Flaherty to toughen mortgage rules, investment properties targeted

[fumbrunner]

More tomorrow, but it sounds like they are targeting investors and reeling in the use of HELOCs.  Could be problematic for investors.

http://www.cbc.ca/money/story/2010/02/15/f...gage-rules.html

 

[Pump]

QUOTE (fumbrunner @ Feb 15 2010, 09:30 PM) More tomorrow, but it sounds like they are targeting investors and reeling in the use of HELOCs. Could be problematic for investors.

http://www.cbc.ca/money/story/2010/02/15/f...gage-rules.html

sounds like it will kill investors but does nothing to stop the real problem of low down payments. will keep prices up for the most part and keep the dream alive for many... big mistake as i see it

 

[GaryMcGowan]

QUOTE (Pump @ Feb 15 2010, 11:19 PM) sounds like it will kill investors but does nothing to stop the real problem of low down payments. will keep prices up for the most part and keep the dream alive for many... big mistake as i see it

I would rephrase that to "it will kill speculators". Which on hand is a good thing.
The side effect is it may slow the housing market down a bit if they decide to take it away from everyone. Not sure if the government really wants to do that. Do I use long ams? Yes. We will have to adjust to how it will effect our business.
It also says in the article that it is not part of Tuesday`s announcement. However it could be considered in the future !!??!?
That is like saying it will snow sometime in the future !

The question is; How you will you make this a positive in your business? I know how we will. This will provide us with more Rent To Own opportunities. We will have to adjust how we approach it but the opportunities will be there.

 

[luckyluciano]

No, it says it WILL be part of Tuesdays announcement.


QUOTE (GaryMcGowan @ Feb 15 2010, 11:42 PM) I would rephrase that to "it will kill speculators". Which on hand is a good thing. The side effect is it may slow the housing market down a bit if they decide to take it away from everyone. Not sure if the government really wants to do that. Do I use long ams? Yes. We will have to adjust to how it will effect our business. It also says in the article that it is not part of Tuesday`s announcement. However it could be considered in the future !!??!? That is like saying it will snow sometime in the future ! The question is; How you will you make this a positive in your business? I know how we will. This will provide us with more Rent To Own opportunities. We will have to adjust how we approach it but the opportunities will be there.

 

[JamesB]

QUOTE (luckyluciano @ Feb 16 2010, 06:09 AM) No, it says it WILL be part of Tuesdays announcement.

I think it was pretty clear that it was not. Below is a clip from the article. Were you speaking about something else and I got confused?

"Sources have told CBC News that those measures are not part of Tuesday`s announcement. However, they could be considered in the future."

 

[JamesB]

QUOTE (fumbrunner @ Feb 15 2010, 10:30 PM) More tomorrow, but it sounds like they are targeting investors and reeling in the use of HELOCs. Could be problematic for investors.

http://www.cbc.ca/money/story/2010/02/15/f...gage-rules.html


It`s too bad they dont understnand that HELOCs can help people pay off their homes MUCH faster than a traditional mortgage. (Sometimes by as much as 8-10 years)

You would think that they would like that idea given their concerns.

 

[ohsofrugal]

Does anybody have a source that actually lists what the changes are?

 

[gwasser]

QUOTE (ohsofrugal @ Feb 16 2010, 07:20 AM) Does anybody have a source that actually lists what the changes are?


Here is the link to today`s globe and mail article outlining the new terms: http://www.theglobeandmail.com/report-on-b...article1469432/

I guess, RTO investors must love this.

 

[LifesMoneyPeople]

here is a link to video

http://www.bnn.ca/news/15711.html

 

[fumbrunner]

QUOTE (gwasser @ Feb 16 2010, 08:28 AM) Here is the link to today`s globe and mail article outlining the new terms: http://www.theglobeandmail.com/report-on-b...article1469432/

I guess, RTO investors must love this.


Alot less cumbersome than I thought it would be. True investors will ensure that properties cashflow at 5 yr rates anyways, so no real change there. The question I have is how will they define "speculative" investing? I certainly hope that they do not lump all non-owner occupied purchases under that umbrella.

 

[zimnicki]

So you need 20% down now on rental properties, thats great, no more 5%, maybe i have 4 weeks to get another one.

 

[Pump]

QUOTE (zimnicki @ Feb 16 2010, 08:12 AM) So you need 20% down now on rental properties, thats great, no more 5%, maybe i have 4 weeks to get another one.

how are you getting under 20% down rental properties?

