The question most heard yesterday was, “what 5 year rate will they have to qualify on?”.
It will be the 5 year rate at that institution granting the commitment. As the client was having to qualify on that institutions 3 year rate, it will now be their 5year rate.
The changes will take place on April 19, 2010.
• TSX +116.56 rose to its highest level in more than 3 weeks as oil and gold prices soared, leading resource issues higher, and as risk appetite returned to the market.
• DOW +169.67
• Dollar +.50c to 95.83cUS A weaker U.S. dollar served to boost the prices of oil and gold, both important Canadian exports
• Oil +$2.88 to $77.01US per barrel.
• Gold +$29.80 to $1,119.40 USD per ounce
GOVERNMENT OF CANADA TAKES ACTION TO STRENGTHEN HOUSING FINANCING
Wednesday, February 17, 2010
Tuesday, February 16, 2010
Financial Update For Feb. 16, 2010
New mortgage rules introduced to lessen mortgage crunch risks
• TSX +34.32
• DOW -45.05 to 10,999
• Dollar -.05c to 95.08cUS
• Oil -$1.15 to $74.13US per barrel.
• Gold -$4.70 to $1,089.50 USD per ounce
New mortgage rules introduced to lessen mortgage crunch risks: sources say
By Julian Beltrame, The Canadian Press
OTTAWA - The federal government is expected to announce new rules Tuesday that would make it more difficult for first-time buyers to enter Canada's hot housing market.
Sources have told The Canadian Press that Finance Minister Jim Flaherty is ready to move on the issue because of concern Canadians may be taking on too much debt.
Economists have advised the minister the best way to protect Canadians is to institute a debt affordability test in order to qualify for a Canadian Mortgage and Housing Corp. insured mortgage.
Currently, prospective home owners can qualify for a CMHC insured mortgage if they put at least five per cent down on the cost of a home.
But bank officials say they usually apply a cushion to ensure home buyers have sufficient income to meet payment requirements if floating rates rise, in some cases by more than two percentage points.
Flaherty is expected to make such an income test a condition for acquiring an CMHC insured mortgage.
Another possibility is for the minister to reduce the amortization period from 35 years to 30, which would have the effect of raising monthly payments.
It is believed Flaherty rejected more radical measures to cool the housing market, which has reached record levels in sales and near record levels in average home prices despite the weak economy.
Economists have cautioned the minister against putting on the brakes too strongly. They say raising the minimum downpayment requirement to 10 per cent, one of the suggestions given the minister, could cause a crash in a key mainstay of the fragile economic recovery.
The Bank of Canada has been warning for months that homeowners should ensure they can absorb an increase in their floating rate mortgages once rates start rising, likely as early as this summer.
By the central bank's own stress test calculation, almost one in 10 households would have a debt-service ratio that makes them vulnerable to economic shocks by the middle of 2012 if current trend continue.
In an address written for deputy governor Timothy Lane last month, the bank suggested the government has all the tools it needs to address the problem.
"An array of supervisory and regulatory instruments can be used by the government to restrain a buildup of systemic risks," said notes the address.
"These include capital requirements for institutions, leverage ratios, loan-to-value ratios, terms and conditions for mortgage insurance, and a variety of other measures. These instruments can be targeted to risks to the entire financial system that stem from particular markets or institutions http://ca.news.finance.yahoo.com/s/15022010/2/biz-finance-new-mortgage-rules-introduced-lessen-mortgage-crunch-risks.html
• TSX +34.32
• DOW -45.05 to 10,999
• Dollar -.05c to 95.08cUS
• Oil -$1.15 to $74.13US per barrel.
• Gold -$4.70 to $1,089.50 USD per ounce
New mortgage rules introduced to lessen mortgage crunch risks: sources say
By Julian Beltrame, The Canadian Press
OTTAWA - The federal government is expected to announce new rules Tuesday that would make it more difficult for first-time buyers to enter Canada's hot housing market.
Sources have told The Canadian Press that Finance Minister Jim Flaherty is ready to move on the issue because of concern Canadians may be taking on too much debt.
Economists have advised the minister the best way to protect Canadians is to institute a debt affordability test in order to qualify for a Canadian Mortgage and Housing Corp. insured mortgage.
Currently, prospective home owners can qualify for a CMHC insured mortgage if they put at least five per cent down on the cost of a home.
But bank officials say they usually apply a cushion to ensure home buyers have sufficient income to meet payment requirements if floating rates rise, in some cases by more than two percentage points.
Flaherty is expected to make such an income test a condition for acquiring an CMHC insured mortgage.
