Christine Buemann Mortgage Broker

As you may have heard, last week there were some changes announced in the Canadian mortgage industry for insured mortgages. The Office of Superintendent of Financial Institutions (OSFI) also released its final Underwriting Guidelines as a result of the B20 Discussion Paper on the same day and they seem to have been overshadowed by the new guidelines. These changes will affect federally regulated financial institutions and how they qualify their clients for mortgages. Here are a few highlights of the changes that will happen in combination with the heavily publicized Bank of Canada changes. • Maximum Loan to Value for Home Equity Lines of Credit will be reduced from 80% to 65%. They will continue to not have a set time amortization, however lenders are must now expect the borrowers to have the ability to repay over time • The qualifying rate will now have to be used to qualify for all conventional mortgages. It is already being used to qualify variable rates and fixed terms of less

The Bank of Canada announced new changes to come to Canadian mortgage guidelines this morning. This is the fourth tightening of guidelines in the past 4 years. They have clearly stated that the intention of their continual clamping down of qualifying criteria is an attempt to cool down the housing market and reduce household debt in Canada. I was pleased to hear that the 5% down payment rule would remain; however it is yet to be determined how these new rules will affect home owners. They will take effect on July 9th and I believe that they have implemented such a short time frame in order to eliminate the surge of people rushing into home purchases that was experienced with the last announcement of changes. Here are the new changes: • Maximum amortizations will be reduced from 30 years to 25 years • Maximum refinances will be reduced from 85% to 80% • Maximum GDS and TDS are set at 39% and 44% • Properties purchased at over $1 million will no longer be eligible for mortgage ins

Breaking News: New mortgage guidelines announced this morning that will take effect July 9, 2012 http://www.theglobeandmail.com/report-on-business/economy/housing/ottawa-tightening-mortgage-rules-no-more-30-year-amortizations/article4358876/ www.christinebuemann.com

Thinking about buying a new home this summer? Now is the time to start preparing! Here are a few tips on how to do so: • Pull your credit report: There are often errors on credit reports or issues that need to be addressed to and take time to rectify. If you go to http://www.equifax.ca/ and www.transunion.ca to pull your own credit report, it will not lower your score. It gives you a comprehensive report, detailing your liabilities and payment history. It is also important to know what your credit score is as qualifying criteria can vary based on your score. If your score is lower, there are numerous steps you can take to increase it, but it is far more beneficial to know in advance and give yourself time to work on it. • Find your tax returns and T4’s: Depending on how you are paid, you may need to provide your last 2 year’s Notice of Assessments and/or T4 slips. Your Notice of Assessment or NOA is the letter that is sent back to from the government once you file your taxes. It

Effective today, the Bank of Canada Qualifying Interest Rate has decreased to 5.24% from 5.34%.

On March 19th, 2012, the Office of the Superintendent of Financial Institutions Canada (OSFI) published draft guide B-20 – Residential Mortgage Underwriting Practices and Procedures. They had asked for comments and suggestions from the industry and are now in the process of preparing final mortgage guidelines to be released in the near future. The following provides a brief description of OSFI’s decisions on a few key issues which will be reflected in the final guideline to Federally Regulated Financial Institutions (FRFI). Re-qualification at renewal: unlike what was originally suggested, it appears that clients will not have to re-qualify for their mortgage at renewal. Lenders have used repayment history as the main determining factor for qualification at renewal and it is anticipated that this will remain. Lenders will however be expected to “refresh the borrowers’ credit metrics periodically (not necessarily at renewal) so that [they] can effectively evaluate their credit risk.

The Bank of Canada announced today that they have decided to maintain its target for the overnight rate at 1%. In turn, Prime Rate will remain at 3%

Effective today, the Bank of Canada Qualifying Interest Rate has decreased to 5.34% from 5.44%.

Canadians have been taking advantage of record-low interest rates to lock in their mortgages, a new survey suggests. The Canadian Association of Accredited Mortgage Professionals, in its annual spring release, says among the 3.8 million Canadians with a fixed rate mortgage, 14% chose to lock in during the past year. “This data supports comments by lenders that they have high numbers of new borrowers who start with variable rate mortgages but soon opt for the security of fixed rates,” says CAAMP in the report. Overall, 29% of those with mortgages have a variable rate leaving them with exposure to any changes in the Bank of Canada’s lending rate which the prime rate — used in those loans — tends to track. The survey also found Canadians are making significant efforts to reduce their debt with 23% of respondents saying they voluntarily increased their regular payments, 19% making lump sum payments and 10% doing both. For those who increased their regular payments, the average amo