Are You Average? This is What First-Time Home Buyers Look Like in Canada

Linda Nguyen – The Canadian Press

 

 

The average first-time home buyer in Canada is 29 years old and expects to be able to put down a down payment of $48,000 on a $300,000 home, according to a recent poll by the Bank of Montreal.

 

But the study, released Tuesday, also found that price expectations vary widely, depending on where the home buyer lives.

 

Buyers in Atlantic Canada say they expect to spend the lowest in the country with an average of $202,000 on a first home, followed by Quebec with $224,000, Ontario with $326,000, British Columbia with $384,000 and Alberta with $406,000. The sample size used in the Prairies was too low to be included in the survey.

 

Meanwhile, the data also found Vancouver to be the most expensive city, with first-time home buyers there saying they plan to shell out an average of $443,000 for a home, followed by Toronto at $347,000.

 

BMO mortgage expert Laura Parsons says that as with any major purchase, it’s important for people be realistic and prepared.

 

“What we tend to do is jump in the market when we’re ready, instead of starting a plan now,” she said from Calgary.

 

“Let’s start getting ready for it so we can start giving you good advice all along the way. Don’t be afraid to get things going.”

 

And while a large down payment is impressive, it does not necessarily mean that young people are diligently saving for their first home. Instead, many may be getting help from their Baby Boomer parents or friends, said Ms. Parsons.

 

Forty-six per cent of those surveyed also they’ll choose a fixed mortgage rate when they buy, against 20 per cent who will choose a variable rate.

 

The study also found that the average first-time home buyer plans on paying off the mortgage on their home within two decades, with 20 per cent anticipating they’ll be mortgage-free even earlier than that.

 

Twenty-three per cent of those surveyed say they will still have a mortgage within 25 years; 16 per cent say within 20 to 24 years and 20 per cent say within 10 to 19 years.

 

On the opposite end of the spectrum, seven per cent say it’ll take them more than 25 years to fully own their home, while three per cent say it’ll take them between one year and nine years to pay it off.

The survey also found that 31 per cent concede they really don’t know when they’ll be able to stop making mortgage payments.

 

The Bank of Montreal report surveyed a random online sample of 2,000 Canadians between Feb. 25 to March 5.

 

The polling industry’s professional body, the Marketing Research and Intelligence Association, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.

When will the housing market rebound?

From TMG The Mortgage Group


This has been a week of reports – all confirming a cooler housing market. On Tuesday April 9, the Canada Mortgage and Housing Corporation (CMHC) reported housing starts were weaker than expected, although edging higher in March. A Statistics Canada report showed the value of Canadian building permits rose a weaker-than-expected 1.7% in February.

BMO Capital Markets senior economist Robert Kavcic sees the housing starts report as a “soft landing” he said in a Globe and Mail interview, noting that, “starts have receded to just above levels seen two years ago.”

In a Royal Bank poll, 15% of those surveyed say they’re likely to buy in the next two years, a drop from 27% from the previous year. Analysts suggest the reason for the delay is that Canadians are paying down other non-mortgage debts. This was proven correct in yet another report, this time from CIBC, that found homeowners are tackling other debts and don’t think they’ll be mortgage-free until they’re 57, which is two years longer than what they expected last year.

A year ago Canada was in the midst of a hot real estate market. Now the Canadian Real Estate Association (CREA) is reporting that actual activity has declined as much as 15.8% below last year’s levels.
We’re also seeing a wide variation in housing prices across Canada. A report by Royal LePage found that prices were up year-over-year nationally, with the exception of Vancouver, Victoria and Saint John, N.B., which had year-over-year price declines.

The once booming real estate sector has turned into a deep housing slump. Even the Spring market has not rebounded as expected. The International Monetary Fund still believes the market is somewhat overvalued, as do many economists. The new mortgage-insurance rules have indeed impacted the market, especially for the first time home buyers. Many analysts suggest the market was correcting itself,that the government’s rule changes were perhaps unnecessary, and may have been the tipping point.

