md of foothills feature a13 – A19 FREE jun 29 to jul 5 2012 issue 02-25 @crebnow www.creb.com
Government tightens lending guidelines cody stuart
managing editor
W
ith concerns regarding overheated housing markets and household debt levels rising nationwide, the federal government has enacted new rules governing mortgage lending and borrowing. The biggest change, and the one most likely to have an impact on
Canadian homebuyers, is the reduction of the maximum amortization period from 30 years to 25. “Our government stands behind the efforts of hard-working Canadian families to save by investing in their homes and their future,” said Federal Finance Minister Jim Flaherty. “The adjustments we are making today will help them realize their goals, build on the previous measures we have introduced to keep the housing market strong, and help to ensure households do not become overextended.” Along with changes to the maximum amortization period, the new rules will alter the amount Canadians can borrow when refinancing their homes, dropping the limit from 85 per cent of the value of the home to 80 per cent. Other changes will fix the maximum
SINGLE FAMILY
gross debt service (GDS) ratio at 39 per cent and the maximum total debt service (TDS) ratio at 44 per cent – which should help ensure loans remain proportional to household income. The GDS ratio is the share of the borrower’s gross household income that is needed to pay for home-related expenses, such as mortgage payments, property taxes and heating expenses. The TDS ratio is the share of the borrower’s gross income that is needed to pay for home-related expenses and all other debt obligations, such as credit cards and car loans. A recently released report from RBC Economics on housing affordability listed Calgary as one of the nation’s most reasonable markets, requiring buyers to take on far less debt than “overheated” markets like Toronto.
1582
1398
1284 722
773
962
988
1036
1106
1153
1313 1217
791
$134,900
Cozy 1 bedroom condo, 10 min to Southcentre, just off Elbow Dr in Southwood. Payments with $6,750 down could be as low as $626 + condo fee $275 + tax, total, under $1000 per month, vacant, when you can own this great starter, just min walk to bus. MLS®C3515918
were announced in February 2010, and came into effect April of that year. Over the life of a 30-year, $375,605 mortgage (the average price of a Canadian home) at five per cent, a borrower would save roughly $76,000 by moving to a 25-year amortization, although their monthly mortgage costs would rise from $2004.57 to $2,184.54.
mortgage rules A3
contents news briefs
A3
community
A6
algary posted a 4.8 per cent increase in the MLS® Home Price Index (MLS® HPI) for May 2012, second only to Greater Toronto said a report by The Canadian Real Estate Association. Nationally, the MLS® HPI increased 5.2 per cent from April to May of this year. Greater Toronto increased by 7.9 per cent followed by Calgary with Greater Vancouver rounding out the top three with an increase of 3.3 per cent.
market A3
event listing
A6
mortgage rates
A10
business directory A10 commercial
A21
Calgary market shines
map
B1
open houses
B23
GREAT CEDARBRAE VALUE!!
Donna Williams 403-617-7749
Pride of ownership in this excellent 3 bedroom, 2.5 bathroom unit. Well managed complex! Features ceramic tile flooring, granite, stainless steel appliances, balcony, patio, berber carpet, walk-in closets & double tandem garage. Close to all amenities: schools, parks, shops, transit! Move-in condition! $288,800
$259,900
Over 900 sq. ft., downtown view, top floor, indoor titled heated parking. Newer 2000 building. Low condo fees $293. Just minutes to Heritage LRT. Insuite laundry. Gas fireplace shows immaculate! MLS®C3529155
New mortgage rules will reduce of the maximum amortization period for Canadian homebuyers from 30 years to 25 years.
Rotary Dream Home
C
*All statistics based on monthly data compiled by CREB® via MLS® activity.
Sutton CanweSt Real eState
Calgary MLS® HPI increases in May CREB® STAFF
MAY10 JUN10 JUL10 AUG10 SEP10 OCT10 NOV10 DEC10 JAN11 FEB11 MAR11 APR11 MAY11 JUN11 JUL11 AUG11 SEP11 OCT11 NOV11 DEC11 JAN12 FEB12 MAR12 APR12 MAY12
734
891
888
958 867
915
1061
1169
1262
1355
1576
1710
MLS® NUMBER OF UNITS SOLD* MAY ‘10 – MAY ‘12
According to the report, the TDS for a standard two-storey in Calgary was 36.7 in May, while the same measure in Toronto and Vancouver stood at 62.6 and 93, respectively. Finally, the government will limit the availability of government-backed insured mortgages to homes with a purchase price of less than $1 million. “Wealthy people can borrow whatever they want from banks and they can work that out with banks and that’s not my concern,” said Flaherty. “My concern is the broader range of Canadian people who might get over extended.” The announcement marks the fourth time in four years that the government has constricted Canada’s mortgage rules since first cutting the maximum amortization period to 35 years from 40 in 2008. Further changes
For more details call the “Home Hunters”
Grant
& Steve Hunter 403-278-9208
sutton group canwest vista • www . thehomehunters . com