Thoughts on BC Politics and More

FIRST PUBLISHED in Canadian Mortgage Trends The federal government announced on Tuesday it will be changing the benchmark qualifying rate used for Canada’s insured mortgage stress test. The change, which will take effect April 6, 2020, means borrowers with insured mortgages (typically those with less than 20% equity) will need to prove they can afford monthly mortgage payment based on a rate equal to the weekly median 5-year fixed insured mortgage rate plus 2%. The Department of Finance (DoF) confirmed that rate would currently equal 4.89%, 30 basis points less than today’s benchmark qualifying rate of 5.19%, which is based on the Big 6 banks’ posted 5-year fixed rates. Critics say the big banks have been keeping their 5-year fixed posted rates artificially high since they are used in setting prepayment penalties. But with mortgage rates falling since last year, the mortgage stress test has been increasingly out of sync with the actual contract rates consumers ...

ORIGINALLY PUBLISHED in Canadian Mortgage Trends After you file a consumer proposal * , the last thing on your mind might be a new mortgage, but you may be a lot closer than you think. Maybe you wish to buy a home, or you own a home and are interested in refinancing your mortgage. Let’s first talk about purchasing a home. When Can You Buy A Home After A Consumer Proposal? Actually, this question comes up often. People want to know how soon can they buy. Sometimes they ask right after they file their consumer proposal, and other times it’s more than five years later, after they’ve paid it off in full. First things first: pay off your consumer proposal completely before you take on major new mortgage debt. If you have at least a 20% down payment, you may even be able to buy as soon as you complete your consumer proposal! As in, immediately. You will almost always be working with either a B-lender or a private lender, but it is doable...

ORIGINALLY PUBLISHED in Canadian Mortgage Trends : Monetary policy has always been a panacea for ailing economies, rarely more than during the financial crisis of 2007-08. It’s a simple concept: lower the cost of borrowing for consumers and businesses and you stimulate the economy and, as a side effect, inflation. Monetary policy easing was used heavily following the financial crisis 10 years ago by countries around the world, including the U.S. and to a lower extent Canada. The textbook cautionary tale of interest rate easing, however, is Japan, which dropped its interest rates to near-zero in the early 1990s, where they have since remained for two decades and counting. Some are now starting to question whether low interest rates are as effective as they once were to stimulate economic growth, saying central banks no longer have the same ability to control inflation, spending and employment through traditional means as they once did. Lo...

REPRINTED WITH PERMISSION : Canadian Mortgage Trends   Canadians need guidance with their mortgages ... t hat’s the takeaway from a national survey released this week by Rates.ca, which found half of Canadians aren’t aware of the mortgage options available to them. Not only that, but Canadians are lacking in some other basic mortgage trivia, with an astounding 9 out of 10 respondents not knowing that mortgage interest is charged semi-annually: 28% think interest is compounded monthly; 17% think it’s bi-weekly; 17% think it’s annually; 28% just have no idea. Should we be concerned? Dustan Woodhouse, President of Mortgage Architects, and a former active broker who has written multiple educational mortgage books, thinks so. “ Sounds about right. We know about what we pay attention to, i.e., The Kardashians ,” he wrote to CMT. “ The material concern in this is how easy it makes it for the government to over-regulate the industry, wi...

I have read Johns comments on this , and I offer the following comments: I have been in the real estate industry for 37 years, longer than John was a lawyer and I co-owned and managed the second highest producing real estate office in western Canada so I am quite comfortable in speaking to this.   In a previous comment, John implied that with this imitative, we were going to crash similar to what happened in the US in 2008 then threw out some stats that were not even relevant to this and to compare us to the US is frankly a joke.   The reason the US market crashed is because the banks down there would loan you 100% of purchase price to buy a home and then to add insult to injury, you could write off the interest on your mortgage payment on your income tax.  This was a complete joke because every time there was an increase in market values, Americans would refinance their home so they could go buy motor-homes, boats, toys of all shakes because they could write it...

John O'Fee ** writers note to me, which I am passing on to you ... given that I teach real estate transactions in Thompson Rivers University (TRU) law school, I feel qualified to comment   When the sub-prime mortgage crisis hit the United States in 2008 it triggered a global recession.   By almost all accounts, Canada emerged from this crisis remarkably unscathed.   The reason for this is that Canada has stricter rules to qualify for mortgages and stricter rules about paying them off. You might think this would result in lower rates of home ownership in Canada when compared to countries with laxer rules like the United States.   In fact, home ownership rates are nearly identical despite the fact that Americans can generally deduct the cost of mortgage interest from their income in the United States. Mortgage terminology can be confusing but a couple of simple concepts should be understood.   Every mortgage has an interest rate, a term (how long ...