By: AMIT DHINGRA

Amit Dhingra- Real Estate Tips

Tags: #AmitDhingraRealestateTips

What is the Impact of New Mortgage Rules?
Since 2010 the real estate market is on upwards trend and government is trying to control it’s upwards trend. Every year market is growing and government is passing new mortgage rules since 2010 to control the market.

Like 2010 LTV (Loan To Value Ratio )borrowing was reduced from 95% to 90 %
2011 Amortization period was reduced from 35 years to 30 years
2012 Amortization was reduced from 30 years to 25 years

And so on year over year by reducing

LTV to 80%
CMHC fees from 1.25% to 3.85%
No 0% down mortgage, minimum 5% down payment needed
2nd Home! no Insurance
Self-employed higher insurance
And now the new stress test of 4.64% qualifying rate.

Every year the demand was suppressed by the government instead of meeting the demand. We all know there is more demand than supply and there is not enough supply. Just by suppressing the demand year over year, will only result in more demand impact in future and we all have seen the game of multiple bidding in 2016. Every house had over 8 to 10 offers on an average. This was the result of suppressing demand in last few years. So over the years of suppressing this demand market has ended up in bubble boom, which is scary! for every home owner. If in case the real estate market falls we all will lose our equity.
So again they have passed the new rule of suppressing demand. This has affected first time buyers who want to start their family in their own home. This will result in more pressure on the real estate market in coming years and will result in more multiple bidding in future years ahead. Until and unless those demands are met.
WHO WILL BE EFFECTED
Small to medium size home owners will not be affected much with this new rule, Those who are trying to upgrade to bigger homes. This is the time for you to buy your bigger home as multiple offer situations is now going out of the market soon for a little while.
WHAT GOVERNMENT NEEDS TO DO
Government needs to control builders who are not releasing new home in abundance and are trying to hold their inventory. Instead government is paving the way for builders to be billionaire’s.