Low Interest Rates Not Having the Same Impact

The Bank of Canada held its key interest rate steady at 0.25 per cent last Wednesday. While the overnight rate has shed 150 basis points (bps), bank notes 5-year mortgage rates only declined 17 bps from the beginning of the pandemic. Lenders have not brought the rates down further because many feel they have a higher risk and lower reward with higher home prices and low mortgage rates.

Until the economy fully gets back on its feet, the absence of rate hikes means variable mortgage rates will remain low, and anyone with a variable rate can expect prime to remain unchanged. Fixed rates will stay near historic lows.

Note: One basis point is equivalent to 0.01% (1/100th of a percent).

Reviewing CMHC’s New Lending Criteri

The Canada Mortgage and Housing Corporation (CMHC) is tightening its lending standards, making it tougher for Canadians, especially first-time home buyers, to borrow money to purchase a home.

As of July 1st, at least one applicant must have a credit score of 680, an increase from the current score of 600.

The gross and total debt servicing ratio will move to 35% (from 39%) and 42% (from 44%) respectively. The gross debt service (GDS) ratio, also referred to as the housing expense ratio is the proportion of income going towards housing related debt, while the total debt service (TDS) ratio adds in all other consumer loans such as credit cards and auto loans in the ratio.

CMHC is also barring “non-traditional sources of down payment or unsecured lines of credit that increase indebtedness.” This refers to a practice of someone using an existing line of credit or other lending sources to come up with the down payment.

Does this mean a grandparent who wants to take out a small mortgage on their own property to help finance their grandchild's down payment no longer allowed? When asked, Beverly LePage, account representative with CMHC replied, “The situation you are describing would be gifted funds for down payment, which continues to be recognized by CMHC has a traditional down payment source by CMHC.”

Greater Victoria Neighbourhoods – Westhills

The Westhills area along the southwest shoreline of Langford Lake is well known for a massive construction project by the same name which to date has built more than 3000 new homes since its inception in 2008.

The developers and builders - The Westhills Land Corp. and Keycorp Consulting - are committed to constructing environment-friendly, energy-efficient residences to BUILT GREEN® standards. They are even using geothermal equipment to aid home heating and cooling.

The community is made up of condominiums, duplexes, single-family homes, and high rises. Two retail centres and sports fields provide a wide variety of amenities and attract local teams for the neighbourhood to enjoy. Close by, Langford Parkway features community amenities such as hockey, soccer, rugby, bowling, mini golf, indoor playground, roller skating, roller skating and more. The YMCA’s new facilities features swimming, weight rooms, gyms, dance floors and a variety of community programs.

A new Belmont Secondary School supporting 1,200 students opened on September 8, 2015 which supports wide range of programs, including expanded students' skills and trades training. Additional programs include global and intercultural skills, French immersion and even robotics.

Westhills has already attracted hundreds of young families due to its beautiful, west coast suburban environment, amazing community amenities within the bustling Langford lifestyle.