Thursday, February 18, 2010

HST and OREA

Ontario Real Estate Association(OREA) = Ontario REALTORS® working hard and investing their dollars to help Ontarians towards a better quality of life.

NEWS RELEASE
Ontario REALTORS® recommend HST relief for homebuyers
(Toronto, February 16, 2010) Ontario REALTORS® are calling on the Government of Ontario to provide relief from the harmonized sales tax (HST) for homebuyers by reducing the provincial land transfer tax (LTT) rate.
The recommendation, which is contained in the Ontario Real Estate Association’s (OREA) 2010 pre-budget submission to the Standing Committee on Finance and Economic Affairs, would save the average homebuyer almost $1,600.
Under the HST, home buyers and sellers will pay 8 per cent more on legal fees, appraisals, real estate commissions, home inspection fees, and moving costs, adding about $1,500 in new taxes to the average residential real estate transaction in Ontario.

QUOTES:

“The HST is going to hit homebuyers and sellers hard,” said Pauline Aunger, a Rideau St. Lawrence REALTOR® and President of OREA. “Cutting the provincial land transfer tax rate will help offset the cost of the harmonized sales tax, making homeownership more affordable for all Ontarians.”

“Our clients deserve a tax break,” said Barb Sukkau, a Niagara REALTOR® and Chair of OREA’s Government Relations Committee. “Ontario’s REALTORS® are open to working with the provincial government to find solutions to assist Ontario homebuyers and sellers transition to the HST.”

QUICK FACTS:
OREA proposes that the Government of Ontario reduce the provincial LTT rate by 0.5 per cent on all property value tax brackets. This proposal would save the average Ontario homebuyer $1,591 and cost the provincial government $311 million annually.
OREA estimates that the HST will add $1,513 in new taxes to an average resale home costing $318,366. OREA also estimates that the HST will add $310 million in new taxes annually to residential resale home transactions.

OREA represents 47,000 brokers and salespeople who are members of the 42 real estate boards throughout the province. OREA serves its REALTOR® members through a wide variety of professional publications, educational programs, advocacy and other services.





OREA represents 47,000 brokers and salespeople who are members of the 42 real estate boards throughout the province. OREA serves its REALTOR® members through a wide variety of professional publications, educational programs, advocacy and other services. Current LTT vs.

Wednesday, February 17, 2010

New Mortgage Rules

Today, the Finance Minister Jim Flaherty made some changes designed to slow down the more speculative and risky portions of the housing market short term - and to provide additional stability for the future. Let's look at them so we understand what is happening.

First - if you want to take out a new variable rate mortgage (or any other mortgage where the rate is less than the 5 year fixed rate) you must qualify for that mortgage using today's 5 year fixed rates. As you know, to qualify for a mortgage, your payments can't be greater than a certain percentage of your income. Yesterday, for example, we would use a mortgage payment based on the current 3 yr fixed rate when looking at a variable rate mortgage request - today (actually no later than April 19, 2010) we will calculate that ratio using a 5 yr fixed rate. People can still get the 1.95% variable rate mortgage but now they have to demonstrate, through that ratio, that they can handle the mortgage even at today's 5 yr fixed rate.

Second - if you want to refinance your home, you can only take up to 90% of your homes value out instead of 95%. This is designed to slow down speculators taking equity out of their homes for other investments and to ensure that if there is a small correction in particular over-heated markets, that we don't end up with negative equity home-owners. None of us want to own a home with more debt on it than it is worth!

Third, and finally - if you want to purchase an investment property - non-owner-occupied - you are going to need at least 20% down. For multi-unit residential (greater than 4 units) this was previously 15% down - but for 4 units and under you could in some cases go as low as 5% down. This is a material change and absolutely targeted at reducing speculation in the market - particularly in the big city condo market.

All in all, this is a decent attempt at slowing speculation and reducing risk as we move forward out of this slower economy, without killing the market. While the media continues to bring up issues like increasing minmum down payments to 10%, everything that I hear and read suggests that this is largely off the table - it has too much potential to kill the market - something nobody wants to do in this fragile economic recovery period

This information has been brought to you by:
Jim Cook
Mortgage Broker
Mortgage Intelligence
519-396-6800
james.cook@migroup.ca