NEW MORTGAGE RULES GO INTO EFFECT
A CHANGE IS GOOD
OTTAWA — New federal rules for Canadian mortgages have now gone into effect.
Well if you are in the construction industry in North America you are looking for a change, but not in the way that you might be thinking. Industry numbers are showing that new builds are down however, that renovations and repurposing are more than compensating in the drop in new build numbers. On the residential side more than half of the construction invest- ment will be in renovations and maintenance work according to industry numbers. New builds will continue to decline even if we see a drop in leading rate as consumers look to increase the value of their current properties. On the Commercial construction side of the industry there looks to be a steady source of new production projects from coast to coast, North and South of the border however, repurposing commercial properties is a growing sector and one that should be looked at as an area of great opportunity as investors look to increase on their property’s return on investment. Again looking at the numbers it looks like a change is coming as both commercial and residential property owners look to reinvest to get the most out of their current properties, while still showing moderate increases in both residential and commercial construction.
The changes affect properties that cost more than $500,000 — a small percentage of the overall market.
Buyers can still have a 5 percent down payment on the first $500,000 of a home purchase but must now put at least 10 percent down on the portion above $500,000.
Finance Minister Bill Morneau has said the new measure aims to ensure buyers have sufficient equity in their homes.
Lenders also face new capital requirements to keep pace with the growing risk of the real estate markets that they bankroll.
And Canada Mortgage and Housing Corp. will change the fees it charges issuers of mortgage-backed securities.
The Finance Department has tightened mortgage rules on several occasions in recent years — along with requiring stricter enforcement and management of loans — to weed out marginal buyers and specu- lators. — The Canadian Press
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SPOTLIGHT ON BUSINESS • APRIL 2016
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