14 Nov

NewRulesHurt.ca IMPORTANT MESSAGE FROM THE FOUNDER OF DLC

General

Posted by: Tracy Price

This letter also appears as a full-page ad in the October 3rd edition of The Globe & Mail and was written by Gary Mauris, the Founder, President and CEO of Dominion Lending Centres.

 

We wouldn’t normally reprint an article, but this message is too important to not share with all of you in Centre Wellington.

 

Dear Prime Minister Justin Trudeau and Finance Minister Bill Mourneau;

 

One year ago, your government introduced new mortgage rules that put the dream of home ownership out of reach for many Canadians. Although well intended, the changes have reduced the average Canadian family’s purchasing power by upwards of 20% and have had the unintended consequence of making housing less affordable for Canadians.

 

Instead, Canadians who were once able to purchase or re-finance their home are being shut out of the market or forced to pay more interest to traditional lenders as competition in our (the broker monoline) sector declines.

 

The new stress test that requires all new mortgages to qualify at the greater of either the Bank of Canada benchmark rate or the contract rate offered, means that Canadians who previously could reasonably afford a mortgage payment at the standard rates no longer qualify. Additionally, changes to portfolio insurance requirements have resulted in some monoline lenders being unable to insure mortgages, thus reducing overall competition, which hurts consumers, regardless of what solution they use for their homes.

 

Canadians who are now unable to fulfill their dream of owning a home have been telling us their stories and we’ve been listening. We’ve documented their stories and we think it’s important for you to see them. We’ve posted these stories at www.NewRulesHurt.ca and are sending every Member of Parliament a printed copy so they can read firsthand how the new mortgage rules have impacted the lives of hard working individuals and families in their constituencies. Please take the time to read these stories and seriously consider changing mortgage rules to make them fair and equitable for all Canadians trying to purchase, or keep their home

If you or anyone you know, have been or will be impacted by these new rules please share your story at www.NewRulesHurt.ca  On behalf of Price Team Mortgages | DLC, we thank you and are here to guide you through these uncertain times. Contact us anytime.

 

14 Nov

MORE MORTGAGE STRESS COMING JANUARY 1st

General

Posted by: Tracy Price

After months of intimations that more mortgage rules are coming, the Federal government made it official last week. As of January 1, 2018 ALL MORTGAGES will be subject to a ‘Stress Test’. Regardless of the loan-to-value, high-ratio or conventional, insured or uninsured, Canadians will be forced to qualify at a rate that is 2% higher than the rate they will actually pay. This reduces borrowing power by 20% on average.

In October 2017, the Trudeau government swooped in with a new stress test for high-ratio mortgages (purchases with less than 20% down), in an effort to cool the housing markets in Toronto and Vancouver. Over the past year, the new rules did little to achieve that goal, but instead, have hurt average Canadians, especially single income earners. It is more difficult for first time buyers to get into home ownership and many people who have been saving up their 5% down payments have been forced to keep renting.

 

Dr. Sherry Cooper, Chief Economist for Dominion Lending Centres, refers to these acts by the Federal Government as “self-inflicted wounds”. The mortgage default rate in Canada is amongst the lowest in the world, at less than 1/3 of 1%. Why the focus on trying to fix something that ain’t broke? Why don’t they make banks give mandatory ‘stress tests’ to double-digit interest lines of credit, credit cards and vehicle loans? Mortgage debt is healthy debt as it’s secured by property, which over time appreciates and builds equity for homeowners.

 

If you are thinking of purchasing with 20%+ down, as of January 1st, you will be made to endure the stress test. If you are thinking of refinancing to consolidate high-interest consumer debt, do some renovations or make some investments, you will also be stress tested as of January 1st. We urge you to contact us ASAP so we can determine if you will be adversely affected.

 

Maureen received our eBlast about this topic last week and contacted us about refinancing to pay off some debt. A single mom of two, she is carrying about $15K in consumer debt and struggling to make the minimum monthly payments. Only 2 years into her mortgage, her property value is up and the penalty to break it early isn’t bad (of course we placed her in a good mortgage with good terms).

