I have received a number of Panic Calls from clients with regard to Flaherty’s announcement this morning—DO NOT PANIC. There was nothing new in the announcement–most of what he had to say–so called new rules , are rules the mortgage industry as been working with for more than a year.

The only totally new item was in the area of refinances–where its official you cannot take out more than 90% of the equity in your house. Even this is really not new , as is has been very difficult for more than a year to take out more than 90% of the equity, unless you were an extremely strong applicant.

With regard to the purchase of investment and rentals–here again the rule the industry has lived by for the last year or more is 20-25% down.

So theres nothing really new in any of this–simply acknowledging the rules all ready in place.

This morning, Federal Finance Minister Jim Flaherty announced prudent changes to mortgage insurance rules intended to come into force on April 19, 2010. CAAMP and it’s members was actively engaged in the discussions around these changes which are as follows:

1. All borrowers must meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term;

2. The maximum amount one can withdraw in refinancing their mortgage will be reduced to 90% from the current 95% of the value of one’s home;

3. Non-owner occupied properties will require a minimum down payment of 20%.

There were no changes to down payment requirements or length of amortizations for owner-occupied residences.

We will continue to monitor developments including transition rules and update you accordingly

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TERMINOLOGY

In order to assist our clients understand the words and terms they may hear while buying or selling a home, we have prepared the following definitions. If any terms are missing, please let us know.

Adjustment Date: Date on which the Vendor and Purchaser have agreed to share any liabilities which may be attached to the property. The most common example is property taxes, which are paid yearly. In most situations, the Vendor is responsible for the portion of the taxes from January 1 up to but not including the adjustment date. The purchaser is responsible for the taxes from the adjustment date to the end of the year.

Amortization Period: The length of time that it will take to pay off a loan when making equal monthly payments (including interest).

Assignment of Rents: A charge registered against title allowing a lender to collect rent directly from a tenant if there is a default under a mortgage.

Assignee: (Transferee) person who receives interest in property in exchange for legal consideration (payment).

Assignor: (Transferor) person who gives interest in property in exchange for legal consideration (payment).

Certificate of Pending Litigation: A document registered against title to a property which indicates that a law suit has been commenced. The person who started the law suit and filed the Certificate of Pending Litigation is claiming an interest in the property.

Civic Address: Street address of the property.

Claim of Builder’s Lien: Claim for materials supplied and/or work done by a contractor. The claim is registered against the property and is valid for one year from the date of registration.

Clear Title: A property that is not subject to any financial encumbrances. There is no money owing against the property.

Completion Date: The date when the documents necessary to transfer title must be registered in the Land Title Office. Also called the Closing Date. This is also the date when the money changes hands.

Contract of Purchase And Sale: The agreement executed by the Vendor and the Purchaser outlining the terms upon which the Property is to be transfered. This is a binding Contract containing the conditions of sale.

Conveyance: The process involving the transfer of ownship of property from the Vendor to the Purchaser (including the preparation, execution and registration of documents to effect the transfer).

Covenant: See Restrictive Covenant.

Deposit: Money paid by the Purchaser to the Vendor or the Purchaser’s real estate agent at the time of signing the Contract of Purchase and Sale.

Duplicate Certificate of Title: A duplicate of the Certificate of Title is a document which may be issued by the Land Title Office, but only at the request of the registered owner and only if the property is free from any encumbrances, i.e. no Mortgages or Agreements for Sale registered against the property. The duplicate Certificate of Title must be returned to the LTO before any further documents are registered on the title.

Easement: A benefit which owners of one piece of property have over an adjoining piece of property.

Equity: The amount of the money left over after subtracting the amounts owing on all financial charges registered against the property from the fair market value.

Foreclosure Action: A law suit commenced in Supreme Court by a mortgagee (lender) once a default occurs in a mortgage.

