Responding to concerns that dramatic increases in house prices in cities like Toronto and Vancouver could increase the risk of defaults in the future should mortgage rates rise, on October 17th, 2016, the federal government put in motion a new set of regulations concerning the rules of mortgage lending.

Since day one, I have had many clients reaching out to me for clarity in the matter. With so much information out there, sometimes it is hard to make sense of it all. Dealing with mortgage professionals on a daily basis, I thought it important to share with my readers accurate information as to the new Minister of Finance (Bill Morneau) mortgage rules.

To do so, I asked Ryan LaHaye, Mortgage Broker and Director at PlaniPret to summarize:

1) Anyone putting less than 20% down payment must qualify at the bank of Canada’s posted rate currently at 4.64%. You can still buy a home with 5% down payment but now no matter what, you must qualify as if your mortgage rate is 4.64%. Mortgage rates are still between 2.20% and 2.80% but the qualifying rate is now 4.64%.

2) No more bulk insurance for conventional mortgages. No need to get into too many details and get confused here. Basically what this means to consumers is that many smaller lenders that required this to raise capital and lend will no longer be able to bulk insure their mortgages. This means less competition in a market that already has very little competition, to begin with. This could translate to higher rates and less variety of options for consumers.

3) No more capital gains exemption if you are a foreign investor at the moment of purchasing a property in Canada. This means that you have to pay capital gains tax if you sell your property at a profit and you were not a permanent resident at the moment of purchase. If you live or lived in the property or not, this rule will apply.

How this will impact the market directly still remains to be seen. For sure there is a readjustment in a buyer's purchase power for the moment, but this may mean a more stable housing market for the years to come. When I started real estate in 2004, we were selling homes to people who were buying with 0$ cash down and on a 40-year term. Gradually the interest rates decreased, and so did the mortgage terms...from 40 years to 35, then 30 and now back to 25.

Every time a change was implemented, many thought it would be the end of an era. Certain markets did cool down, however, the general state of the market is a healthy balance for both buyers and sellers.

This also means that it is more important than ever to consult an independent advisor that can give you unbiased, free advice. A good mortgage broker will be able to explain all these new rules and the implications on your family and finances while finding you the best rates and conditions that are available.

LaHaye is one of the Sperano team’s most trusted partners. Here is what you need to know about him: A graduate of actuarial mathematics from Concordia University, Ryan La Haye chose to pursue a career in the mortgage industry for the past 5 years. After obtaining his mortgage broker license in 2006 from Le College Immobilier, he joined the mortgage broker firm Home Loans Canada. Within just a few years he became one of the top producers in Canada, and in 2010 decided to join Mortgage Planners to pursue new goals and objectives. In only a few years, La Haye established himself as one of the most prolific mortgage brokers in his industry. Among many honors and awards in his young career, he was named Rookie of the Year in 2006 and Best Producer in the province of Quebec in 2009. Always on the lookout for new challenges, he is now a Director with his own mortgage broker team at the heart of Mortgage Planners. On top of personally completing hundreds of mortgages a year, his mission continues to be to offer continuing education to his mortgage broker team as well as develop new markets. Innovation, vision, and quality customer service are the foundations that govern his career and allow him to be a leader in the mortgage broker field.

Feel free to contact him and his team, for all your mortgage inquiries. There is no fee for a consultation, yet the right information is priceless.

Ryan LaHaye rlahaye@planipret.com. (514) 830-6619 or (450) 629-3101

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