Call out the dogs; circle the sheep – let’s move em’!
Its official… They’ve gotten together to slow down a real estate market that seemed unstoppable.
The banks, the bureaucrats, and the politicians for the most part.
We seem to be making our payments – mortgage arrears are at a normal level.
That’s today, but what about next year? It’s all about next year and the years after that.
With Government deficits continuing to increase at all time levels, sooner or later the money supply has to tighten. Mortgage rates may even go up to double digits. Think I’m crazy, well for those of you old enough to remember, we had double digit rates through most of the crazy 70’s and the 80’s.
So what have ‘they’ done, to cool down the market?
CMHC has made some subtle changes that will have a ‘not so subtle’ impact. These changes include a reduction in the loan to value on refinancing, tightening the rules for the self-Employed; and borrowers working for commission only will no longer be eligible for the program.
The biggest tweak is a cut back on rental properties. Borrowers will need at least 20% down payment to obtain CMHC insurance, on investment properties. Real Estate Gurus cross the
Country are still preaching that the road to riches runs through a multitude of properties purchased using high leverage and low down payment. Starting next month, they might find the conventional halls
Banks and other Mortgage Lenders are doing their part. Mortgage Interest rates are rising. Every Tick up, knocks a percentage of buyers out of the market.
Don’t forget the HST. HST is just around the corner. How will this affect the market? We don’t know for sure, but the smart money may not be betting on real estate.
Keep in mind that the years of a lop sided trade balance with China has left them with lots of Canadian and American Dollars to spend.
There will come a time when China will stop buying up the debts of North America. China is a huge buyer of U.S. Treasury Bills. This may not go on forever. When it stops, the need for funds will still be
there and they will have to raise the interest rates even further.
So what does this mean to us?
It means a lower quality of life for those that don’t get on top of their debt and credit management. Money that should be spent on health
care and infrastructure will be going to pay interest on debts.
What can we do?
We can secure a low interest rate for a medium to long term mortgage. We can make efforts to pay down debt, consolidate so we’re not paying high rates on loans and credit cards.
Talk to a Mortgage Broker that can go over your situation and come up with a few options that can help.
Another option is to just ignore what is going and get pushed around like the rest of the he ‘herd’.
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel