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“I am a Canadian, free to speak without fear, free to worship in my own way, free to stand for what I think right, free to oppose what I believe wrong, or free to choose those who shall govern my country. This heritage of freedom I pledge to uphold for myself and all mankind.” ~~ John G. Diefenbaker

It was tough; however, it was a personal choice so that buying a first home could happen – and the government wasn’t there acting as big brother to say NO

Andrew Scheer, Conservative Party of Canada (Facebook)

Yesterday (September 23rd), Conservative Leader Andrew Scheer announced that a new Conservative government would introduce four new measures to make it easier for first-time homebuyers to buy a home.

With his poor judgement and tax hikes, Justin Trudeau has put the dream of home ownership further out of reach for so many, especially young Canadians,” Scheer said. “As Prime Minister, I will fix his bad policies and work to get more homes on the market to lower the price of housing.”

That would seem to be good news, based on an article in Canadian Mortgage Trends from just four weeks ago (August 21st), which quoted Matt Fabian, TransUnion’s director of Financial Services Research and Consulting

“... there are signs of some potentially unintended consequences. We have started to see an uptick in co-borrowing as the means of getting a foothold on the property ladder, where multiple consumers make an application together—in effect combining the power of their salaries”.

That kind of income would be what those involved in resource industries would earn however – those in the oil and gas industry – those in mining – those in forestry.

Oh but wait ... those are the industries that both Justin Trudeau’s federal Liberal government, and John Horgan’s BC NDP government, keep throwing roadblocks in front of.

Although this is nothing new, it is now often with the help of a parent, other relative or a friend rather than just a partner or a spouse.”

The article went on to say that the youngest demographic of buyers is most affected by the new mortgage rules due to being at the early stages of their careers and, typically, receiving lower salaries compared to the other cohorts, making it harder to pass the stress tests.

Two points in Scheer’s Conservative plan, to make home ownership more affordable, takes that stress test into account. He indicated yesterday that changes would be made so that first-time homebuyers aren’t unnecessarily prevented from accessing mortgages, and that they would work with the Office of the Superintendent of Financial Institutions (OSFI) to remove the stress test from mortgage renewals to give homeowners more options. Scheer also stated that a Conservative government would increase amortization periods on insured mortgages to 30 years for first-time homebuyers to lower monthly payments.

The article in Canadian Mortgage Trends indicated those with a down payment of 20% or more must qualify at the greater of the contract rate or the Bank of Canada’s benchmark rate (currently 5.19%), while uninsured mortgages are stress-tested at the greater of the benchmark rate or the contract rate plus 200 basis points.

This, limits both their ability to qualify under the mortgage stress test rules, as well as the size of mortgages they can obtain,” the TransUnion report notes. “In many of the major Canadian housing markets, many younger consumers have now been effectively priced out of buying.”

The Conservative housing affordability plan takes that into account as leader Andrew Scheer also commented that:

Canada’s Conservatives know the government has an important role to p[lay to put home ownership within reach for more Canadians”.

He went on to say, “The government should help you – not stand in your way.”

Will extending the option to have a 30-year mortgage, to lower monthly interest rates, eventually cost more?  Of course, it will, however, it’s an option that the Conservative are offering – NOT a mandatory choice.

What Canada needs first and foremost is a strong economy – secondly it needs a government that doesn’t overspend

Many years ago, when I was putting together the financing to purchase my first home, I needed to cobble together four financing streams to make it happen.  A CMHC first mortgage, a BC government 2nd mortgage (yah it was a LONG time ago), a mortgage from the bank, as well as a small personal loan.  It was tough; however, it was a personal choice so that buying a first home could happen – and the government wasn’t there acting as big brother to say NO.

In a commentary today, John O’Fee makes the following observation:

Let’s take a 30-year old couple starting with a $550,000 home in Kamloops.  We’ll set them up with a $500,000 mortgage based on a 25-year amortization period.  Their payment would be $2630 per month and they could be debt free by 55.

If we increase the amortization period to Andrew Scheer’s proposed 30 years (a 20% increase in time) would that cut the payment by 20%?  No. This couple’s payment would only reduce to $2378 just over a 10% drop.  Instead of paying $789,000 over the course of a 25-year mortgage, the couple with Scheer’s proposed 30-year mortgage would pay about $856,000 and not be out of debt until they turned 60.

The reality is, there are VERY FEW Canadians who can afford that kind of mortgage – PERIOD. Taking into account the fact that the cost of housing / shelter should be roughly one-third of income, that Kamloops couple would need to be earning almost $8,000 a month – or annual household income of just under $100,000.

That’s the kind of income, and more, that professional and business people would earn, but well out of reach of the average Canadian struggling to get by.

That kind of income would be what those involved in resource industries would earn however – those in the oil and gas industry – those in mining – those in forestry.

Oh but wait ... those are the industries that both Justin Trudeau’s federal Liberal government, and John Horgan’s BC NDP government, keep throwing roadblocks in front of.

What Canada needs first and foremost is a strong economy – secondly it needs a government that doesn’t overspend – and third, it needs governments at all level who are not putting their hands on what little change is left in the pockets of middle-class working Canadians, for new taxes, increased taxes, and more fees.

When that’s done, getting a mortgage and a new home will once again begin to be in reach of more Canadians.

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