Buyers can still purchase with 5 per cent down

Friday, September 30th, 2011


PLUG IN CARS: Electric charging stations for automobiles are coming to the streets – and garages – of Vancouver. Shown is the new GE Durastation at the Fairmont Waterfront, and a home charging station such as being installed in some new Metro Vancouver condo buildings. Under a Vancouver city bylaw, new Vancouver condo projects must have plug-ins for electric vehicles (EV) in 20 per cent of their parking stalls. All stalls must also be able to support future installation of plug-ins. In addition, all new single-family homes and off-street storage rooms for bikes must have EV outlets. Photos: Fairmont Waterfront / GE

Despite moves this year to tighten access to mortgages, it is still possible for home buyers to purchase with a small downpayment – and take advantage of the lowest mortgage rates in years. Earlier this year federal Finance Minister Jim Flaherty announced new changes: – The maximum amortization period was reduced to 30 years from 35 years for government-backed, insured mortgages with loan-to-value ratios of more than 80 per cent; – The maximum amount Canadians can borrow in refinancing their mortgages was lowered to 85 per cent from 90 per cent of the value of their homes; and – Government insurance backing on lines of credit secured by homes was withdrawn. – Also, buyers must qualify for the higher five-year mortgage rate, even if they choose a lower rate. But lending regulations are still not too restrictive. For instance, a buyer is still required to have only a 5 per cent downpayment to qualify for mortgage insurance. Canada’s mortgage rules have remained much more stringent than U.S. regulations governing home loans, said Sherry Cooper, chief economist at BMO Capital Markets. Because of that, she considers Canada’s housing market to be in much better shape than it would be otherwise. “Not only did Canada dodge the subprime problem, but when you look at the aggregate of equity in homes among Canadian households it is much higher than in the United States,” she said. She is also encouraged by the fact that Canadians typically pay off their mortgages prior to retirement. While there has been an inordinate rise in house prices in some regions of the country, Cooper notes much of the demand for Canadian homes is coming from foreign investors who aren’t reliant on mortgages to make their purchases. “As anyone who has been involved in the housing market, there seems to be tremendous interest in our markets by foreigners who want to diversify their investment and see Canadian real estate as a positive and affordable – believe it or not – opportunity,” she said. Current mortgage rates are as low as 3.59 per cent on five-year terms. Check with your Realtor for more information. Copyright Real Estate Weekly

Comments are closed.