Form B: This is the part of the mortgage which shows the details of the mortgage. This is where the terms of the mortgage (names, amount borrowed, length of term, interest rate, etc.) are displayed.

Guarantor: A person guaranteeing performance of certain obligations by another person. Also refered to as a Covenantor.

Infant: In British Columbia, a person under 19 years of age.

Joint Tenants: A form of ownership of property. In this form, parties have an equal undivided interest with a right of survivorship. The right of survivorship simply means that when an owner becomes deceased, their ownership passes to the survivor, regardless of any terms in a Will. This form of ownership is frequently used when family members (husband and wife) acquire property.

Legal Description: Description of real property as recorded in the Land Title Office (not the street address).

Mortgage: A document which represents a loan secured by land. These are almost always registered in the Land Title Office as a financial charge. A mortgage is comprised of two parts, the Form B and the Standard Mortgage Terms. These are defined elsewhere.

Mortgagee: The person or company who has lent money to a borrower.

Mortgagor: The person or company who has pledged land or property as security to ensure repayment of the debt to the Mortgagee.

Option to Purchase: Right conferred by agreement to accept or reject an offer to buy property within a certain time.

Possession Date: Date on which the Purchaser is entitled to move in and take physical possession of the property, usually the same day as Adjustment Date and after Completion Date.

Power of Attorney: A document allowing one person to execute documents on behalf of another. If a Power of Attorney is used, the original must be filed at the Land Title Office.

Priority Agreement: Agreement to postpone a claim, putting one party’s claim ahead of another.

Purchaser: The person buying the property, who will be registered as the new owner after registering the transfer document.

Restrictive Covenant: A charge registered on title to land which documents a promise made by the Owner to another not to do certain things on the Owner’s land.

Right of First Refusal: Agreement giving a party rights to make an offer on property if a sale is pending.

Right of Way: A charge registered on title allowing a party access rights to the property. A Right of Way is limited to certain benefits, such as power poles, telephone poles, sewer, etc. and can only be filed by persons defined in the Land Title Act.

Standard Mortgage Terms: This is the part of the mortgage which is standard to most mortgages. This part outlines the 5 basic obligations of the mortgage, and imposes a personal covenant to pay on the Borrowers.

State of Title Certificate: A certified copy of title issued by the Registrar of the Land Title Office of the ownership and state of the title as of a given date and time.

Statement of Adjustments: A document for each of the Purchaser and Vendor showing how much the Purchaser must pay and how much the Vendor will receive.

Statutory Building Scheme: A charge registered against the property showing limitations as to what buildings, etc. can be built on a property.

Survey Certificate: A drawing prepared and signed by a BC Land Surveyor which identifies the boundaries of the property and the location of the home inside the property lines.

Tenants in Common: A form of ownership of the property. Unlike Joint Tenants, there is no right of survivorship. What this means is that each party on title may leave their interest to whomever they choose in their Will. This form of ownership is frequently used when business partners (not family members) acquire property.

Title Insurance: See Title Insurance.

Vendor: The person who is selling the property.

The Fraser Valley experienced a return to typical home sale levels plus an early surge in new listings in January, according to the latest figures from the Fraser Valley Real Estate Board. “Compared to last January, the market has returned to balance. Consumers continue to take advantage of the affordability created by lower interest rates.”

There were 981 sales processed on FVREB’s Multiple Listing Service® (MLS®) in January, an increase of 152 % compared to the same month last year when 389 sales were processed. There was also a 46.8 % increase in new listings, 2,941 compared to 2,003 during January last year.

On a month-to-month basis, sales decreased 22 % in January compared to December, while new inventory more than doubled, going from 1,453 new listings in December to 2,941 in January. This increased overall inventory by 14 % in one month.

“If I were house-hunting right now, I’d be pretty excited. There is more selection and potentially less competition over the next few weeks. Some buyers will put their house-hunting on hold during the Olympics creating an advantage for those who don’t want to wait.”

