Tag Archives: mortgage brokers
Brokers pursue mortgage break for first-time home buyers
Tara Perkins – The Globe and Mail
Mortgage brokers are pressing the federal government to make it easier for young people to buy their first homes, just as the spring sales season descends and Ottawa prepares its next budget.
Jim Murphy, the head of the Canadian Association of Accredited Mortgage Professionals, recently met with finance department officials in a bid to convince them that their efforts to cool the housing market have gone too far, especially when it comes to the impact on first-time buyers.
“March, April and May are the most important months for both new sales and re-sales,” said Mr. Murphy. “And the market is slowing.”
The government has deliberately taken measures to cool the growth of house prices and mortgage debt levels four times since the financial crisis, amid fears that it was heating up too quickly.
The most recent measures, which took effect in July, included chopping the maximum length of insured mortgages to 25 years from 30. All other things being equal, a shorter mortgage means higher monthly payments for the borrower.
Mr. Murphy and a number of other industry players say this rule change, coupled with stiffer lending guidelines that regulators have imposed on the banks, have made it too difficult for young people to enter the housing market at a time when prices remain high. While sales have dropped significantly in the wake of the July rule changes, prices have yet to follow suit.
Now Mr. Murphy is asking the government to resume its backing for insurance on 30-year mortgages, as long as the buyer can prove they could qualify for a 25-year mortgage. He is also pushing for an increase to the $750 tax break that first-time buyers receive.
The Finance Department declined to comment, but it is unlikely that Ottawa will take any such steps right now. Finance Minister Jim Flaherty signalled this year that he was pleased with the impact his changes have had so far, and wouldn’t mind seeing house prices come down.
And he took Bank of Montreal to task last week for its decision to cut the advertised price of its five-year fixed-rate mortgages from 3.09% to 2.99% (lower rates are available in the market, but that was the lowest posted five-year fixed rate among the largest banks), indicating that he continues to be worried about consumers racking up too much mortgage debt and inflating house prices.
Indeed, he went so far Friday as to pat other banks on the back for not following suit by dropping their posted five-year rates to such levels (customers can negotiate with banks and obtain discounts from the posted or advertised rates).
Some economists, such as Canadian Imperial Bank of Commerce’s Benjamin Tal, are cautioning that the housing market could rebound more quickly and to a greater degree than expected this spring after months of slumping sales. And the point at which consumer debt levels are likely to become a real issue for the economy is when interest rates finally begin to rise.
Phil Soper, the chief executive of real estate agency Royal LePage, supported Mr. Flaherty’s three earlier interventions in the market, agreeing it had become overheated, but thought the changes in July went too far and made it unnecessarily difficult for first-time buyers.
However, he suggested that, eight months on, the damage has been done, and so he is not pressing Mr. Flaherty to create new incentives for first-time buyers right now. The government might as well save those for when interest rates rise, he suggested.
“There is not an overwhelming cause from a public policy standpoint to provide further assistance to young people who want to own their own homes,” Mr. Soper said. “I think that might come, and we might be talking about that in a couple of years as it becomes more difficult for them.”
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Contact the Jeffrey Team for more information – 416-388-1960
Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
—————————————————————————————————–
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First-time buyers are back after 2012 slump in sales
Strong start to 2013 providing hope that the overheated GTA housing market isn’t headed for a crash.
Susan Pigg – Toronto Star
Just a few weeks ago, the house on East York’s Marlow Ave. would have looked like a simple starter home – two bedrooms and two bathrooms crammed onto a 17-by-93-foot lot, listed for $469,900.
But by Monday night, after the barn-shaped detached home sold for $525,000 in a flurry of eight competing offers, it became symbolic of something much bigger.
The first-time buyer is back.
“January can be a very volatile month. I’m usually struggling for buyers. But I cannot remember having this much business coming into the new year,” says listing agent Carolyn Griffis of ReMax.
Mortgage brokers have also seen a surge since Christmas in would-be home buyers, especially first-time buyers, looking to get preapprovals or to renew approvals that lapsed last fall and winter as they headed for sidelines, waiting for the housing market to cool or crash.
“There seems to be a lot of pent-up demand in the first-time buying community,” says long-time mortgage broker Joe Sammut of Mortgage Architects.
“People seem to have let the dust settle (since the market started softening last summer) and they’re saying, ‘Maybe it’s time to buy now that we’ve had six months more to save up and see what is happening in the marketplace.’ “
In fact, the Toronto Real Estate Board (TREB) is reporting a strong start to 2013. Home sales were down just 1.3% in January over a year earlier, welcome news after six months of largely double-digit decreases. And prices were up 4.3% last month across the GTA, according to figures released by TREB.
The average sales price of a GTA home last month was $482,648, up from $462,655 in January, 2012.
Assuming the turnaround holds, “expect annual price growth in the three to five% range this year,” says TREB’s senior market analyst, Jason Mercer.
The strong January “suggests that some buyers, who put their decision to purchase on hold last year due to stricter mortgage lending guidelines, are once again becoming active in the market,” said Toronto Real Estate Board president Ann Hannah in a statement.
She noted that sales were especially strong in the suburban regions around Toronto, citing the dampening effect of the city’s land transfer tax. But affordability can’t be discounted: The average sales price of a detached house in the city was $765,049 in January compared to $563,675 in the 905 regions, TREB’s January sales figures show.
