February 23, 2016 Best Mortgage Rates Update
Fixed rates continue to drop as a few mono-line lenders duke it out for best deals. New downpayment rules are now in effect and new property transfer tax rates arrived this week.
Local Real Estate Market:
This week continued to be a crazy seller’s market in Greater Victoria. Demand is outstripping supply, and buyers seem to be quenching their frustration with unconditional offers at $50-75K above asking price. This February will likely be the 2nd strongest February the Victoria Real Estate Board has ever experienced.
Despite this, prices are only up 1.1% from 2008 prices, so it may be indicative that there is still alot of room for Victoria’s market to move.
Affordability in the region still remains quite amenable. Low mortgage rates and higher family incomes in the region have our average mortgage payment as a percentage of BC Family Pre-Tax income is sitting just above 40% - not bad considering that in 2007 was just below 60%.
Graph courtesy of House Hunt Victoria - an excellent source for un-biased info on the Victoria real estate market.
New Changes to Property Transfer Tax:
This week the BC Government announced it’s annual budget with changes coming for the property transfer tax. The changes seem to be aimed squarely at earning more tax revenue from Vancouver's foreign influenced market. The extra tax revenue earned will likely be redistributed to average British Columbians and developers, in the form of a tax exemption for newly built homes.
The changes took effect immediately on February 17, 2016.
A quick summary of the new property transfer tax rates:
- 1% on the first $200,000
- 2% on the portion of the fair market value greater than $200,000 up to and including $2 Million
- 3% on the portion of the fair market value greater than $2 Million
There is also a new exemption for "Newly Built Homes":
- 100% tax exemption for purchases of 'newly built homes' of $750,000 or under.
- Partial tax exemptions for purchases of 'newly built homes' between $750,000 and $800,000. (A sliding scale)
- Purchasers must be a Canadian Citizen of Permanent Resident
- Purchasers must move into the home with 92 days of the transfer and...
- continue to live in the new home, as a principle residence for one year following the transfer date.
- Property must be 1.24 acres or smaller. - Partial exemption may apply if the property is larger.
The First Time Homebuyer's Program remains relatively unchanged, but first time homebuyers CAN apply for the Newly Built Home Exemption.
New downpayment rules are now in effect after February 15, 2016.
Use my new Closing Cost Calculator for First Time Homebuyers to figure out what your minimum downpayment would be under the new rules. (You don't have to be a first time homebuyer to use the calculator)
Fixed rates continued to drop this week, with several mono-line lenders really duking it out. Regular quick close 5 yr fixed rates are now reaching 2.49%, with several other lenders hovering around 2.54%. Some amazing low basic rate products out there as well - as low as 2.44%,
Variable rates are beginning to move as well, but much slower than fixed rates. Some full featured quick close variable rates are closing in on P-0.4% (2.3%) and some low basic rate products are digging into P-.55 (2.15%) territory again.
Big Banks continue to lag behind the mono-line lenders. If you have a renewal notice from your big bank, you will definitely save some cash by shopping your mortgage around and switching lenders.
Best union option for a 5-year fixed is currently is Coast Capital at 2.79%.
There are some really attractive 3 year fixed rates as well. Some as low as 2.34%.
|5 Year Fixed Rates||5 Year Variable Rates||HELOC|
|Quick Close Specials||2.49% - Must Close within 45 Days - High Ratio Only||P-0.45% (2.25%) 45 Day Close||P +0.5%|
|Best Standard Rates||2.64%||P-0.4% (2.3%)||P +0.5%|
|Low Rate Basic Products||2.44% -Must Close in 90 Days - High Ratio Only 2.49% - Must Close in 90 Days - Conventional||P-0.55% (2.15%) - Must Close in 90 Days - High Ratio Only P-0.50% (2.2%) - Must Close in 90 Days - Conventional||n/a|
|Credit Unions||2.79%||P-0.25% (2.45%)||P +0.5%|
* Low Rate Basic Products have great rates, but have restrictions that include high discharge penalties, inability to blend mortgage rates if you sell & buy, inability to leave lender during term, etc.
|Bank of Canada Key Overnight Lending Rate||0.5%|
|Next Bank of Canada Rate Update||March 9, 2016|
|5 Year Government of Canada Bond Yield (Feb 22, 2016)||0.61%|