 

Mortgage Amount Monthly Mortgage Payment Monthly Consumer Debt Payments Total Monthly Payments
Pre-Refi $195,000 $1176 $973 $2149
Post-Refi $225,000 $1011 $0 $1011

Monthly Savings: $1138!!!!!

Annual Savings: $13,656!!!!!

 

By placing Maureen into a new conventional mortgage (80% LTV), she no longer needs to pay the default insurance premium that high ratio mortgages have. Even though interest rates are a little higher than two years ago, we are able to get her more money and actually save her money. Think this is too good to be true? Contact us for more insight.

 

She is a prime target for the new January 1st rules. If she had waited until next year, it would not be possible to refinance her and she would be stuck with $15K of high interest debt and struggle to make the minimum payments and be debt-ridden for the foreseeable future.

 

Contact us today and we will see whether or not you’ll be adversely affected after January 1st. We’re here to help.

13 Nov

THE SKY IS FALLING – WAIT, NO IT’S NOT!

General

Posted by: Tracy Price

Be careful what you read folks or at the very least, how you interpret it and understand who is saying it. Draconian headlines continue to fly in the realm of real estate, and they want you to panic.

A recent example is the August 2nd issue of the Financial Post which stated ‘Toronto home sales plunge 40% in biggest drop since the recession’. This was followed up with ‘Home prices in Canada’s biggest city also posted their biggest monthly drop in at least 17 years in July’.

From this type of hype one might ask, could this be the beginning of a major correction or crash? In a word, NO. This is not the case at all.

What is really happening is that the pressure cooker is now simmering down nicely as we head to a more balanced and healthy market. These recent market adjustments are the best thing that could have happened in order to avoid the real estate ‘boom bust’ scenario people were talking about for the past several years. That trend was simply not sustainable. So this is good news not bad news.

In fact, the rate of price increase is now moderating, but prices are not dropping as the headlines would make you believe. Case in point, the average house price in the GTA increased 5 per cent from July 2016.

Are prices dropping, no. Is the froth and frenzy gone, yes and thankfully so. The supply of listings is also picking up, also good news giving home buyers more choice than previously.

This is all leading back to a more balanced real estate market, meaning supply and demand are more in sync.

Will prices drop in real terms year over year? That’s the big question now. Even if they do end up dropping slightly, is that a bad thing? We don’t think so because it could have been worse, much worse.

Many believe that current prices represent the new ‘bar’. With summer vacations now in full swing, the reduction in real estate transactions during the summer (not last year) represents the historical norm.

Realtors believe that sales activity will pick up in the fall and that we may see a mini boom in sales again.

Hopefully though inventory will continue to grow, multiple offers will not return, and market competition will be more healthy and positive.

Mortgage rates remain near all time lows, so if you are thinking about getting into the market in the near future, it is a very good time to make your move!

13 Nov

BMO JUST DID NOT CARE

General

Posted by: Tracy Price

A recent CBC News story about how the Bank of Montreal only reversed an action of foreclosure on a federal civil servant who after the loss of her husband and estate issues, a colossal mess up with a new federal pay system, not getting paid for nine months, having her daughter have to quit college to work three jobs to help meet all payments, and then missing just one line of credit payment, never a mortgage payment went through hell with the bank.

She even got the federal government to write a letter to the bank ‘asking for understanding and flexibility’ without response. That is until she had no other choice but to reach out to Go Public the complaints division of CBC.

Without hesitation now that the bank knew the matter was in the public eye, changed their position backing off threats of foreclosure and offering to refinance her to solve her short term problems.

This bank did not care. Period. Truth is all banks are the same. What a shame isn’t it?

We remember when we were young, that Canadians trusted and even loved our banks. Times have changed, oh how they’ve changed to undue all those good feelings, now to a present bank culture which is documented daily to be uncaring and callous, and even predatory.

13 Nov

FEDERAL GOVERNMENT PUNISHING HOME BUYERS UNNECESSARILY

General

Posted by: Tracy Price

The federal government is taking a sludge hammer to the housing market, making it even more difficult to purchase as new (much) more restrictive rules will take effect as early as December 1st.

It doesn’t make any sense and it behoves us to understand where all of this is coming from, and why especially since the housing market frenzy is gone, and has returned to a more healthy balanced state.