The resale condo sector remains soft, with TREB reporting a 5.1% decline in sales in January over a year earlier. The biggest drop in sales (6.4%) was in the 905 regions, compared to a 4.5% decline in the city.
The average price of a resale condo in the 905 regions dropped 1.4% to $269,073, while units in the 416 area were down 1.3% to an average $340,295, says TREB.
Townhouses saw the biggest decline in sales in January year over year in Toronto, with sales slumping 11.2%. Prices, however, were up almost 2%, to $418,262. That compares to a 1% increase in 905 sales and a 5.6% increase in price to $359,271.
The sale of detached homes in the 416 region declined 7.6%, but prices held steady, up 2.7% year-over-year. Sales of detached homes in the 905 regions were up 3.7% and prices up almost 7%, TREB reports.
Some 4,375 homes changed hands in January compared to 4,432 a year earlier.
—————————————————————————————————–
Contact the Jeffrey Team for more information – 416−388−1960
Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
—————————————————————————————————–
Incoming search terms
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First-time buyers are back after 2012 slump in sales
Strong start to 2013 providing hope that the overheated GTA housing market isn’t headed for a crash.
Susan Pigg – Toronto Star
Just a few weeks ago, the house on East York’s Marlow Ave. would have looked like a simple starter home – two bedrooms and two bathrooms crammed onto a 17-by-93-foot lot, listed for $469,900.
But by Monday night, after the barn-shaped detached home sold for $525,000 in a flurry of eight competing offers, it became symbolic of something much bigger.
The first-time buyer is back.
Comment: Like I predicted last year, after the new mortgage rules, they sat back and saved, getting ready for 2013. I thought we would see them in March, but it seems they started early.
“January can be a very volatile month. I’m usually struggling for buyers. But I cannot remember having this much business coming into the new year,” says listing agent Carolyn Griffis of ReMax.
Mortgage brokers have also seen a surge since Christmas in would-be home buyers, especially first-time buyers, looking to get pre-approvals or to renew approvals that lapsed last fall and winter as they headed for sidelines, waiting for the housing market to cool or crash.
Comment: How did that work out? The market was never going anywhere but up. Yes, there was a drop in prices from the fall through the winter, but there will also be a 10-15% rise by the time we get to April / May. Happens every year. Same as prices rise every year, they have for a very long time.
“There seems to be a lot of pent-up demand in the first-time buying community,” says long-time mortgage broker Joe Sammut of Mortgage Architects.
“People seem to have let the dust settle (since the market started softening last summer) and they’re saying, ‘Maybe it’s time to buy now that we’ve had six months more to save up and see what is happening in the marketplace.’ “
Comment: The market never “softened”, sales volume merely slowed. And slowed from a record pace back down the 5-year trend – which is way higher than the decade before that. So to say that the Toronto real estate market softened is more than a little ingenuous.
In fact, the Toronto Real Estate Board (TREB) is reporting a strong start to 2013. Home sales were down just 1.3% in January over a year earlier, welcome news after six months of largely double-digit decreases. And prices were up 4.3% last month across the GTA, according to figures released Tuesday by TREB.
Comment: Note than while sales volume fell in the last 6 months of 2012, prices rose in each of those months.
The average sales price of a GTA home last month was $482,648, up from $462,655 in January, 2012.
Assuming the turnaround holds, “expect annual price growth in the 3% to 5% range this year,” says TREB’s senior market analyst, Jason Mercer.
The strong January “suggests that some buyers, who put their decision to purchase on hold last year due to stricter mortgage lending guidelines, are once again becoming active in the market,” said Toronto Real Estate Board president Ann Hannah in a statement.
Comment: Just as I predicted time and agent in the latter half of 2012.
She noted that sales were especially strong in the suburban regions around Toronto, citing the dampening effect of the city’s land transfer tax. But affordability can’t be discounted: The average sales price of a detached house in the city was $765,049 in January compared to $563,675 in the 905 regions, TREB’s January sales figures show.
Comment: Ann, get off it, the land transfer tax has nothing to do with it.
The resale condo sector remains soft, with TREB reporting a 5.1% decline in sales in January over a year earlier. The biggest drop in sales (6.4%) was in the 905 regions, compared to a 4.5% decline in the city.
The average price of a resale condo in the 905 regions dropped 1.4% to $269,073, while units in the 416 area were down 1.3% to an average $340,295, says TREB.
Townhouses saw the biggest decline in sales in January year over year in Toronto, with sales slumping 11.2%. Prices, however, were up almost 2%, to $418,262. That compares to a 1% increase in 905 sales and a 5.6% increase in price to $359,271.
The sale of detached homes in the 416 region declined 7.6%, but prices held steady, up 2.7% year-over-year. Sales of detached homes in the 905 regions were up 3.7% and prices up almost 7%, TREB reports.
Comment: Because detached homes are getting too darn spendy!
Some 4,375 homes changed hands in January compared to 4,432 a year earlier.
—————————————————————————————————–
Contact the Jeffrey Team for more information – 416-388-1960
Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
—————————————————————————————————–
Incoming search terms
Related posts:
- Canada Housing Slump Only amongst the media, the pundits and the wags. Anyone...
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- January Existing Home Sales Rose to Record, Realtors Say By Greg Quinn – Bloomberg February 14 (Bloomberg) — Canadian...
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