Second most sales homes in Calgary EVER for the month August!
The average cost of a home in YYC is now 545,000! When you include condos in the mix the average is 459,500!
To be able to buy many people are turning to condos as most are priced below 400k.
BUT conod purchases include: AGM’s, reserve fund studies, board meetings minutes, financial statements, engineering reports, bylaws, post-tension cables, elevators, and all the rest.
Ensure you use a broker that is a condo expert and knows the in’s and out’s of how to get them financied. Surprise – we do lots of condos because we love 1st time buyers many of them buy condos!
Article from the Calgary Herald is below:
… The benchmark price, which CREB says is the cost of a typical home, was up 10.18 per cent to $459,800.
Total sales were the second highest ever for August behind only the 2,326 sales level set in August 2005.
Calgary sales this month were buoyed by strong activity in the condo market as single-famly home sales actually dropped from a year ago. The single-family market saw activity decline by 2.38 per cent to 1,477 sales but the median price rose by 6.47 per cent to $479,000 while the average price was up by 5.42 per cent to $545,238. The benchmark price rose by 10.24 per cent to $512,300…
http://www.calgaryherald.com/business/Calgary+resale+housing+market+soars+August/10167487/story.html
Is it time for mortgage interest rates to start going up?
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The Canadian housing market shows no signs of slowing down during the typically slowing summer months. Economists say they continue to be surprised by the strength in the housing market and continued appetite that Canadians have towards home ownership. The U.S economy is growing much faster than expected and unemployment is down to 6.1% which is at its lowest level since the summer of 2008. Housing starts across the US have also exceeded the expectations of many economists. This encouraging news is causing speculation that the US Federal Reserve will be forced to raise interest rates faster than anticipated to ensure inflation does not become a concern. According to Bloomberg News, Charles Plosser of the Federal Reserve states, “The data keeps telling us we ought to be raising rates, if we wait too long we could find ourselves raising rates faster and higher than we want to.” Historically, our interest rates usually follow the lead of the US. With the hot real estate market this summer, it makes sense to get a pre-approved mortgage with a locked in interest rate while we are still at historical lows. Access to major banks, trust companies and credit unions combined with my expertise provides you the opportunity to get the right mortgage with the best possible rate and terms. Contact me today.
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5 Plex and up, Yes we do them now!
Multi Residential Lender within a bank that will work with 5-PLEX and UP!! These are multi residential rates (APPROX 3.99% on 5 year).
This is nerdy news but it is a big deal for real estate investors who have a tough time getting funding for small 5 and 6 plex deals as they are so small lenders will not look at them commercially and anything more than 4 units can not be done as residential.
For more data call me;
Mark Herman, AMP, B. Comm., CAM, MBA-Finance
WINNER: #1 Franchise for Funded $ Mortgage Volume at Mortgage Alliance Canada, 2013
Direct: 403-681-4376
CMHC not insuring luxury homes with sales price of more than $1M
This was announced about 4 months ago so it is no surprise – unless you have been sitting on a huge pile of cash and just now thought it is a good time to buy a home for $1,000,001 or more.
Another great example of rules that we have been working under for months that did not make the headlines …
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CMHC no longer offering mortgage insurance for luxury homes
CALGARY – Canada Mortgage and Housing Corp. says it will no longer offer mortgage insurance for homes that cost $1 million or more, starting July 31, even if the buyer has made a deposit of 20 per cent or more.
It also announced on Friday that it will no longer insure loans that are used to finance construction of multi-unit condominium projects, effective immediately.
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In Calgary, luxury home sales for the MLS market, for properties of more than $1 million, were 359 year-to-date until the end of May, representing three per cent of total sales activity. For the same period a year ago, there were 318 sales, still equating to three per cent of total sales.
Last year, a record was set with 727 MLS sales in the luxury bracket, representing 3.1 per cent of all residential sales in the city, according to the Calgary Real Estate Board.
“Consumers were already required to have 20 per cent down for million plus homes, and insurance was not required for these properties,” said Ann-Marie Lurie, chief economist with CREB.
http://www.calgaryherald.com/business/cmhc+longer+offering+mortgage+insurance+luxury+homes/9915137/story.html
CMHC and Flood Damaged Homes in YYC / Calgary
We get this question often as there is lots of fully bizarre data out there.
