NEW CMHC Restrictions: New Rules for Low Ratio Mortgages + MORE Jun 7th

A poll found that the average age a Canadian person will be before paying off their full mortgage is 57, according to St. Lawrence EMC. This is up a few years compared to age 55 a similar poll conducted in 2012 found. Canadians are making positive changes to speed up mortgage payments, but it may actually be their non-mortgage debt that determines how quickly they can become mortgage free.
St. Lawrence EMC said that the poll found that residents in British Columbia had the longest repayment expectation at 59 years, and 50 percent of Canadians that own homes said since they first took out their mortgage, their non-mortgage debt has increased. Canadian homeowners also said that lack of funds keeps them from making lump sum payments.
One way to determine how quickly a mortgage can be paid back is by using a mortgage calculator. A mortgage calculator can compare many mortgage rates side-by-side, showing someone that simple changes can speed up or slow down payments. Making changes like adding lump sum payments, making prepayments, accelerating payments or getting the lowest rate can affect interest over time…

Bank of America Corp could pay more than $12 billion to settle probes by the U.S. Justice Department and a number of states into the bank’s alleged handling of shoddy mortgages, the Wall Street Journal said on Thursday, citing people familiar with the negotiations.

Lenders to continue competitive discounting tactics through summer months
June 4, 2014: Toronto, Ontario – There’s nothing lukewarm about lenders’ efforts to stay competitive in this spring’s mortgage market. Rate discounting battles have risen with the mercury, providing buyers with a slew of affordable options. Lenders big and small have cut their fixed mortgage rates to 2.99 per cent and below, while variable mortgage borrowers will continue to enjoy low central and Prime rates for some time to come.
Fixed Mortgage Rates: Unchanged
The fixed-mortgage-rate battle wages on, as brokers and big banks alike wade in with discounted offers. Bond yields, which have trended lower during the spring months, show no sign of reversal, leading RateSupermarket.ca’s panelists to anticipate low rates to linger in the coming weeks.
Variable Mortgage Rates: Unchanged
Canada’s long-lagging inflation rate made news this month, reported to have finally hit the 2 per cent benchmark decreed by the Bank of Canada…

It seems hardly a week goes by this spring without a new announcement from Canada Mortgage and Housing Corporation – another slew of changes were announced today, targeting multi-unit developers and low-ratio mortgage borrowers.
What are the New Changes for Mortgage Borrowers?
As of July 31, low-ratio mortgage borrowers who take out CMHC insurance will be subjected to the same restrictions as high-ratio borrowers. These include:

A maximum home price of $1 million

An amortization cap of 25 years

Debt-to-income requirements: 39 per cent for Gross Debt Service and 44 per cent for Total Debt Service ratios, respectively.

The group affected are home buyers who pay more than 19.99 per cent down on their mortgage, and who also choose (or their lender chooses) to take out additional insurance to securitize the mortgage, further limit risk, or help with capital requirements. This insurance, however, is optional unlike high-ratio mortgage insurance, which is required by law for any buyer paying less than 19…

Despite inflation hitting 2 per cent in April, Bank of Canada Governor Stephen Poloz has maintained the key interest rate at 1 per cent in yesterday’s interest rate announcement. While some experts are still predicting a rate hike by the end of this year, the BoC’s current stance indicates it’s not yet confident enough to raise rates, despite stating that “financial conditions remain very stimulative,” in Canada. Here’s more on the announcement and what this means for mortgage rates.
Slow Global Growth
The Bank notes that the global economy continued to be weak in the first quarter of 2014. Canada was no exception. Growth was further slowed by the extreme winter weather we got this year. The Bank is confident that Canada’s economy will improve later this year as “The ingredients for a pickup in exports remain in place.” These ingredients include a lower dollar and a pickup in the U.S. economy, our biggest trading partner.
Downside Risk Remains
The latest numbers from April show the total Canada Price Index (CPI) was up to 2 per cent…