 

[RobMacdonald]

QUOTE (Pump @ Feb 16 2010, 08:28 AM) how are you getting under 20% down rental properties?

Several banks and mortgage lenders have offered programs for as little as 5% down through a CMHC program.

 

[tbarcier]

20% down payment on investment properties. Ouch!

 

[bizaro86]

He`s also raising the downpayment that borrowers must pay for speculative investments. If prospective home buyers want to purchase a property where they will not be living, they will have to come up with a 20 per cent downpayment, Flaherty said.

"We`re not aiming here at investment properties" such as rental units, he said. "What we`re getting at is the speculation in multiple-condo markets, in particular."

http://www.google.com/hostednews/canadianp...2jDn8AtcpuM-1dw

This quote from the finance minister would seem to suggest that some investment properties will be exempt from the new 20% down requirements, on the basis of investment vs. speculation. Has anyone seen the specifics of how that will be decided, or am I totally off base?

Michael

 

[bizaro86]

Looks like I was off-base, or the quote was a bit misleading.
I found the backgrounder on the CMHC`s website: http://www.fin.gc.ca/n10/data/10-011_1-eng.asp

Discouraging Speculation by Requiring a Minimum Down Payment of 20 per cent for non-owner-occupied properties

This measure will require a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation. Currently, borrowers may purchase a residential property with a 5 per cent down payment. Today`s change will require a 20 per cent down payment for small (i.e., 1- to 4-unit) non-owner-occupied residential rental properties. Borrowers purchasing owner-occupied residential properties which also include some rental units (e.g., borrowers purchasing a duplex to live in one unit and rent out the other) will still be able to access government-backed mortgage insurance with a 5 per cent down payment.

So 5% down will only be available on property with at least one owner occupied suite.

Michael

 

[fumbrunner]

QUOTE (bizaro86 @ Feb 16 2010, 11:23 AM) Looks like I was off-base, or the quote was a bit misleading.
I found the backgrounder on the CMHC`s website: http://www.fin.gc.ca/n10/data/10-011_1-eng.asp

Discouraging Speculation by Requiring a Minimum Down Payment of 20 per cent for non-owner-occupied properties

This measure will require a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation. Currently, borrowers may purchase a residential property with a 5 per cent down payment. Today`s change will require a 20 per cent down payment for small (i.e., 1- to 4-unit) non-owner-occupied residential rental properties. Borrowers purchasing owner-occupied residential properties which also include some rental units (e.g., borrowers purchasing a duplex to live in one unit and rent out the other) will still be able to access government-backed mortgage insurance with a 5 per cent down payment.

So 5% down will only be available on property with at least one owner occupied suite.

Michael

So, it`s a big hit for those who purchase SFDs and duplexes I guess, which allowed for the 5% down or 10% down for 3 and 4 plexes. Definitely not good for investors.

The government had to make the apprearance that they were doing something about the perceived "bubble". Unfortunately, I think they are targeting the wrong group. a 10% down payment across the board, would have alliviated alot of fears and still not impacted investors the way this policy does. To lump investors with speculators is absolutely wrong.

No impact for me, since I have been puting 20% down to avoid CMHC anyways....

 

[JamesB]

QUOTE (Pump @ Feb 16 2010, 10:28 AM) how are you getting under 20% down rental properties?


You can do this quite easily and legaly. Contact Jas Grewal at The mortgage center. 416-410-9905

 

[luckyluciano]

Speculators simply say they intended to live in the condo etc but changed their mind. Flahrety is out of the loop. Meanwhile I am seeing prices which have gone up 10% in 6 months
.
QUOTE (JamesB @ Feb 16 2010, 03:26 PM) You can do this quite easily and legaly. Contact Jas Grewal at The mortgage center. 416-410-9905

 

[GoRentFreeFast]

20% Down will clearly impact how investors view LTO/RTO deals as it gives the impression of stunting the ROI cash-on-cash return however they are still GREAT deals. Much re-education needs to be done to ensure investors don`t panic (as we all know Canadian investors do so incredibly well) over a slight shift in the way we approach deals and a market.

After 12 years I have seen many...OK most of the rules in real estate investing change so please, whine a little to whoever will listen, pick yourselves up and lets all get back to doing what we do best...

Philip