Why is their focus entirely on real estate GOOD debt without mention of line of credit and credit card BAD debt?

Did you know that 60 per cent of Canadian home owners are MORTGAGE FREE, Yes it’s a fact.

Mortgage defaults are at all time lows, interest rates remain very low as well. The economy remains sluggish, and inflation remains low.

The government wants us to consume to help grow the economy, yet on the other hand they are paranoid about household debt. It’s called ‘Suck and Blow’ at the same time and ya just can’t do it!

So what’s the problem? Where there isn’t one. So we can only scratch our heads, and wonder why?

It seems common sense no longer prevails in this world, just look at The Donald…lol, so we can’t help but think something bigger is going on here in Canada. Hum!

Could Morneau, our federal finance minister, be in any more trouble with conflict of interests and as was news last week. He has owned up to making profit through his company’s contracts with Bombardier only after he was caught, coming clean and pledging to forward all (illegal) profits to charity. WOW, WOW, WOW INDEED as those politicals like to utter. How dare they do this!

Let’s not be naïve to think there is no collusion going on here folks between the powerful rich and the rest of us.

As of Jan 1st Canadians will be 20% poorer, or at least because of the new stress tests requiring everyone to qualify based on a rate 2.0% higher than their actual contract mortgage rate (4.9% instead of 2.9%) will qualify for one fifth less purchase price, mortgage, and refinance needs.

This new reality will force many Canadians into higher cost debt arrangements.

Mortgage debt is Good Debt because it is at low rates, very low rates still. Just think about it, you can get a prime first mortgage still around 3 per cent. Your line of credit debt is between 4, 5, 6 per cent or more. Your loan interest rate is higher. Your credit card interest rate is well, let’s just say INSANE between 20 to 29%.

So our message to you is simple. If you have any credit card, loan, line of credit debt and/or you currently have a bank mortgage, DO EVERYTHING YOU CAN TO GET OUT NOW BEFORE IT’S TOO LATE.

Our purpose and role has become that of consumer advocates to educate, inform, and advise consumers about the best financial solutions for them going forward and to warn you about unfair practices, rule changes etc.

AND TO EXPOSE THE TRUTH ABOUT THE BANKS & GOVERNMENT as best as we can.

It’s not just about your mortgage, it’s about your financial health and financial security going forward.

We love our business and we care deeply about you.

Please call us for an unbiased, truthful conversation about your financial prospects (no cost OAC) and by all means please become fully informed about the potential consequences to you by acting now

13 Nov

GET APPROVED NOW BEFORE IT’S TOO LATE!

General

Posted by: Tracy Price

THIS IS THE BIGGEST GROUND SHAKING RULE CHANGE OF ALL TIME!

If you are thinking a buying, refinancing or are renewing within the six months

you need to get approved as soon as possible. Such an approval now will get you a rate guarantee up to 4 months AND WILL PROTECT YOU FROM THE NEW LEGISLATION.

The federal government as of January 1st is making it much more difficult FOR EVERYBODY to qualify for a mortgage no matter what the purpose of the mortgage is, how good your credit is and no matter how much equity you have.

In a nutshell, let’s say your mortgage contract rate is 2.9%. To qualify under the new rule you will need to qualify at 4.9% or 2% higher even though your payment is based on the contract rate.

Everyone will qualify for 20% less than today whether you are purchasing or want to refinance so if you have any intention to buy, renovate, renew, refinance for any reason.

In fact, the new rule may come into effect sooner as some lenders, as in the past, will decide to adopt the rule change earlier so you cannot assume that you have until January1st to get a mew mortgage. December 1st is a more likely cut off date.

This rule change is not only completely unnecessary but completely uncalled for since it is intended to cool a real estate market that has already cooled. This is the most significant change in history and it is likely to be of a more permanent nature.

Unfortunately, the consequences may seriously impact the real estate and mortgage markets well beyond the intended purpose.

Many home purchasers will only qualify for 20% less purchase price and realtors predict that home sellers at the high end of the market will be most affected since the high end will become that much more difficult to sell.

To say it is curious how the federal Liberal government seems not to care about public opinion and is alienating millions of Canadians against them, is an understatement.

