Wednesday, January 19, 2011

Toronto: Winterlicious 2011 stars January 28th

Winterlicious 2011 starts January 28th and the opportunity to try Toronto's top restaurants for a steal is about to begin!

Here is a list of the participating restaurants - Enjoy!

http://wx.toronto.ca/inter/se/restaurants.nsf/Winterlicious?Openform

Tuesday, January 18, 2011

Toronto Real Estate: Mortgage Insurance changes

Lots of questions today about the changes to Mortgage Insurance rules. In follow up to my previous blog, this should net it out. Federal Finance Minister Jim Flaherty announced changes to mortgage insurance rules intended to ensure the stability of Canada's housing market.

These measures include:
1. AMORTIZATION period reduced to 30 years from 35 years.
2. Maximum REFINANCING Loan to value (LTV) lowered to 85% from 90%.
3. Government insurance backing on home equity lines of credit, or HELOCs, has been removed.

IMPORTANT: There are no changes to down payment requirements as of yet that was widely expected to be raised from 5% to 10%.

Changes will take effect March 18th for 30yr AMORTIZATION and REFINANCING to max 85% whereas changes for Heloc's no longer being insured will take effect April 18th.

Know your options and contact a Realtor or a mortgage broker you trust to support you if you are looking to buy or refinance in the next 6 months.

Mortgage Rules: Canada makes changes to Mortgage terms

There is no doubt that the hardest hit will be new home buyers. If you are a first time buyer and were basing your budget on a 35 year amortization, you may want to consider buying before March 18th 2011.

Here is an excerpt from the Globe and Mail:

Ottawa’s three-pronged announcement Monday will effectively eliminate 35-year mortgages for home buyers who need mortgage insurance, lower the maximum amount that people can borrow in refinancing their mortgage and put an onus on lenders to be more careful about which customers get home equity lines of credit.

“It’s a tough little set of measures that will pull back the excess availability of credit,” said John Cocomile, a broker with GreedyMortgage.com in Toronto. “I think it’s fantastic. It’s too bad the Americans didn’t do this three or four years ago, or the mess they’re dealing with wouldn’t be nearly as bad.”

The Bank of Canada is worried about how indebted Canadians are, big bank executives have spoken up on the subject and now the federal government has shown how concerned it is as well. Borrowers, as Mr. Cocomile tells it, have been oblivious. As a result, they need to be saved from themselves.

At Mr. Cocomile’s office, nine of 10 new home buyers have been choosing to pay off their mortgage over 35 years. Starting March 18, 30 years will be the new ceiling for people with down payments of less than 20 per cent.

The extra interest charges resulting from an amortization period of 35 years as compared with 30 years can amount to tens of thousands of dollars. Mr. Cocomile said clients who are informed of this typically say they intend to start paying down their mortgage at the earliest opportunity. Does that actually happen?

“No,” Mr. Cocomile said. “I’ll follow up with them and say, ‘Why don’t we ramp up payments?’ They say, ‘Oh, we have a car loan now, or we spent some money on renovations, or we’re trying to get rid of credit card debt.’ Credit’s so easy – everyone’s using it.”

Requiring people to pay off their mortgages over a shorter period means they must either pay more per month, or buy a cheaper house. So it’s hard not to see home sales suffering as a result of the new measures in pricey cities like Toronto, where David Larock is building up his new mortgage planning business.

“None of these measures will be popular with mortgage brokers and realtors, but Canadian debt levels were climbing to alarmingly high levels,” said Mr. Larock, a onetime employee in a big bank’s mortgage department. “I don’t like it, but for the long-term health of our market I think it’s short-term pain for long-term gain.”

Mr. Flaherty said his prime concern is that people are borrowing to the maximum at a time of low interest rates. Rising rates will make the debt load less manageable, but people haven’t shown any inclination to alter their behaviour in the housing market and in other forms of borrowing.

That’s why the government is lowering the maximum people can borrow through a refinancing of their mortgages to 85 per cent of the value of their home, down from 90 per cent. Mr. Cocomile said he’s seen strong demand for refinancings from people who have run up other debts and want to consolidate them in their mortgage.

