Kelowna Mortgage and CMHC Housing Update

Kelowna Mortgage Update

The Kelowna housing market is trending towards balanced market conditions. The market still favours the buyer with plenty of inventory on the market and home prices lower than where they were a year ago. But the Canadian Mortgage and Housing Corporation (CMHC) is predicting total housing starts in Kelowna to slightly increase this year and next. They are also forecasting average MLS® home prices to mildly increase to $409,000 in 2012 and $417,000 by next year. Although these averages are still below the May 2010 peak of $501,746. The Canadian agency also expects MLS sales to increase by 8% this year and followed by a big 14% jump in 2013.

Date

MLS® Avg Price

% change (y/y)

MLS Sales

2011

$404,756

3300

2012 (Forecast)

$409,000

+1.0%

3600

2013 (Forecast)

$417,000

+1.9%

4100

 

Kelowna Mortgage Rates

BC mortgage rates are hovering near record lows and it is a good time to enter the housing market to take advantage of low financing costs. Fixed rates are particularly attractive given the small spread right now between them and variable rates, which come with the risk of fluctuation with market interest rates.

The appeal to enter the housing market is also compounded by the fact that there is a possibility of mortgage lending rules tightening soon. Recently, the CMHC announced that they were approaching their $600 billion mortgage insurance ceiling. Mortgage insurance is mandatory in Canada if you are purchasing a home with anything less than a 20% down payment.

How does this affect you?

As CMHC approaches their limit, they will start to find ways to curb the amount of mortgage insurance they issue in the future. That means finding new ways to restrict the amount of people taking on CMHC mortgage insurance. Currently, there is speculation on which borrowers are likely to be affected, and it looks like the self-employed and new immigrants could face stricter requirements soon.  [Find out more details here].

There is even talk of mortgage tightening for condo buyers. Right now lenders only count 50% of condo fees to calculate debt-to-income ratio for mortgage applicants. Raising that number to 100% could affect the affordability for some applicants.

With that in mind, those looking to purchase the twenty new condo and townhouse developments slated to hit Kelowna in the near future might want to consider acting on it sooner rather than later.

To understand your financial situation, it’s best to speak with a mortgage professional before making any decisions. If you’d like to learn about your options, click here.

 

Brennan Valenzuela is writer for Ratehub.ca, a source for Canadians to compare mortgage rates. The site also includes a comprehensive education centre geared toward addressing common mortgage questions.

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