Huge news has come down the pipe about changes to mortgage lending.  Whether  you are looking to buy a home or refinance a current mortgage, these changes will affect you.  The changes will come into effect on July 9th, 2012 so if you have been considering mortgage financing, you may want to get it done sooner than later to ensure you qualify. Here is a list of the major changes and what they will mean.   1.  Amortizations have been shrunk from a maximum of 30 years to 25 years for high ratio mortgages.  This means that if you have less than 20% equity in your home, the maximum amortization you can get is 25 years.  The most major impact this has is that monthly payments will increase dramatically.  For a $300,000 home purchase, the minimum payments go up $150 per  month.  For a $500,000 home purchase, the minimum payments go up $250 per month.  And for a $700,000 purchase, the minimum payment increases by $370 per month.   2.  GDS/TDS changed to 39/ 44. These numbers represent gross or total debt servicing and ensure that a borrower is only using that percent of their income towards mortgage payments and total liabilities.  These numbers have increased from the past so although amortizations have shrunk, the qualifying ratios have increased.   3. Refinances to a maximum of 80% of the home value.  This is a major change.  If you own your home, you cannot refinance your mortgage unless you have 20% equity in your home.  Having said this, if your mortgage is up for renewal, we can still shop the market and transfer to a more competitive lender despite this rule change.  You simply cannot add more funds or consolidate without leaving 20% equity in the home.   4.  No more mortgage insurance for mortgages over $1 million.  This probably does …

  On Thursday Finance Minister Jim Flaherty announced changes to the rules for government-backed insured mortgages for residential properties of 1-4 units in this announcement four new measures were announced effective July 9th, 2012 for new government-backed insured mortgages. Below are some of the frequently asked questions from prospective buyers and those homeowners who currently have an insured mortgage. Q. Why is the Government making these changes at this time? A. These measures will support the long-term stability of the Canadian housing and mortgage markets and promote savings through home ownership. They are intended to be timely, targeted and measured. The measures will reinforce the importance of borrowing responsibly and using home ownership as a savings vehicle. The Government actively monitors developments in the housing market and is committed to taking action when necessary. Q. What will be the impacts of the adjustments to the rules for government-backed mortgage insurance on the Canadian economy? A. The adjustments to the rules for government-backed mortgage insurance will provide significant benefits to the Canadian economy by supporting the stability of the housing market and promoting savings through home ownership. The short-term impact on the housing market is expected to be manageable, given that the majority of Canadian families are already taking a prudent approach in managing household debts. In the long term, these measures are expected to have a positive impact on the economy through higher savings and a lower number of financially vulnerable households. Q. When do these measures take effect? A. The new measures will take effect on July 9, 2012. Q. Are further measures expected? A. The Government actively monitors developments in the housing market, consumer debt and the economy, and is committed to taking action when necessary to support the long-term stability of the housing market and protect the investment of …

As part of the Government’s continuous efforts to strengthen Canada’s housing finance system, the Honourable Jim Flaherty, Minister of Finance, today announced further adjustments to the rules for government-backed insured mortgages. “Our Government stands behind the efforts of hard-working Canadian families to save by investing in their homes and their future,” said Minister Flaherty. “The adjustments we are making today will help them realize their goals, build on the previous measures we have introduced to keep the housing market strong, and help to ensure households do not become overextended. As just one example, the reductions to the maximum amortization period since 2008 would save a typical Canadian family with a $350,000 mortgage about $150,000 in borrowing costs over the life of that mortgage.” The Government is announcing four measures for new government-backed insured mortgages with loan-to-value ratios of more than 80 per cent: Reduce the maximum amortization period to 25 years from 30 years. This will reduce the total interest payments Canadian families make on their mortgages, helping them build up equity in their homes more quickly and pay off their mortgages sooner. The maximum amortization period was set at 35 years in 2008 and further reduced to 30 years in 2011. Lower the maximum amount Canadians can borrow when refinancing to 80 per cent from 85 per cent of the value of their homes. This will promote saving through home ownership and encourage homeowners to prudently manage borrowings against their homes. Fix the maximum gross debt service ratio at 39 per cent and the maximum total debt service ratio at 44 per cent. This will better protect Canadian households that may be vulnerable to economic shocks or an increase in interest rates. Limit the availability of government-backed insured mortgages to homes with a purchase price of less than $1 …

WARMER WEATHER GENERATES ACTIVITY IN FRASER VALLEY’S HOUSING MARKET (Surrey, BC) – Home sellers and buyers in the Fraser Valley took advantage of the first warm spell of the year triggering an increase in new listings and keeping sales steady last month. The Fraser Valley Real Estate Board posted 1,616 sales in May, an increase of 13 per cent compared to April and on par with the 1,608 sales processed on the Board’s Multiple Listing Service (MLS®) during May 2011. At the same time, the Board received 3,305 new listings, an increase of 5 per cent compared to April and 8 per cent more than were received during the same month last year. The new inventory took the number of active listings in Fraser Valley to 10,826, an increase of 8 per cent compared to the volume available in May 2011. Scott Olson, President of the Board, says “Fraser Valley’s market is at an even keel. Since February, the ratio of sales compared to the number of active listings has stayed at 14 or 15 per cent, which means for every 100 properties available to purchase, 15 sold. “It’s a healthy, competitive market. It gives buyers excellent selection and the time to negotiate, but not too much time. The average number of days to sell a detached home or a townhome is still only a month and a half and for condos a little over two months, which is why we’re seeing benchmark prices in most communities holding steady.” The benchmark price* as determined by the MLS® Home Price Index (MLS®HPI) of a single family detached home in Fraser Valley increased 3.6 per cent in one year. It went from $528,900 in May 2011 to $548,000 last month. In May, the MLS®HPI benchmark price of a Fraser Valley townhouse was …