New mortgage rules

5 Ionson Blvd.

By Michael McCann

No one can accuse the new Trudeau Liberal government of inaction.

Since being sworn in they’ve wasted no time implementing some of their key election promises:

• National public inquiry into missing and murdered indigenous women
• Tax rate cut for Canada’s middle class
• Canada commitment to the historic Paris climate agreement
• The fast tracking of Syrian refugees coming to Canada

New mortgage rules

It seems our new Prime Minister, somewhere in his spare time, also wanted to cool down our overheated housing market by introducing new mortgage rules. Most experts were not surprised as there has been constant chatter of a looming Canadian housing bubble.

We all look at our homes as one of our primary investments.

However with any significant loss in value, say between 10% to 15%, those with high mortgages and/or struggling with debt it could seriously derail their financial future.

So what is the new policy? Simply put the government has increased the minimum down payment from 5% to 10% on the portion of a home purchase above $500,000.

Lets run the math on this and use a home purchased for $800,000. For the first $500,000 that’s $25,000 (5%) and for the remaining $300,000 it would be $30,000 (10%). Your total down payment would be $55,000 which is an additional $10,000 than under the old 5% down.

Toronto and Vancouver targeted

For most of the country this new rule will have little impact, but it is pretty obvious that both Toronto and Vancouver are the housing markets being singled out.

Almost anywhere in Canada $500,000 will get you a lot of house, but not here in the GTA. In November 2015 the average detached home in the 416 area code sold for $1,018,621…that’s right, over 1 million dollars.

Though it’s early to tell I do hope they got this one right.

To avoid a sharp national housing correction it was critical that the brakes be applied to the country’s two largest housing markets.

Toronto over the years has experienced year-to-year double-digit increases, so slower more moderate growth might just avoid an unpleasant alternative.

This new rule applies February 15, 2016 so for those who already have a mortgage or new buyers who have applied for mortgage insurance before the start date will not be affected.

Let’s look at the local statistics for November.

Birch Cliff – Cliffside Home Sales in Nov. 2015 – 15 homes sold

Source:Toronto Real Estate Board. Excludes commercial properties, condos and vacant land.

Birchcliff/Cliffside

• November 2014, 24 homes were sold compared to 15 sold in November 2015 – a drop of 38%
• November 2014 the average sold price was $625,885 while November 2015 the average sold price came in at $645,804 – an increase of 3.2%
• November 2014 it took on average 19 days and November 2015 it took 16 days

Toronto Real Estate Board

• 6,476 sales in November 2014 with November 2015 showing 7,385 sales – Up by 14%
• $577,502 average selling price November 2014 with November 2015 coming in at $632,685 – Up by 9.6%
• November 2014 it took an average of 27 days to sell a home where November 2015 it was 26 days

For a look at local real estate statistics over the last few months, click on the tabs.

[tabs slidertype=”top tabs”] [tabcontainer] [tabtext]October[/tabtext] [tabtext]September[/tabtext] [tabtext]August[/tabtext] [tabtext]July[/tabtext] [tabtext]June[/tabtext] [/tabcontainer] [tabcontent] [tab]
Birch Cliff – Cliffside Home Sales in Oct. 2015 – 23 homes sold
Source:Toronto Real Estate Board. Excludes commercial properties, condos and vacant land.[/tab] [tab]
Birch Cliff – Cliffside Home Sales in Sept. 2015 – 19 homes sold
Source:Toronto Real Estate Board. Excludes commercial properties, condos and vacant land.[/tab] [tab]Birchcliff – Cliffside Home Sales in August 2015 – 21 homes sold [/tab] [tab]Birchcliff – Cliffside Home Sales in July 2015 – 28 homes sold [/tab] [tab]
Birchcliff – Cliffside Home Sales in June 2015 – 39 homes sold
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According to the Toronto Real Estate Board, our local housing market is defined as Birch Cliff/Cliffside and the boundaries can be seen below.

View Birch Cliff / Cliffside in a larger map