There is no arguing that the market has cooled down. Any hopes of a big rebound this year seems unlikely. So the big question is how long this slowdown will last. For that answer we need to look at both the Canadian and U.S. economies.

Both countries are showing signs of weakness in job creation. Consumer confidence is down; manufacturing is weak. Both economies are expected to grow a sluggish pace of under 2% this year. The Canadian government and the Bank of Canada have consistently lowered their growth prediction as reports are released. The trade gap in Canada has widened and will likely get worse, given the weaker U.S economy – Canada’s major trading partner. There is, however, a bright light –new home construction in the U.S.is increasing -- which is good for our exports.

According to Benjamin Tal, Deputy Chief Economist with CIBC in a weekly Market Insight Report, the economy will remain sluggish until the end of 2013. Given that, like a big ship trying to turn in the middle of the ocean, we think it’s safe to say that it will take until well into 2014 for the economy and the housing market to come alive again.

Canadian housing market ‘in a highly unusual place’

Susan Pigg, Business Reporter, TheStar.com

An unusual combination of factors is fueling house price increases despite a downturn in sales, a new housing survey finds.

Toronto house prices are likely to continue to soften into next year, but will avoid a hotly anticipated major downturn, as “2013 finds the Canadian housing industry in a highly unusual place,” according to a new quarterly housing survey by Royal LePage.
 

The rare combination of low interest rates, flattening house prices and an improving economy “is not something we’ve seen before,” says Royal LePage president Phil Soper.
 

“Typically, one of these variables is moving hard in an opposite direction.”
 

That unusual combination of factors should give buyers some breathing space, as prices flatline and sellers gain some confidence that house values will hold strong, according to the quarterly survey, which shows that despite a significant slowdown in sales since last summer, the average price of a home in Canada increased between 1.2 and 2.4 per cent in the first quarter of this year over the same time last year.
 

“While some have spoken loudly about impending market volatility and dramatic downward pressure on home prices, we are simply not seeing evidence of this,” said Soper, whose company has a network of 14,000 realtors across Canada.
 

“The current environment is very supportive for housing. Those waiting for big declines in home prices will likely be disappointed.”
 

While such optimism is unsurprising from a real estate company, despite the fact sales have plummeted across the country since last summer — especially in the condo sector — the survey of Canadian house prices in the first quarter does provide hopeful signs.
 

Only the once superhot Vancouver and Victoria housing markets, along with Saint John, N.B., have seen significant downturns in house and condo prices, according the annual survey, which looks at seven types of housing in over 250 Canadian communities.
 

Vancouver bungalows, for instance, which still average just over $1 million, saw price declines of 5.1 per cent while condo prices were down almost 6 per cent in the first quarter of 2013, year over year.

Saint John’s declines are largely because an influx of new jobs and consumer confidence, which started four years ago, is starting to peter out, noted Soper.
 

St. John’s, N.L., on the other hand, saw some of the biggest price gains in the country, with two-storey houses up an average 10.6 per cent year over year, largely buoyed by move-up and executives buying pricier homes.
 

While Toronto saw a double-digit downturn in buying activity in the first quarter of this year over last, it has yet to seriously impact prices, the survey shows.
 

The average price of a bungalow was up almost 4 per cent in the first quarter over the same time last year, to $565,700. Even condo prices were up almost 2 per cent year over year to an average $359,671, according to the survey.
 

But Soper noted that those gains are unlikely going forward, even if sales do start to pick up, as Royal LePage expects, later this year.
 

Soper predicts prices gains could slip, possibly into negative territory, by the end of 2013 and would be unlikely to pick up again until into 2015, driving the Toronto market into serious buyers’ territory for the first time since the 2008 recession.

How to get a Mortgage Started with Bad Credit

From Syndicate Mortgages


One out of eight Canadians will file for bankruptcy or settle with creditors. Needless to say Canada mortgage has seen its fair share of potential homeowners who have bad credit.
It will be difficult for you to acquire a mortgage loan if you have a bad credit history. Fortunately there are still ways through which you can have a roof over your heads nonetheless.

