘net affordability’ goes a long way to explaining why homebuying activity has remained strong in Canada and why a large majority of Canadians see homeownership as financially better than renting, despite the rapid run–up in house prices and the higher burden of mortgage (principal plus interest) payments.”

(Source: Mortgage Professionals Canada)

 

Not only have low interest rates allowed borrowers to repay their mortgages more quickly, but it’s also kept housing moderately “affordable” despite the 38.4% run-up in average home price in the past 12 months.

“If it were not for the extremely low interest rate, most cities in Canada, especially Toronto, Ottawa, Vancouver and Montreal, would be in overvalued territory,” Alberta Central chief economist Charles St-Arnaud wrote in a recent analysis. “It means that the main driver for affordability is the record low level of interest rates.”

But Rates Won’t Stay Low Forever

All good things must come to an end, and that goes for ultra-low mortgage rates.

The Bank of Canada has made it abundantly clear that it expects to start raising interest rates by late next year.

How much rates will increase in the Bank’s next rate-hike cycle is anyone’s guess. But for what it’s worth, markets are pricing in at least eight 25-bps hikes over the next five years, which would bring Canada’s overnight rate to 2.25%, up two percentage points from its current record-low of 0.25%.

But even a more modest rise in rates of as little as 100-150 basis points could “push the valuation metrics into overvalued territory,” St-Arnaud noted, making today’s still somewhat “affordable” housing market patently unaffordable for most.

“Our simulations show that many cities in Canada will struggle with housing affordability as interest rates increase,” he added. “A 150-bps increase in mortgage rates could be enough to generate significant headwinds on some housing markets and house prices.”

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