TIGHTER MORTGAGE RULES (TD Economics)

TIGHTER MORTGAGE RULES TO COOL DEBT GROWTH, BUT HIGHER RATES ULTIMATELY REQUIRED

• The Department of Finance recently implemented tighter mortgage insurance rules to help take some of steam out of the Canadian housing market and to curb households from taking on too much debt during a continued low interest rate environment.
• Analysis shows that past regulatory tightening led to a significant permanent drop in housing demand. However, while home prices took an immediate hit following the rule changes, they bounced back within two to three quarters and continued to grow faster than underlying economic fundamentals. The dampening effect on household credit growth was more notable and sustained.
• The changes implemented on July 9th may have more of a bite as they will hit a larger segment of the housing market and lead to a larger deterioration in affordability than past rule changes, particularly for first time homebuyers. Overall we expect the new rules to shave 5 percentage points off sales and 3 percentage points off prices over the rest of 2012 and early 2013 and reduce about 1 percentage point off credit growth.


• However, new guidelines will only go part of the way in unwinding the imbalances developed in the Canadian housing market. As long as interest rates remain at their current low levels, households still have a strong incentive to borrow and the overvaluation in the housing market will persist. Ultimately, interest rate increases by the Bank of Canada are needed to ensure sustainable growth in the Canadian housing market.

 

 

Source : http://www.td.com/document/PDF/economics/special/dp0912_mortgage_rules.pdf

New mortgage rules hit first-time buyers. Maximum amortization period is cut from 30 years to 25.

dumaBuying a first home or taking out a loan against an existing residence will be more difficult for Canadians under new rules announced Thursday, but Finance Minister Jim Flaherty says it’s for their own good.
For the fourth time in as many years, the finance minister moved to tighten the mortgage and lending landscape – changes that mean up to 5% of Canadians who might be considering buying a new home will likely no longer qualify.
This time Flaherty’s cutting the maximum amortization period for government insured homes to 25 years from the current 30 years, and limiting how much homeowners can borrow on the value of their homes to 80% from 85%.
Those are not the only changes the government is making.

Read moreNew mortgage rules hit first-time buyers. Maximum amortization period is cut from 30 years to 25.

MLS® Home Price Index / L’Indice des prix des propriétés

The MLS® HPI is the best and purest way of determining price trends in the housing market. / L’Indice des prix des propriétés MLS® est le moyen optimal et le plus fondamental de déterminer les tendances des prix sur le marché de l’habitation.

Read moreMLS® Home Price Index / L’Indice des prix des propriétés

February 2012: MLS® Sales Steam Ahead!

Greater Montréal Real Estate Board (GMREB) registered a 9% increase in sales throughout the Montréal Metropolitan Area as compared to February 2011. This marks the ninth consecutive increase and the strongest one since April 2010. Active listings grew by 13% in February with almost 29,000 residential properties for sale by real estate brokers in the Greater Montréal area.
The Vaudreuil-Soulanges region continued to lead the way with an overall 26% increase in residential sales for February 2012. The Laval and the South Shore regions are tied at second place with an 11% increase, followed by a 7% increase for the Island of Montréal and a 5% increase for the North Shore relative to the same period last year.

For the 23rd consecutive month, condominiums are the performance leader out of all property categories with 1,394 transactions, a 15% increase relative to February 2011. Single-family homes increased by 6% despite a slight 2% decrease in January 2012. Plexes registered a 7% increase.(Source : http://www.cigm.qc.ca)

 

L’achat d’une première habitation : REER et RAP / First-time Home Buyer : RRSP and HBP

Régime d’accession à la propriété (RAP)

reerpigLe Régime d’accession à la propriété (RAP) est un programme qui vous permet de retirer des fonds de vos régimes enregistrés d’épargne-retraite (REER) pour acheter ou construire une habitation admissible pour vous-même ou pour une personne handicapée qui vous est liée. Vous pouvez retirer jusqu’à 25 000 $ dans une année civile.

Vos cotisations REER doivent demeurer au compte REER au moins 90 jours avant de les retirer pour participer au RAP, ou les cotisations pourraient ne pas être déductibles pour aucune année.

Généralement, vous avez 15 ans pour rembourser les montants retirés de vos REER. Vous devez rembourser chaque année un montant dans vos REER, jusqu’à ce que le solde du RAP soit nul. Si vous ne remboursez pas le montant prévu pour une année, vous devrez l’inclure dans vos revenus de cette année-là.

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Home Buyers’ Plan (HBP)

Calculator & coins with arrowThe Home Buyers’ Plan (HBP) is a program that allows you to withdraw funds from your registered retirement savings plan (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. You can withdraw up to $25,000 in a calendar year.

Your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the HBP, or they may not be deductible for any year.

Generally, you have to repay all withdrawals to your RRSPs within a period of no more than 15 years. You will have to repay an amount to your RRSPs each year until your HBP balance is zero. If you do not repay the amount due for a year, it will have to be included in your income for that year.

Source : http://www.cra-arc.gc.ca