I know there is a great amount of confusion going on about the new mortgage insurance guidelines coming into place, so here is a brief explanation for you, and if you have any work associates or clients that need this information, please feel free to forward it on.

BANK OF CANADA CHANGES

Qualifying Rate – For new applications received on or after April 19th, the qualifying rate will be changed for all Variable rate terms, as well as 1-4  year fixed rate terms.  The new qualifying rate for those terms will be the chartered bank’s 5 year posted rate.  5 year fixed rate terms or longer fixed rate terms will be qualified at the actual contract rate given to the client (which is the lender’s discounted rate).

Self Employed Stated Income–

- Income qualifying – CMHC feels that clients who have been self employed for more than 3 years should be able to produce adequate tax returns and financials to fully income qualify using the income declared to CRA (line 150).  Therefore, effective on all new applications received on or after April 9th, CMHC will only be accepting stated income applications for clients that are LESS than 3 years business for self.  This is because these clients don’t typically have 2 full years completed tax returns yet, so they aren’t able to fully income qualify with a 2 year average.  If they are less than 2 years BFS, the client will need to have had employment in the exact same line of work previously.

- Self employed borrowers,without traditional income verification, must put 10% down payment on purchases, the maximum loan to value (LTV) is 90% on a purchase or when porting a mortgage, previously 95% LTV.

- And refinancing maximum is 85% LTV, previously 90% LTV.

CMHC ONLY CHANGES into affect April 9, 2010. (Genworth and AIG have yet to jump on board this change)

• An 80% rental offset is no longer allowed in the TDS calculation (used to help borrowers qualify) if the subject property is generating rental income. 50% of the gross rental income can form part of the borrowers gross annual income, this works out to be MUCH less than the previous 80% offset used by CMHC.
• Rental income from other properties can be used, but must be verified with T1 Generals and NOAs. You can only gross up the net rental income by 15%.

**For further details please see the two attachments straight from CMHC on the new guidelines set out by the Bank of Canada**

If you have any questions or concerns, feel free to respond to this email and I’ll do my best to clear up any further confusions.

Good luck with the new guidelines!

Not even the most engaging Olympics in Canadian history could completely slow the appetite for house hunting, according to the most recent statistics from the Fraser Valley Real Estate Board.
The Board’s Multiple Listing Service® (MLS®) recorded 1,204 sales in February, an increase of 23 % over January’s sales and an increase of 77 % over the 682 sales during February of last year.
 “Although the phones were quieter and we did experience less traffic at open houses, we were surprisingly busy given how much everyone, including REALTORS® were enjoying the Games.”
“Buyers are aware of two key changes that could impact their purchasing ability. The new mortgage rules coming in April, plus the Harmonized Sales Tax in July, so the ‘Olympic effect’ we were expecting wasn’t as deep.”
The Board’s MLS® received 2,879 new listings in February, an average of 144 per business day, providing buyers with 14 % more selection than they had the previous month. The number of active listings in February was 8,485, 12 % fewer than were available during February last year.  
The combined strength of listings and sales currently is stabilizing Fraser Valley home prices. “Overall, we’ve seen modest price gains for the last three months. The benchmark price for all residential types combined increased less than % from January to February.
“When you have a healthy level of inventory, it puts less upward pressure on prices and creates a stable, balanced market.”
In February, the benchmark price for Fraser Valley detached homes was $508,136, an increase of 11.3 per cent from the February 2009 price of $456,683.
The benchmark price of Fraser Valley townhouses in February was $324,708, a 9.8 $ increase compared to $295,731 in February 2009. The benchmark price of apartments increased by 7.8 % year-over-year going from $228,091 in February 2009 to $245,879 in February 2010.