Effective January 1st, 2018 mortgage borrowers with a 20% or more downpayment will have to qualify at the GREATER of the Bank of Canada posted rate (currently 4.89%) or the contract rate +2%. This decreases buying power by about 15-20% for those purchasers. The goal of OSFI is to ensure that Canadians can absorb higher payments for potential interest rate increases. Insured mortgages were hit with the stress test in the Fall of 2016. There is still one lender that will honour pre-approvals submitted before year end, these pre-approvals will allow you to qualify under the old rules for up to 8 months, so long as there’s an accepted offer in place during the pre-approved period of 120 days. An example of how stress testing will affect purchasers is if a Buyer qualifies for a mortgage of $500,000 today, with a purchase price of $625,000 and a 20% downpayment, on January 1, 2018 the same buyer will qualify for a mortgage of about $425,000, with a purchase price of about $535,000, and a 20% downpayment.
There are some big changes coming for short term vacation rentals in Victoria, many of the details are still being fine tuned but we should know more in the new year. If you are currently operating a short term rental or planning to purchase an investment property, it is important to be aware of the cities proposed regulation changes. The proposed changes include a $2,500 annual licence fee, and although short term rentals will no longer be allowed, transient zoned buildings with units currently being operated on platforms such as Airbnb will be grandfathered in, but will lose that status if they are not operated as a short-term rental for a six-month period.
There are still places available at Chard Developments new building the Vivid on Johnson, with prices 8% under market value! If you are looking to purchase in a new development Downtown, this building is a great opportunity for purchasers with a current income of less than $150,000 and who would like to live in the home for two years after move in. Prices have now been released, contact me for more information!