Wow, 2019 sure flew by, as did the entire decade! With the excitement of a brand new year upon us, let’s have a look back at 2019 and unpack some of the key issues that impacted the mortgage world and home ownership in Canada.
The mortgage stress test
The much-debated mortgage stress test has been in effect since January 1, 2018, and it’s still a hot topic among many in the real estate and lending industries. The stress test was introduced when there was a lot of buzz around the threat of higher interest rates coming into effect, but that has yet to happen. The stricter qualifying requirements have made it harder for many people to secure a mortgage and as a result, many would-be homeowners are still renting…and waiting, creating a negative impact on housing, construction, lending, rent prices, and so on. Just recently, the federal government asked for an inquiry into the stress test, so be sure to stay tuned and see what (if any) changes are made in 2020.
Mortgage interest rates didn’t do much at all in 2019, which is why it’s newsworthy! Interest rates were predicted to rise at some point in 2019, but the fact that variable interest rates stayed consistent in 2019 meant that the real estate markets could breathe a little easier. It also helped the millions of Canadians who renewed their mortgages in 2019.
First-Time Home Buyers Incentive Program
The much-talked about First-Time Home Buyers Incentive Program was introduced in September of 2019 by the federal government’s National Housing Strategy. Through this incentive, the CMHC provides a portion of the purchase price, but it’s not a standard type of loan per se, it’s more of an exchange for a stake in the home when it sells. While this program may have success in smaller cities and towns where home prices are more affordable, it doesn’t really work in larger cities such as Toronto (and the GTA), Vancouver, and so on. The most expensive home someone can purchase under this incentive program would be approximately $550,000, which just isn’t a realistic price in large urban centres. Be sure to watch for some tweaks and changes to this program in 2020.
The world of finance is naturally unpredictable, which means that mortgages and lending rates are too. While no one can accurately forecast interest rate fluctuations, we can stay informed and keep on top of trends and industry news so that we make the most financially sound decisions possible. That’s why it’s essential to work with a mortgage broker. We’re industry experts who have a wide range of of options to find you the best financing for your home purchase. If you’re looking to buy a home, cottage or condo or you want to renew and need a mortgage that fits you goals specifically, connect with me today at (705) 315-0516 and let’s make 2020 an awesome year.