A new study released by CAAMP concludes that very few Canadians face unaffordable increases in mortgage costs and Canadian lending criteria are already tight.
The report entitled, “Revisiting the Canadian Mortgage Market – The Risk is Minimal” states that “lenders and borrowers have been highly prudent in the mortgage market … and a vast majority of borrowers have left themselves considerable room to absorb increases in interest rates.”
The study said 79 per cent of mortgages are fixed rate and mostly for terms of five years or longer, leaving 21 per cent of borrowers with variable rates and more exposure to changes in interest rates. The study was based on about 59,000 mortgage loans (excluding renewals or refinances of existing mortgages) totaling just under $16 billion, which were funded during 2010, which represents about one-quarter of the total mortgage activity.
The study reported that the average gross debt service (GDS) ratio was 19.6 per cent, well below typical lender standards of 32 or 35 per cent used to qualify borrowers. The average total debt service (TDS) was 28.9 per cent, still well below the 45 per cent lender standard.
For fixed rate mortgages the GDS was 22. 5 per cent and the TDS was 32.5 per cent.
According to the report a 2.5 per cent rise in interest rates for variable mortgages would see the average GDS would increase to 24.6 per cent and the average TDS would increase to 33.7 per cent. CAAMP’s research indicates that of the mortgages funded in 2010, only 800 to 950 would exceed the 45 per cent TDS ratio.
For fixed rate mortgages, a one per cent increase in interest rates would increase the average GDS to 22.5 per cent and the average TDS to 32.5 per cent and less than one per cent (1,000 to 1,350) would have TDS ratios of more than 45 per cent.
The Association also found that among the high ratio loans approved in 2010 – with the reduced amortization period (30 years versus the prior 35 year limit), a small minority (about 2 per cent) would have TDS ratios above 45 per cent and those loans would probably not qualify. Some of those consumers would still be able to buy, by buying lower priced homes.
The report cited job loss or reduced income as the main reason for mortgage defaults, saying that “Unaffordable premium increases are a negligible risk factor at present and in the near-to-medium term future.”
A third cause is unaffordable increases in mortgage payments, something that caused difficulty in the U.S. as low introductory rates were replaced by market rates and payments that rose substantially. Stated the report “But this third category of risk is the source of recent concerns about future threats. This study concludes that very few Canadians face unaffordable increases in mortgage costs.”
Source: mortgagebrokernews.ca
Thursday, January 20, 2011
Wednesday, January 12, 2011
Should You Buy a Home in 2011?
Posted on January 10, 2011
Attractive mortgage rates lured more home buyers into the market in 2010. Doom and gloom predictions brought on by the HST, tighter mortgage rules and projected interest rate increases failed to materialize. While not all housing markets experienced the best of times, overall, real estate investors didn’t experience the free fall that many had feared.What are forecasters predicting in 2011?
Real Estate OrganizationsThe very nature of real estate organizations tends to favour more optimistic housing forecasts. According to a report by a national real estate sales brand and reported by the Globe and Mail, mid-size cities will see positive housing sales activity in 2011, led by Winnipeg.The Canadian Real Estate Organization (CREA) predicted in June, 2010 that this year’s home sales activity will decline slightly – dragged down by Ontario and B.C.
However, it also predicts modest housing price increases for all except these provinces. The downside of rising prices, says CREA, is that many potential buyers will be priced out of the market. Home sellers in smaller markets may benefit from the migration of buyers from expensive urban centres to more affordable neighborhoods.Financial InstitutionsTD Bank changed its forecast mid-way through last year from predicting a 1.7 percent gain in home prices to a 2.7 percent decline. Its report concurred with that of CREA, suggesting Ontario and B.C. prices would see the greatest declines.
In late December, TD adjusted its forecast again – issuing a more rosy outlook for 2011 and a decline in resale home prices of less than 1 percent.Last month, Scotiabank Global Real Estate Trends listed Canada as one of the best-performing real estate markets in its study of twelve advanced nations in 2010. The report also suggests that global economies are showing signs of stabilizing. The report predicts a flattening of Canadian home prices in the coming year; attempts by public sector agencies at fiscal restraint, combined with the burden of consumer debt, will dampen employment and discretional spending among Canadians.Beyond 2011While forecasters agree that borrowing rates are likely to remain low – at least until mid 2011, rate hikes are inevitable as the global economy wakes up – and it’s already twitching.
This isn’t a good scenario for the amateur investor; the days of making huge short-term gains in real estate investments are over, for now. However, if you’re in the market for a long-term investment, buying in at a low interest rate can save you tens of thousands of dollars in interest over the life of your mortgage. From all economic indicators, it appears that higher interest rates are on the way in 2012.What would your monthly payments be at current home prices in your neighborhood? Compare your options using CENTUM Mortgage Calculators.
