With all the doom and gloom we've been getting from the media I thought you might like to hear a bit of good news. The following information is from the Colegrave Mortgage Team, local brokers from our area.
Sunshine will return: Canadians have been confused and justifiably skeptical of the efforts the worlds' central banks and governments have been making to combat the global economic crisis. There is however a broad belief, that Canada's financial house is in significantly better shape than many peer countries, particularly the U.S. While the federal and most provincial governments have been slow to implement economic stimulus packages, they enjoy wide public support in principle. Together with the actions taken by the Bank of Canada and the positive impact on consumer confidence stemming from infrastructure spending announcements, stimulus programs are expected to be significant in the latter half of 2009.
First time buyers and investors will lead the way. Increased affordability (and perceived value) will be a key mover for the first time buyer. For example in August 2008 a home purchased at $360,000 with a 3 year term of 5.8% the monthly payment was $1949. The income required was $82,000. Today the same home is now valued at approximately $340,000. A 3 year term at 3.75% equals a $1420. Saving $529 a month and requiring an annual income of only $65,000.
Private sales will become more difficult to finance.
An email dated Dec 29, 2008 from a nationwide lender read: "Effective immediately, we will no longer be accepting Private Sale Agreements on ANY submissions. It is unfortunate that we need to make this decision, but the reality is that Private Sales are too often linked to property or Loan To Value misrepresentation and we are seeing more of these now as the credit market tightens up. Our statistics gathered are now also showing a very high percentage of delinquency in deals that were funded with private sales."
This is in addition to other lenders that had previously limited certain products (particularly stated income) to be excluded in a private sale.
Foreclosures will increase...but barely make a dent.
Foreclosure rates in Canada are expected to increase, but remain very limited, especially when compared to the U.S. experience, where a broad structural failure of the credit system occurred. Canada's relatively insignificant subprime market, and in turn, the low number of Canadians contractually committed to very risky mortgages, will result in a foreclosure rate of insufficient volume to impact house prices or transaction activity.
Return of the B lender.
All but extinct as of July 2008. Many B lending specialists have moved to A, rather than close up shop, indicating a "waiting on the sidelines" attitude, looking for an opportunity to jump back into the more profitable returns of the B market. As the credit market loosens and investors return to mortgage paper, (they will because they always do!), products will start to trickle back into the market in late 2009.
Rates will move...down...then up.
Our world is changing every day. It is hard to keep up. Nows the time to have your financial advisor and your realtor providing you with up-to-date information if you are looking to create opportunities in 2009.
There will be business this year, but you have to know when and how and in what direction things are moving.
As for Setter and Associates, we are busy. Yes, we are listing more than we are currenlty selling however, the fence for buyers to sit on can only hold so much weight. When the fence breaks we will be ready.
If you have a question you would like answered personally by all means give us a shout. We are always happy to talk with you.
Here to Spring finally getting here.
Enthusiastically,
Dawn Setter