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What The New Stress Test Means For You By Barb Eglauer – One of Our Recommended Service Providers

What the New Stress Test Means for You  A few years ago, the stress test was introduced as a safeguard against rising interest rates, to make sure homebuyers would still be able to make their mortgage payments if their rate increased down the road. To qualify for a mortgage, buyers need to qualify at the greater of 2% higher than their actual rate, or the Bank of Canada’s benchmark 5-year rate, which today is 5.19%.

Earlier this month, Minister of Finance Bill Morneau announced changes to the benchmark rate used to determine the qualifying rate for insured mortgages – mortgages with less than 20% down payment. This change will come into effect on April 6, 2020.

There has been mixed response from the financial community about the effectiveness of this change. For some, the new qualifying rate will make it more affordable; for others, it won’t make much of a difference, especially in hot-market areas, where prices are rising quickly.

There has been pushback from some economists and housing experts who say that the new stress test will just further fuel the housing market.

Here’s what we do know:
1. Currently, the stress test for insured mortgages is 2% above contract rate or the benchmark rate, whichever is greater.
2. The new stress test, if it was in place today, would be approximately 4.89%, which is about 30 basis points below the current benchmark rate.
3. The Big Banks posted rates will no longer directly establish the benchmark rate.

4. Borrower’s will have slightly more purchasing power

Here’s what we don’t know:
1. We are still waiting for clarity on how the stress test on conventional (those with more than 20% down payments) mortgages will be determined.
2. If it will affect home prices. 

The new benchmark calculation, as stated, is more market-driven. If interest rates continue to fall, then, in many cases, buying power would also increase. Some economists are predicting rate cuts later this year, which could drop the median rate for the stress test even further.

The one truism is that every homebuyer has a unique situation. The stress test notwithstanding, each mortgage has to be tailored to each homebuyer. This will ensure that the mortgage is meeting their needs and helping achieve their financial goals.

I’d love to discuss these new developments, so call me today and let’s talk.        

Weekly Calgary Real Estate Update March 9/2020

Weekly Calgary Real Estate Update March 9/2020

6539 homes for sale in metro Calgary (up 372)

1302 homes sold in the last 30 days (up 41)

5.02 months worth of inventory (up 0.13)

19.91% of the homes statistically to sell in the next 30 days (down .54%)

Market Conditions: Buyers

Average List Price: $469,750 (up $6,187)

Average Sale Price: $452,217 (up $5,451)

Average days on market: 60 (up 1)

Average list to sale price ratio : 96.37% (up 0.03)

*Numbers in the brackets are a comparison from last week’s stats. Ideally, we want the number of homes selling in the last 30 days to increase weekly, the months of inventory to decrease (meaning demand is matching inventory) and the % of homes to sell in the next 30 days to increase

Weekly Calgary Real Estate Update March 2/2020

Weekly Calgary Real Estate Update March 2/2020

6167 homes for sale in metro Calgary (down 19)

1261 homes sold in the last 30 days (up 112)

4.89 months worth of inventory (down 0.49)

20.45% of the homes statistically to sell in the next 30 days (up 1.88%)

Market Conditions: Buyers

Average List Price: $463,563 (up $4,894)

Average Sale Price: $446,766 (up $5,028)

Average days on market: 59 (down 2)

Average list to sale price ratio : 96.34% (up 0.07)

*Numbers in the brackets are a comparison from last week’s stats. Ideally, we want the number of homes selling in the last 30 days to increase weekly, the months of inventory to decrease (meaning demand is matching inventory) and the % of homes to sell in the next 30 days to increase

Four Questions To Ask Your Mortgage Broker

Four Questions To Ask Your Mortgage Broker   Buying a new house should be exciting, but it can get pretty harrowing at times. You may worry you won’t qualify. You may feel unsure about house prices and worry about interest rates.  If you’re considering renovating instead of purchasing, you may worry you won’t qualify for a refinance. 
 
As we head in to the Spring season, this is the ideal time for us to discuss your goals, including a review of your financial goals, your credit profile, and find the best solution for your personal situation.  I will help you answer the following questions:

1. How much can I afford?

Usually people pick their homes before they organize their financing, but it should be the other way around. Determine what monthly payment you would be comfortable with and what money you have available for a down payment before delving into your house hunting. We can review your current sources of income and credit profile to help you determine the maximum purchase price you can afford and are comfortable with.

2. What type of mortgage should I consider?

Fixed or variable? A fixed interest rate is set when you sign for the mortgage; it won’t change for the entire term. A variable rate, however, may change according to market interest rates. While market fluctuations are hard to predict, I can give you historical data and economic information to help you make this decision. 

3. How much do I need for a down payment?

Many homebuyers assume they need to make a large down payment in order to get the best mortgage rate, but that’s not always the case. Mortgage insurance products allow buyers to put as little as 5% down and still get the same competitive mortgage rates.

4. What should I take into account for the future?

Everyone is excited about buying a beautiful home, but not everyone is thinking about what that means in the long term. For example, do you plan to have children, go back to school or take a trip of a lifetime? We would factor in the costs of your future potential plans as well. 

In 2017 and 2018 the government imposed the Benchmark Rate and Stress Test rate on all mortgages funded by federally-regulated institutions. We will review these factors and see what impact, if any, it has on your ability to qualify for a mortgage.