Submitted by CENTUM Canada
Thinking of Buying? We have zero down mortgage: Pls. go to http://www.centum.ca/Grace_Brewster for Free Mortgage Pre-Approval.
http://www.778HOMES.com to get your free MLS Listings in your area. No Obligation. No Pressure.
Attractive mortgage rates lured more home buyers into the market in 2010. Doom and gloom predictions brought on by the HST, tighter mortgage rules and projected interest rate increases failed to materialize. While not all housing markets experienced the best of times, overall, real estate investors didn’t experience the free fall that many had feared.What are forecasters predicting in 2011?
Real Estate OrganizationsThe very nature of real estate organizations tends to favour more optimistic housing forecasts. According to a report by a national real estate sales brand and reported by the Globe and Mail, mid-size cities will see positive housing sales activity in 2011, led by Winnipeg.The Canadian Real Estate Organization (CREA) predicted in June, 2010 that this year’s home sales activity will decline slightly – dragged down by Ontario and B.C.
However, it also predicts modest housing price increases for all except these provinces. The downside of rising prices, says CREA, is that many potential buyers will be priced out of the market. Home sellers in smaller markets may benefit from the migration of buyers from expensive urban centres to more affordable neighborhoods.Financial InstitutionsTD Bank changed its forecast mid-way through last year from predicting a 1.7 percent gain in home prices to a 2.7 percent decline. Its report concurred with that of CREA, suggesting Ontario and B.C. prices would see the greatest declines.
In late December, TD adjusted its forecast again – issuing a more rosy outlook for 2011 and a decline in resale home prices of less than 1 percent.Last month, Scotiabank Global Real Estate Trends listed Canada as one of the best-performing real estate markets in its study of twelve advanced nations in 2010. The report also suggests that global economies are showing signs of stabilizing. The report predicts a flattening of Canadian home prices in the coming year; attempts by public sector agencies at fiscal restraint, combined with the burden of consumer debt, will dampen employment and discretional spending among Canadians.Beyond 2011While forecasters agree that borrowing rates are likely to remain low – at least until mid 2011, rate hikes are inevitable as the global economy wakes up – and it’s already twitching.
This isn’t a good scenario for the amateur investor; the days of making huge short-term gains in real estate investments are over, for now. However, if you’re in the market for a long-term investment, buying in at a low interest rate can save you tens of thousands of dollars in interest over the life of your mortgage. From all economic indicators, it appears that higher interest rates are on the way in 2012.What would your monthly payments be at current home prices in your neighborhood? Compare your options using CENTUM Mortgage Calculators.
Submitted by CENTUM Canada
Thinking of Buying? We have zero down mortgage: Pls. go to http://www.centum.ca/Grace_Brewster for Free Mortgage Pre-Approval.
http://www.778HOMES.com to get your free MLS Listings in your area. No Obligation. No Pressure.
Thursday, January 6, 2011
Real Estate Market Stable at Year End
The Greater Vancouver residential housing market entered three distinctive phases in 2010. Continued buoyancy from the post-recession recovery began the year, followed by a summer lull and, throughout the fall, a sustained period of stability.
The Real Estate Board of Greater Vancouver (REBGV) reports that total sales of detached, attached and apartment properties in 2010 reached 30,595, a 14.2 per cent decrease from the 35,669 sales recorded in 2009, but a 24.2 per cent increase from the 24,626 residential sales in 2008. Last year’s number of housing sales was 10.3 per cent below the ten-year average for annual Multiple Listing Service® (MLS®) sales in the region.
The number of residential properties listed for sale on the MLS® in Greater Vancouver increased 9.7 per cent in 2010 to 58,009 compared to the 52,869 properties listed in 2009. Compared to 2008, last year’s total represents a 7.3 per cent decline compared to the 62,561 residential properties listed in 2008. The number of properties added to the MLS® peaked in April and generally declined for the remainder of the year.
“The last two years have been a bit of a rollercoaster for the real estate market. However, sales over the past six months have definitely shown a trend toward stability. We think that’s good news for home buyers and sellers,” Jake Moldowan, REBGV president said. “The Greater Vancouver housing market experienced a modest increase in home prices in 2010, and a continual decrease in the number of properties being listed for sale.”
Residential property sales in Greater Vancouver totalled 1,899 in December 2010, a decrease of 24.5 per cent from the 2,515 sales recorded in December 2009—an all time record for the month—and a 24.3 per cent decline compared to November 2010 when 2,509 home sales occurred.
More broadly, last month’s residential sales represent a 105.5 per cent increase over the 924 residential sales in December 2008, a 0.1 per cent increase compared to December 2007’s 1,897 sales, and a 12.6 per cent increase compared to the 1,686 sales in December 2006.
