31 Jul

First Time Home Owners to eligible for 30-year amortization

General

Posted by: Frank Fik

Effective August 1st, 2024, the Department of Finance will now allow homeowners purchasing a newly built property and who meet First Time Home Buyer (FTHB) criteria, the option of a 30 year amortization for insured mortgages.

At least one borrower to be a FTHB, defined as below:

      • The borrower has never purchased a home before; or
      • In the last 4 years, the borrower has not occupied a home as a principal place of residence that either they themselves or their current spouse or common-law partner owned; or
      • The borrower recently experienced the breakdown of a marriage or common-law partnership.
  • At least one borrower must occupy the property
  • Eligible Properties:
    • Available for 1 – 4 Units
    • Owner Occupied or Partially Owner Occupied
    • Newly built homes and condos ONLY
  • Insurer Premium – surcharge of 0.20% applicable to loans where amortization is >25 years
  • Eligible loan type – Purchase, Purchase Plus Improvement, Port/Replacement
  • Ineligible loan type – Small Rental and Secondary Home Programs

Please reach out to me with any questions.

8 Jul

Residential Market Commentary – Employment and rate cuts

General

Posted by: Frank Fik

Canada’s latest employment numbers are widely seen as supporting more interest rate cuts by the Bank of Canada.

The economy shed 1,400 jobs in June and the unemployment rate rose to 6.4%, up 0.2% from May.  The loss of about 3,000 full-time jobs was somewhat offset by the addition of about 2,000 part-time positions.  Economists are saying the numbers give the BoC more latitude to move ahead with interest rate reductions.

The prospect of lower rates is, of course, appealing to anyone looking to get or renew a mortgage, but reduced interest costs are not likely to improve affordability.

Economist Marc Desormeaux recently ran simulations looking at the impact of some commonly proposed solutions to Canada’s housing affordability problem, including lower interest rates.  He found that the decline in interest rates is expected to be moderate in the short term, which will make mortgage payment relief minimal and likely to be offset by increasing housing prices.  He also notes that income growth is expected to be modest making the likelihood of improved affordability only moderate, if at all.

Desormeaux also looked at extended amortizations, limiting immigration, a spike in new listings, and recession.  All of the scenarios were seen to be minimally effective, and only in the short term.

“Increasing housing supply is the only sustainable long-run solution”, says Desormeaux in his report.

Published by First National Financial LP