Although the real question is whether or not I’ve done enough to make the home worth more than what I paid for it. Or at least, recoup enough to pay off the mortgage and all the arbitrary penalties & fees.

Scary. I guess in the end though, if I suffer, the bank suffers. I wonder if they’ll see it that way too?

Personally I think the earlier you sell, the better price you’ll get…

I might be selling my house soon though. Hopefully I can break even…Fingers crossed.

Are there still many people from Alberta who can put 20%- 100% down as they did in 2007? Even so, the policy at least makes it true that they will be able to speculate on only 1/4 number of houses for the same amount of money. Though as Jen said, it perhaps is still much too little, far too late,

I believe what Norm said is true, currently the buyers are mostly buying for a place to live. However, they are probably buyers who wouldn’t have bought if the rent hasn’t been so high. It seems that condos priced below 300k sell the fastest. I guess that’s part of the reason now there’re no more waiting lists for many vacant rental properties. And in some cases, if you negotiate with the landlord, they agree to lower your rent. Considering the space one person could afford in the past now is usually occupied by two, and so many new buildings are now for rent, the vacancy rate has to go up. Not sure how long and by how much it’ll take to bring down the housing price though.

Jen,

“Considering that I can find a 5-year fixed rate at 4.09%, this is a bit of a joke.”

Funnier yet, TMG is advertising a five-year rate at 3.69% today.

From now til 19 April 2010 will be interesting. Will it be a rush to enter the market, or a scramble to exit? Tighter monetary policy usually signals the end of a business cycle. So I think it’ll be a scamble to exit with smart money remaining on the sidelines.

I suppose making explicit that borrowers should be able to qualify for 5-year fixed rates is something, but as Norm points out, many lenders are already doing this as a matter of course. Considering that I can find a 5-year fixed rate at 4.09%, this is a bit of a joke. Before all of this is said and done I would not be surprised to see rates near double that. Still levered at 20:1 (or even 10:1), this remains a mighty precarious position to be in when rates rise and/or prices fall, unless one has other (liquid) assets to fall back on. This will do nothing to curb speculative leverage risk amongst the woefully mal-informed masses (in a particularly nasty recession, no less).

The refinancing bit will have very little effect in curbing current market excesses. Admittedly, the maximum 90% refinancing rule will have the effect of helping marginal owners keep some equity in their homes and will be particularly advantageous when home prices fall. As far as the 80% maximum insured financing on rentals goes, I can’t really comment objectively. I’m of the mind that people who are attempting to finance rental properties should not be eligible for taxpayer-financed CMHC insurance in the first place. If you are willing to accept all of the financial reward of such a speculative position regarding a rental property, you should be willing to bear all of the risk.

Right now, you can buy a nice rental house for $350k with $70k down and a $280k mortgage. There are tons of people out there who can put together $70k. If you elect a variable rate mortgage, your payments are $1200 /month. You can rent up and down for over $2000 a month. Even with property tax, insurance, repairs, etc you can make money. That fact, and none of that other government noise is what is keeping housing prices up. Now these investors are going to be get crucified if interest rates spike but until then they will keep buying and housing prices will at least stay level.

The fact that government is taking measures to cool housing without increasing rates makes me wonder if they aren’t planning on an extended period of low rates. They want the rates to stay low to stimulate the economy but without overstimulating housing, hence they take these unconventional measures to cool housing. Just food for thought.

“The refinance change is pretty substantial, and is going to seriously impact anyone with 5% (or less) equity in their homes.”

Really? People with 5% or less equity aren’t very good candidates for “refinancing.”

These three “weapons” strike me as a tad bit impotent. As one of my wise friends suggests, it’s “political posturing” at best.

Major lenders have been qualifying on five-year fixed rates for some time.

I’m uncertain on the “speculation” angle but I’m thinking business as usual on the other two points.

Captcha: “party disrupted” (fitting, don’t you think?)