FEDERAL BUDGET 2019 - HELP FOR FIRST-TIME BUYERS
Toronto- Sales in the GTA were flat in March compared to March 2018 as many buyers remained on the sidelines and new listings declined. Strong areas continue to experience multiple offers which have resulted in a very small average price decline of 2.4 percent for detached homes.
Big news with the details of the 2019 Federal Budget being released on March 19th. Although we had hoped for a change in the mortgage stress test rules or even the return of 30-year amortization for insured mortgages, the government took a different approach. They have announced an “Equity Share” program which will come into effect this Fall. Under the program, CMHC will provide first time home buyers with 5% of the down payment on re-sale homes and 10% on new construction. This is essentially given by way of an interest free loan which will eventually need to be paid back. The idea is that it will reduce monthly costs for the borrower and make it easier to get into the market.
There are still details to be worked out but for now we know the following criteria to qualify:
• Must be a first-time home buyer
• Maximum household income cannot exceed $120,000
• Maximum mortgage amount cannot exceed 4 times your gross household income
The government has also proposed changes to the Home Buyers Plan. They are now going to allow you to draw $35,000 from your RRSP’s to use towards the purchase of a home! This is up from the current limit of $25,000.
They also said they will amend the rules to allow those who have been through family crisis to access the program.
MORTGAGE RATE UPDATES:
Bond yields continue to drop and that means that fixed rate mortgages are dropping as well. We can likely expect fixed rates to continue to slowly decrease as we continue into the spring market. Chances are that by the time you are reading this the best 5-year fixed rate of 3.19% will likely be lower.
Variable mortgage rates change with the Bank of Canada overnight rate. The last time the Bank of Canada increased its overnight rate was October 2018. The last Bank of Canada rate announcement was March 6, 2019 and the overnight rate was maintained at 1.75% and correspondingly the prime rate for majority of lenders remained at 3.95%. While original predictions thought the economy would be strong in 2019, the year has started out with a lot of economic uncertainties. Most experts are predicting there will not be any more increases this year and potentially even a rate drop at some point. The next Bank of Canada announcement is scheduled for April 24, 2019.
If you are looking for mortgage financing, please contact Amiel Jelinek from Mortgage Alliance at jelinekmortgages.ca
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