Archive for November 2017


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Understanding New Mortgage Qualifying Rules

I had a text message from a friend as soon as the new mortgage qualifying rules were announced.

“In the least dramatic way of asking this: Does this mean I can never own a home?
Because paying 20% down payment no longer means anything substantial because
of these changes.”

 Prior to October 16th, if a buyer had less than 20% down payment, he/she had to pay a premium to CMHC to insure the mortgage. Regardless of the amount of their “locked-in” mortgage rate, the mortgage company would use the Bank of Canada benchmark rate currently 4.89%. Mortgagees with 20% or more down would qualify at the actual “locked-in” rate.

After October 16th, all mortgages, regardless of down payment amount, must now be qualified at the higher of (1) the Bank of Canada benchmark rate of 4.99% or (2) 2% higher than their actual “locked-in” rate.

Even if you are pre-approved by a lender, you must have a firm deal by Dec 31, 2017. You can close in 2018. For refinancing, the closing cannot be more than 120 days later.

Credit unions are not governed by the same OSFI (Office of the Superintendent of Financial Institutions)
regulations, so you may want to seek advice from your local credit union. They are not subject to the same
qualification rules, but they may decide to follow suit.

Another thing to keep in mind, the premium payable for insuring a mortgage less than 20% down can be added to your principal mortgage amount. Sure, it may mean your mortgage payment is slightly higher, but it may mean purchasing now, rather than waiting. In the last year, condo prices were up about 21%, so that means you need to save an EXTRA 21% just to stay where you are now.

Case Study

If you are a couple looking to buy a 2 BR, 2 BA condo in downtown Toronto for $799,000 with 20% down payment, your combined income would have to be $146,000 at 3.25% to afford the mortgage, but it would have to be $173,000 to qualify at 5.25% with 25 yr. amortization. By extending the mortgage to 30 yr. amortization, the income required would be reduced by $10,000-$12,000.

By looking just a bit further from the downtown core and reducing your budget to $459,900, again using a 20% down payment, your combined income would only have to be $93,000 to afford the mortgage and $108,000 to qualify at 25 years. By increasing the amortization to 30 years, the income requirements would be $86,000 to afford the mortgage and $102,000 to qualify.

Of course, your debt load is important and will affect the amount of mortgage you can afford.

I work with mortgage brokers who represent many different financial institutions and they can tailor a mortgage to your individual needs. There will be a difference, for example, whether you are salaried or self-employed. And, remember, once you are pre-approved; do not add to your credit in any way. It could affect your final approval just before closing.

Get Pre-Approved

Wounded Warriors Canada

Wounded Warriors Canada’s mission is to honour and support Canada’s ill and injured Canadian Armed Forces members, Veterans, First Responders, and their families.

They do this through donations and a host of programs to benefit the physical and mental health of their clients and their families.

Two of the most popular annual events are the Highway of Heroes Bike Ride and the Battlefield Bike Ride. The Macdonald-Cartier Freeway, better known as Highway 401, from Trenton to Toronto, was renamed the Highway of Heroes. This is the route that the remains of soldiers being repatriated followed from CFB Trenton to the Coroner’s office in Toronto. Citizens rallied and paid respects to the returning fallen soldiers, by lining roadways and overpasses, often displaying Canadian flags. The Wounded Warriors Canada Highway of Heroes Bike Ride (held every August) takes a group of Canadians along this sacred stretch of highway to raise funds and awareness in support of those living with operational stress injuries like Post-Traumatic Stress Disorder. The riders will carry forward our charity’s mission to Honour the Fallen and Help the Living – connecting with Ontarian’s along the way as we bring community’s back to the bridges in support of our ill and injured Canadian Armed Forces members, Veterans, First Responders and their families.

The Battlefield Bike Ride takes a group of cyclists to battlefields in Europe commemorate those soldiers who paid the ultimate sacrifice. In September 1993, Canadian soldiers experienced their most intense firefight since the Korean War.  The soldiers of 2nd Battalion, Princess Patricia’s Canadian Light Infantry were subjected to heavy machine gun, artillery, and small arms fire in the Medak Pocket of Croatia. Canadian soldiers would remain in the Balkans until 2005 and would continue to experience the horrors of civil conflict. Despite the challenges, Canadians acted with honour, courage, compassion, and bravery.

BBR18 will commemorate the 25th Anniversary of Medak Pocket, honouring the service and sacrifice of those brave Canadians who fought there; the 23 Canadians who paid the ultimate sacrifice in the Balkans; and the thousands who were forever changed with the physical and mental scars of the conflict. One of the unique and very special aspects of BBR18 is that the cyclists will have the privilege of riding with Veterans who served in Bosnia-Herzegovina and Croatia.

As a Realtor, I believe in giving back to the communities in which I live and work. After each transaction I donate a portion of my service fee to a non-profit community organization. My next donation will be going to Wounded Warriors Canada.

– Chip Barkel, MCNE, SRES, REDM, Toronto Real Estate. Extraordinary Service. Top Results. 

