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This morning, the Federal Finance Minister announced further changes to Canada’s mortgage insurance rules. Four measures were announced:

1. Amortizations reduced to 25 years
2. Refinancing limited to 80%
3. Properties purchased at over $1 million no longer eligible for mortgage insurance
4. GDS and TDS set at 39% and 44%

CAAMP believes that Canadians understand the importance of paying down their mortgages. These changes, together with new OSFI underwriting guidelines – also to be announced today – may precipitate the housing market downturn the government so desperately wants to avoid. The changes take effect July 9, 2012.

FAQ are outlined below……..

Additional information from the Department of Finance :

FREQUENTLY ASKED QUESTIONS

2012 Announcement on Measures to Support the Long-Term Stability of Canada’s Housing Market

Concerns about borrowers

Q. I already have an insured mortgage. How will these changes affect me?

A. Mortgage insurance is good for the life of the mortgage. Borrowers renewing their insured mortgages will not be affected by these changes. For example, if a borrower had a 30-year amortization and there are 27 years remaining on the mortgage, the mortgage can be renewed with a 27-year amortization, as long as no new funds are being added to the mortgage.

Q. What is required to qualify for an exception to the new parameters?

A. The new measures will apply as of July 9, 2012. Exceptions will be made to satisfy a binding purchase and sale, financing or refinancing agreement where a mortgage insurance application has been made before July 9, 2012. While the changes come into force on July 9, 2012, any mortgage insurance applications received after June 21, 2012 and before July 9, 2012 that do not conform to the measures announced today must be funded by December 31, 2012.

Q. Will a purchase and sale agreement dated prior to July 9, 2012 be considered binding if there are outstanding conditions that have not been fulfilled prior to July 9, 2012?

A. Yes, if the date on the purchase and sale agreement is earlier than July 9, 2012, and a mortgage insurance application has been made prior to that date, the new parameters will not apply, even if the conditions of the agreement have not been waived.

Q. Will the new refinancing rules allow a borrower with a mortgage above 80 per cent loan-to-value (LTV) to refinance by extending the amortization period?

A. No. Effective July 9, 2012, borrowers will not be permitted to refinance a mortgage above an 80 per cent LTV, unless the borrower has a binding refinance agreement dated prior to July 9, 2012, and a mortgage insurance agreement has been made prior to that date.

Q. I have a written mortgage pre-approval from a lender, dated before July 9, 2012 with a 30-year amortization. Will I still be eligible for a 30-year amortization if I don’t sign an agreement of purchase and sale until July 9, 2012 or later?

A. No, a mortgage pre-approval without an agreement of purchase and sale is not sufficient to qualify for a 30-year amortization. You may have a 30-year amortization only if your agreement of purchase and sale is dated before July 9, 2012 and you have made a mortgage insurance application before July 9, 2012. You may wish to discuss with your lender to revise your mortgage pre-approval using the new parameters announced today.

Q. Will the new parameters apply to assignment (“switch” or transfer) of a previously insured loan from one approved lender to another?

A. No. As long as the loan amount and amortization period are not increased, the new parameters will not apply to a switch/transfer/assignment of the mortgage to a different lender.

Q. If I sell my current home and buy another, will the new parameters apply if I transfer the outstanding balance of my insured mortgage to the new home?

A. As long as the outstanding balance of the insured loan, the LTV ratio and the remainder of the amortization period are not increased, the new parameters will not apply when the mortgage insurance is transferred from one home to another.

Q. What if I need to increase the amount of my insured loan when I sell my current home and buy another?

A. In this situation, the new parameters will apply for any insured loan.

Q. If I bought a condo that is not expected to be built for another two years, will the new parameters apply?

A. If you bought a condo and have made a mortgage insurance application on or before June 21, then the new parameters would not apply.

If you buy a condo and make a mortgage insurance application after June 21, the new parameters will apply if the mortgage loan is not funded by December 31, 2012.

General

Q. Why is the Government making these changes at this time?

A. These measures will support the long-term stability of the Canadian housing and mortgage markets and promote savings through home ownership. They are intended to be timely, targeted and measured. The measures will reinforce the importance of borrowing responsibly and using home ownership as a savings vehicle. The Government actively monitors developments in the housing market and is committed to taking action when necessary.

