June 21, 2018

Will The New Mortgage Rules Effect House Prices?

In my previous blog I discussed the changes made by CMHC that were coming into effect on March 18th, 2011 which are aimed at toughening up mortgage lending in an effort to curb further growth in record household debt levels.

According to The National Post, as a ratio of money owed to disposable income we are nearing a startling 150% as of the third quarter of last year.  That surpasses the level of debt held by American households, whose appetite for borrowing helped stoke the financial crisis of a few years ago.  The Bank of Canada recently warned debt levels are growing faster than income and the risk posed by consumer indebtedness to the domestic economy would continue to escalate without a “significant change” in how consumers borrow and banks lend.

This has fueled numerous conversations about how the tougher lending rules will affect house prices.  Will people rush in before the March 18th deadline to lock into the 35 year amortization?  Chances are this is exactly what will happen and will elevate prices again.  After March 18th, that demand may go way down and with the elevated supply of new homes likely coming on the market, this will set us up for what could be a very troubling spring and summer market.  The reduced amortization is in effect the same as qualifying for about 4% less on the purchase price.

As the next six months unfold, it will be very interesting to see what impact the new mortgage rules will have on home sales, interest rates and household debt ratios.

How Do The New Rules Governing Selling Or Buying A House Affect You

Simply put, a seller can now pick and choose the level of service they want from a Realtor. You can just pay a flat fee to list or post your property on the ‘Multiple Listing Service’ (MLS) under mls.ca. You can negotiate directly with the seller and Realtors are no longer required to present offers or negotiate terms.

The Competition Bureau and the Canadian Real Estate Association (CREA) have been battling for 3 years on ‘Flat Fee MLS.’ For years it has been common for home sellers to pay both the buyer’s and listing agent’s commission (5-6%). Now people can list their property on MLS for under $100.00!! Under the agreement the public will not get direct access to the MLS website. Only members of CREA will have access to www.mlslink.mixchange.com to see current listings and commission being offered. Therefore, your listing will not be exposed to Realtors hence no Realtor will bring in an offer because they will not be able to see it.

Exciting times are ahead of us!  There are so many opportunities available and you can weigh the pros and cons of either utilizing the expertise of a Realtor or purchasing/selling a property through a Flat Fee Realtor on www.realtor.ca.  Good Luck

How Do The New Changes To CMHC Guidelines Impact Your Family and Friends

Effective March 18th, 2011 Central Mortgage and Housing Corporation (CMHC) have changed their lending guidelines on government backed insured mortgages by CMHC to support long term stability of Canada’s housing market.

On purchases of residential properties, the maximum amortization has been reduced from 35 years to 30 years.  This will reduce the total interest payments Canadian families make on their mortgages allowing Canadian families to build more equity in their homes more quickly.
On refinances of existing mortgages, the maximum of 90% Loan to Value (LTV) of the property will be reduced to 85% LTV.  This reduction will promote savings through Home Ownership and limit the repackaging of consumer debt into mortgages guaranteed by taxpayers.
They will also withdraw government insurance backing on Lines of Credit secured by homes.  This will ensure that risks associated with consumer debt products used to borrow funds unrelated to house purchases are managed by Financial Institutions and not borne by the taxpayers.

Any mortgages currently approved for either a 35 year amortization or 90% LTV refinance must close within 120 days of the March 18th, 2011 deadline.  This may present a problem for anyone that has purchased a newly constructed home with a closing date after June 2011 as they will have to re-qualify on the new 30 year amortization.
If I can provide any information or assistance please call me for a confidential conversation.

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on our site or call 416-459-2406

Demystifying The Role of A Mortgage Broker

In speaking with a colleague, I was surprised to learn that she was unaware that Mortgage Brokers do not necessarily charge fees for their services as the lender will pay a broker a referral fee to obtain the business. As the Broker has access to many different institutions, you will receive a competitive or better interest rate and in most cases better mortgage terms than your Bank and with the convenience of doing all aspects of the financing in the comfort of your home. No more lining up and waiting for hours to see your Bank rep, playing telephone tag or not receiving a timely response.

Confidentiality, respect, great rates and convenience.  That is a Mortgage Brokers goal.


Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on our site or call 416-459-2406

What is financial success?

I have now entered the world of blogging so that I can give you valuable, insightful and timely financial information that can help you on your journey to financial success. 

What is financial success?

Success means different things to different people.  Some people may feel being successful is to amass millions of dollars in assets whereas others may feel success is paying off a mortgage of a small bungalow and can take one carefully planned vacation every other year.  My role as your Mortgage Agent is to treat each client with respect and confidentiality.  If it is important to you then it is important to me.

The happiest people don’t have the best of everything.  They just make the best of everything.

Call me today for a confidential discussion of your mortgage needs.