New mortgage rules, lower housing prices?

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New mortgage rules, lower housing prices?

On Thursday government announced new new mortgage rules
    25 year is the longest amortization period
    More stringent income requirements for self-employed borrowers.
    Funds from cashback mortgages are not allowed as a source of down payment
    Use of the five-year posted “benchmark” to qualify uninsured terms of one to four years and all variable terms (currently most lenders use a three-year posted or a lower rate to qualify uninsured mortgage).
    Home insurance to be included in debt-servicing ratios (it is currently not included.)
    CMHC reforms – no insurance for mortgages on houses selling for more than $1 million

These changes will bring down the prices across Canada. Hope you didn't buy a house recently planning to flip it.
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New mortgage rules, lower housing prices?

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Re: New mortgage rules, lower housing prices?

Unread postby betsi » Fri Oct 05, 2012 3:40 pm

Here’s something you don’t hear every day – homes getting cheaper in Fort McMurray.

The Royal LePage house pricing survey for the third quarter shows standard condos in the city dropping 8 percent in price.

It’s still about $100k above the national average, at 350 thousand dollars.

President Phil Soper says the change in the maximum mortgage length from 30 to 25 years had a major effect.

But nationally, standard condo prices are up almost 2 percent.


They didn't mention anything about the house prices, but they are not going up like crazy anymore, and seem to have dropped a bit from this spring.
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Re: New mortgage rules, lower housing prices?

Unread postby byronfm » Wed Oct 10, 2012 11:59 am

it didn't make sense to me. Tougher rules should mean increased difficulties for people to get the mortgage from the bank, so less people can afford to buy expensive houses. Then people should tend to buy smaller properties.

Why are only condo prices dropping, which should not be affected by the rule? Those affected by the rule acturally increase the price.
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Re: New mortgage rules, lower housing prices?

Unread postby mcmurrian » Wed Oct 10, 2012 2:04 pm

People who need financing the most, are the new buyers. If they can't get a mortgage smaller properties don't sell as well. Later people who want to move up will be affected because they can't get as much for their house, so they will be looking at cheaper properties.
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Re: New mortgage rules, lower housing prices?

Unread postby akouznet » Thu Nov 29, 2012 9:35 pm

I personally think that prices will go down. I looked at the interest rates yesterday and they went up .2 since the last time I checked. Higher interest rates mean lower housing prices. New mortgage rules will affect what people can afford in today`s market and an average Joe guy in fort mac brings home around 100 000, with a wage like that max amount a bank is willing to lend is 600 000. All those houses at 700-850 should drop a 100 so more people can afford them. All the new housing developments they doing right now will bring prices down because now we ll have more to choose from and at the same time they have to be competitive.
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