Q. What will be the impacts of the adjustments to the rules for government-backed mortgage insurance on the Canadian economy?

A. The adjustments to the rules for government-backed mortgage insurance will provide significant benefits to the Canadian economy by supporting the stability of the housing market and promoting savings through home ownership. The short-term impact on the housing market is expected to be manageable, given that the majority of Canadian families are already taking a prudent approach in managing household debts. In the long term, these measures are expected to have a positive impact on the economy through higher savings and a lower number of financially vulnerable households.

Q. When do these measures take effect?

A. The new measures will take effect on July 9, 2012.

Q. Are further measures expected?

A. The Government actively monitors developments in the housing market, consumer debt and the economy, and is committed to taking action when necessary to support the long-term stability of the housing market and protect the investment of Canadian families.

Q. Do these measures apply to multi-unit buildings?

A. These standards apply to mortgages on residential property with four units or less.

Q. Why is the Government lowering the limit on refinancing again?

A. The new measure announced today will reduce the maximum amount on refinancing to 80 per cent from 85 per cent of the value of the home. Limiting the amount of refinancing will promote saving through home ownership and limit the shifting of consumer debt into mortgages guaranteed by taxpayers.

Q. Why is the Government lowering the maximum amortization period again?

A. The new measure announced today will reduce the maximum amortization period to 25 years from 30 years. Limiting the maximum amortization period will reduce the total interest payments Canadian families make on their mortgages, helping them build up equity in their homes more quickly and pay off their mortgages sooner.

For example, reducing the amortization period from 30 years to 25 years on a mortgage would result in a moderate increase in the monthly payment. However, over the life of the mortgage, this modest increase would result in a significant reduction in the total interest payments. For a $350,000 mortgage at 4 per cent interest rate, the interest savings could be over $45,000.

Q. Why is the Government limiting the maximum gross debt service (GDS) and total debt service (TDS) ratios?

A. The GDS ratio is the share of the borrower’s gross household income that is needed to pay for home-related expenses, such as mortgage payments, property taxes and heating expenses. The TDS ratio is the share of the borrower’s gross income that is needed to pay for home-related expenses and all other debt obligations, such as credit cards and car loans.

The new measure announced today will set the maximum GDS ratio at 39 per cent and reduce the maximum TDS ratio to 44 per cent. These debt service ratios measure the share of a household’s income that is required to cover payments associated with servicing debt. Both measures are already used by lenders and mortgage insurers to assess a borrower’s ability to pay. Setting a GDS limit and reducing the TDS limit will help prevent Canadian households from getting overextended and reduce the number of households vulnerable to economic shocks or an increase in interest rates.

Q. Why is the Government introducing a maximum allowable price for insured mortgages?

A. The new measure announced today will establish that government-backed mortgage insurance is only available for a new high loan-to-value mortgage if the home purchase price is less than $1 million. Because homes priced at or above $1 million would not be eligible for government-backed high ratio insurance, borrowers for these homes would require a down payment of at least 20 per cent.

Introducing a maximum allowable price will ensure that government-backed mortgage insurance operates the way it was originally intended: to help working families and first-time homebuyers. This measure is expected to have a negligible impact on working families and first-time homebuyers as the vast majority of these borrowers purchase properties priced below the threshold.

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Idea Jam Kicks Off Vancouver’s re:THINK HOUSING

Laura Rodgers
Van. Courier

Could housing people in container ships off Vancouver’s coastline solve the city’s affordable housing crisis?

An “idea jam” that took place last Friday sought to test out the idea, and other out-of-the-box solutions from the mundane to the wacky. The event, attended by city officials, developers and creative types, involved nine groups cobbling together proposals to try and fix Vancouver’s housing problem.

A handful of people, including Vancouver assistant director of housing policy Abi Bond, sketched out a plan to transform a cargo ship into a green-roofed utopia. They proposed a kayak co-op for commuting to and from the shore, filtered seawater to drink, and occasional rotation of the hull so the container-homes on both sides could get southern exposure.

