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New Mortgage Rules – Renewing and Refinancing

January 1st, 2018 Canada’s new mortgage rules came into effect and it was big news. These new rules appear to have the greatest impact on those looking to qualify for a new mortgage but if you are looking to renew or refinance your mortgage, you may be impacted as well. At the centre of the new rules is a stress test requiring applicants to qualify at a rate at least 2% higher than the rate they will be paying, regardless of the down payment they are making on the home. The new rules may limit your options but rest assured, you will not lose your mortgage over these changes.

Mortgage Renewals

If your mortgage is up for renewal, lenders do not need to apply the stress test to renew an existing mortgage. This means that as long as you stay with the same lender and don’t change any of the terms of your mortgage, you will have no problems. But, if you want to shop around for the best rate, you will need to pass the stress test with any other financial institution. This may limit your options and may force some Canadians to accept a higher or uncompetitive rate if they are unable to pass the stress test.

Mortgage Refinancing

If you are planning on refinancing your mortgage, even if it is with the same lender, you will need to qualify at the higher stress test rates. This will affect Canadians who are looking to borrow money against their homes for renovations or repairs. If you are looking to refinance, you will have to qualify for the new loan at a rate that is 2% higher than your existing rate. This may mean that some Canadians may have to settle for a smaller loan or forego plans altogether.

Take Aways

The most important thing to remember not to panic, you will not lose your home over these new rules.  Many Canadians will be able to pass the stress test for renewals and refinancing, but in any case as long as you stay with your existing lender, you will remain approved for the entire term of the mortgage.  To better understand how these changes may affect you, it is always advisable to speak to your mortgage broker or bank well before your renewal date;  it is best to understand your options in advance.

If you are looking to buy a home in 2018,  especially in the Ottawa real estate market,  getting your financing in order before you start serious house hunting, is increasingly important.  It will help you act quickly and with confidence when you find your dream home!  Let us know how we can help!

It’s hard to believe November is over but here we are!  If you’ve been following Ottawa real estate you’ll know it’s been a busy 2017 and December will likely be no exception.  With the new mortgage rules coming into play in a few short weeks, many buyers are motivated to have firm deals completed before January 1st, 2017.

We’ve included the latest news release from the Ottawa Real Estate Board below.  Please note: average sale price information can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The average sale price is calculated based on the total dollar volume of all properties sold.  We have access to current statistics and trends in our neighbourhoods and communities, it’s our job to stay on top of the market trends!  We have up to date Real Estate Market Reports readily available for you and we love to chat real estate – contact us anytime!

Market Snapshot-November 2017-DRAFT

Ottawa Real Estate Update | Latest News and Highlights in the Ottawa and Area Real Estate Market

OTTAWA, Dec. 5, 2017 – Members of the Ottawa Real Estate Board sold 1,239 residential properties in November through the Board’s Multiple Listing Service® System compared with 992 in November 2016, an increase of 24.9 per cent. The five-year average for November sales is 1,001.

“November numbers are upholding the robust year we have been experiencing in the real estate market in 2017,” Rick Eisert, President of the Ottawa Real Estate Boards states. “Both residential sales and condo sales continue to steadily increase.”

November’s sales included 294 in the condominium property class and 945 in the residential property class. “This is not surprising though,” Eisert remarks.

“The Office of the Superintendent of Financial Institution’s (OSFI) announcement regarding the new stress tests for low- ratio borrowers may have buyers rushing into the market before the stricter mortgage regulations come into play in January 2018. If this keeps up, I expect December could be a busier than usual holiday season for REALTORS®.”

The average sale price of a residential class property sold in November in the Ottawa area was $418,354, an increase of 3.2 per cent over November 2016. The average sale price for a condominium-class property was $257,212, a decrease of 7.6 per cent over November 2016. The Board cautions that the average sale price can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The calculation of the average sale price is based on the total dollar volume of all properties sold. Price and conditions will vary from neighbourhood to neighbourhood.

“It is crucial in a market that is moving quickly, such as the one we are experiencing, to ensure you are pricing your property correctly. Having the guidance and market knowledge of a REALTOR® is essential for home buyers and home sellers,”

suggests Eisert. “The most active price point in the residential market is the $300,000 to $450,000 range, accounting for 46 per cent of the market. While the most active price point in the condo market, between $150,000 and $275,000, accounts for 66 per cent of the market,” says Eisert. “In addition to residential and Condominium sales, OREB Members assisted clients with renting 2,821 properties since the beginning of the year.”