Mortgage rule change spurs 1st-time buyers
A looming deadline for changes to mortgage rules in Canada seems to have sparked a home buying binge for first-timers in Calgary.
As of Friday, the maximum amortization period for a government-insured mortgage will be lowered from 35 to 30 years.
"That sort of got a lot of folks that have been fence sitting, off the fence. They came into the market, inventory levels went down rapidly," said Calgary realtor Doug Hayden, adding that the biggest spike has been in the starter home market.
"January was much higher than last year at this time, and February's been higher. Over ten per cent higher in terms of sales."
Finance Minister Jim Flaherty announced the tighter mortgage rules in January as a way to address concerns over high household debt among Canadians.
Buyers who purchase a home with a down payment of less than 20 per cent of the value of the home are required cover it with government-backed mortgage insurance through the Canada Mortgage and Housing Corporation.
After Friday, mortgages amortized over longer than 30 years will no longer qualify for that insurance, making it effectively impossible to get a highly leveraged mortgage spread out over more than three decades.
The impending changes compelled Black McCullough to buy his first house recently in the city's northwest.
"It was just kind of a perfect storm. We found a house we liked, we had the money and obviously the interest rates just made sense to kind of invest right now," he said.
But even if potential first-time buyers miss the deadline to get a 35-year mortgage — and its attendant lower monthly payments — there are good deals to be had as the spring market heats up, according to Hayden.
"If you don't have to worry about locking in at the 35-year rate, just be patient. There will be good inventory, probably coming on in April, May," he said.