While residential benchmark prices, as determined by the MLSLink Housing Price Index (HPI), continued to recover, they remain 3 % lower than in spring 2008. The price in January for the three main residential property types combined was $446,671 compared to $460,682 in May 2008.

In one year, the benchmark price for detached homes in the Fraser Valley increased by 10.8 %going from $452,145 in January 2009 to $500,931 in January 2010. The benchmark price of Fraser Valley townhouses in January was $317,719, a 7.6 % increase compared to $295,339 in January 2009. The benchmark price of apartments increased by 10.4 % year-over-year going from $220,595 in January 2009 to $243,470 in January 2010.

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Highlights:

• This week’s spate of U.S. economic news told the tale of a tepid U.S. recovery, still-benign inflation pressures and a Fed that is poised to stand pat for some time to come.
• U.S. retailers suffered an unexpected drop in sales in December of -0.3% and -0.2% excluding autos. Q4 results still point to a recovery in retail spending, but a relatively shallow one in light of the precipitous slump in sales during the recession.
• U.S. CPI headline and core inflation rose by a modest 0.1% M/M in December and the 12-month trend in core prices was stable at 1.8%.
• Bolstered by this week’s reports, the U.S. 10-year Treasury yield fell to a one-month low. What is good for bonds is often bad for the USD, which continued to shed ground against a number of major currencies.
• In Canada, housing developments moved to centre stage again, with evidence that new homebuilding activity continued to gear up and resale activity stayed strong in December.
• Remarks by a Bank of Canada Deputy Governor this week reinforced the view that regulatory changes, not rate hikes, would be used to address an overheated housing market if future conditions warrant.
• The Canadian trade balance worsened unexpectedly in November, moving back into deficit territory on the back of a 3.9% M/M surge in imports.

Summary:

This would indicate to me that we could see extended amortizations scaled back further in which case, a 35 year could be reduced to a 30 year, and this of course would affect the mortgage amount that one could qualify for. Down payments could be affected, and/or sources of down payment, and variable rate mortgages may have restrictions to those with little down payment.
The report is also an indicator that we might not see rates go up as early or by as much as originally speculated. However, for anyone about to get into the market and buy, or about to refinance an existing mortgage, now couldn’t be a better time to secure your options and make plans.

In 12 months, we went from the worst January in 20 years to the third best December. A significant portion of the 148% increase in activity in December’s sales, 1,260 compared to 508 in December 2009, can be attributed to first-time home buyers confident with the current economic conditions and taking advantage of all-time low interest rates. An informal poll in December revealed 40% of home sales were by first-time buyers when it would normally be in the 25% range.

The trend overall for 2009 was one of increasing sales, decreasing inventory and prices rebounding. The Board’s MLS® processed 16,721 sales in 2009, compared to 13,194 the previous year, an increase of 26%. However, it received 15% fewer new listings during the same time period – 30,221 in 2009 compared to 35,651 in 2008. Over the year, the number of active listings for buyers to choose from dropped by 34% going from 9,960 properties in December 2008 to 6,534 in December 2009.

We’re seeing the combined effect of fewer homes being listed, which is normal for this time of year, a flurry of buying activity, plus a decrease in the number of new homes being built. This has put pressure on prices in the Fraser Valley, particularly on homes in the lower to mid-range markets.

The Housing Price Index (HPI) benchmark price for detached homes was $497,732 in December compared to $464,189 in December 2008, an increase of 7.2%. Although prices have gradually recovered, they have not yet reached the previous benchmark high of $513,798 in May 2008.

The benchmark price of Fraser Valley townhouses in December 2009 was $318,174, a 7.4% increase compared to $296,296 in December 2008. That price also last peaked at $335,991 in May 2008.

The benchmark price of apartments decreased by 0.3 % year-over-year going from $237,786 in December 2008 to $237,157 in December 2009. It’s previous high was in April 2008, at $260,037.