Non Traditional Sources

Banks do not lend to people who have a bad credit history. If you happen to be one of them you have your work cut out for you. In cases such as these turning to non traditional lenders will be your best course of action.

Down Payment Requirements for Bad Credit

Lenders will be more willing to oblige you if you put down a 20% down payment of the total value of the property. The reason why is simple. Such an amount would reassure them that there is less risk involved. You would be able to acquire the mortgage since a lender will be able to issue it at the lowest possible rate.
Your down payments, credit and job history will have an equal impact on whether you will be able to apply for a mortgage loan in the country.
However, potential homeowners who have a bad credit history seldom have the cash to put down such an exorbitant sum of money upfront. In fact such a feat is also problematic for the most qualified buyers.
Mortgage with down payments that come up to less than the property’s value (less than 20%) involve high ration loans. Such loans also require the approval of the Canadian Mortgage and Housing Corporation (CMHC).
Lenders also charge higher interest to applicants that are granted BC (bad credit) mortgages since the latter are considered to be high risk. An experienced mortgage broker will work with you to ensure that the interest rate your lender charges is a low as possible.
However it is better to settle for a down payment that is more than 20% of the property’s actual value since doing so will help you achieve preferable rates. You can also achieve payments that are less than 20% if you have a steady income.

Bankruptcy

You will still be eligible for a mortgage loan after bankruptcy if you have a reasonable explanation for your lack of funds. For example, a lender will sympathize with you more if your bankruptcy was caused by a medical emergency. In other words, if your funds were depleted because you spent too much time shopping no lender would oblige you.
A bankruptcy proposal requires that you earn a lender’s trust by having at least two credit accounts. Both of them also need to have a two year track record. For instance in order for lenders to take you seriously you might need to have a $1000 or $2000 credit limit.
It may be possible to apply for a Canada mortgage with a bad credit history, however since your options are limited it is best that you do your research before proceeding any further.

How to score the best deal on your mortgage

Kathryn Boothby, Postmedia News
The Financial Post


Sean Morphy and his wife got a very competitive mortgage rate when they made the jump to home ownership a little over a year ago but it took a long-term relationship with a mortgage professional to get them there.

“Our advisor was a family friend so we trusted him,” says Morphy. “He was able to get us a four-year fixed rate at 2.99% which we were very happy with. We did look at other options but this was the best rate that we could find at the time.”

For those without connections, navigating the mortgage waters can be a challenge. However there are steps that consumers can take to ensure that they are getting the best possible deal.

Regardless of whether you’re looking for a first mortgage, renewing or refinancing, there are two key actions to take before approaching a mortgage provider. Do your homework and get your credit report, says Julie Hauser, spokesperson for the Financial Consumer Agency of Canada (FCAC), an independent federal government organization that helps to protect and inform consumers.

“Getting a credit report six months ahead of time allows you to check for errors or other items that need addressing so that you can improve your credit score before applying for a mortgage,” she says.

A credit report provides a summary of credit history including bill payment and debt repayment with credit providers such as banks and retail stores. It also shows records that may affect creditworthiness such as court judgments, bankruptcies or liens. FCAC provides information about how to obtain free credit reports and the steps that can be taken to improve credit scores.

“Good credit gives leverage that can be used to your advantage when negotiating a mortgage. A bad report could see the lender refuse to approve, ask for a larger down payment or co-signer, or approve with a higher interest rate.”

When it comes to interest rates, a difference of a fraction of a per cent can equate to thousands of dollars over the life of a mortgage. But according to an Angus Reid survey, when renewal time rolls around, more than a quarter of Canadian households allow their mortgage to automatically renew with their existing lender rather than seek a better deal.

Lenders typically send out renewal notices 30 days before a mortgage term expires.

(Federal regulations stipulate that they must be sent at least 21 days prior to the end of the term).
“Consumers are not obliged to renew with the same institution and need to start seriously looking around about four months before the renewal date,” says Hauser.

Many institutions offer a 120-day early renewal which allows mortgage holders to renew before the maturity date without penalties. This can help save interest costs if rates rise before the regularly scheduled renewal date.