Whereas you can get a five-year mortgage at 3.85 per cent, a typical credit card would charge about 19 per cent. But refinancing to the maximum drastically reduces your home equity and leaves your house vulnerable if you can’t keep up with your mortgage when interest rates rise.

Home equity lines of credit have become one of hottest borrowing tools around, but they’re getting the lightest treatment from Ottawa. Instead of targeting borrowers directly, the government is putting the onus on banks to lend responsibly. Starting April 18, government-backed insurance will no longer be available to banks to cover losses from customers with lines of credit.

Interest rates on new home equity credit lines could rise as a result, or it could become tougher to qualify for one. Call this another example of how protecting Canadians from themselves comes at a cost that even people who make their living in the housing market think is worthwhile.

“You can totally realize why the Finance Minister is imposing these rules,” Mr. Cocomile said. “As interest rates nudge up, people won’t be as pressed as they might have been.”

Changing Mortgage Rules

Starting March 18, people buying a home with a down payment of less than 20 per cent will be able to take no more than 30 years to repay the loan, down from the current maximum of 35 years. Here are two ways the changes will affect people.

1.) The maximum affordable house price falls

Example: A couple with household income of $120,000 and a 10 per cent down payment.

Maximum house price with a 35-year amortization: $620,000
Maximum house price with a 30-year amortization: $560,000

2.) Monthly payments rise (but the amount of interest paid over the long term falls)

Example: A $300,000 mortgage at 4 per cent

Monthly payments over 35 years: $1,322
Monthly payments over 30 years: $1,427
Additional monthly cost: $105
Total interest savings: $41,850

Source: John Cocomile, Department of Finance

http://www.theglobeandmail.com/report-on-business/economy/housing/flaherty-details-new-mortgage-rules/article1872599/page2/

Saturday, January 15, 2011

Toronto Real Estate: 2010 in Review

GTA REALTORS® Report Monthly Resale Housing Market Figures
TORONTO, January 6, 2011

Greater Toronto REALTORS® reported 4,395 existing home sales for the month of December, bringing the 2010 total to 86,170 – down by one per cent compared to 2009.

“Market conditions were anything but uniform in 2010. We went from super-charged sales activity during the first four months of the year, to a marked drop-off in transactions in the summer and then in the fall saw sales climb back to levels that are sustainable over the longer term,” said TREB President Bill Johnston.

“New Federal Government-mandated mortgage lending guidelines, higher borrowing costs and misconceptions about the HST caused a pause in home buying in the summer. As it became clear that the HST was not applicable to the sale price of an existing home and buyers realized that home ownership remained affordable, market conditions improved,” continued Johnston.

The average home selling price in 2010 was $431,463 – up nine per cent in comparison to the 2009 average selling price of $395,460. In December, the average annual rate of price growth was five per cent.

“At the outset of 2010, we were experiencing annual rates of price growth at or near 20 per cent. This was the result of extremely tight market conditions coupled with the fact that we were comparing prices to the trough of the recession at the beginning of 2009,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

“Balanced market conditions in the second half of 2010 resulted in more moderate home price appreciation,” continued Mercer. “Expect the average selling price to grow at or below five per cent in 2011. With this type of growth, mortgage carrying costs for the average priced home in the GTA will remain affordable for a household earning an average income.”

Home sales in the GTA were spread across a number of different housing types in 2010. Detached homes accounted for 49 per cent of total sales. Condominium apartments accounted for an additional 25 per cent per cent of sales. Other housing types including townhomes and semi-detached houses accounted for the final 26 per cent. In some areas like TREB’s central districts the mix was quite different, with condominium apartments accounting for 61 per cent of total sales.

“Ownership housing is available in a diversity of types and price points across the GTA, allowing plenty of choice for first time buyers and experienced home buyers alike. This housing diversity is one factor that continues to make the GTA a popular choice for households and businesses,” concluded Johnston.