Here is what we are seeing. Remember, as the #1 mortgage brokerage/ franchise in ALL of Canada for 2013 at the countries largest SuperBroker – Mortgage Alliance we see lots of deal flow so this is based off of many hundreds of conversations with the insurers and lenders:
- IF the flood damage has been repaired AND you are in the flood zone then an insurer (CMHC/ Genworth/ Canada Guarantee) WILL / can insurer your purchase with as little as 5% down as long as all the other normal criteria are met.
- IF there is damage that is not repaired then the odds of an approval with an insurer are very, very LOW. Often, even if you put 20% or more down, and do the purchase without CMHC involved, the lenders are not taking the risk and doing them.
the KEY is to fix the damage first, then sell.
Call if you have any questions on this as there are many specific examples that are not mentioned above.
Mortgage Mark
403-681-4376
More on how Banks “get ya” with payout penalties
The beginning of a great article below goes more into the details on what the BANKS do to you when you get their low rates deals like the BMO 2.99% – which everyone now says is not a great deal as you must sell your home to get out of it – among other things. Ensure you always use a broker for your mortgage.
Low mortgage rates tempt, but penalties for breaking can be high!!
You want some of these record low rates on the market but you’re locked into a mortgage. Just break it, right?
Not so fast, there’s a key question you need to ask before you commit to break a mortgage: how much will it cost you? Actually, it’s a question you should be asking before you sign up in the first place.
Don Hurman, a 64-year-old from Okotoks, Alta., learned the hard way when he incurred a $10,000 penalty after selling his house halfway through a five-year mortgage term. Some mortgages let you port the loan to a new home but Mr. Hurman was forced to break his and pay what is called the interest rate differential.
http://business.financialpost.com/2014/04/12/be-careful-before-you-break-that-mortgage/
Lump Sum Payment Strategy / Use your RRSP refund pay down your mortgage
Here is a great way to use your tax refund to repay / pay down your mortgage. It does make a difference.
But you still have to live. I recommend using 1/2 of it for this and the other 1/2 for something you NEED, not want.
Lump Sum Payment Strategy
Tax Season is fast approaching and the average Canadian tax refund is approximately $1600. An excellent use of these funds would be a lump sum mortgage payment. If a client was to do so they could save thousands of dollars in interest over the life of their mortgage. For example:
Mortgage Amount $300,000
Mortgage Interest Rate 3.25%
Pre-Payment $1,600
Approx. Interest Savings Over 25 years $1,600 x 3 = $4,800
The above savings might seem trivial if looked at as a one-time event, however if you continue this strategy on a yearly basis they could save over $17,000 in interest over the life of their mortgage. Additionally, this would help you become mortgage free almost 5 years faster.
***note the above calculations are based off a 25 year amortization, a higher interest rates would increase the savings***
the 2.99% BMO deal is not that great
My colleague in Toronto wrote this and he puts it very well:
Don’t let the Banks Play you for a Fool.
With all the press surrounding the 2.99% % year fixed rate mortgage from BMO we thought we should clarify some if its characteristics. There is no point in saving 0.05% on a mortgage if it means having to pay outrageous break fees, or be limited to dealing with one Lender for the entire term of your mortgage. Believe it or not, many Lenders offer the same 2.99% without the draconian terms the Bank insist upon you.
Even though the Government of Canada is trying to put the brakes on the red hot housing market there are lots of great mortgages to be had in the market. It seems every major Lender in Canada will be offering a really low 4 Year or 5 Year Fixed Rate Mortgage by the time spring really has sprung. But you should be careful.
One such incredible rate that many people are asking about is BMO’s 2.99% 5 Year Fixed Rate Mortgage. We did a few interviews last week with different news outlets and made some comments on this offering and few others.
We have been doing our best to explain the perils of some of these new low rate products, as most are extremely restrictive. For example the BMO mortgage doesn’t let you break the mortgage unless you are selling your house. Consumers quickly find that additional value added features are typically removed from these products. These include your ability to pre-pay, to port your mortgage, to have someone assume your mortgage, or add or remove someone from the title.
Since most Canadians augment their mortgage in some way at about the 3rd year of their mortgage, we should be really careful about what type of product we choose. For instance, right now when it makes sense for many people to be breaking their mortgage to save money with the lower rate fixed and variable rate offerings many clients are locked in with no ability to change their rate or Mortgage Lender.