For those intimidated by the negotiation process, or who lack the time to do the necessary research, a mortgage broker can take up the slack. “Brokers account for 25% of the mortgage market in Canada. They have access to a wide range of products and are trained to assist purchasers whether it is a first mortgage or refinancing,” says Jim Murphy, president and CEO of the Canadian Association of Accredited Mortgage Professionals (CAAMP).

But a great rate is not the only important consideration in getting the best deal, says Murphy. “When speaking with a mortgage professional consumers need to ask lots of questions so that they understand the features of a mortgage. Can additional payments be made? Are there penalties for early refinancing? Is a fixed, open, variable, or closed product the best choice? Is it portable – can I take it with me if I move?” All of these things have an affect on the cost of a mortgage.

In retrospect, Morphy says he should have asked more questions before signing on the dotted line. “I didn’t realize until after the fact that there are penalties for renegotiating before the end of the term. We’ll likely stay where we are, but if there are huge savings to be had elsewhere we’d certainly consider it.”

What is a 20/20 or 15/15 Prepayment Option?

Question: What is a 20/20, 15/15, 10/10 Prepayment Option? What does it mean?

Answer: With "20+20" Prepayment Privileges, you can save thousands of dollars in interest costs by making small increases in your mortgage payments and prepaying some of the principal.
The First "20": Increase Your Mortgage Payments
Increase your mortgage payment by up to 20% over the current payment. This option can be exercised once each calendar year, at any time, without charge.
The Second "20": Make Lump Sum Payments
Prepay up to 20% of the original mortgage principal each calendar year. This option can be exercised in minimum amounts of $100 without charge, some conditions may apply.

You have an annual prepayment privilege of up to 20% of the original mortgage balance as well as the annual option to increase the monthly payment by 20% without penalty, combining the two options you need to keep within the 20% value of the original mortgage amount.

Example:

$100,000.00 mortgage with a 20/20 prepayment
a) Once a year pay 20,000.00
b) Once a year increase your mortgage payment by $200.00/ month and then put down $17,600.00 in that year
c) Only increase monthly payment of any amount.from $100.00- $1666.67
d) Keep payments the same in that year
The prepayment option is flexible and either can be used or not. Whichever method you use you cannot go over the maximum percentage for that year.



These options are very important. You may think that you will never use these options but you never know. If you should receive an inheritance or win a small lottery, you can use the prepayment option to pay down your mortgage without penalty.

Many Canadians do not keep their mortgage for the full 5 years. They may want to refinance or move to a bigger house. If their mortgage is not portable, they will have to pay a penalty to get out of that mortgage. You can use the prepayment clause for that year, so the penalty will be less.

Prepayment options can save you thousands of dollars in the life of your mortgage, it costs nothing to have them and are easily one of the best options you can have included in your mortgage.


Mortgage Calculator Tool

This calculator determines your mortgage payment and provides you with a mortgage payment schedule. The calculator also shows how much money and how many years you can save by making prepayments.

Bankruptcy and Mortgages

Question: How long do I have to wait to get a mortgage after bankruptcy?

Answer: The waiting period varies, here is a list of what is commonly available among my lenders.

3 years discharged, *BFS 5 years discharged; 2 trades re-established for 2 years
2 years discharged, 1 year re-established credit / min. 1 trade line; no property inc. in bankruptcy
2 years discharged with 2 years re-established credit
3 years discharged, with 2 years of re-established credit
2 years discharged,with 2 years re-established on 2 trades or more(credit cards)
3 yrs discharged with 2 yrs re-est, clients under 4 yrs discharged rate premium
2 years discharged with 1 year re-established; rate premium
2 years discharged, 1 year re-established on min. 1 trade line ( credit card)

With some Lenders it is as soon as 3 years and others are 4 or 5 years.
*BFS- Self Employed (Business For Self)

Mortgage Insurers

CMHC 2 years discharged, with 1 year re-established credit.
Genworth 2 years discharged, with 2 years re-established credit; no property involved.
CG 2 years discharged, with 2 years re-established credit.