Another possibility is for the minister to reduce the amortization period from 35 years to 30, which would have the effect of raising monthly payments.
It is believed Flaherty rejected more radical measures to cool the housing market, which has reached record levels in sales and near record levels in average home prices despite the weak economy.
Economists have cautioned the minister against putting on the brakes too strongly. They say raising the minimum downpayment requirement to 10 per cent, one of the suggestions given the minister, could cause a crash in a key mainstay of the fragile economic recovery.
The Bank of Canada has been warning for months that homeowners should ensure they can absorb an increase in their floating rate mortgages once rates start rising, likely as early as this summer.
By the central bank's own stress test calculation, almost one in 10 households would have a debt-service ratio that makes them vulnerable to economic shocks by the middle of 2012 if current trend continue.
In an address written for deputy governor Timothy Lane last month, the bank suggested the government has all the tools it needs to address the problem.
"An array of supervisory and regulatory instruments can be used by the government to restrain a buildup of systemic risks," said notes the address.
"These include capital requirements for institutions, leverage ratios, loan-to-value ratios, terms and conditions for mortgage insurance, and a variety of other measures. These instruments can be targeted to risks to the entire financial system that stem from particular markets or institutions http://ca.news.finance.yahoo.com/s/15022010/2/biz-finance-new-mortgage-rules-introduced-lessen-mortgage-crunch-risks.html
Friday, February 12, 2010
Financial Update For Feb. 12, 2010
• TSX +149.16 as a commitment from the European Union to help Greece deal with its huge debt problem eased fears of a default.
• DOW +105.81 The announcement gave investors the impetus to push the Dow back above the 10,000 mark, which it has been straddling for the last week
• Dollar +01.06c to 95.13cUS
• Oil +$.76 to $75.28US per barrel.
• Gold +$18.40 to $1,094.30 USD per ounce
Statistics Canada reported this morning that the New Housing Price Index rose 0.4% in December, the same increase as reported in November.
Proposals would shake pillars of real estate
Garry Marr And Theresa Tedesco, Financial Post
The Canadian Real Estate Association has proposed an overhaul of its rules in the wake of allegations by the federal competition watchdog that some of CREA's practices are anti-competitive, according to internal documents obtained by the Financial Post.
The documents show the proposed amendments, which will be voted on on March 22, will ultimately give consumers some ability to decide how much they use a realtor on a transaction and allow consumers to conduct parts of a transaction without using a realtor.
The Ottawa-based association will present the proposed modifications to its bylaws to the representatives of the 100 real estate boards that comprise its membership.
The rule revision comes after the federal Competition Bureau filed an application with the Competition Tribunal five days ago. The dispute centres around the Multiple Listing Service system, owned by CREA, that handles about 90% of the real estate transactions in Canada each year.
A source familiar with the discussions said many of the proposed rule changes to be voted on are similar to those the Competition Bureau has already rejected.
"CREA's leadership was unwilling to agree to changes that would have opened up competition, and offered options for consumers and real estate agents," Melanie Aitken, Commissioner of Competition, said earlier this week. The bureau had been negotiating with CREA since October 2009 after a three-year investigation.
The source said the bureau filed the application after CREA was unwilling to make changes to the "three pillars," the main rules that govern use of the MLS system.
In its application to the tribunal, the bureau laid out those three pillars. It described the first as allowing only a realtor to place a listing on MLS. The second requires that a listing realtor act as an agent for the seller of the property and assist them during the entire time of the listing contract. The third pillar demands the listing realtor agree to pay the co-operating realtor compensation that must be more than zero.
The rules to be voted on make only changes to the second pillar, removing the requirement that a realtor act as agent for the seller "throughout the entire time" of a listing contract. In CREA's proposed amendments, its interpretations of the three pillars have eliminated the clause that required a realtor to handles all offers and counter offers.
It has also removed the qualification that made it against the rules to simply post property information without providing more service. The watchdog had singled out that rule in particular as anti-competitive in its release on Monday. "The Bureau is looking for removal of all of the three pillars. They are saying if you are lawfully licensed and a member of a board you should be able to list on MLS. They don't want any another rules," said the source.
Another source familiar with the workings of the federal competition agency said, "they've been trying to get CREA to bend and couldn't get anywhere. The bureau decided it was taking too long and it was time to put some public pressure on them."
If CREA is successful at modifying its bylaws and eliminating some or all of the alleged anti-competitive restrictions, the real estate association can go back to the competition bureau and ask the federal agency to discontinue its application to the Competition Tribunal.
"At that point, they can argue there are no longer any anti-competitive restrictions to haggle over," said the source who asked not to be named.
