Another year come and gone - The Toronto Real Estate Board (TREB)announced that 2010 ended up as the third best year for existing home sales... it was however not a typical year following traditional patterns for sales.
Following is a brief synopsis of the year just passed.
The December 2010 Market Watch from TREB Revealed a balanced market at year end. Prices overall in 2010 were up 9% compared to 2009. However we began the year generally up 20%, compared to the lows from the recession and generally ended the year up about 5% compared to year earlier periods.
Sales volumes were very high in the first part of the year with very low inventories. Sales volumes then tailed of dramatically during the summer as a result of mortgage rule changes, consumer concerns about increasing mortgage rates and confusion over the HST.
As fall approached it became clear interest rates remained at historic lows, that the HST did not impact the cost of buying in any substantial way and buyers returned to the market. The inventory of available homes remained steady but did not increase dramatically provinding an overall foundation for the market. As a result most of the fall was a balanced market with prices moving sideways and were generally 5% higher than fall 2009. Properly prepared, priced and marketed properties continued to sell, however by year end the Average days on market had increased to 37 from the year earlier period of just 27 days. With multiple offer scenarior's being the exception rather than the rule Realtor's and Sellers had to adjust their expectations on what and how long it took for even the best properties to sell.
Overall 2010 was an excellent year for real estate and has established a sustainable trend for the year ahead. Next post i'll offer up my thoughts for the year ahead and why the next couple of months may be the ideal time to sell.
Showing posts with label Mortage rule changes. Show all posts
Showing posts with label Mortage rule changes. Show all posts
Tuesday, January 11, 2011
Thursday, February 18, 2010
Changes to Insured Mortgage Rules Announced
Thanks to Mary McCreath of from Mortgage Intelligence for sharing the following insights into the recent announcement by the Ministry of Finance with respect to the changes to the rules for insured mortgages. (i.e those mortgages with less than 20% downpayment.
Further to yesterday’s announcement on government backed mortgages (CMHC insured), we thought you would appreciate clarification on the changes to come on April 19, 2010.
1. Qualifying at a 5 year fixed rate.
Currently when someone takes a short term mortgage or variable rate mortgage we qualify them at a 3 year rate. With the change, we now need to qualify them at the 5 year rate. The difference in these rates (as at feb 17, 2010) is approximately 20 basis points...from 3.59 (3 year) to 3.79 (5 year). This change shouldn’t affect a buyers purchasing power in any substantial way, but will offer you a modest buffer against the cost of higher rates down the road.
2. Limitation of refinancing to 90% of the value of the home rather than 95%.
You can borrow against the equity you have in your property when you refinance, the amount you can borrow when you do that is now limited to 90% of the value of the property. This does not affect purchases as the change impacts existing home owners.
3. Discouragement of Speculation by requiring a minimum down payment of 20%.
On non-owner occupied properties only, borrowers will require 20% down rather than the 5% it has been. This change will affect clients who are buying multiple condos and homes for “flipping” if they don’t have 20 % down. It will have no impact on those who are looking to purchase a house or condo to live in.
Exceptions on these changes will be made after April 19 where they are needed to satisfy a binding purchase and sale financing or refinance that has been entered into prior to April 19, 2010. Guidelines are still to be set which will be outlined over the next month or so. Note that banks and financial institutions may opt to implement these changes in advance of the prescribed government deadline.
Your Realtor and Mortgage Broker should work to ensure you understand the implications of the choices you are making and that the options match your personal circumstances today and into the future. Be sure to identify a professional who will take the time to get to know you and your personal needs and will then help you understand the options and implications before you make decisions. If you still have questions about how these changes effect you please post a comment and we'll gladly respond.
Further to yesterday’s announcement on government backed mortgages (CMHC insured), we thought you would appreciate clarification on the changes to come on April 19, 2010.
1. Qualifying at a 5 year fixed rate.
Currently when someone takes a short term mortgage or variable rate mortgage we qualify them at a 3 year rate. With the change, we now need to qualify them at the 5 year rate. The difference in these rates (as at feb 17, 2010) is approximately 20 basis points...from 3.59 (3 year) to 3.79 (5 year). This change shouldn’t affect a buyers purchasing power in any substantial way, but will offer you a modest buffer against the cost of higher rates down the road.
2. Limitation of refinancing to 90% of the value of the home rather than 95%.
You can borrow against the equity you have in your property when you refinance, the amount you can borrow when you do that is now limited to 90% of the value of the property. This does not affect purchases as the change impacts existing home owners.
3. Discouragement of Speculation by requiring a minimum down payment of 20%.
On non-owner occupied properties only, borrowers will require 20% down rather than the 5% it has been. This change will affect clients who are buying multiple condos and homes for “flipping” if they don’t have 20 % down. It will have no impact on those who are looking to purchase a house or condo to live in.
Exceptions on these changes will be made after April 19 where they are needed to satisfy a binding purchase and sale financing or refinance that has been entered into prior to April 19, 2010. Guidelines are still to be set which will be outlined over the next month or so. Note that banks and financial institutions may opt to implement these changes in advance of the prescribed government deadline.
Your Realtor and Mortgage Broker should work to ensure you understand the implications of the choices you are making and that the options match your personal circumstances today and into the future. Be sure to identify a professional who will take the time to get to know you and your personal needs and will then help you understand the options and implications before you make decisions. If you still have questions about how these changes effect you please post a comment and we'll gladly respond.
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