By Garry Marr, Financial Post August 7, 2013

 Last week, realtors in both Vancouver and Toronto released results showing a strengthening market. Toronto July sales were up 16% from a year ago and Vancouver 40%.

The latest tightening of mortgage rules might come down to a couple of thousand dollars for the average Canadian consumer but that still has many wondering why Ottawa is cracking down once again on housing.

Don Lawby, chief executive of Century 21 Canada, said if the latest changes raise borrowing costs, housing is going to get more expensive.

“In the eyes of the government, housing must be out of control again, but I don’t see it,” he said, adding the warning, “if you push hard enough, there will be a correction.”

CMHC has notified banks, credit unions and other mortgage lenders that they will each be restricted to a maximum of $350-million of new guarantees this month under its National Housing Act Mortgage-Backed Securities (NHA MBS) program.

The federal Crown corporation was given authority to guarantee up to $85-billion this year under the program — of which about $66-billion was committed by the end of July and approaching the total of $76-billion in all of 2012.

Ultimately, the limit will increase bank funding costs because insured mortgages held on balance sheets under the NHA MBS are easier to securitize. More expensive funding will just be passed on to homeowners.

The move comes as the housing market has shown some nascent signs of taking off again. Last week, realtors in both Vancouver and Toronto released results showing a strengthening market. Toronto July sales were up 16% from a year ago and Vancouver 40%.

Rob McLister, editor of Canadian Mortgage Trends, downplayed the latest changes and said they amount to about 20 basis points or 0.2% percentage points on a five-year mortgage.

“At that rate it’s $1,900 on a five-year fixed rate, $200,000 mortgage. It’s real dollars and cents to most consumers but I don’t think it’s going to have a real dampening effect on credit,” he said.

Mr. McLister said he has heard that some larger lenders were asking for big guarantees on some of their pools “and that made the powers that be nervous” and led to the crackdown.

The decision likely has been dictated by Finance Minister Jim Flaherty, whose department took control of the program after recent changes to the National Housing Act.

Mr. Flaherty in the past has expressed concern about the housing market being overheated, and has tightened mortgage rules on four occasions. His department even got directly involved in the lending market, discouraging the major banks from engaging in a rate war that lowered five-year fixed mortgages below 3%.

Peter Routledge, an analyst with National Bank who says the latest changes could add anywhere from 0.15% to 0.45% percentage points to the mortgage rates, said he’s been expecting more changes but not right away.

“I thought with the changes they made last fall, that they were done,” said Mr. Routledge. “I’m a bit surprised by the timing. I’m surprised they didn’t wait for a couple of more months of data.”

He also wonders whether Ottawa is reacting to the past mortgage rate wars that occurred in March. “There was the price war. Put yourself in the government’s shoes as a stakeholder. About 62% of residential credit is insured. Who is holding the bag if it goes bad? Most of the credit risk lies with the federal government,” said Mr. Routledge. “You are trying to progressively manage the flow of credit without damaging the value of the underlying collateral which is [potential] loss to the government in home prices.”

Doug Porter, chief economist with Bank of Montreal, wonders if housing statistics over the last couple of months showing sales and prices rebounding might have spooked the CMHC.

“I think this step is being taken because we have seen some signs in recent weeks that the market is not cooling as much as had been expected,” said Mr. Porter. “All the debate has been whether we will have a soft or hard landing and I would question whether the market had any landing whatsoever.”

1. When to Buy Real Estate

  If the papers say that a city is booming, everyone wants to buy.

  Therefore, this is the perfect time to sell.  When everybody is           selling  because of a recession, they you buy, which prices are 

  rock bottom. 

2. More Experience the better

  If a RELATOR® has not kept up to date with the changing technology, regulations, market conditions, or modern

service style, then all of their past experience won't help you be properly represented.

3.  It's all about Price

  Negotiating mainly only the price of a property will limit your 

  opportunity.  If you can offer more favorable terms to the other

  party, then the price will secondary.  

4.  Calling off signs is the best way to find a property

  A Realtor® selling a property cannot represent their seller's best

  interests and yours at the same time.  This is a conflict of 

  interest.  Save yourself. potentially thousands of dollars, find your       own Realtor®.

5.  Banks are the best Finaincing Source

  Banks have different mortgage options, but can only ever provide

  you witj their interest rates and handful of options to choose from.

  A mortgage broker works with most major banks, has way more

  options and tons of different lenders' interest rates to choose from.

  Plus, they can work to fit your schedule.

Thanks,  hope you found this information useful

Terri 

A new survey* suggests that, last year, single women made up 20% of all home buyers; single men only accounted for 12%. And by single, I mean unmarried or divorced. So what does all this mean?

Well, according to some folks who have been weighing in, the reason single women are buying more homes is because of women’s deep-rooted concept of home and what it represents.

Why single women buy more homes

According to the National Association of Home Builders, this is the perfect time for single women to buy a new home, what with the interest rates at historic lows.

And home builders are starting to build with single women in mind – gourmet kitchens, extra security features and backyards that require almost no maintenance.

Single women, it seems, are also quite savvy when it comes to purchasing a home, asking the right questions and making informed decisions.

According to the Joint Center for Housing Studies, the top three reasons single women are buying homes in record numbers are:

3- Single women want to relocate closer to a job or family
2- Single women need more space
1- Single women have a strong desire to nest

The real reasons single women buy more homes

What do I think? Well, I’m glad you asked. I think that single women are buying more homes on their own because, to start, they work full time and make enough money to do so.

Second, it may not be their life’s mission to find a man to settle down with and have children.

Instead, single women are living their lives independently and have the mentality that, if a man comes along, great, they already have a home for them to live in, and if a man doesn’t come along, well, they have their beautiful sanctuary all to themselves

Single and looking for a home -  Call I'm here to help. 

There is no doubt that the housing market is coming back nicely. What, if anything, could slow down the current momentum? We believe it may be sellers’ over exuberance when it comes to pricing. There is little doubt that house prices have appreciated over the last twelve months in most regions of the country. However, with both the inventory of homes for sale and interest rates increasing, we have to be careful to not over judge what the market can bare.

Trulia just reported that asking prices have jumped dramatically and the increase is accelerating:

• Year-Over-Year prices jumped 10.7%
• Quarter-Over-Quarter prices jumped 4.1% (16.4% annualized)
• Month-Over-Month prices jumped 1.5% (18% annualized)

No expert is expecting home prices to shoot up 18% in the next twelve months. If anything, price appreciation may slow as rates and inventories increase. Investors will begin to slow their purchases and the first-time buyers expected to take their place will be working within a pre-set budget in many cases.

Buyers’ Purchasing Power

Let’s look at an example: A young couple is looking for a home and have predetermined that their budget will only allow them to spend $1,000 a month on a mortgage. At today’s mortgage rate of 4.5%, they could afford a $200,000 mortgage ($1,013 principal & interest). However, if rates jump to 5%, they would have to lower their mortgage amount to $190,000 in order to keep their monthly payment where they need it ($1,020). At 5.5%, the mortgage would need to be no more than $180,000 ($1,022).

The Impact on Prices

This decrease in buyers’ purchasing power will have an impact on home values going forward. We do not believe it will cause a decrease in prices. However, we do believe it will likely cause current rates of appreciation to slow.

If you are thinking about selling your home, don’t get carried away with current headlines about home price increases that have taken place over the last twelve months. Instead, call a local real estate professional. They will be best prepared to explain where prices are headed over the next six months.