If you are in more of a hurry, a Private Lender will lend, depending on your story. With private lenders, they charge higher interest.

Top 10 Most Asked Mortgage Questions

By Danielle Spitters, TheRetiringBoomer.ca

When considering buying your first home, or refinancing to buy your dream home, there are many questions you may have and the whole process might seem foreign to you, even if you have done it before. I get a lot of questions from my clients and have summarized the most common ones to give you some insight to what the lenders are looking for when qualifying you for a mortgage. For first timers this is a good overview and for those refinancing a refresher.

 

1. What’s the best rate I can get?

 

The rate that you receive depends on a number of things. I get a lot of clients that are what I like to call “rate sensitive” this means that they are fixated on the lowest rate and may not understand why they cannot receive that low advertised rate. A number of those rock bottom rates you see advertised have conditions to them. For instance they may only be for a 30 day quick close, or they may not be portable. When qualifying for a mortgage a lender and the broker will look at a number of things to determine the rate you will receive. Some of these things include employment, credit score, loan to value, income and many more. Each application is unique so it is best to talk to your broker about how you feel your credit may be before determining which kind of rate you will receive.

 

2. What’s the maximum mortgage amount for which I can qualify?

 

This of course is going to be based on your income and liability circumstances.
There are two calculations both lenders and mortgage brokers use to qualify a borrower. The first is your Gross Debt Service (GDS) ratio. GDS looks at your proposed new housing costs (mortgage payments, taxes, heating costs and 50% of strata/condo fees, if applicable). Generally speaking, this amount should be no more than 32% of your gross monthly income. For example, if your gross monthly income is $4,000, you should not be spending more than $1,280 in monthly housing expenses. Second, you will need to calculate your Total Debt Service (TDS) ratio. The TDS ratio measures your total debt obligations (including housing costs, loans, car payments and credit card bills). Generally speaking, your TDS ratio should be no more than 40-44% of your gross monthly income. Keep in mind that these numbers are prescribed maximums and that you should strive for lower ratios for a more affordable lifestyle. Before falling in love with a potential new home, you may want to get a pre-approved mortgage. This will help you know what you can comfortably afford, so you can go house shopping with confidence.

 

3. How much money do I need for a down payment?

 

The minimum down payment required is 5% of the purchase price. If you want to avoid having to pay CMHC fees than 20% is needed.

 

4. What happens if I don’t have the full down payment amount?

 

There are programs available that enable you to use other forms of down payment, such as from your RRSPs Home Buyers’ Plan (HBP), a cash-back product, or a gift. There are mortgage products out there that allow you to purchase with no money down at a bit a higher interest rate which is called a cash-back mortgage. You can also use a non-repayable gifted down payment from a family member.

 

5. What will a lender look at when qualifying me for a mortgage?

 

These are the most important factors a lender will look at when qualifying you for a mortgage. Employment history, income, debt, credit history and the value of the property you are purchasing make up the list. Most importantly the lender is looking to make sure you can afford the home you want to purchase. Second most important thing they consider is the value of the home. The lender wants to make sure that if you default on payments they have security in the home. What lenders like to see is stability. They want to see this through your employment. They want to see that you don’t miss payments on anything. It’s important for you to have good credit, and minimal liabilities or that you are at least never late on those payments. You don’t want to be holding a bunch of debt that you can’t afford. This shows you are responsible and less of a risk for the lender.

 

6. Should I go with a fixed or variable rate?

 

This ultimately depends on your risk tolerance. If you’re a first time home buyer you may feel a lot safer going fixed as you would know what you’re expected to pay for the term of the mortgage. Variable however can save you a lot of money, I mean thousands. This is of course if the rate doesn’t go up, and no one can predict the future. If you want to go variable I say it’s best to qualify you a bit lower than your max, this way you have room and can afford the payments if the prime rate moves up. There is also a 50/50 rate where you can go half fixed and half variable, so you can enjoy some savings but still feel a bit more secure.