The Fraser Valley Real Estate Board (FVREB) processed 1,704 sales on its Multiple
Listing Service (MLS®) in October, an increase of 122 per cent compared to the 768 sales during the same month last year.

“We’ve had a reversal. Last October was unseasonably slow and now this past month was one of the strongest real estate markets we’ve had in the Fraser Valley in the last decade.”

“We continued to see resale buyers from Greater Vancouver and first-time buyers from all over the Lower Mainland taking advantage of competitive interest rates and lower prices in the Fraser Valley.”

Although the MLSLink® Housing Price Index (HPI) benchmark price of all three residential property
types combined has increased by 7.4 per cent in the last six months in the Fraser Valley, prices for each property type remain at or below what they were one year ago.

The benchmark price of a detached home in October was $491,128, an increase of 0.4 per cent compared to October 2008, when it was $488,983. The benchmark price of townhouses decreased 2.1 per cent from $319,160 in October 2008 to $312,339 last month. The benchmark price of apartments also decreased year-over-year by 2.3 per cent, going from $245,635 in October of last year to $240,048 in October 2009.

“We expect to see prices remain competitive in the Fraser Valley,” “Even during our
unusually busy summer, prices were sensitive to location and property type.”

Although Fraser Valley’s MLS® received 7 per cent more new listings in October than it did in
September, the strength in October’s sales reduced overall inventory. In October 2009, Fraser Valley property hunters had 8,807 listings to choose from, compared to 11,715 in October last year – a decrease of 25 per cent.

(Surrey, BC) – Low interest rates continue to fuel a strong housing market in the Fraser Valley according to Paul Penner, President of the Fraser Valley Real Estate Board.

The Board processed 1,590 sales on its Multiple Listing Service (MLS®) in September, an increase of 62 per cent compared to the 980 sales during the same month last year, however, 11 per cent fewer sales compared to August’s 1,786 sales.

“Summer months are historically stronger for home sales in the Valley compared to the beginning of fall,” Penner explained. “However, as far as Septembers go, this one was solid, in fact the third strongest in the last decade.

“That pent-up demand we saw in the spring has carried forward, buoyed by low interest rates and housing prices that, despite inching up in some areas, remain more economical than they were a year ago.”

The MLSLink® Housing Price Index (HPI) benchmark price of a detached home in September was $491,404 a decrease of 1.5 per cent compared to September 2008, when it was $498,822. In the last three months, the HPI benchmark price of a detached home has increased by 4.2 per cent.

The HPI benchmark price of Fraser Valley townhouses decreased 4.2 per cent from $325,898 in September 2008 to $312,143 in September 2009, and in the last three months has increased by 3.7 per cent. The benchmark price of apartments also decreased year-over-year by 5.2 per cent, going from $253,489 in September of last year to $240,378 in September 2009, and has increased by 4.1 per cent in the last three months.

In September, the average number of days on market for a detached home in the Fraser Valley was 55 days, a decrease from the average of 60 days where it’s hovered for five months. Townhomes sold on average in 46 days in September and apartments, 54 days.

The HPI benchmark price of Fraser Valley townhouses decreased 4.7 per cent from $325,833 in August 2008 to $310,389 in August 2009, and in the last three months has increased by 4 per cent. The benchmark price of apartments also decreased year-over-year by 5.9 per cent, going from $250,888 in August of last year to $236,146 in August 2009, and has increased by 1.7 per cent in the last three months.

The number of active Fraser Valley listings in September decreased 2 per cent from August, dropping to 8,799 listings. This represents a 29 per cent decrease from last year’s all-time high for actives, 12,379. The MLS® received 2,640 new listings in September, an increase of 7 per cent compared to August, yet 14 per cent fewer than September of last year.

The Fraser Valley Real Estate Board is an association of 2,944 real estate professionals who live and work in the communities of North Delta, Surrey, White Rock, Langley, Abbotsford, and Mission.