What we need to know about 2018.
It’s been a while since I’ve written a newsletter – too long I know because I now have too much to talk about! LOL.
The new mortgage rules have had an impact and a large one in fact, working in files day to day I keep catching myself presuming client’s affordability based on previous rules and this latest round really does drop overall affordability. Now this must be taken with the flip side in that MOST of my clients can still accomplish what they want to accomplish, many people were playing “within the rules” anyway so it makes it really that clients cannot overstretch themselves and have a full braking system in place. The new rules really just level the playing field and make it so new buyers can enter the market the same as people who have already owned and are sitting on equity wondering what to do with it. Our firms “find a way” attitude and access to many lenders and programs makes me thank the sweet Lord I’m a mortgage broker. If I was working for a bank I’d be …… Not as grateful 😊
The rules are not as great for our very ambitious clients who want as many properties as possible but these are good rules in general and we have work-arounds. I feel like I’m almost as busy as an accounting firm this time of year with all the calls we’ve been fielding from our big self-employed database wondering what they should file because they have money in their companies and what they should take – if you’re self employed and wondering whether to pay personal tax or keep in the Corp please reach out to discuss. Lending is now even more “in the box” and it comes down to what you file or earn in income. Credit is same same, down payment same same, so really it’s coming down to how much money do you earn on paper. You either pay the government in taxes once/year or you pay out the nose every month in your interest rate on your mortgage. Long and short – declare all income or pay higher rates. We must be reminded that owning real estate is a privilege and not a right. You must pay to play I believe the saying goes.
Interest rates have risen to between 3.29% and 3.84% on a 5 year fixed depending on lender, loan to value, owner occupied/tenant occupied and amortization. It’s Pandora’s box out there trying to sort which rate clients qualify for. The new rules are that you must qualify at contract rate (let’s say 3.79% is available for you) plus 2% – so you end up having to qualify at 5.79% to get your 3.79%
Variable mortgages still qualify at Bank of Canada posted (and have for the past three years) so to get a Variable now clients qualify at 5.14% – Variable rates are between 2.46% and 3.30% again pending lender and situation. Our “out of the box” recommendation remains taking the lower Variable mortgage and paying as though taking the higher fixed rate especially because Variable is now “easier” to qualify for but there’s a 7 year fixed at 3.39% that is all of a sudden attractive if you’re keeping your property long term, planning to turn your property in to a rental, or just getting skittish about rates overall. Email us for a strategy specific to you.
NDP Budget & Projections below
Wow. I was nervous as hell going in to Tuesday, but I have to say I’m impressed with the “focus on locals” approach NDP has unveiled. Overall, I am surprised to say I like their plans. Maybe I just don’t understand them fully just yet, but they seem quite common sense (Government using common sense, I know, it’s odd to type…)
Focusing on taxing larger corps for health taxes and deleting MSP for individuals – smart, and a win. Increased child care benefits for young families. Ferry price freezes (to help my Tofino trips!) are a win. Wildfires. Etc – Here’s the best article I’ve seen for a quick summary – CBC 10 things to know
IF the NDP can enforce the 2.0% foreign owner tax it will mean good things for the local economy and the reason why we are seeing more money in ChildCare/Health reductions/Wildfires etc. The 5% increase on foreign purchaser’s tax to 20% from 15% is “nominal” now that the tax has been implemented especially given foreign currency to Canadian. I truly hope these measures allow local BC residents to enter the real estate market as home owners. Let’s see how this plays out in to 2019 amidst ICBC & BC Hydro meltdowns (please bring on the privatized insurance!)
Our projections *with caveats everywhere to not be sued* – The bottom of the market is still expected to increase and likely significantly. We’ve already seen $250,000 condos in many burb areas suddenly increase to $400,000 basically “overnight”. Migration to BC (from Canada or overseas) is resulting in increased housing demand and upward pressure for values on all properties sub $1.5M. A huge amount of our client base continues to find out ways they can keep their current home and still buy more. NOBODY is thinking of selling unless they must so there really is slim pickings out there.
We still have a supply and demand issue and we have a huge amount of job creation happening across many industries. The tech industry alone is expecting another 200,000 new jobs in BC over the coming three years. Those jobs all paying $100,000 or more and possible spouses income as well. Construction – still booming and trades can’t keep up. Auto industry. Fisheries. And possibly, if the Federal Government actually steps in, the LNG pipeline creating thousands of jobs and income to our Province. $46.7Billion dollars is projected in the first 20 years of operation. IF it can get underway. FYI 0.0003% is the BEST case scenario for reductions in global emissions if Kinder Morgan pipeline is cancelled.. Common team… Aside from that BC is kicking ass at the moment, and should things continue the real estate market will continue to follow suit. We just all hope at not as frantic a pace as the last couple years. We’re seeing a few less properties in multiple offers but I mean like… Very few. And Spring market isn’t here yet, I’m referring to right now during SnowMageddon. We’re expecting another hair on fire year in our office and ready to assist should you, friends, family, coworkers or anyone else need help sorting through the mess that is “How do I buy a house in 2018?”
Birds Of A Feather. Flock Together.
Whether a mortgage client, realtor, lawyer, lender, advisor, accountant, etc. We are driven to engage with shared goals and objectives. Our mission is to have a great experience working together. We have planned touchpoints throughout the buying process and follow up to ensure our clients have an enhanced and professional experience they will talk about to their friends, family, coworkers and anyone else wondering who to refer as a mortgage broker.Contact