Mortgage Market Update

MORTGAGE MARKET UPDATE

Mortgage Regulation Change this Friday, March 18 - Limit the maximum amortization period to 30 years (from 35 years); limit the refinance maximum to 85% (from 90%); and insured lines of credit will no longer be available (effective April 18). If your clients require a mortgage at the longer amortization or higher loan amount, they must have their application in and unconditional before March 18, however, the closing date can be much later.

Impact to Canadian Homebuyers

·         A lower amortization period means less interest paid since the monthly principal & interest payments are higher, but it also takes more income to qualify for the same loan amount making it less affordable.

·         With the reduction in amortization, using an example of a $300,000 loan amount at a 5 year term means a borrower must select a home roughly 8% lower in price, make around $100 more per month in principal & interest payments, and/or their qualifying income will have to increase by 5%.

NEW & NOTEWORTHY

Several lenders have re-introduced their 'B' programs (for borrowers who require alternate financing sources from the general 'prime' market). This is great news as it opens up the market to those borrowers that were unable to qualify with the traditional lenders.

·         One lender introduced a B-Program last week for those with credit scores as low as 550, and allows a 'stated income' application even for those that are salaried or commissioned (previously only self-employed persons could access this product).

·         Another lender introduced an Equity Visa Card (this is equivalent to a second place line-of-credit but can be accessed by those that wouldn't qualify for a Line of Credit.

I have a selected group of Mortgage specialists I can refer you to if needed.

** no cost or obligation  - find out what you can afford today

Terri Stephens - CIR REALTY- 403-827-4663