So, I was recently at a meeting and we were privileged to have a member of CMHC there to give us a little bit of information on new products coming forward in the CMHC catalogue as well as answer any general questions the audience may have. This CMHC representative was extremely knowledgeable and an excellent choice for them to throw into the snake pits of public speaking, she carried herself with being both knowledgeable as well as clear and easy to understand. There were 2 things I got from this presentation that really really irked me:
The first being CMHC has a new insured mortgage product coming forth in an indeterminate timeline that will account for the purchase of a home at CMHC rates (under 20% downpayment), the part that is new is they are allowing for a renovation budget to be factored into your mortgage. This type of flexibility has traditionally only been offered to those with a traditional low risk (again that 20% number) mortgage, or some of the major banks may offer a line of credit blended with the mortgage or a card service blended that gives you some of this flexibility. So sounds like a fantastic product, I think everyone can agree to that, a first time buyer can’t afford new or less than 10 year old home move in ready so they buy a bit of a fixer upper and now can factor a new kitchen, 2 new bathrooms and a finished basement - $90,000 in renovations, into their new CMHC mortgage. Then comes the catch, you need to propose the renovations when getting the mortgage, justify their value, and if approved they will pay the purchase mortgage at the closing date then a lawyer is commissioned at your expense to hold the renovation money in trust until all renovations are complete. Not the most economical way for them to be spending your money, which with CMHC of course you are paying a premium to borrow in the first place, I kind of feel like it’s kicking the hard starter while he is clawing his way up.
Which brings me to the second injustice. So many questions were focused on the government changing the new qualifying mortgage rate. Incase you don't know what I am talking about, there are mortgage qualifying rules in place now that required you to QUALIFY for your mortgage at 2% higher rate than you will actually be paying. Now, I seem to be in the minority in this opinion, but coming off the heels of a 2+ year STRONG sellers market, where houses were selling consistently for tens of thousands, often hundreds of thousands over list price in a single day with no conditions, the government is saying hey, prices need to settle and if you are still buying, we want to make sure that you are buying safe. If interest rates jump, if prices fall, if, what was the driving force of that sellers market (foreign money), that money starts to be liquidated driving prices down, what can the government do to protect these first time buyers? I think making them qualify with a little bit of breathing room, forcing a required buffer may save some from getting in completely over their heads. Now, this is kinda like putting a bandaid on a garden hose. What has been done wrong in the past few years with regards to even allowing the market to rise as high as it did as fast as it did, totally viewing our housing market as an investment opportunity for international manipulation and not viewing it as a protected resource for citizens is atrocious. I am not looking to debate foreign investment policy, or individual choices in political office/candidates. I merely feel that when something as important as housing, transportation, food service are being controlled and manipulated by international forces with their own, possibly very valid agenda, that’s EXACTLY why and WHEN our government bodies should have flexed their muscle, not after the market has blown the top off 40% or more over a couple of years, has reached unattainable for almost all of the first time buyers and even renting becomes a bit of a pipe dream. I don’t ever want to see someone in over their head, I don’t ever like to see people being taken advantage of and grasping every month just to make it work. My job is bringing an informed level head to the negotiating table, to the buying process and getting ready to go to market. You need caring informed level heads to be in your corner when it all gets real, because it’s easy to shop, but the pageantry of the moment can become blinding, that’s what we are here for! mccarthomes.com