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Greetings to all and a warm Welcome to New Subscribers.
These articles are interesting and will give you an idea of what is going
on in the mortgage industry these days. I wanted to touch on how the
country’s new home starts could not possible maintain the explosive growth
it was on last year. At the same time this year we are still seeing a very
healthy and growing housing market. With interest rates staying relatively low and
stable it still makes home ownership very reasonable and affordable for most Canadians
right now. The Second Article explains the effects the high priced oil has on our economy and
what it means for Interest Rates for you and I. No one has a Crystal Ball to forsee where the Interest Rates will
will be in the future. I really like to stay informed and make educated decisions to minimize any risk. (not likely at this point)
I will do my best to keep you all uptodate
with as much information as I have.
Seniors to Benefit from Renovation Funding and Mortgage Loan Insurance Enhancements
The federal Residential Rehabilitation Assistance Program (RRAP) will now enable the creation of secondary rental and garden suites — an affordable rental housing option for low-income seniors as well as adults with a disability.
A secondary suite involves the creation of a unit within an existing dwelling or an addition to the home. A Garden Suite is a separate self-contained living area created on the owner's property.
"The Government of Canada is committed to teaming up with our partners to help seniors and their need for affordable housing," said Minister Ianno. "Units such as secondary and garden suites make it possible for seniors to remain close to their family and friends, allow them to remain active in their communities, and maintain their independence."
Homeowners, private entrepreneurs, and First Nations owning single-family residential properties that can accommodate the creation of a bona fide affordable self-contained secondary suite or garden suite will be eligible to apply for RRAP funds. This year, the federal government will provide $128 million toward funding renovation programs.
Minister Ianno also announced enhancements to CMHC's Mortgage Loan Insurance for owner occupied properties that would enable seniors to financially remain in their homes for longer. With this change, Canadians can purchase and occupy a two unit, new or existing residence with as little as five per cent down. Up to 80 per cent of the gross rental income for the second unit can be used for income qualification purposes, thereby making it easier for the homebuyer to qualify for mortgage loan insurance.
Canada Mortgage and Housing Corporation (CMHC) is Canada's national housing agency. For over 55 years, CMHC has been contributing to improving the living conditions and the well-being of Canadians through four areas of housing activities — housing finance, assisted housing, research and information transfer, and export promotion. CMHC is committed to helping Canadians access a wide choice of quality, affordable homes, and making vibrant and sustainable communities a reality across the country.
The federal government, through CMHC, also supports the creation of affordable housing for low-income seniors through the Affordable Housing Initiative. In addition, CMHC provides financial assistance to extend the time low-income seniors can live in their own homes independently through the Home Adaptations for Seniors Independence (HASI) program. The assistance, in the form of a forgivable loan of up to $3,500, is available to homeowners and landlords.
For further information please contact:
Peter Graham,
Backgrounder
Secondary/Garden Suite Program
The objective of RRAP — Secondary/Garden Suite is to assist in the creation of affordable housing for low-income seniors and adults with a disability by providing financial assistance to develop existing residential properties that can reasonably accommodate a secondary self contained unit.
Eligibility
Eligibility is limited to existing family housing residential properties, where self-contained secondary or garden suite(s) is being created. The property must also meet local zoning and building requirements. Selected clients must enter into an Operating Agreement which establishes the rents that can be charged during the term of the agreement. A ceiling is also placed on the income of households who occupy the newly created self-contained units.
Assistance
The assistance is in the form of a fully forgivable loan which does not have to be repaid provided the owner adheres to the conditions of the program. The maximum loan available varies in accordance with the type of unit(s) being created and the geographic zone in which the property is located:
Eligibility Costs
Eligible costs include all costs related to the creation of a self-contained secondary suite or garden suite. Additional assistance is also available under RRAP for low-income persons with disabilities to undertake accessibility modifications.
The cost of creating and upgrading areas and elements will be prorated between the existing unit and the newly created unit. Homeowners may be eligible for assistance under the Homeowner RRAP to cover their share of the prorated costs subject to the program criteria being met.
Mortgage Loan Insurance
Two-unit properties have become an important source of affordable rental housing for senior, young adults, recent immigrants and the working poor. The associated rental income also helps borrowers meet the costs of homeownership.
Borrowers who wish to purchase a duplex or a single home with a secondary suite can now achieve homeownership sooner, using CMHC financing with a minimum downpayment as low as 5%.
Borrowers can also now use up to 80% of the confirmed gross rental income from the subject property to qualify for the insured mortgage loan.
Be in the future. Although I really like to stay informed and make educated decisions to minimize any risk
That rates would go through the roof. (not likely at this point) I will do my best to keep you all uptodate
With as much information as I have.
This month's issue of Monthly Indicators discusses the impact of Oil
Prices
on the economy and the fact that this time around, high oil prices are non
inflationary so there shouldn't be pressure on Central banks to increase
rates to combat high inflation. However, a move to $100/brl, potentially
by
the end of the decade from the current level of around $50/brl will shift
the direction of monetary policy.
In the US the prediction is for the Feds to continue to tighten,
however,
the rise in Oil Prices has a net negative impact on the US economy so
the
end of the tightening may be in sight. The prediction is for an
increase
of only 50 bps to the end of 2006 in the US. Certainly the US
tightening
of monetary policy is having a negative impact on the Cdn Dollar,
however
the current account deficit in the US appears to be offsetting some of
this gain.
With the Canadian dollar back over 80 cents, the prediction is for the
Feds to tighten up relative to Canada's neutrality which will cause the
Cdn Dollar to drop in value. In April, political fallout from the
"Adscam" inquiry caused the Canadian Dollar to perform poorly on world
markets and relative to the US dollar. Prediction is for the Cdn Dollar
to hit 77 cents by the end of 2006.
The Bank of Canada is predicted to remain on the sidelines until the end
of 2006, so that prime sits at 4.25%. Keep in mind the forecast from
Ben
Tal who predicts steady Prime increases in 2007. The value of the Cdn
Dollar and the drag it has on the economy are forcing the Bank of Canada
to the sidelines. Recent GDP results were less than expected in Canada
with soft exports.
Yield on 10 year Gov't Bond issues are predicted to fall into the latter
part of 2006.
(May 25, 2005)
Take care and have a fantastic month.
Don’t forget to call me anytime just to brain storm about what that next purchase might look like
In terms of financing. One new product or idea may save you thousands!
Dan Heon
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