Other suggestions ranged from tweaking property tax laws to building tiny apartments atop warehouses. The prevailing attitude seemed to be that the current crunch in the least affordable city in North America was caused not by a lack of housing supply, but by a dearth of creativity.

“There’s some really thought-provoking work here that’d be useful for city hall,” said Mayor Gregor Robertson, who attended the city-sponsored event at the HiVe on West Hastings. “A couple of groups that had [ideas about] ‘float houses’ and ‘ship living’ which [are] kind of way outside the box—offshore affordable housing?…There may be an opportunity for more [housing] in the water.”

Robertson said zoning and taxation are a challenge. “There have been ideas around reforming the property transfer tax, creating more incentives for co-op housing… but unfortunately we don’t control the levers on those [taxes] at city hall.”

The event was intended to be a jumping-off point for the city’s “re:THINK HOUSING” contest, which offers cash prizes of up to $3,000 for the best novel housing strategies. Entries, which must be submitted by June 29, will be judged by a jury of urban-planning experts.

One group proposed eliminating property tax on any improvements to land. Another brought forward the idea of marketing an iPhone app—which, for some reason, involved squirrels—where players win a game if they minimize housing costs.

The event crackled with energy, but some attendees doubted if a single evening of brainstorming could realistically effect change.

“As much as it’s exciting, and a publicity stunt, I think there are a lot of people here who are not professionals, who don’t have a real finger on the pulse as far as what’s really needed,” said attendee and aspiring urban planner Andrew Martin.

Freelance architect Mitra Mansour questioned the effectiveness of soliciting ideas on a volunteer basis, outside of participants’ regular working hours. “Great ideas come out… but some of the ideas that get thrown around—because we’re too busy being slaves to our day jobs—don’t get fully realized.”

Mansour nonetheless praised the event’s openness, comparing it favourably to similar gatherings such as the Vancouver Urban Forum, which charged $249 for one day’s admission.

Still, Robertson is hopeful that the mostly young crowd in attendance will continue to push for change. “When you have a roomful of people that I expect have far more housing challenges than most Vancouverites… they’ll be a force to contend with, lobbying for change that gets them into housing” said Robertson.

© Copyright (c) Vancouver Courier

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Elizabeth Wilson
Van. Courier

Get out those slip-on shoes.

In the first weekend of June, there were 700 open houses on Vancouver’s West Side and 500 on the East Side. Rich pickings for buyers and lookie-loos. From sellers, the cry goes out: “Well what day CAN the staging people get here, then?”

. Sales and Listings The open house numbers certainly reflect the Real Estate Board of Greater Vancouver’s May statistics, which show new listings on the MLS up 14.4 per cent over April and 16.8 per cent over May 2011. New listings in Greater Vancouver were 15.3 per cent above the 10-year average.

In all, there were 17,835 homes listed for sale in the region’s MLS. It took 43 days on average to sell a home in May, which is eight days longer than it took last year at the same time. Meanwhile, buyers seem to be waiting for the other slip-on shoe to drop.

Overall sales were 21.1 per cent below the 10-year average for May, the lowest total since 2001. Detached house sales looked to be hardest hit at first glance. They declined by almost one-quarter (24.8 per cent) from May 2011-but then, detached house sales last May were more frenzied than usual. Compared to May 2010, a more normal year, sales were only down by 6.1 per cent.

And sales of detached homes and townhouses actually improved over April, while apartment sales fell just 2.9 per cent compared to the previous month.

May sales of all housing types increased in North Vancouver, New Westminster and Maple Ridge/Pitt Meadows over April. And Port Moody also had substantially more sales of detached and townhouse properties compared to April. Maybe home buyers are finding attractive communities that are lower-priced alternatives to the neighbourhoods where prices have been driven sky-high.

. Benchmark Price (MLS Home Price Index)

We’re still in a balanced market, says REBGV president Eugen Klein.

“Our sales-to-active-listings ratio sits at 16 per cent…. As a result of this stability, home prices at the regional level have seen little fluctuation over the last six months.”

(This month’s benchmark prices look like they’ve experienced more change than they actually have. That’s because of a re-calculation of the benchmark price to better reflect the trends measured by the MLS Home Price Index. You can find out more at homepriceindex.ca.)

