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Canadians more likely to be homeowners, have a mortgage

Homeownership rates are higher now than they were two decades ago according to a new analysis from Statistics Canada.

It says that, apart from a dip between 2012 and 2016, Canadian families are more likely to be homeowners now than in 1999. The study looked at homeownership from 1999 to 2016.

The share of Canadian families who have paid off their mortgage has declined though in that period, from 46% in 1999 to 43% in 2016, with the trend consistent across all age groups but was most prolific among those where the primary wage earner was aged 35-54.f Continue reading

Lower down payment, reserve fund could cut defaults says study

Slightly reducing down payments and saving surplus cash in a reserve account could mean lower mortgage defaults according to a recent study.

The JPMorgan Chase Institute found that when borrowers have less than three months’ mortgage payment equivalent (MPE) of post-closing liquidity, their 3-year default rate (1.8%) was six times higher than those with between 3 and 4 MPE (0.3%).

The findings challenge conventional wisdom that larger down payments cut default rates due to the lower LTV ratio; and suggests that a program allowing homeowners to make a slightly lower down payment but bank residual cash in a reserve account, may help cut default rates. Continue reading

Launch date and other info about First Time Home Buyer Incentive

The federal government’s plan to boost Canadian homeownership among middle class families now has an expected launch date.

The First Time Home Buyer Incentive is set to be available from September 2, 2019, Jean-Yves Duclos, the minister responsible for CMHC has announced.

The incentive will allow eligible first-time homebuyers who have the minimum down payment for an insured mortgage with CMHC, Genworth or Canada Guaranty, to apply to finance a portion of their home purchase through a form of shared equity mortgage with the Government of Canada.

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The cost of living in Canada has increased again

Canadian inflation data released Wednesday reveals that the cost of living is rising; but that should give the Bank of Canada another reason to maintain interest rates at their current level.

Data from Statistics Canada shows a 2.4% rise for the Consumer Price Index on a year-over-year basis in May, up from a 2.0% increase in April. This was the largest gain since October 2018 and beat expectations for 2.1% according to experts polled by Bloomberg.

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Millennials need a major home price drop or sharp wage increase

Despite some lower prices recently, many young Canadians are still far from able to afford to buy a home according to a new report.

Generation Squeeze says that in many cities there would have to be a major drop in home prices or a significant rise in wages to enable millennials to enter the housing market.

For example, Vancouverites would need their typical full-time wages to increase to $200,400 or four times their current level; or house prices would need to fall by three-quarters (a $795K drop) to make homes affordable (based on CMHC’s measure of households spending no more than 30% of their pre-tax earnings on housing.)

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