What does a Liberal Majority government mean for mortgage rates and Canadian home buyers?! Well, it's hard to say for sure until their first budget is released in the spring but we can make some pretty good informed guesses!
So what do Canadians need to know?
Mr. Trudeau is planning on spending, spending and some more spending to stimulate our economy and fix some of the things he finds broken. Their plan does not show a balanced budget until 2019. Bond traders are not overly happy about larger government debt and will for sure mean higher fixed mortgage rates. Do not expect a cut in prime rate either, the probability of a rate hike is increasing as we speak!
Some good news however will be that Mr. Trudeau does have many aspects in his platform to make it easier for Canadians to buy a home.
-Easier access to RRSP's for down payment purposes. As of now, RRSP's are only accessible tax free to first time home buyers. Mr.Trudeaus plan is to open this up to others coping with life changes such as divorce, death of spouse etc.
-More affordable housing especially in high priced markets such as Vancouver and Toronto. Mr. Trudeaus government will consider different policies to get home ownership in reach. This is good new for renters and income property investors. One thought is to take away GST from brand new income properties.
-New programs will be developed for first time home buyers. This is what I am most excited to see come into place. What will they be? Not sure yet. For a first time home buyer saving up for a down payment can be an enormous obstical, especially with rising house prices. Another though is reinstating longer amortization periods.
To sum up, as mortgage rates lower government regulations tend to increase and there are more hurdles to jump to get a mortgage. As rates then start to rise government tends to ease off of qualification rules. So it is safe to assume that in he next year we will see mortgage rates rise but mortgage restrictions and regulations ease.
Morale of the story?! If you are in the market to purchase now is the time! At the very least got into to your bank/mortgage broker and get your rate hold!