Happy New Year, folks! 2017 has finally arrived, and for the real estate world, change is in sight. As most of us already know, 2016 brought forth a lot of chatter about several significant changes (decided upon by our government) toward our country’s mortgage and housing rules. Those who will primarily be affected by these implementations will be anyone who, is not only looking to perhaps qualify for government-backed insured mortgages, but also those who may be looking to purchase their first home and/or are looking to refinance their existing mortgage. Having said that, the Government of Canada has been known to make multiple changes to our mortgage requirements in years past which, in turn, reassures us all that there is nothing to be too concerned about. In fact, we are reminded of what Royal LePage President and CEO, Phil Soper had to say about our real estate markets in a recent interview: “Nationally, our real estate markets remain healthy, with home values showing modest to strong (yet rational) price appreciation in almost every Canadian city … Even in the hardest hit oil patch regions, prices have held up well, with small single-digit declines, year-over-year”.
We understand that, though the New Year has only just begun, some of us may need to be reminded of such aforementioned changes. Not to worry, here’s a quick summary that closely analyzes the changes to Canada’s housing rules, now in affect:
- Extending a “mortgage rate stress test” to all insured mortgages in order to ensure affordability.
- Launching “consultations on lender risk sharing” in order to limit the governments financial obligations if there just so happens to be a surplus of mortgage defaults.
- Implementing new restrictions on when the government “will provide insurance for low-ratio mortgages”.
- New rules that have been put in place regarding the “primary residence capital gains exemption” and how you – as a seller of your primary residence – are now obligated to report the details of the sale to the CRA.
If you’d like to read up on more information about each housing rule, The Globe and Mail published an article that outlines the four most prevalent changes in more detail.
Furthermore, and in light of all these recent changes to our housing market, it had been announced in 2016 that our land transfer tax rebate program for first time home buyers would be doubling (from $2000 to $4000) as of this month, January 2017. So now that this program is in full effect, it comes as great news for those who are looking to purchase their first home (or thinking about purchasing one in the early-to-mid New Year) as they will no longer be required to pay a land transfer tax on the first $386,000 of the cost of their homes.
Needless to say, there is an ample amount of new information that is to be discovered this New Year as it is extremely relevant to current and future home buyers. It’s important that we become well aware of the details of these new changes and new rules, as well as the logic behind such recent changes.