Here are the MOST popular and frequently asked questions, post Mortgage rule change:
1. What is the qualifying interest rate?
Today, the qualifying interest rate is 4.64%. This means that potential home buyers need to qualify for their Mortgage AS IF their interest rate was 4.64%. Once this hurdle is achieved, buyers have access to the best market interest rates.
Note: For home purchases with GREATER OR EQUAL TO a 20% down payment, the best Mortgage interest rates are STILL allowable to be used in home qualifying. This means a lower Mortgage payment is used in the home affordability qualifying equation
2. What is the maximum amortization allowable?
For a down payment GREATER OR EQUAL TO 20% of the purchase price, a 30 year amortization is available.
For a down payment LESS THAN 20% of the home purchase price, a 25 year amortization is the maximum.
3. Will this effect my Mortgage renewal?
A straight Mortgage renewal DOES NOT factor the new Mortgage qualifying rules. You have green lights to renew your Mortgage.
If at your Mortgage renewal, you want to access your home equity OR make any changes to your Mortgage details, you are subject to the Mortgage qualifying rules at that time. This financial maneuver would be considered a Mortgage refinance.
4. If I purchased a home already, does this effect me?
No. Any committed Mortgage, already approved, is not made retroactive to new Mortgage rules. Typically, a Mortgage rule change announcement is followed with a future effective deadline date.
5. What do you think will happen in the market?
I see this rule change as another belt notch tighter on the demand side of Calgary Real Estate. I also think, in a challenging economic time for Calgary, any additional pressure on demand has the tendency to over-react to the negative.
I think the opposite is also true. Any Mortgage rule loosening, in a “up market”, has the tendency for the market to overshoot.
Conclusion:
Continue to stay close to my monthly report on the supply side of the Real Estate equation. Please view the most recent months report here.
What other questions do you have about the Mortgage rule changes or how they might effect you?
Talk soon,
C. Moore
