Mortgage Rules Change & Buying Frenzy in 2010
During the fall of 2008, the Canadian Government announced the elimination of the 0% down payment and 40 year amortization programs. Fortunately, the low mortgage rates provided some relief from high payments and affordability last year, 2009. Who would have known house sales would have been so active in Vancouver BC this past year? The market has been so hot the government has been investigating controlling the activity through changes to mortgages and lending practices.
Just recently the Canadian Government commented on the mortgage and real estate industry and provided new lending rules to take affect in the coming days. All buyers will be required to qualify for the posted 5-year rate, even if they wish to take the lower variable rate. This is to ensure buyers will be capable of handling a higher mortgage rate when opting for lower rates in the short-term. A second change is all investment properties will require a 20% or more down payment.
As a Vancouver Realtor helping clients buy and sell homes I can say we’re off to a great start in 2010. There has also been plenty of positive news making headlines in terms of economic and employment growth for Canadians. As there has been an announcement by the government to make changes to our mortgage lending system we’re see a buying frenzy before the new rules take affect. For a lot of buyers this is the time to purchase as they will no longer be able to qualify for the mortgage they feel they need.
In my opinion these new proposed lending rules wouldn’t affect all buyers. It may in fact affect first-time homebuyers the most. Working as a Realtor on the Westside I’ve seen a lot of foreign investment in the house market, primarily from Hong Kong and Mainland China. I’ve noticed a lot of these types of transactions are completed as mostly cash transactions.
It will be interesting to see how these changes to the mortgage lending practices for 2010 will affect our real estate market in Vancouver. I plan to keep the public and my clients up-to-date on any changes. I’m also open to answering questions people may have about investing in our house and apartment market.
