Vancouver Mortgage Blog
Quick Rate Update
Variable Rate Closed
Prime 2.25 -0.5%
Fixed Rate Closed
3 Year 3.75%
4 Year 4.41%
5 Year 4.35%
Based upon well qualified credit.
Credit Card Balances Can Damage Your Credit Score
As an experienced mortgage broker in BC, I see quite a few applications. The following article is a warning to those people who have come to rely on their credit cards.
The MBNA Bank of Canada will be changing the way they calculate minimum payments. The increase will be substantial for those individuals who are used to running with balances on their cards. As an example, a cardholder whose minimum payment is $185 per month will now have to pay $307 per month.
Extremely low interest rates and teaser rates encouraged people to build up balances on their cards. The trouble is if they are only making minimum payments due to the inability to pay down the balance…what is going to happen when the minimum payment is increased by 66%.
Credit card debt has been worrisome issue for the banks recently. The banks went to the Canadian government to tighten mortgage lending standards because they were concerned about the potential impact of higher mortgages and higher personal debt. Canadians have the highest consumer debt of the G20. Bankruptcies have increased dramatically in the past year. Credit card debt is another matter.
The accounts written off by the credit card companies fell marginally. This could be due to the teaser rates on balance transfers. The credit card business was the most profitable segment of the banks business unfortunately the profitability of the business has declined to the point where it is the less profitable. Low rates and increasing delinquencies are impacting the banks margins. The adjustment to payment levels will have negative affect on the delinquency and write off levels.
The mortgage payment is the primary debt payment for most Canadians. They will let the credit cards go if it comes to a choice. The implication of this is the impact on the credit score. With the new CMHC rules, damaging the credit score may prevent Canadians from refinancing their mortgages.
Vancouver mortgage rates are near historical lows. It makes sense to consolidate debt now and avoid the chance of a low credit score…
Vancouver Real Estate is Doing Just Fine
The wrtier is a Vancouver mortgage broker.
The first quarter of 2010 reflected a 26.5% decrease in unit sales in the province of BC. Buyers in BC put down the real estate ads and picked the television remote for the Olympics. Post Olympic activity has been brisk driven by low Vancouver mortgage rates and a buyer that is increasing immune to the high real estate prices in Vancouver.
People like to live in Vancouver. The vibe of the city along with the weather seem to compensate for the high real estate prices. A recent survey did show some resistance to price increases. A TD survey revealed that 2/3 of Vancouverites would balk at spending more then $400,000 for a two bedroom condo.
Vancouver is moving towards the small and high foot print. Micro lofts with less then 270 square feet and now “laneway housing”. Small non-strata backyard homes have been approved by city council. Costs are estimated to run between $190,000 to $230,000 for a 710 square foot unit. Rental income for the units is estimated to be between $1,500 to $2000 per month.
After you deduct the increased taxes, maintenance costs and other sundry expenses the cash flow on these units is pretty thin. The bonus is the eventual tax free capital gain on the lane way home.
Vancouver will continue to be an expensive city. Competition from offshore buyers who are used to high prices will drive the market. Vancouver is still an exceptionally attractive city for those people with money.
Net, that makes Vancouver real estate a terrific long term investment.
Need Rental Income to Qualify for a Mortgage – Options Exist
The author is a BC mortgage broker with extensive experience with bad credit mortgage loans.
People buy houses to live in and others as vehicles for speculation. Another group buys the house to live and carves off the space to rent. The rental income can provide a cushion or a way to pay down the mortgage faster.
On April the 19th CMHC changed the rules governing rental income and suites. CMHC now requires that rental suites be legal and they will only include 50% of the rental income. The 30% reduction in the rental income can be a make or break for home buyer who needs a the rental income to qualify.
Vancouver mortgage rates are on the up swing. The potential increase in mortgage payments will make it more difficult for people to manage their mortgages from purchase and refinance perspectives.
There are still lenders and mortgage insurance companies that will extend rental income to 80%. In the provinces of Ontario and BC, some lenders and mortgage insurance companies will allow up to 80% of the rental income. Some lenders and mortgage insurance companies will also allow for the income from illegal suites to be counted.
There is hope for the home buyer. They will need to be savvy and tight with a dollar but the purchase of a home is still the best way for most Canadians to ensure financial independence.
Vancouver Housing Prices Up or Down?
The writer is an experienced BC mortgage broker with expertise in bad credit mortgage financing.
One of the two big variables in housing prices, Vancouver mortgage rates
, has been influx recently. The other variable affordability has been strained to incredible levels over the past few years.
The sudden shift in interest rates has not impacted the market values yet. The rule of thumb for mortgage payments is that it shouldn’t be more then 32% of total income to cover principal, interest, taxes and heating.
As housing prices spiraled in the 2000’s, mortgage lenders began to increase flexibility into the system by introducing 40 year mortgage, zero down mortgages, No Income Qualifier Mortgages. The parade stopped on the April the 19th with the introduction of stricter mortgage underwriting guidelines by CMHC.
Naturally CMHC is the big boy on the block and the industry followed suit. With the new restrictions on mortgage lending the prices in the market are now out of step. Especially in Vancouver, Vancouver enjoys or suffers the highest percentage of income to service mortgage payments. The average bungalow requires 80% of income to service debt.
While interest rates have adjusted downward in the past couple of days, the long term trend is upwards. Consumers will focus on the short term trends in mortgage rate adjustments. Home ownership and mortgages require a long term view.
The recent increase in housing prices was an aberration in the market. Real increases in house prices have historically matched inflation. Hold onto your financial common sense. Some buyers will try to time the bottom of the market…hoping and praying for a crash so they can cash in on someone’s misery. The key is to ensure that the price you pay is affordable; save some money, and above all you can sleep at night.