The residential benchmark price, as calculated by the MLSLink Housing Price Index®, for Greater Vancouver increased 2.7 per cent to $577,808 between Decembers 2009 and 2010. However, prices have decreased 2.6 per cent since hitting a peak of $593,419 in April 2010.
“Although we saw some pressure on home prices throughout the year, home values in 2010 remained relatively steady in the region compared to the last few years when we witnessed much more fluctuation,” Moldowan said.
New listings for detached, attached and apartment properties in Greater Vancouver totalled 1,699 in December 2010. This represents a 21.1 per cent decline compared to the 2,153 units listed in December 2009 and a 43.9 per cent decline compared to November 2010 when 3,030 properties were listed.
Sales of detached properties in December 2010 reached 769, a decrease of 14.8 per cent from the 902 detached sales recorded in December 2009, and a 121.1 per cent increase from the 348 units sold in December 2008. The benchmark price for detached properties increased 4.0 per cent from December 2009 to $797,868.
Sales of apartment properties reached 811 in December 2010, a decline of 29.7 per cent compared to the 1,154 sales in December 2009, and an increase of 94.5 per cent compared to the 417 sales in December 2008.The benchmark price of an apartment property increased 1.2 per cent from December 2009 to $387,115.
Attached property sales in December 2010 totalled 319, a decline of 30.5 per cent compared to the 459 sales in December 2009, and a 100.6 per cent increase from the 159 attached properties sold in December 2008. The benchmark price of an attached unit increased 2.7 per cent between December 2009 and 2010 to $490,869.
The Real Estate Board of Greater Vancouver (REBGV) reports that total sales of detached, attached and apartment properties in 2010 reached 30,595, a 14.2 per cent decrease from the 35,669 sales recorded in 2009, but a 24.2 per cent increase from the 24,626 residential sales in 2008. Last year’s number of housing sales was 10.3 per cent below the ten-year average for annual Multiple Listing Service® (MLS®) sales in the region.
The number of residential properties listed for sale on the MLS® in Greater Vancouver increased 9.7 per cent in 2010 to 58,009 compared to the 52,869 properties listed in 2009. Compared to 2008, last year’s total represents a 7.3 per cent decline compared to the 62,561 residential properties listed in 2008. The number of properties added to the MLS® peaked in April and generally declined for the remainder of the year.
“The last two years have been a bit of a rollercoaster for the real estate market. However, sales over the past six months have definitely shown a trend toward stability. We think that’s good news for home buyers and sellers,” Jake Moldowan, REBGV president said. “The Greater Vancouver housing market experienced a modest increase in home prices in 2010, and a continual decrease in the number of properties being listed for sale.”
Residential property sales in Greater Vancouver totalled 1,899 in December 2010, a decrease of 24.5 per cent from the 2,515 sales recorded in December 2009—an all time record for the month—and a 24.3 per cent decline compared to November 2010 when 2,509 home sales occurred.
More broadly, last month’s residential sales represent a 105.5 per cent increase over the 924 residential sales in December 2008, a 0.1 per cent increase compared to December 2007’s 1,897 sales, and a 12.6 per cent increase compared to the 1,686 sales in December 2006.
The residential benchmark price, as calculated by the MLSLink Housing Price Index®, for Greater Vancouver increased 2.7 per cent to $577,808 between Decembers 2009 and 2010. However, prices have decreased 2.6 per cent since hitting a peak of $593,419 in April 2010.
“Although we saw some pressure on home prices throughout the year, home values in 2010 remained relatively steady in the region compared to the last few years when we witnessed much more fluctuation,” Moldowan said.
New listings for detached, attached and apartment properties in Greater Vancouver totalled 1,699 in December 2010. This represents a 21.1 per cent decline compared to the 2,153 units listed in December 2009 and a 43.9 per cent decline compared to November 2010 when 3,030 properties were listed.
Sales of detached properties in December 2010 reached 769, a decrease of 14.8 per cent from the 902 detached sales recorded in December 2009, and a 121.1 per cent increase from the 348 units sold in December 2008. The benchmark price for detached properties increased 4.0 per cent from December 2009 to $797,868.
Sales of apartment properties reached 811 in December 2010, a decline of 29.7 per cent compared to the 1,154 sales in December 2009, and an increase of 94.5 per cent compared to the 417 sales in December 2008.The benchmark price of an apartment property increased 1.2 per cent from December 2009 to $387,115.
Attached property sales in December 2010 totalled 319, a decline of 30.5 per cent compared to the 459 sales in December 2009, and a 100.6 per cent increase from the 159 attached properties sold in December 2008. The benchmark price of an attached unit increased 2.7 per cent between December 2009 and 2010 to $490,869.
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