In short, be careful when picking a mortgage! Weigh all your available options before making a decision. Make sure that you are not sacrificing tens of thousands of dollars in penalties in the future for a small rate benefit today. Ask an expert, typically Bank Branch Representatives are not Licensed Mortgage Agents, and can only offer you one set of products.
Ask about our special “Mortgage Breaker Program” going on right now. If your mortgage is locked in for the next 2 or 3 years at 3.5% or more you could be saving thousands of dollars by breaking.
With all the people you have to worry about playing tricks on you today at least your mortgage will be safe.
Alberta creates 9/10 jobs in ALL OF Canada for 2013
I have about 50 posts saying the continued inbound immigration from all places in Canada and the world supports our home prices and high qualify jobs down town. Here is more awesome news …
… It was the highest pace of monthly job creation in nearly three years and well above the average gain of about 6,000 since the end of the 2009 recession.
And Alberta accounted for a stunning 87 per cent of all the jobs created in the entire country since February of last year.
and the link is here: http://www.calgaryherald.com/business/Steady+hiring+climate+expected+Calgary+region/9603604/story.html
Great news!
CMHC Rate Increase & More…
This is the blog version of the Winter Update 2014:
Insurer Rate Increase – Technical Details – and the B20 Rules Phase In.
1. Much to do about nothing: CMHC increases mortgage insurance.
- May 1st the new CMHC fee increase goes into effect.
- Genworth quickly followed, matching the effective date and premium increases. Canada Guaranty has not yet but is expected to increase their rates by the same amount – so rates for all will be the same but are not right now.
- To AVOID the increase:
- The purchase must be underwritten and submitted to the insurer by the bank BEFORE end of day April 30. We will still be in the Spring rush so banks may be backed up; it is important to avoid last minute rushes during this time.
- The fee is inconsequential. A $400,000 mortgage has a monthly payment increase of less than $10.
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Down Payment |
OLD: One-time CMHC fee added to mortgage |
New fee May 1, 2014 |
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5%(borrowed) |
2.90% |
3.35% |
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5% |
2.75% |
3.15% |
|
10% |
2.00% |
2.40% |
|
15% |
1.75% |
1.80% |
Nowhere in the news: Very little is being discussed on self-employed borrowers without traditional proof of income. Their premiums are going up as well.
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Down Payment |
OLD: One-time CMHC fee added to mortgage |
New fee May 1, 2014 |
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10% |
4.75% |
5.45% |
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15% |
2.90% |
3.35% |
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20% |
1.64% |
1.9% |
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25% |
1.00% |
1.15% |
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35% |
0.80% |
0.90% |
Bottom line: for those qualifying on their tax paid income- much to do about nothing. For those needing to use self-employed “declared” income, there is a much greater premium increase.
2. More Importantly – Full Implementation of the B20 (and soon the B21) Rules
- Some of the banks are already underwriting with the new rules causing unexpected declines and delays.
- Banks are about to start using 3% of the balance for unsecured loans and credit cards as the monthly payment. Right now some are and some are not.
- Clients that have multiple properties or want to keep their existing home as a rental, to purchase another property are increasingly having a difficult time for various different qualification reasons. (rental offsets or rent added to income, secured lines used for down payment etc.)
Bottom line: Buyers that are close to the limits of the lending guidelines may no longer qualify. Many of them are self employed buyers but even the first time home buyer with a little bit of credit debt are having trouble. It is important that a buyer’s application is presented properly to the right lender and the right insurer the first time.
The Mortgages are Marvellous Advantage
Why not take advantage of the skills, years of experience, and non-biased advice of a professional, dedicated, top- broker with top-tier access to a variety of lending institutions for your buyers?
We fully pre-qualify your buyers before you go shopping: Your pre-approval is fully underwritten by a past senior bank employee. Income, down payment and credit information are in the file upfront and any wrinkles are ironed out before putting in an offer.
Mark Herman; AMP, B. Comm., CAM, MBA- Finance www.MarkHerman.ca
Katie McDowell ; Broker of Record
WINNER: #1 Franchise for Funded $ Mortgage Volume at Mortgage Alliance Canada, 2013
Mortgage Alliance w Mobile: 403-681-4376 w Secure e-Fax: 1-866-823-1279