Posted 8.14.13 @ 12:20
A new Bank of Montreal study that was recently released says that about 20% of people who are first time homebuyers are having to wait because of the new mortgage rules. Some are being flat out denied, others don’t want to worry about getting turned down when trying to buy their first home. Many just want to get a nice house but don’t know exactly how the rules will really affect them. Most of the rules are going to apply to people buying a home worth less than $1m, so if you’re in this camp you can probably breathe a nice sigh of relief!
Amortization Periods Have Gone Down
A little more than a year ago you could get a mortgage on a home that had a max amortization term of 30 years, which was great for a large chunk of the housing market. Yes, you would end up paying almost twice as much over those 30 years, but it allowed people to buy homes they wouldn’t otherwise be able to buy.
But once Flaherty shook up the housing market last year with the mortgage rule changes, the max amortization terms are now 25 years. Less time to pay means mortgage payments go up, but buyers pay less over time. It also means that many people who probably couldn’t have afforded they home they wanted anyway (up to 1 in 9 according to the Bank of Montreal survey), can’t get the mortgage they need to buy a home.
2/3rds Aren’t Changing Their Plans
This mainly affects homes that are priced under $1m, but almost 70% of Canadians just don’t see the new rules impacting their plans to buy a home. Many homeowners don’t know if the rules will apply to them, so they’re saving up 30% down before interest rates go up so they can see big savings.
Others have been denied – which is never a great feeling. While many brokers and financial analysts take a “woe is me” approach to this, almost 80% of all mortgage applications in Canada are approved today – that’s a huge leap compared with 10 years ago.
New Rules Helping Market?
Many economists are saying that the new mortgage rules are actually helping the sub-luxury market have a soft landing as demand begins to slow. It’s cut down on speculation, it’s kept interest rates in a good place and it’s prevented a nasty housing bubble like the Americans experienced 5 years ago.
Will the Rules Affect You?
If you’re buying luxury Oakville real estate, you probably won’t come head to head with the downsides of the rule changes. Many of the financing problems borrowers are facing are for those buying homes worth less than $1m – and the same can be said for some of the housing woes that may be around the corner.
If you’re thinking about buying a home, there’s no better time than the present! With interest rates so low and a nice selection of great homes in every shape, size and flavour, you’ll find the one that’s right for you. Give us a call today to see what makes us the best Oakville luxury realtors.