 

7. What credit score do I need to qualify?

 

Generally speaking a credit score of 680 and up is an excellent credit score. The higher above 680 it is the more likely to get the best rates. There are lenders that lend on lower credit scores but you may not be able to get the lowest rate offered. Having a larger down payment can also help to increase your odds at getting a better rate. Statistics show that the larger the down payment, the less defaults on payments.

 

8. What happens if my credit score isn’t great?

 

If your credit isn’t the greatest there are ways to increase your score. Most credit reporting companies report every month. So luckily you can change your score within a month’s time if you do the right things. First most important thing is to pay down your credit cards so they are at below 70% of your limit. Pay off your credit card balance in full if possible, credit agencies do not see that you may have paid $1000 last month, all they see is the last payment and what is owing, so if you can have balance at 0, that of course is the best! Keep using cars you have had for a long time, older is better here. Make sure everything is up to date. You don’t want to find out that an old bill is still showing up on there when you paid it ages ago.

 

9. How much are closing costs?

 

Closing cost is on average 1.5% of the total purchase price. This is just a guideline to go by, but the lender will generally want to confirm you have the means to pay this. Closing costs will cover things like, inspections, lawyer fees, property transfer tax, appraisals, and title insurance.

 

10. How much will my mortgage payments be?

 

This is going to depend on many different things. The size of your down payment, the interest rate, the purchase price, amortization, whether or not you’re paying mortgage insurance and also the frequency of payments (bi-weekly, bi-weekly accelerated, or monthly).

How to find the home you never thought you wanted

CAROLYN IRELAND

The Globe and Mail

 

 

Toronto’s spring real estate market is full of quirks and happenstance.

Last week I wrote about Arie and Sabina Diamant, who were contemplating making an offer on a fixer-upper with a sloping basement floor in the pocket south of the Eglinton West subway station. The couple decided to pass on the house on Belvidere Avenue, but there’s a twist to the story – Ms. Diamant’s sister immediately bought it. Jody Segal and her husband have been renting in the neighbourhood during their one-and-a-half-year search for a place to buy.

They had looked at the semi-detached brick house earlier but they didn’t see the potential, says Ms. Segal. Like so many house hunters they had trouble envisioning a chic, modern house emerging from decades’ worth of clutter and oppressive window treatments.

But the couple was discouraged after another house they liked in the area sold in a bidding war for a price way beyond what they could afford. They had started to look in Thornhill and other areas farther from the core.

But when Ms. Segal heard from her sister Sabina that the house could be rejuvenated with a renovation, she reconsidered. She talked to Sabina’s agent, Ira Jelinek of Harvey Kalles Real Estate Ltd.

He saw the house as a solid property that offered lots of room for improvement – and therefore enhanced value.

That’s when Ms. Segal and her husband decided that the house might work for them and their two young children. It has a large lot and three bedrooms. And it wasn’t drawing much attention.
“It was cold,” says Ms. Segal. “It had been listed for a while.”

So they made an offer conditional on inspection and bargained the owner down from the $499,000 asking price.

During the five days they had to carry out an inspection, Ms. Segal says, another semi came up for sale on the same street. It had an asking price of $689,000 and offered only two bedrooms but it was renovated top-to-bottom and “showed” extremely well.

“People were flocking to it,” says Ms. Segal, who was walking contractors through the house she had purchased. While she was there, people who had been drawn to the house up the street and saw the “for sale” sign on hers were knocking on the door.

She figures those potential buyers weren’t even considering houses under $500,000 and therefore it wasn’t on their radar screens until they visited the street to see the more expensive house.

All of a sudden, the house they had purchased conditionally was getting fresh attention. Ms. Segal figures if she had waited just a few more days, they would have missed out.

“If we don’t take this now, we’ll never be able to stay in this neighbourhood,” Ms. Segal told her husband. Meanwhile, the builders and inspectors she talked to reassured her that the house is solid.
Now she and her husband are looking forward with great excitement to taking possession and getting the reno under way. They won’t attempt to live in the house while the work is going on.
“I’ve heard that marriages end that way,” she says.

Meanwhile, a savvy professional woman I know was tempted this week by a renovated two-bedroom house in New Toronto just a few doors up from Lake Ontario. She contemplated putting an offer on the table, but backed away when she heard that four offers had already been registered with one hour to go before the deadline.

