Tag Archives: housing

5 things mortgage shoppers can expect in 2015

Posted By |

Smiling beautiful couple sitting on a bench at summer park and pFrom the Globe & Mail’s mortgage columnist Robert McLister comes this list of five predictions for mortgage shoppers in 2015:

1.) More mortgage restrictions:

McLister says new limits on government-backed mortgage funding will make it costlier for lenders to fund mortgages, or new underwriting rules will make it harder to qualify for mortgages.

2.) Record discounts for variable mortgage rates:

By the end of 2015, some lenders or brokers will be advertising discounts better than prime minus 1%.

3.) Brokers will break into there camps:

These will be full-service, online mortgage brokers and everyday brokers. The latter will be uncompetitive versus other brokers, banks and credit unions, McLister says.

4.) A glut of private money:

Alternative lenders like Mortgage Investment Corporations (MICs) will thrive as investors chase higher yields and the abundance of capital will tempt sub-prime lenders to take more risk. McLister expects that as a result some will offer mortgages with only 10% or 15% down instead of the traditional 20% or 25%. As a result, consumers will have more lending options at lower interest rates.

5.) Brokers will pitch you other stuff:

Expect cross selling of everything from GIS to insurance, credit cards and RRSPs.

The 10-year rule: what home buyers can learn from the stock market

Posted By |

House With Life Preserver CrashingInteresting piece by the Globe & Mail’s Rob Carrick today about the 10-year rule. The columnist says prospective home buyers should follow the same 10-year rule that investors do with stocks:

“If you can’t wait at least a decade for a transaction to make financial sense, don’t do it.”

Carrick worries about the recent estimate by the Bank of Canada that housing here may be overvalued by 10 to 30%. With all the chaos going on in the world lately, “Houses don’t have immunity. They are financial assets, just like stocks, gold bars and gallons of oil.”

And in an example that hits home, he reminds us that after reaching $254,197 in 1989, the average house price in Toronto fell so long and hard it took until 2002 to set new highs. I recall personally buying a starter home in Toronto in 1988 for $230,000 and ultimately selling in 1996 for $182,000.

It worked out though, since we bought a better home closer to the lake: a strategy known as “moving up in a down market.” That initial $50,000 paper loss has been recouped ten or twenty times over.

On stocks, I’ve often heard experts cite a five-year rule but Carrick says a 10-year rule is more prudent and “a 10-year hold should work for housing, unless we get a crash like the one in the United States or in Toronto in the late 1980s.”

Ouch, he reminded me again!