MORTGAGE CHANGES

  1. OSFI (Office of the Superintendent of Financial Institutions) has removed the stress test for straight switches of uninsured mortgages (i.e. the homeowner has more than 20% down (equity)) – effective Nov 21, 2024.  Those borrowers were in essence locked into their current lender as to go to another financial institution they would have to requalify at 2% above the typical 5 year fixed interest rate (i.e. the ‘stress test’)

2. CMHC changes;

  • Reduced income requirements – eg. On a $300k mortgage previously one needed $81,000 income – that has now been lowered to $71,000 annual income.
  • 30 year amortization – effective Dec.15, 2024 for;
    • Uninsured mortgage holders ( 20% or more downpayment)
    • First time buyers on re-sale property and  NEW properties
    • ANY buyer of NEW properties.
    • Compared to typical 25 year amortization this amounts to 8% lower monthly payments on a $500k loan.  
    • Interest rate on a 30 year amortization is only .1% higher than conventional 25 year loan rates.
  • Purchase price cap for buyers with less than 20% down has been raised from $1 million to $1.5 million – effective Dec.15, 2024 making it easier for buyers without the 20% downpayment.
  1. BC NDP ;
    1. Say they will build 2600 new homes on Native leased land – 40% funded by taxpayers.
  1. Say they will build 26,000 low cost homes (shared equity with the government ) but restricted to specific incomes and 1st time buyers only. Over $1Billion tax dollars has been committed. Based on current building costs $1 billion may not be enough.    In 2017 the NDP promised “Our plan calls for 114,000 new units to be built over the next 10 years. Co-op housing, rent purpose housing, not-for- profit housing and market based housing,” said Horgan. (they actually funded about 30,000 since 2017)

Interest rates – now and predicted;  

CIBC predicts rate cuts in December 2024 and January 2025 due to;

  • Weakened labour market
  • many mortgages (50%?) coming up for renewal in 2025/2026
  • Rising household debt
  • They also predict rates will drop to 3.25% next year, down to 2.5% in 2 years, 2.25% in 3 years and down to 2.5% in 4 years. ( The current Bank of Canada rate is 4.25%)

Current best discounted 5 year fixed rate is 4.39%

The best discounted variable rate is 5.55%