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GRG55
07-09-08, 06:04 PM
Thankfully, the Canadian mortgage market never got as crazy as the stuff that went on in the US. But the idiocy going on in Vancouver [well documented by our Wet Coast correspondent, who seems to have gone on permanent holiday] and other select Canadian metro centres finally has the attention of the authorities.

This announcement out of Ottawa today should throw a bit of cold water on further price gains for awhile. Who knows, maybe we'll even see some price drops in the most egregiously overvalued markets...but we'll be polite and avoid naming any of them ;)



Ottawa, July 9, 2008
2008-051
Government of Canada Moves to Protect, Strengthen Canadian Housing Market


The Government of Canada today announced adjustments to the rules for government guaranteed mortgages aimed at protecting and strengthening the Canadian housing market. The new measures include:

Fixing the maximum amortization period for new government-backed mortgages to 35 years;


Requiring a minimum down payment of five per cent for new government-backed mortgages;


Establishing a consistent minimum credit score requirement; and


Introducing new loan documentation standards.
Today’s announcement marks a responsible and measured approach by the Government to ensure Canada’s housing market remains strong and to reduce the risk of a U.S.-style housing bubble developing in Canada.

The new limits are planned to take effect October 15, 2008. This would allow existing mortgage pre-approvals with the common 90-day duration to be used or expire. Certain exceptions would also be permitted after October 15. The Government will work closely with all stakeholders to ensure timely and effective implementation of these measures.

As these measures relate only to new, government-backed insured mortgages, Canadians who already hold mortgages will not be affected by this announcement.

The measures announced today will build on the strength of Canada’s housing market. According to the International Monetary Fund (http://www.fin.gc.ca/scripts/glossary.asp?Lang=E&Term=International_Monetary_Fund), the increase in house prices in Canada is based on sound economic factors such as low interest rates, rising incomes (http://www.fin.gc.ca/scripts/glossary.asp?Lang=E&Term=incomes) and a growing population. A recent Statistics Canada report concluded that home ownership is at record levels, with over two-thirds of Canadians owning their own home.

Mortgage arrears—overdue mortgage payments—have also remained low. In recent years, the percentage of mortgages in arrears for three months or more continues to be at low levels not seen since 1990.

Backgrounder... (http://www.fin.gc.ca/news08/data/08-051_1e.html)

idianov
07-09-08, 06:25 PM
It is all down from here. June sales dropped -43% YoY. Listings increased 53% YoY. The months of inventory (MOI) reached 8 compared to 3 months in June 2007. You can safetly add 27,000 of new units under construction to existing supply ready to hit the market in 2008-2009.

Detailed stats and graphs are available here on Mohican blog:
REBGV Statistics - June 2008 (http://langley-financial-planning.blogspot.com/2008/07/rebgv-statistics-june-2008.html)

Igor

GRG55
07-09-08, 06:32 PM
It is all down from here. June sales dropped -43% YoY. Listings increased 53% YoY. The months of inventory (MOI) reached 8 compared to 3 months in June 2007. You can safely add 27,000 of new units under construction to existing supply ready to hit the market in 2008-2009.

Detailed stats and graphs are available here on Mohican blog:
REBGV Statistics - June 2008 (http://langley-financial-planning.blogspot.com/2008/07/rebgv-statistics-june-2008.html)

Igor

Great post Igor. Many thanks for the link!

metalman
07-09-08, 11:46 PM
Great post Igor. Many thanks for the link!

* minimum down payment of five per cent for new government-backed mortgages;

* Establishing a consistent minimum credit score requirement; and

* Introducing new loan documentation standards.

five percent minimum? credit score requirements? loan doc requirements?

draconian! anti free market! pack of ******* crazed socialists! :D

idianov
07-10-08, 02:24 AM
Digging a little deeper into this I found the following gem hidden on the Backgrounder Residential Mortgage Insurance (http://www.fin.gc.ca/news08/data/08-051_1e.html) page linked to the Press Release (http://www.fin.gc.ca/news08/08-051e.html):


E) Other Parameters

The new guarantee framework also includes other parameters that are required to give full effect to the initiative. These include:

* Excluding high-ratio mortgages where no amortization is required in the first few years from the government guarantee.

* Setting a maximum of 45 per cent on borrowers’ total debt service ratio.

Rasing GDSR from 32% to 45% for a family making 60K a year will increase mortgage payment allowance by $650/month, so they can afford about $100,000 more mortgage. :eek:

jimmygu3
07-10-08, 02:59 PM
Digging a little deeper into this I found the following gem hidden on the Backgrounder Residential Mortgage Insurance (http://www.fin.gc.ca/news08/data/08-051_1e.html) page linked to the Press Release (http://www.fin.gc.ca/news08/08-051e.html):



Rasing GDSR from 32% to 45% for a family making 60K a year will increase mortgage payment allowance by $650/month, so they can afford about $100,000 more mortgage. :eek:

Well, perhaps they can qualify for $100k more mortgage, not necessarily afford it.