Fall 2016 Newsletter
 October 17 2016     Posted by Siemens Group

    Stay Calm and Carry On!

I'm sure everyone wants to know what's going on with real estate! First the 15%

Foreign Owner's Tax, then the Federal Government announced changes to lending rules,

then Gregor Robertson announces he is going after the AirBNB properties.

What is going to happen to 'Vancouver' real estate?

Isn't it typical that every level of government decides to make a change to affect affordability

without consulting each other and all within weeks of one another.

Clearly, this has all been on the table for some time, but it is amazing that they would not

get together and take a holistic approach to what has become a problem for the lower mainland.

While it is true that we will be impacted by all of the above I don't think we will have a huge change

in values. The only way we would have a large adjustment is if people had to sell and the market

became a buyer's market with an overabundance of listings. There will be reductions on listings

for sure as those people who were caught off guard who had bought subject free before selling

have to take less to complete on their purchases.However I don't think we will have a huge reduction.

Lending will be a bigger adjustment. As most lenders back end insure their mortgages so that they

can be sold into the CMB, this is where the real change is about to occur.Under the new guidelines

effective October 17th, 2016, all insured mortgages must be qualified using the MQR rate which is currently 4.64%

and a 25 year amortization. That is all mortgages that will be insured either because the borrower has less than 20%

down or because the lender needs insurance to be able to put the mortgage into the CMB.

If your application works under these new guidelines, GREAT, no problem! If your application does not work

you will get a decline.But don't worry. Not all mortgages must be insured. Lenders who take deposits

will have the option of leaving the mortgage on their books and have the ability to approve the mortgage

at the actual rate and a 30 year amortization. The mortgage industry has seen a lot of change and we have always adjusted

to the changes, and I feel we will find a way to adjust to these changes. The biggest impact will be on

the non bank lenders, they will have less money to lend and with less money it will be more expensive to do the loan

so you can likely expect the rates to increase a bit with less money in the system to borrow.