NEW FEDERAL MORTGAGE RULES CAME INTO EFFECT YESTERDAY, OCT 17, 2016

NEW FEDERAL MORTGAGE RULES CAME INTO EFFECT YESTERDAY, OCT 17, 2016

In an effort to slow down Canada’s ultra-hot housing market, the federal government has put into effect new mortgage rules. What do these new rules really mean for those looking to buy or sell real estate? Let’s have a look.

The first change affects foreign home buyers. Foreign buyers who purchase Canadian property, but are not residents of Canada at the time of the purchase, will no longer be able to claim a “principal residence exemption” as a tax loophole to avoid paying capital gains once their home increases in value and is eventually sold.

The second change involves a mortgage repayment stress test at Bank of Canada’s posted rate of 4.64% for all insured mortgage applications. The banks will assess whether the borrower will be capable of repaying their loan should interest rates increase or the borrower’s financial situation changes. In other words, if a purchaser does not have a 20% down-payment for their home, that homebuyer will have to prove that they can continue to make their mortgage payments at a higher interest rate.

These changes will inevitably cut into the purchasing power of some buyers – particularly first-time homebuyers. However, according to Canada’s Finance Minister, Bill Morneau, these new rules will “not affect Canadians with existing mortgages“.

Click here

to read more about how the new mortgage rules will affect foreign buyers and first-time homebuyers.

A GLANCE AT OAKVILLE’S REAL ESTATE MARKET

A GLANCE AT OAKVILLE’S REAL ESTATE MARKET

We continue to see unprecedented price growth in Oakville’s real estate market. According to last month’s statistics released by the Oakville, Milton & District Real Estate board, the median sale price of a home in Oakville was $980,000 in September 2016. To compare, in September 2015, the median sale price of an Oakville home was $720,000 – that’s a 36.11% increase!

We attribute this incredible increase in resale home prices to a high demand for real estate in the GTA, limited inventory, ultra-low interest rates, and excellent consumer confidence.

As outlined in this Financial Post article, experts do not expect a market collapse. Rather, they believe that “Canada’s housing market will slow down without any hard landing”. In other words, while price growth may slow down, home prices are expected to remain stable. Read more about it here.

 

We attribute this incredible increase in resale home prices to a high demand for real estate in the GTA, limited inventory, ultra-low interest rates, and excellent consumer confidence.

Rina DiRisio
B.A., SALES REPRESENTATIVE
Lifetime resident of Oakville

Rina DiRisio

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