Paula Seimens of The Siemens Group-Invis wrote in her February 16th, 2010 Newsletter:
Jim Flaherty announced today that Effective April 19, 2010 buyers will have to qualify under this set of guidelines:
- any borrower arranging a mortgage less than 5 yrs in term or a variable rate mortgage must be qualified as if they are taking a 5 yr term. This is not clear as to whether there will be a huge impact as variable rate mortgages and 3 year terms or less are already qualified on the 3 yr posted rate. The 3 yr posted rate is often lower than the discounted 5 yr rate. If the guideline turns out to be "qualification must happen based on the 5 yr posted rate" - this will have an impact on the market i.e. the 5 yr posted rate is 5.39% vs. the discounted rate for most lenders being at 3.89%. The 3 yr posted rate today is 4.30% so you can see if the guideline is not clear on qualifying at the posted 5 yr rate then there will be no negative impact on qualification.
- for investment properties they are requiring 20% down payment on all insured mortgages. Currently we have lenders going up to 80% on rentals without insurance. If lenders keep their polices as is then there will be some impact to the market. Most persons buying an investment property either put 20% down to avoid the high insurance premiums charged by CMHC or the take equity out of another real estate holding to effectively put! 20% down on the purchase property.
- Refinances can only be approved up to 90% LTV vs. 95% LTV. Once again I do not think this will impact the majority of applications being made
For further information you may read the full article at:
Enjoy your day!
Please contact Paula for further information on mortgage qualification.
The Siemens Group-Invis
Phone (604) 351-7438
Fax (604) 648-9106