Toronto Regional Real Estate Board's November Sales Data

The November sales report released by TRREB shows home sales in the GTA are up almost 25 percent from a year ago. The report displays a record pace of sales with 8,766 home sales up from 7054 last November.

Along with an increase in the number of homes sold the average sale price also rose 13.3% year over year to $955,615 from $843,307. The largest increase came from single-family homes sold outside of the 416.

"Homebuyers continued to take advantage of very low borrowing costs. - TRREB President Lisa Patel.

The condo market has seen nearly double the number of condos listed in 2020 compared to the same time last year. The substantial increase in inventory has led to a decline in sale prices across the GTA. Condo sale prices are down 2% in the GTA and 3% in the city.

TRREB Chief Market Analyst Jason Mercer said "This may be somewhat of a short-term phenomenon. Once we move into the post - COVID period we will start to see a resumption of population growth, both from immigration and a return of non-permanent residents."

Check out the entire report by clicking here

Oct 28 2020 Bank of Canada Rate Decision

BoC Key Interest Rate Remains At 0.25%

As expected the Bank of Canada announced this morning that it will be maintaining its overnight interest rate at 0.25%.

Highlights from the banks announcement today:

• The BoC keeps the overnight lending rate at 0.25% with retail prime rate remaining at 2.45%

• After some rapid economic growth though the summer the bank is reporting in recent weeks a slowing recovery and expects it to continue thought the 4th quarter of 2020 due to a second wave of COVID-19.

• The bank will continue to assist the economy with the Quantitative Easining the purchasing $4B/week in bonds and maintaining low interest rates for atleast another 2 years.

How does this affect mortgages?

Variable rate mortgages and secured credit lines will have no changes to payments. 5 year fixed rate mortgages are now availble for under 2% Please check out the video below! If you have any questions about today's Bank of Canada's announcement or anything else mortgages, remember that my door is always open! You can book a call directly into my calendar by clicking here.

See the full report here

Do You Care That July 1st CMHC Is Tightening Mortgage Insurance Qualification Rules?

Last week CMHC announced that they have decided to tighten up qualification rules for insured mortgages.

Why Is CMHC Changing Qualification Guidelines?

It is no secret that COVID-19 has caused the housing market to slow to a snail’s pace. Housing sales fell 15% in March followed by the worst sales level for April in 36 years. They based the decision on these facts combined with projections that forecast housing prices will fall between 9% and 18% in the next 12 months. They are also projecting that COVID-19 will cause Canada to enter a ‘historic recession in 2020’

https://www.cbc.ca/news/business/chmc-housing-report-1.5586732

Who Does This Change Affect?

These rules will affect borrowers who are putting less than 20% down on a purchase that is required to get default insurance though CMHC.

CMHC’s First Change

In order to understand the first change you must understand GDS – Gross Debt Service and TDS Total Debt Service. Lenders and insurers use these numbers to determine if you are able to afford to live life after acquiring a mortgage. No one wants to be house poor! The lenders do not want their borrowers to be house poor! However, what the lenders are actually trying to achieve is to calculate the probability of each mortgage going into default.

A GDS ratio is: the percentage of your income needed to pay all of your monthly housing costs including principal, interest, taxes and heat.

A TDS ratio is: the same as GDS however in this calculation we add in other additional monthly expenses. For example, car payments, student loans, credit card payments and so on.

The first major change CMHC has implemented is lowering GDS percentage from 39% to 35% and TDS from 44% to 42% of your income. I calculate this as a 10-16% reduction in mortgage money qualification.

CMHC’s Next Change

CMHC has also announced that one of the borrowers must have a minimum credit score of 680 up from 600. This change probably will not destroy many borrowers chances as most lenders already required a credit score of 680 in order to obtain an approval.

CMHC’s Third Change

CMHC has eliminated non traditional sources of down payment that ‘increase indebtedness’ This basically means you are no longer allowed to borrow down payment. Financial gifts from family members are still permitted as long as they are not required to be repaid

Bring On The Private Insurers!

Believe it or not the proposed rule changes from CMHC will probably not alter the mortgage market as drastically as originally expected. CMHC is a Crown Corporation

'A crown corporation is any corporation that is established and regulated by a country’s state or government. This is the opposite of private companies, which are privately owned, structured, and operated to serve the owners of the company. The government commercially owns a crown company.'

There are two privately owned companies within Canada that are also in the mortgage default insurance business:

• Canada Guaranty

• Genworth Financial

I am not sure if CMHC expected the private insurers to follow suit with the qualification changes however Genworth recently announced that they will not be changing their qualification criteria. Canada Guaranty is also not expected to make any changes.

The private insurers have appeared to come to the rescue to allow borrowers the opportunity to enter the market a little easier however there are select lenders who will only work with CMHC.

Longs story short, these changes may not actually change your ability to get a mortgage depending on your specific scenario.

Still confused? Set up a call with me to explore your options for home ownership!