The house had an asking price of $639,000 but she figures that a selling price above $700,000 would leave no room for increasing the value.

Besides, spring market competition is too nerve-racking, she adds, and she’s going to stay in her current house for a while longer.

Agents say there have been very few detached houses for sale in the west-end neighbourhoods along the lake this spring so any properties that do come on the market are immediately swarmed.
Still, they add, sales remain fickle and they’re sometimes at a loss to understand why some houses attract multiple offers and others none at all.

Do home buyers need to be cautious?

It seems many first-time home buyers are taking a wait-and-see attitude before jumping into the housing market. The question is: What are they waiting for? In an Ipsos Reid poll released in late March, 15% of those polled said they'll probably buy a house in the next two years -- down from 27% last year. About 75% of the 3,000 people polled between Jan. 31 and Feb. 8 cited the mortgage market restrictions for delaying their buying decision. However, six of 10 respondents didn't see the 5% minimum down payment and the shorter amortization as that big a deal. Eighty-four per cent felt real estate was a sound investment, and 52 % said now is a good time to get into the market. Could the overall uneasiness about the economy and the housing market be more perception than reality? Almost half of those polled said they believed mortgage rates are going to be at the same level next year, suggesting they see no rush at this point. The move-up market is also on hold, likely waiting to see if sale prices increase to get more value out their homes. It's true the housing market has slowed since Minister of Finance Jim Flaherty introduced the changes to mortgage rules. Many in the mortgage and housing industry believe he may have gone too far. His recent intervention with lenders advertising a 2.99 fixed rate special may have confused many Canadians and could lead to increased caution. With interest rates at historic lows, and likely to stay there through 2013, and house prices stabilizing, it's be a good time to review the reasons you might be staying away from the market. Consider the following: Because the housing market is cyclical in nature, corrections are to be expected Broad economic and industry forecasts have not been stellar, which contributes to the cautious mood The Bank of Canada has hinted it is less concerned about household debt levels Inflation rate is still in check despite a recent jump Credit growth is slowing, meaning consumers are shopped-out Job growth continues Interest rates are in no danger of increasing soon Overall, Canadians exercise fairly good judgment when it comes to borrowing A majority of homeowners believe they could manage their mortgage payments if rates went up Perceived market weakness may be keeping new home buyers out of the market; however, more mature, experienced buyer may see this as the right time to buy.

CMHC Introduces New Calculator and Mobile App for Homebuyers

CMHC is pleased to introduce two new tools to help Canadian homebuyers make informed and responsible homebuying decisions. CMHC's new Debt Service Calculator allows homebuyers to evaluate their financial situation and understand how much they can comfortably afford to spend on a mortgage. The easy to use calculator allows users to quickly estimate their gross debt-service ratio (GDS) and total debt-service ratio (TDS), both important measures in assessing their financially readiness for homeownership. The Debt Service Calculator can be accessed on www.cmhc.ca (search 'calculator'). CMHC's new 'Ready, Set, Home' mobile app provides consumers, especially first-time homebuyers, with comprehensive CMHC information and tools at their fingertips. The app helps homebuyers keep track of the details throughout the homebuying process and provides access to a variety of helpful calculators, articles and other resources. Recognizing the increasingly fast paced, electronic and mobile environment, the new 'Ready, Set, Home' mobile app is a free application that offers quick and convenient access to CMHC's extensive housing information. The app can be downloaded to your Blackberry, Android or iPhone device at cmhc.ca/mobile. These new tools are the latest additions to CMHC's comprehensive suite of resources that are available to support Canadian homebuyers. For more than 65 years, CMHC has shared a wealth of knowledge and housing expertise, as well as useful tools and guidance, to help Canadians enjoy an informed and assured homebuying and homeownership experience It pays to be informed and I can help. It is the highest form of a compliment to be recommended. My mortgage business comes from many sources but referrals from you rank at the top of my list. Please remember to pass my name along to anyone that may benefit from my knowledge and expertise.