The recent TD Economics report, “Toronto and Vancouver: The Housing Markets that Have All Eyes Watching,” agrees that Greater Vancouver benchmark prices are stable, although the rate of growth has slowed.

It predicts a price correction of around 15 per cent over the next two-to-three years, particularly in the condo market. But it doesn’t see any immediate triggers for that correction-to-come.

In short, if you’re buying, you’re still going to have to pay more than anybody else in Canada for a detached house, townhouse or condo. Sorry.

And if you’re a seller hoping to make a bundle and buy somewhere less expensive, you’ll have lots of competition from people with exactly the same idea.

REW.ca is a real estate search website for Vancouver and the Lower Mainland.

© Copyright (c) Vancouver Courier

 

Property owners want to build 108-unit condominium complex

Mike Howell
Van. Courier

The provincial government has offered to give the Musqueam Indian Band at least $4.8 million to help resolve a land dispute with a Marpole property owner wanting to build a condominium development on what is believed to be an ancestral burial site.

The $4.8 million is owed to the band as per a previous agreement related to the government’s South Fraser Perimeter Road project in Delta and Surrey, which falls on traditional Musqueam lands.

“We’re happy to hear the province has agreed to [a cash deal] and we’re looking forward to moving forward with negotiations with the developer,” said Wade Grant, a Musqueam band councillor who worked with an assistant deputy minister to reach the deal.

Another sum that Grant expects to be “a little bit less” than the $4.8 million will be forthcoming from the government as per a similar agreement related to the Evergreen transit line.

Those two cash deals will be bolstered by a third agreement with government related to a project elsewhere in Vancouver, the details of which haven’t been finalized.

“It is further acknowledged that the accommodation ultimately paid to the Musqueam regarding this third project may exceed the amount necessary for Musqueam to acquire the condominium development site,” wrote Mary Polak, the provincial minister responsible for aboriginal affairs, in a letter to the band Wednesday.

Neither Grant nor Bob Ransford, a spokesman for property owners Gary and Fran Hackett and Century Group HQ Developments Ltd., would speculate on how much it would cost to satisfy all parties.

But Ransford said negotiations will not only have to look at the value of the acre-sized lot but money already spent in preparing the site on Southwest Marine Drive, near the Arthur Laing Bridge.

“We’re hopeful that we can come to a resolution on this,” Ransford said. “It’s been dragging on for a long period of time and it’s been upsetting for a lot of people.”

Polak said in her letter the government would provide “independent real estate mediation” during the negotiations, if required.

The Hacketts, who have owned the property for more than 50 years, were working with Century Group to build a 108-unit condominium complex with an underground parkade.

During the required archaeological dig of the well-known Canadian heritage site, the intact remains of two adults and two infants believed to be ancestors of the Musqueam were discovered.

Known as the Marpole Midden, the area was designated a Canadian heritage site in the 1930s and was once home to a Musqueam village.

The band began a protest outside the site May 3 and initially recommended a complex land swap with the development team, the provincial government and the city. The Musqueam wants to preserve the property and turn it into a public interpretive park in which remains and artifacts would not be disturbed.

Meanwhile, the protest will continue outside the property until all parties sign an agreement that sees the Musqueam acquire the land, said Cecilia Point, an organizer of the protest.

“We don’t know how much [the development team] is going to want for the land,” Point said. “So until the land is back in our possession, we’re not comfortable leaving the site.”

Assembly of First Nations Chief Shawn Atleo and Grand Chief Stewart Phillip, president of the Union of B.C. Indian Chiefs, have visited the property in support of the Musqueam.

Phillip was among protesters who recently blocked the north end ramps of the Arthur Laing Bridge for almost three hours to send a public message to government about the band’s desire to preserve the property.

The government’s offer to the Musqueam comes less than a week after it rescinded the permit to allow the developer to continue digging on the site.

Mayor Gregor Robertson and Vision Coun. Andrea Reimer have publicly supported the Musqueam’s vocal protest, with both politicians signing a petition to leave the land undisturbed. Robertson also participated in a drum circle with protesters.

© Copyright (c) Vancouver Courier

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