Stated Income Home Buyers hit first
Last week in Kitchener Waterloo real estate’s weekly look at the housing market in Canada and in Kitchener Waterloo, I reported that the the mortgage rules were about to change. They did.
CIBC is the first bank to no longer accept new applications from so-called “stated-income” homebuyers. If other banks and mortgage brokers follow suit, it will become difficult for self-employed, new immigrants and higher-risk borrowers to get mortgages.
There is a lot of noise about Canada being at risk of a U.S. subprime housing crisis. The Post said that the housing bubble is really a balloon and the banks, government and mortgage companies are finding ways to let the air out slowly.
CHMC Hits Lending Limit
One of the other ways to cool the housing market is by not guaranteeing mortgages. The Canada Mortgage and Housing Corporation will be cutting back on the number of mortgages it insures. The Crown corporation has almost reached the $600-billion lending cap imposed by the federal government. CMHC gave no indication whether it would seek an increase in its limit.
Financial institutions are required to have mortgage-default insurance when a consumer has less than 20% equity. The CMHC takes care of the majority of these. (Genworth Financial does too).
According to Genworth, Toronto and Vancouver may see some market corrections this year but states that it will not be an “abrupt correction, but more of a soft landing”.
Prices Rise in KW Cambridge
Here in Kitchener Waterloo, house prices increased by a whopping 12.9% in January (over January of a year ago).
The average sale price was $315,932. (In January 2010 it was $279,957). These numbers include all units sold (including condos). The average price a detached home rose 14.5%, to $361,470. Bank regulators have been taking aim at condo investors, and I predict we’ll see the air go out of this market first.
House prices also increased in Cambridge last month, but at a more moderate rate.
This weekend is Superbowl Sunday so Alasdair and I are taking the day off. We will be holding open houses today 2:00-4:00pm. Alasdair will be at 29-49 Cedarwoods Crescent in Kitchener (behind the Fairview Park Mall. I’ll be at my favorite Eastbridge listing – 639 Bonavista Drive, Wateloo.
Come out and see us.
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