Summary

I have access to many primary lenders who offer the lowest interest rates, best terms and conditions. They also have the most stringent qualifying criteria.

I also have access to numerous “alternative” lenders. These lenders consider files with less stringent criteria than the primary lenders for qualification.

In addition, I have access to several pools of private mortgage options and to individuals who invest directly in mortgages. 

I realize that every individual has their unique situation. I will sit with you and go through all your possible options and outcomes so you can make an informed decision.

Let’s talk!    

Weekly Calgary Real Estate Update February 24/2020

Weekly Calgary Real Estate Update February 24/2020

6186 homes for sale in metro Calgary (up 118)

1149 homes sold in the last 30 days (up 54)

5.38 months worth of inventory (down 0.16)

18.57% of the homes statistically to sell in the next 30 days (up 1.10%)

Market Conditions: Buyers

Average List Price: $458,669 (up $417)

Average Sale Price: $441,738 (down $48)

Average days on market: 61 (down 2)

Average list to sale price ratio : 96.27% (up 0.03)

*Numbers in the brackets are a comparison from last week’s stats. Ideally, we want the number of homes selling in the last 30 days to increase weekly, the months of inventory to decrease (meaning demand is matching inventory) and the % of homes to sell in the next 30 days to increase



Weekly Calgary Real Estate Update February 18/2020

Weekly Calgary Real Estate Update February 18/2020

6068 homes for sale in metro Calgary (up 128)

1095 homes sold in the last 30 days (up 115)

5.54 months worth of inventory (down 0.52)

17.47% of the homes statistically to sell in the next 30 days (up 0.97%)

Market Conditions: Buyers

Average List Price: $458,252 (down $8,725)

Average Sale Price: $441,786 (down $7,699)

Average days on market: 63 (down 2)

Average list to sale price ratio : 96.24% (down 0.09)

*Numbers in the brackets are a comparison from last week’s stats. Ideally, we want the number of homes selling in the last 30 days to increase weekly, the months of inventory to decrease (meaning demand is matching inventory) and the % of homes to sell in the next 30 days to increase

Weekly Calgary Real Estate Update February 10/2020

Weekly Calgary Real Estate Update February 10/2020

5940 homes for sale in metro Calgary (up 214)

980 homes sold in the last 30 days (up 123)

6.06 months worth of inventory (down 0.62)

16.50% of the homes statistically to sell in the next 30 days (up 1.53%)

Market Conditions: Buyers

Average List Price: $466,977 (down $2,256)

Average Sale Price: $449,485 (down $932)

Average days on market: 65 (down 3)

Average list to sale price ratio : 96.33% (up 0.19)

*Numbers in the brackets are a comparison from last week’s stats. Ideally, we want the number of homes selling in the last 30 days to increase weekly, the months of inventory to decrease (meaning demand is matching inventory) and the % of homes to sell in the next 30 days to increase

Weekly Calgary Real Estate Update February 3/2020

Weekly Calgary Real Estate Update February 3/2020

5726 homes for sale in metro Calgary (up 22)

857 homes sold in the last 30 days (up 107)

6.68 months worth of inventory (down 0.93)

14.97% of the homes statistically to sell in the next 30 days (up 1.82%)

Market Conditions: Buyers

Average List Price: $469,233 (down $14,143)

Average Sale Price: $450,417 (down $12,671)

Average days on market: 68 (down 1)

Average list to sale price ratio : 96.14% (up 0.07)

*Numbers in the brackets are a comparison from last week’s stats. Ideally, we want the number of homes selling in the last 30 days to increase weekly, the months of inventory to decrease (meaning demand is matching inventory) and the % of homes to sell in the next 30 days to increase

Weekly Calgary Real Estate Update January 27/2020

Weekly Calgary Real Estate Update January 27/2020

5704 homes for sale in metro Calgary (up 204)

750 homes sold in the last 30 days (up 118)

7.61 months worth of inventory (down 1.09)

13.15% of the homes statistically to sell in the next 30 days (up 1.66%)

Market Conditions: Buyers

Average List Price: $483,376 (down $14,215)

Average Sale Price: $463,088 (down $6,218)

Average days on market: 69 (same)

Average list to sale price ratio : 96.07% (up 0.04)

*Numbers in the brackets are a comparison from last week’s stats. Ideally, we want the number of homes selling in the last 30 days to increase weekly, the months of inventory to decrease (meaning demand is matching inventory) and the % of homes to sell in the next 30 days to increase

Weekly Calgary Real Estate Update January 20/2020

Weekly Calgary Real Estate Update January 20/2020

5500 homes for sale in metro Calgary (up 136)

632 homes sold in the last 30 days (down 36)

8.70 months worth of inventory (up 0.67)

11.49% of the homes statistically to sell in the next 30 days (down 0.96%)

Market Conditions: Buyers

Average List Price: $497,591 (down $9,677)

Average Sale Price: $469,306 (down $9,232)

Average days on market: 69 (down 3)

Average list to sale price ratio : 96.03% (down 0.17)

*Numbers in the brackets are a comparison from last week’s stats. Ideally, we want the number of homes selling in the last 30 days to increase weekly, the months of inventory to decrease (meaning demand is matching inventory) and the % of homes to sell in the next 30 days to increase