The Canadian government recently announced revised mortgage qualification rules that will come into effect on April 6.
Current rules require would-be buyers to qualify for a mortgage using the Bank of Canada’s average five-year-rate. But starting in early April, qualifying using that Bank of Canada rate goes out the window. According to a department of finance press release, “the new benchmark rate will be the weekly median five-year fixed insured mortgage rate from mortgage insurance applications, plus two per cent.”
So, what does this actually mean for buyers? This new rule translates to being able to buy roughly five per cent more home than you can now. While not a drastic change, five per cent isn’t anything to sneeze at. If you’re currently pre-approved for $600,000, these new rules could add $30,000 to your budget.
Talk to your bank or mortgage broker for more details on this change and how it affects you.
On the Sunshine Coast in February 2019 there were 56 sales for a total of $37 million in real estate changing hands. The average price was $667,000 and the average days on market was 70.
February 2020 saw 47 sales for a total of $30 million in real estate changing hands. The average price was $643,000 and the average days on market was 103.
This is a 3.5-per-cent reduction in average price, and a 33-per-cent increase in time on the market.
For those planning buying your first home or an investment property, everything seems to be lining up. If this is your situation, one thing to keep in mind is the potential changes in short-term rental permits in the Sunshine Coast Regional District. At its Feb. 13 meeting, directors decided to move away from allowing temporary use permits for short-term rentals with offsite managers.
This change means short-term rentals with no on-site management are essentially banned in rural areas unless owners get permission though a rezoning application. A modernized definition of what constitutes a bed and breakfast, plus fines of up to $1,000, could lead to off-site operators re-evaluating their business plan. If this happens, we may see a flood of short-term investment properties hitting the local real estate market later this year. An increase in supply tends to make prices fall which would be to the benefit of potential buyers.
If you own a short-term rental and you’re not sure if these rules apply to you, contact the SCRD or call your realtor. It may make sense to get ahead of these changes by either listing your property for sale or transitioning to long-term rental.
Tony Browton is an award-winning Realtor who lives and works on BC’s Sunshine Coast.
His weekly blog can be found here http://www.truebluerealty.ca/blog