New North Your Medical Clinic / Family Physician: Dr. Jyoti Rawat

Dr. Jyoti Rawat, an experienced family physician, has opened her new office at 4800 Leslie Street, Suite 401, in North York. She looks forward to welcoming new patients and focusing on the health of the entire family, including children. When I met Dr. Rawat, I was immediately taken with her kind and empathetic manner, complementing her medical expertise.

Her husband, Dr. Sapan Rawat is also a family physician practicing in Whitby. With two physicians in the family, Dr. Rawat keeps very busy as a mother to two school-age children. She also enjoys travelling, music, and playing squash.

Welcome to the neighbourhood Dr. Rawat.

– Chip Barkel, MCNE, SRES, REDM, Toronto Real Estate. Extraordinary Service. Top Results. 

October 2017 Toronto Real Estate Market Report

The Toronto residential resale market returned to form in October. It returned to where it should have been before the frenzy set in at the beginning of this year and buyers began competing for properties indiscriminately and paying unreasonable prices. Price increases of 30% on a year-over-year basis are simply unsustainable. Even without the implementation of the 15% foreign buyers tax introduced in April the market would have returned to reality. The reality was accelerated by the tax. Comparing the resale market today with what was happening in the first four months of 2017 is pointless, although that appears to be a favourite part-time of journalists. Rather, if we compare the market to last year, and assess what has happened since the end of May, we get a picture of a strong, stable market, that surprisingly has yet to move to a balanced market. Having said that, we also see a fractured picture in which some trading districts in the greater Toronto area are much stronger than others.

In October, there were 7,118 reported sales, a substantial improvement compared to the 6,379 in September. Last October there were 9,830 reported sales in the greater Toronto area. Although the year-over-year variance was 26%, that variance was a dramatic improvement compared to the monthly variances between May and this month. With the exception of the condominium apartment sector, what has changed is the supply of properties on the market. In October supply was up by almost 70% compared to last year. At the end of October there were approximately 18,850 properties available for buyers to purchase. That compares to only 10,563 last October. It was last year’s lack of supply, coupled with historically low mortgage interest rates that drove the market into the frenzy that we experienced during the months from January to April.

Buyers are still alive. They are now more deliberate. However when attractive homes in desirable neighbourhoods become available buyers respond quickly, often still finding themselves in competition. This is clearly demonstrated by the fact that all sales in the greater Toronto area took place in only 26 days. By any assessment, this is a scorching pace. Twenty-six days represents the overall days on market. Depending on housing type and location the market is even faster. For example, and notwithstanding that the average sale price for detached properties came in at $1,287,765 in the City of Toronto ($1,008,207 in the 905 region), all detached properties sold in only 19 days. Semi-detached properties, with an average sale price of $948,309, sold in an astounding 17 days. Historically strong neighbourhoods like Riverdale, Leslieville, and the Beaches are seeing sales take place in only 10 to 12 days, and for average sale prices substantially higher than asking prices. The marketplace in these neighbourhoods appears to be shockingly unchanged when compared to the pre-April market.

The average sale price for all properties sold also strengthened in October. It came in at $780,104, up 2.3% compared to October 2016. In September, the average sale price was $775,564. A year-over-year increase of approximately 3 percent is ideal. It is consistent with inflation and more importantly wage increases. During the latter part of last year and into this year, price increases were many-fold times higher than increases in wages. That is an unsustainable situation. Since April we have also seen the Bank of Canada increase the bank rate by 50 basis points, causing mortgage interest rates to rise, although at 3.5 percent (five-year fixed term) they continue to be historically low. Looming ahead is the stress testing that will take place in January. Even though borrowers will be paying the lenders reduced mortgage rates, they will be qualified on a rate 2 percent higher than what they will be paying. The new stress testing will act as a further control on exuberant increases in home prices.

Although prices generally have come under control and are in the sustainable range, condominium apartments continue to sell for approximately 21 percent more than a year ago. There are two reasons for this unique activity. Even though condominium apartments are becoming pricier, they are still the most affordable housing type available to buyers. Secondly, there is little supply. Whereas the overall supply of housing year-over-year has increased by almost 80 percent. There have been no appreciable increases in the supply of condominium apartments. Under these circumstances, it is not surprising that condominium apartment prices are rising. In October, the average sale price for condominium apartments came in at $555,004. In Toronto’s central core where most condominium apartments are located and where most sales take place, the average sale price was an eye-popping $620,000.

In October, we also witnessed an improvement in the numbers of high-end sales, properties having a sale price of $2,000,000 or more. In September, there were 188 sales in that category. In October that number jumped to 208, an increase of more than 10 percent.

As the resale market moves towards the end of the year and a form of balance that we have not experienced in some time, both buyers and sellers should be thrilled with the transformation of the market since April. We have an increase in supply for buyers and steady but sustainable price increases for sellers. The area of major concern, which is beyond the scope of this residential resale market report, is the rental market and its critically low vacancy rate.

Chris Kapches, CEO, Chestnut Park Real Estate Ltd., Inc.

– Chip Barkel, MCNE, SRES, REDM, Toronto Real Estate. Extraordinary Service. Top Results.