REDISCOVER REAL ESTATE

Early Christmas present for first-time buyers?

First-time buyers may be given an early Christmas present if a petition to reduce mortgage insurance premiums comes to fruition.

The lending rules have changed, and now it’s time for mortgage default insurance premiums to fall in line with new market conditions. This is the view of Brian Bell, former vice-president of private insurer Canada Guaranty, who is calling for a 15 per cent reduction in mortgage default insurance premiums.

“This is an opportunity to give first-time buyers a break and help those who are about to get on the ladder a step on it,” says Bell, now president of iPro Realty Ltd. “This is not a game changer in the industry or will cause a boom, as some are suggesting, but simply help out those who are about to cross the line of buying. There are so many costs when buying for the first time. I think it would be good for the overall economy as it gives them extra spending power.”

By law, any consumer with a down payment of less than 20 per cent and borrowing from a financial institution regulated by the Bank Act must get mortgage default insurance. CMHC controls about three quarters of the market with Genworth Financial and Canada Guaranty splitting the rest.

While some argue that such a premium is required to manage the high level of risk in today’s market, Bell is arguing that the pot is big enough to cover any unexpected market drama. “The insurance companies are more than capable of absorbing this cost. The Crown corporation has averaged $1.1 billion annually over the last five years,” he tells CREW.

The average equity in CMHC’s insured portfolio is 45 per cent and 79 per cent of borrowers with high ratio loans approved for insurance in 2012 have credit scores of 700 or greater . The arrears rate of 0.35 per cent in 2012 remains historically low and is expected to continue to decline according to CMHC.

By Grainne Burns - Real Estate Wealth

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Another good-news day! No Bank of Canada rate change.

Since September 2010 the Bank of Canada has held the key rate steady. And today was no different. The Bank of Canada is staying the course and not changing the benchmark rate.

Today's announcement noted that "downside risks to inflation assume increasing importance" and "the Bank must also take into consideration the risk of exacerbating already-elevated household imbalances." With these considerations, the Bank is maintaining its substantial monetary policy stimulus.

If you’ve got a variable-rate mortgage, the prime rate should stay at 3%. The next rate-setting day is December 4.

Eight times a year, the Bank of Canada sets the rate that governs each lender’s prime rate. The lenders base their decision on this rate because it influences their own borrowing. Variable-rate mortgages and lines of credit move in conjunction with the prime lending rate. Fixed rates are different and are based on the bond market. 

Looking to buy, sell or refinance? Know your options. I can help! Direct line: 416-219-6662

Home prices in the GTA continue to climb despite Ottawa’s efforts to cool real estate market

Sales across the GTA were up 30 per cent in September, year over year, and prices were up 6.5 per cent over September 2012, according to figures released Thursday by the Toronto Real Estate Board.

Toronto house sales – and prices – continue to climb despite the best efforts by Ottawa to cool a market that shows no signs of giving buyers a breather.

Sales across the GTA were up 30 per cent in September, year over year, and prices were up 6.5 per cent over September 2012, according to figures released Thursday by the Toronto Real Estate Board.

The average transaction price for houses and condos combined last month was $533,797.

So far, three-quarters of the way through 2013 — and what was looking, a year ago, like the start of a significant slump in the resale housing market in the wake of tighter mortgage lending rules imposed by Ottawa — some 68,907 houses and condos have changed hands across the GTA.

That’s down by just one per cent over the pace of sales recorded by TREB during the same nine-month period of 2012.

The average sale price during that same nine months of 2013 has been $520,118, up more than four per cent from the first three quarters of 2012.

Condos continued a surprising surge, which started this past summer, with sales up 28.8 per cent year over year — up 31.5 per cent in the City of Toronto and 22.3 per cent in the 905 regions.

Average sale prices, however, were down 3.7 per cent in the city but up 2.9 per cent in the suburbs. That resulted in an almost 2 per cent decline in condo prices overall across the GTA from September of 2012 to the same month this year.

“The price growth story in September continued to be about strong demand for low-rise home types, coupled with short supply of listings,” says Jason Mercer, TREB’s senior manager of market analysis.

“Even with slower price growth and month-to-month volatility in the condo apartment market, overall annual price growth has been well above the rate of inflation this year.

“This scenario will continue to play through the remainder of 2013.”

Published on Thu Oct 03 2013 -The Star Real Estate

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