I just read this article at:
http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2011/01/top-10-effects-of-the-new-mortgage-rules.html
Very interesting predictions, indeed. The most interesting, and likely, in my opinion are these two:
1) A small portion of home buyers will sprint to buy homes with a 35-year amortization before March 18, followed by downward pressure on home prices after March 18 as the amortization reduction removes market liquidity
2) If amortization restrictions accelerate falling home prices, we’ll see somewhat greater default risk and more negative equity situations among low-equity homeowners
The bottom line for most people deciding whether or not now is the right time to buy or sell is their life situation. People with job transfers, experiencing divorce, with a growing family, or who are empty-nesters, will buy and/or sell without worrying about what the market is doing, assuming that they have the ability to do so. The mortgage qualifying changes may reduce the ability of a portion of the population to buy, which could have a negative effect on prices.
If you need help in analyzing current market trends, in order to help you with your decision to buy or sell, please give me a call. I'd be happy to help!
Tuesday, January 25, 2011
Wednesday, January 19, 2011
What's Affecting Your Credit Score?
I just read this article at:
http://www.financialpost.com/personal-finance/What+affecting+your+credit+score/4126038/story.html
It isn't something that most people think about very often, but it becomes very important when you are applying for a mortgage on a house. There are a number of factors that affect your credit score, not just whether or not you generally pay your bills in full and on time.
I am not a financial advisor, and it could be misinformation, but I actually also heard recently that even if you pay your bills on the due date, your credit score wouldn't be as good as it would be if you paid it as soon as you receive it.
As the article explains, having too many credit cards can be a bad thing, but having too few can also be bad:
"Your utilization of credit is also a major factor — that’s your balance divided by available credit. It’s not based on whether you have a balance at the end of the month but it’s the balance outstanding at a given moment divided by your available credit.
“If that number exceeds 40%, that is typically a warning sign,” says Mr. Reid, noting a higher credit limit will keep that percentage down.
The last factors are longer term credit history and the breadth of your credit, somebody who has just one credit card doesn’t look as strong as someone who also has a line of credit and say a mortgage." click the link to see the whole article by Garry Marr, Financial Post · Tuesday, Jan. 18, 2011. (Read more: http://www.financialpost.com/personal-finance/What+affecting+your+credit+score/4126038/story.html#ixzz1C642R7KB.)
http://www.financialpost.com/personal-finance/What+affecting+your+credit+score/4126038/story.html
It isn't something that most people think about very often, but it becomes very important when you are applying for a mortgage on a house. There are a number of factors that affect your credit score, not just whether or not you generally pay your bills in full and on time.
I am not a financial advisor, and it could be misinformation, but I actually also heard recently that even if you pay your bills on the due date, your credit score wouldn't be as good as it would be if you paid it as soon as you receive it.
As the article explains, having too many credit cards can be a bad thing, but having too few can also be bad:
"Your utilization of credit is also a major factor — that’s your balance divided by available credit. It’s not based on whether you have a balance at the end of the month but it’s the balance outstanding at a given moment divided by your available credit.
“If that number exceeds 40%, that is typically a warning sign,” says Mr. Reid, noting a higher credit limit will keep that percentage down.
The last factors are longer term credit history and the breadth of your credit, somebody who has just one credit card doesn’t look as strong as someone who also has a line of credit and say a mortgage." click the link to see the whole article by Garry Marr, Financial Post · Tuesday, Jan. 18, 2011. (Read more: http://www.financialpost.com/personal-finance/What+affecting+your+credit+score/4126038/story.html#ixzz1C642R7KB.)
Tuesday, January 18, 2011
Changes Made To Ensure Long-Term Stability of Canada’s Housing Market
On January 17, 2011, the Honourable Jim Flaherty, Minister of Finance, and the Honourable Christian Paradis, Minister of Natural Resources, announced prudent adjustments to the rules for government-backed insured mortgages to support the long-term stability of Canada’s housing market.
“Canada’s well-regulated housing sector has been an important strength that allowed us to avoid the mistakes of other countries and helped protect us from the worst of the recent global recession,” said Minister Flaherty. “The prudent measures announced today build on that advantage by encouraging hard-working Canadian families to save by investing in their homes and future.”
“The economy continues to be our Government’s top priority,” continued Minister Paradis. “Our Government will continue to take the necessary actions to ensure stability and economic certainty in Canada’s housing market.”
The new measures:
Reduce the maximum amortization period to 30 years from 35 years for new government- backed insured mortgages with loan-to-value ratios of more than 80 per cent. This will significantly reduce the total interest payments Canadian families make on their mortgages, allow Canadian families to build up equity in their homes more quickly, and help Canadians pay off their mortgages before they retire.
Lower the maximum amount Canadians can borrow in refinancing their mortgages to 85 per cent from 90 per cent of the value of their homes. This will promote saving through home ownership and limit the repackaging of consumer debt into mortgages guaranteed by taxpayers.
Withdraw government insurance backing on lines of credit secured by homes, such as home equity lines of credit, or HELOCs. This will ensure that risks associated with consumer debt products used to borrow funds unrelated to house purchases are managed by the financial institutions and not borne by taxpayers.
Our Government’s ongoing monitoring and sound underlying supervisory regime, along with the traditionally cautious approach taken by Canadian financial institutions to mortgage lending, have allowed Canada to maintain strong and secure housing and mortgage markets.
The adjustments to the mortgage insurance guarantee framework will come into force on March 18, 2011. The withdrawal of government insurance backing on lines of credit secured by homes will come into force on April 18, 2011.
In order for a person to be able to obtain a 35-year amortization, they would have had to have been prequalified with a lender prior to the announcement and they will have to have a firm (non-subject) offer in place on a home, with a lending comittment in hand by March 17th, 2011.
“Canada’s well-regulated housing sector has been an important strength that allowed us to avoid the mistakes of other countries and helped protect us from the worst of the recent global recession,” said Minister Flaherty. “The prudent measures announced today build on that advantage by encouraging hard-working Canadian families to save by investing in their homes and future.”
“The economy continues to be our Government’s top priority,” continued Minister Paradis. “Our Government will continue to take the necessary actions to ensure stability and economic certainty in Canada’s housing market.”
The new measures:
Reduce the maximum amortization period to 30 years from 35 years for new government- backed insured mortgages with loan-to-value ratios of more than 80 per cent. This will significantly reduce the total interest payments Canadian families make on their mortgages, allow Canadian families to build up equity in their homes more quickly, and help Canadians pay off their mortgages before they retire.
Lower the maximum amount Canadians can borrow in refinancing their mortgages to 85 per cent from 90 per cent of the value of their homes. This will promote saving through home ownership and limit the repackaging of consumer debt into mortgages guaranteed by taxpayers.
Withdraw government insurance backing on lines of credit secured by homes, such as home equity lines of credit, or HELOCs. This will ensure that risks associated with consumer debt products used to borrow funds unrelated to house purchases are managed by the financial institutions and not borne by taxpayers.
Our Government’s ongoing monitoring and sound underlying supervisory regime, along with the traditionally cautious approach taken by Canadian financial institutions to mortgage lending, have allowed Canada to maintain strong and secure housing and mortgage markets.
The adjustments to the mortgage insurance guarantee framework will come into force on March 18, 2011. The withdrawal of government insurance backing on lines of credit secured by homes will come into force on April 18, 2011.
In order for a person to be able to obtain a 35-year amortization, they would have had to have been prequalified with a lender prior to the announcement and they will have to have a firm (non-subject) offer in place on a home, with a lending comittment in hand by March 17th, 2011.
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