Federal Government Announces Changes To Mortgage Law

Effective March 18, 2011 the new rules for obtaining a mortgage will differ from current mortgage law.  There will be a limit to a maximum of 30 year amortization period rather than the current 35 years. The amortization period is the life of the mortgage and should not be confused with the term, which can range anywhere from a few months to more typically 5 years. That being said the new changes will remove qualified individuals from the market place or put a mark in the purchasing power of many buyers. As the chart below describes the increase in monthly payments, this in effect raises your debt service ratio, which banks analyze to determine your suitability for borrowing, then which that in turn decreases your maximum allowable mortgage amount.

Furthermore, changes are also being made to the maximum allowable re-finance amount. Borrowers can re-finance and increase the amount of their loan against their home. The changes announced on January 17th will limit the amount of re-finance available from 90 percent to 85 percent of the value of the home.

As an illustration, for a home appraised (your bank will send an appraiser out when you look to re-finance) at $200,000, re-financing at 90 percent would allow the home-owner to withdraw $180,000 worth of equity. With the new change being an 85 percent maximum re-finance, a home-owner may access $170,000 worth of equity in place.

Last of the changes the government made is that mortgage insurance to banks will no longer be provided for home equity line of credits - HELOC's. Tax payers will now be relieved of this duty and it is up to the financial institution carrying the HELOC to absorbed the financial loss incurred on home-owners who default on the HELOC. Previously mortgage insurance in Canada covered the default payment on these borrowing models, now the insurance is in place to only cover any losses incurred by the lack of equity in a homes principal mortgage amount. 

The adjustments for the maximum amortization and maximum re-finance amount will come in effect March 18, 2011. The withdrawal of government insurance backing HELOC's will come in effect April 18, 2011.

Realtors Association Of Edmonton Monthly Averages: December Year End

The average price for a single family detached home in December was $355,270, down about $10,000 as compared to the price in November. The average condo price dropped less than $6,000 to $223,454. The marginal price reduction (down 2.7%) continued a SFD slide that started in June when average prices were over $390,000. Condo prices peaked at $252,700 in April and have continued a relentless march downward since then.


The REALTORS® Association of Edmonton released month end and year end results for sales through the local Multiple Listing Service® and includes all residential sales for the City of Edmonton and surrounding communities and counties.

As compared to December 2009, single family prices were down 2.7% and condo prices were off by 7.2%. The average price of all residential property sales in December was down 2.0% as compared to a year ago.

“Homebuyers are watching housing prices slide and may attempt to catch the market at the bottom by delaying their purchase but the low point is only evident about three months after it is reached,” said Larry Westergard, President of the REALTORS® Association of Edmonton. “Home sales are still happening each day and by waiting, the wary buyer may miss the ideal home.”
He urged home sellers to also watch the pricing trends to ensure that their home was appropriately priced relative to the market. “Market activity will pick up again in the spring as usual according to trends,” said Westergard, “Keep your REALTOR® on speed-dial to ensure you have access to the latest market figures.”

Residential sales activity in December was off 34% (784 sales) as compared to November but fewer homes (1,110) were listed and that reduced the available inventory by 18% to 5,721 residential properties on the Edmonton MLS® System. The average days on market rose from 59 to 66 days.

Year-over-year, the all-residential price (includes all single family, condominiums, duplex/rowhouses and mobile homes sold through the year in the Edmonton area) rose 2.6% from 2009. The SFD price rose 3.52% and condos rose 1.89% for the year. REALTORS® sold a total of 18,293 properties of all types in 2010 which was down 14% from 2009. They listed 40,597 properties which is up 7.6% from the previous year. Total Edmonton MLS® System sales were valued at $6.12 billion: a 12% drop from 2009.