Knowledge is power, and when it comes to making a major life decision, you want to make it a powerful one that you’ll feel great about. Our blog is designed to communicate the latest news about industry changes, as well as our thoughts on smart purchasing. Keep up to date with the latest news from BRMC right here–because we’re not going anywhere, and mortgage news never gets old or stops.

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Market Update – Interest Rate Increase Oct. 24, 2018

We’re not sure about everyone else, but does it not feel like sunshine and 30-degree weather was yesterday? Is there anyone else wondering how it’s already mid October!? We are 16 days away from Halloween and Christmas is around the corner. The organized individuals of the world have probably started shopping however, there is something to be said about those who scramble last minute – we’re either mildly insane for doing so OR is there a sense of achievement attached if you manage to pull it off? It’s almost the same level of pride you experience when you successfully carry your groceries from the car to the house in one trip and who doesn’t appreciate a one tripper?

Speaking of scrambling last minute, let’s talk interest rates. While there is no need to panic, in just over a week from now the BoC should be increasing the benchmark rate a quarter percent on October 24th, followed by another potential increase in January 2019. You should speak with a mortgage consultant if you are 3 or more years into your mortgage term, in a variable rate mortgage or have considered refinancing, now would be the time to act.

There is a lot of speculation when it comes to the future of interest rates, some economists are predicting rates to reach as high as 6% by 2020 but it’s near impossible to predict such thing. While this may seem drastic to some (by some we’re referring to the millennial’s of the world who never experienced 13%-20% interest rates in the 80’s) it’s important to remember that the rates we have now are still considered historically low.

We are starting to see the affects of the new B20 mortgage regulations, introduced over the last two years. Together with interest rate increases, the real estate market in Abbotsford, Mission and Chilliwack have slowed down. Reports show a 33.2% decrease from the same month last year in residential unit sales. The average home price in BC is down 1.1% year-over-year, averaging the detached home price at $685,749.

If you’re interested in accessing the equity in your home, you might want to consider doing it sooner than later. Chances of this slow down continuing are relatively high especially with increasing rates in the forecast, it’s likely that these changes will result in further depreciation.

The slow down we’re starting to experience could open a window for interested home buyers but given all the recent regulatory changes it’s more important now than ever to work with a seasoned team of mortgage advisors who are familiar with the new requirements and know how to work around them.

If you have any questions about how the interest rate increase might affect your current mortgage, please feel free to contact our team. We offer complimentary mortgage reviews and will work with you to secure the best mortgage product suited to your financial goals and needs.

Refinancing? Don’t miss out

If you’ve considered refinancing your house for a renovation, debt consolidation or any other reason, now might be your last chance to qualify.

Earlier this year the Government of British Columbia implemented a new mortgage rule which required borrowers to qualify at 2% above the contract rate.

Example

Before new mortgage rule – Borrowers could qualify at the given contract rate: 3.59%

After new mortgage rule – Borrowers we’re required to qualify at 2% above the given contract rate: 3.59% + 2% = 5.59%

Almost all lenders followed suit and changed their lending guidelines so that borrowers had to abide by the new rule, known as the “stress test” or “B20”.

Up until this point, there were a very small handful of lenders that did not change their lending guidelines and continued allowing clients to qualify at the contract rate. This small pool of lenders has slowly dwindled down and one by one are now requiring clients to qualify under the new mortgage rule.

It has been brought to our attention the last lender that was not qualifying clients under the new “stress test”, will now be implementing the stress test to all borrowers in the new future.

Please call our team as soon as possible to discuss your options as it is unlikely we will receive any warning prior to the implementation of this rule change.

Important Update – Last Chance to Traditionally Qualify

With summer in full swing, we hope you are all enjoying the weather just as much as we are. Although our team has been remarkably busy, our families have managed to plan a getaway up to the cabin that we’re very much so looking forward to, especially considering the close call we encountered. Last year the forest fires burned their way right up to our front door on Green Lake, miraculously our cabin managed to survive.  It’s been 2 years since our last visit and to celebrate it’s survival, we plan on making this a trip to remember.

While this summer has been busier than usual, we believe it’s about to get even busier. Tomorrow, the Bank of Canada is going to make another rate announcement and if I was a betting man (which I am) I would say rates are going up. In addition to the rate increase, rumor has it ALL of our lenders will be applying the “Stress Test” within the next 90 days.

Earlier this year, the federal Government implemented a new policy which required lenders to qualify clients at 2% above their contract rate, this new rule reduces borrowing power as much as 20%.

Up until this point we were fortunate enough to have small group of lenders who were not required to follow these guidelines, which in return made it easier to qualify for a mortgage. Now there are rumblings that these two institutions will follow suit shortly and also abide by the new policy, ultimately decreasing the mortgage amount you’d qualify for. 

If you are considering any financing in the future you might want to to consider pushing that time line up to ensure you still qualify.