If CREA is not successful at persuading the bureau to withdraw its complaint, it may continue to make changes to its bylaws, or decide to challenge the competition agency at the Tribunal, which is a legal battle that could take two to three years to resolve.
Lawyer Lawrence Dale, a part owner of Realtysellers (Ontario) Ltd., which was singled out as a victim of anti-competitive practices by the Bureau, said it now appears that CREA is retracting many of the changes it implemented in 2007. Back then CREA put in a series of rules on how you could sell on the MLS, saying they were vital to protecting its trademark.
"That position was obviously a sham given what they are proposing to do now," said Mr. Dale, who sued the Toronto Real Estate Board (TREB) and Canadian Real Estate Association. "It appears to me the Bureau saw through their antics and wasn't prepared to be maneuvered around."
• DOW +105.81 The announcement gave investors the impetus to push the Dow back above the 10,000 mark, which it has been straddling for the last week
• Dollar +01.06c to 95.13cUS
• Oil +$.76 to $75.28US per barrel.
• Gold +$18.40 to $1,094.30 USD per ounce
Statistics Canada reported this morning that the New Housing Price Index rose 0.4% in December, the same increase as reported in November.
Proposals would shake pillars of real estate
Garry Marr And Theresa Tedesco, Financial Post
The Canadian Real Estate Association has proposed an overhaul of its rules in the wake of allegations by the federal competition watchdog that some of CREA's practices are anti-competitive, according to internal documents obtained by the Financial Post.
The documents show the proposed amendments, which will be voted on on March 22, will ultimately give consumers some ability to decide how much they use a realtor on a transaction and allow consumers to conduct parts of a transaction without using a realtor.
The Ottawa-based association will present the proposed modifications to its bylaws to the representatives of the 100 real estate boards that comprise its membership.
The rule revision comes after the federal Competition Bureau filed an application with the Competition Tribunal five days ago. The dispute centres around the Multiple Listing Service system, owned by CREA, that handles about 90% of the real estate transactions in Canada each year.
A source familiar with the discussions said many of the proposed rule changes to be voted on are similar to those the Competition Bureau has already rejected.
"CREA's leadership was unwilling to agree to changes that would have opened up competition, and offered options for consumers and real estate agents," Melanie Aitken, Commissioner of Competition, said earlier this week. The bureau had been negotiating with CREA since October 2009 after a three-year investigation.
The source said the bureau filed the application after CREA was unwilling to make changes to the "three pillars," the main rules that govern use of the MLS system.
In its application to the tribunal, the bureau laid out those three pillars. It described the first as allowing only a realtor to place a listing on MLS. The second requires that a listing realtor act as an agent for the seller of the property and assist them during the entire time of the listing contract. The third pillar demands the listing realtor agree to pay the co-operating realtor compensation that must be more than zero.
The rules to be voted on make only changes to the second pillar, removing the requirement that a realtor act as agent for the seller "throughout the entire time" of a listing contract. In CREA's proposed amendments, its interpretations of the three pillars have eliminated the clause that required a realtor to handles all offers and counter offers.
It has also removed the qualification that made it against the rules to simply post property information without providing more service. The watchdog had singled out that rule in particular as anti-competitive in its release on Monday. "The Bureau is looking for removal of all of the three pillars. They are saying if you are lawfully licensed and a member of a board you should be able to list on MLS. They don't want any another rules," said the source.
Another source familiar with the workings of the federal competition agency said, "they've been trying to get CREA to bend and couldn't get anywhere. The bureau decided it was taking too long and it was time to put some public pressure on them."
If CREA is successful at modifying its bylaws and eliminating some or all of the alleged anti-competitive restrictions, the real estate association can go back to the competition bureau and ask the federal agency to discontinue its application to the Competition Tribunal.
"At that point, they can argue there are no longer any anti-competitive restrictions to haggle over," said the source who asked not to be named.
If CREA is not successful at persuading the bureau to withdraw its complaint, it may continue to make changes to its bylaws, or decide to challenge the competition agency at the Tribunal, which is a legal battle that could take two to three years to resolve.
Lawyer Lawrence Dale, a part owner of Realtysellers (Ontario) Ltd., which was singled out as a victim of anti-competitive practices by the Bureau, said it now appears that CREA is retracting many of the changes it implemented in 2007. Back then CREA put in a series of rules on how you could sell on the MLS, saying they were vital to protecting its trademark.
"That position was obviously a sham given what they are proposing to do now," said Mr. Dale, who sued the Toronto Real Estate Board (TREB) and Canadian Real Estate Association. "It appears to me the Bureau saw through their antics and wasn't prepared to be maneuvered around."
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