Good luck with the next election boys and girls, Aye!

PLEASE UNDERSTAND THAT YOU MUST HAVE A FULLY UNDERWRITTEN PRE-APPROVAL IN WRITING IN ORDER TO COMPLY UNDER TODAY’S RULES.

BEWARE, THE BANKS DO NOT DO THIS, THEY ONLY PRE-QUALIFY BUT WE DO AND YOU CAN RELY ON OURS. WE CAN ASSIST YOU TO PURCHASE UNDER THE OLD RULES FOR 4 – 6 MONTHS FROM NOW, THAT IS UNTIL NEXT APRIL, BUT ONLY IF YOU APPLY AND ARE APPROVED NOW.

If you know anyone thinking of buying, refinancing, renewing, renovating etc., please let them know about this article and have them call us for more details as soon as possible.

We are here to inform, help and protect you!

13 Nov

TELL ME WHY I SHOULD LEAVE MY BANK?

General

Posted by: Tracy Price

I was asked this question last week by a caller who was not altogether happy with his bank mortgage experience, so he decided to call us.

When my dad is asked the same question he asks back ‘Would you like the thirty second version or the thirty minute one?’

If they opt for the longer version he can give them up to one hundred reasons and when he is finished, they usually thank him and say something like ‘I wish I had known this before.’

My response was ‘Well think of it like you think of the political party you have been aligned with your whole life because your parents ingrained this in you. Year after year you probably vote for the same party without investigating the issues in depth.’

Many Canadians follow the same path when it comes to getting a mortgage, often until they get upset with the banks’ service, response time and ultimate offer.

13 Nov

‘CANADA’S HOUSING BUBBLE HAS VANISHED…’

General

Posted by: Tracy Price

‘…Without a crash landing’, say economists according to an August 16 th article in the Financial Post.

Not only that but the article goes on to say that the real estate market has already readjusted to an almost perfectly balanced one.

Economists say the Canadian housing bubble – long feared to be vulnerable to a dangerous ‘pop’ is now officially dead.

That was fast, very fast, in fact this happened just in the last four months when the market started to level off.

The definition of a ‘balanced’ market is one where the supply and demand for real estate is more or less equal as the supply of inventory has increased significantly. Locally the supply is still at this point slightly below the traditional norm but it’s on its way up.

This is wonderful news for home owners and prospective home buyers as it would suggest that current real estate values are sustainable.

Economists further predict that price growth remains in the cards at between two and four per cent next year, outside of the Toronto and Vancouver markets.

While real estate looks rosy, the mortgage and affordability side is less rosy as recent tightening regulations has impacted high ratio insured loans making them more difficult to qualify.

It now appears imminent that the same tightening is going to be applied to the low ratio, uninsured market which represents 80 per cent of total mortgages. In other words, OSFI’s current proposals when enacted will make it that much more difficult for (all) Canadians with 20% equity/down payment to refinance and purchase than before.

In short, making it more difficult for the entire market to qualify for a mortgage will, in turn, have a further impact on housing market activity, which could serve to dampen real estate in general.

What we are seeing is a continued intervention in the mortgage/real estate market by government introducing regulations designed to reduce future ‘risk’ and exposure at a time where mortgage default is at an all-time low as is unemployment.

In the past, the only intervention was done by the Bank of Canada raising interests, but was in high inflationary times. Not so today. So why is government intervention even happening?

Now it is government meddling with the market which is ultimately going to hurt, if not marginalize many more Canadians, as it appears, in the coming months ahead.

Buckle up your seat belts folks, and stay tuned!

Next week’s article will be centered specifically on who will be impacted the most, with financial examples of how the next round of tightening will look compared to the present framework.

13 Nov

BEWARE OF NEW HOME BANK FINANCING

General

Posted by: Tracy Price

If you have purchased a new built house set to close this fall or you plan to buy, you owe it to yourself to become informed and shop around.
Don’t just take builder / bank financing because it is likely you will NOT end up with the lowest rate – we see it all the time! This can mean $$$Thousands$$$ of dollars in your pocket.
What is the best way to become fully informed? Well we cannot think of any better way than to talk to an experienced, reputable independent mortgage professional who will protect you and save you money.
Such bank financing can be a ‘trap’. This is because mortgage rates are not guaranteed beyond 120 days and new homes take longer to build and complete. Consequently, new build financing is structured with a ‘hedge’ against rates rising between the time of offer and closing. For example, the bank gives you an approval with or cap or maximum rate which is typically one half to a full one percent below posted rate. Today that would look like 4.64% minus 1.0% or a committed cap rate of 3.64%.
This compares not too favourably with current rates guaranteed for up to four months of 2.75 to 2.89%. As you can see their remains a significant ‘spread’ between current rates and cap rates for new builds, leaving money on the table.
Hypothetically your rate is supposed to float down to current rates closer to closing. The problem is that the bank does not provide any guarantee of giving you the lowest rate and most often they do not and the final rate ends up somewhere in between. The truth is, new build financing gives the bank a opportunity to make more profit than with resale and they will if they can.
So if you currently are in this situation PLEASE COME SEE US WITH YOUR OFFER within 120 days of closing AND WE GURANTEE WE WILL BEAT THE BANK RATE!!!
In addition you can benefit greatly from our VALUE ADDED LOCAL RETAILER DISCOUNT PROGRAM WITH  UP TO 35% off of home improvement and furnishings, including décor paints, window coverings, carpets, landscaping, decks, patios etc etc, all the things you will need to pay for after you move in. Potential savings here by buying locally are in the $$$Thousands$$$ of dollars.
Buying a brand new home is one of the most exciting times of our lives because we are first to live in it and the first to put our personal touches on it.
Because of the myriad of expences associated with ‘new’ it is of the utmost importance to ensure you do not waste money and there is no bigger potential for that than with a cap rate mortgage scenario. We also have a discounted legal cost arrangement with one of the best real estate lawyers in the region to save you even more.
If you are planning to buy ‘new’ in the near future, save yourself the hassle and the headache of a bank cap rate mortgage.
WE NOW HAVE GUARANTEED RATE FINANCING FOR UP TO NINE MONTHS WITH OUR GUARANTEE TO BEAT THE BANK!
Please call to make an appointment to learn more, now.

13 Nov

NEXT MORTGAGE RULE TIGHTENING WILL SHUT THE DOOR ON MANY!

General

Posted by: Tracy Price

This is the second part of this two-part series on the impact of government intervention designed to make mortgage qualification much more difficult. The proposals if put into effect are entirely unnecessary since the real estate and mortgage markets have already contracted. MOST IMPORTANTLY the proposed changes will dramatically affect everyone.
Affordability will decrease by over 20% as you will need to qualify based on a rate 200 basis points or two per cent above the contract or commitment rate. Using current rates of 2.89% you will need to debt service using 4.89%.
Let’s say you qualify today for a $500,000 purchase price with 20% ($100,000) down today and a $400K mortgage. The new regulations will qualify you for a maximum $320,000 mortgage only and you will be required to make a down payment of $180,000 or $80,000 higher. If you cannot come up with $180,000 down, you will need to lower your purchase price expectation to $420,000 from $500,000. To repeat, this regulation change will apply to everyone.
THE IMPACT WILL BE EXTREMELY SIGNIFICANT since it will affect all mortgages not just purchases including refinances.
The result will mean fewer home purchases, purchases at lower prices and fewer refinances. Approvals of refinance mortgages will drop dramatically as well, forcing people into second mortgages, higher interest lines of credit, loans and credit card borrowing.
Single income households (one spouse working), households with worrisome credit card debt, single parents, retirees and the disabled on fixed incomes will be impacted the most and either qualify for much less or not at all. Some will also be forced to sell their homes longer term.
In short, the proposed new changes will hurt every one without a doubt.
In the bigger scheme, the real estate market will be impacted very negatively.
The new restrictions can and likely will be introduced (like last time) without warning or at least with very short notice.
We apologize for being the bearer of such alarming news, however we are compelled to warn and inform Canadians so that you can act before it is too late.
PLEASE CALL US AS SOON AS POSSIBLE to make an appointment to take care of your needs and PLEASE SPREAD THIS TO ALL YOU KNOW WHO INTEND TO PURCHASE OR REFINANCE. THANK YOU.