The combination of interest rate cuts with new mortgage rules that take effect on Sunday are expected to boost British Columbia’s real estate sector, analysts say.
Under the new rules, mortgage insurance will apply to homes valued up to $1.5 million.
Previously, any home valued at over $1 million would have required a minimum 20 per cent down payment.
But starting Sunday, the rules will allow for a five-per cent down payment on the first $500,000 and 10 per cent on the remaining amount up to $1.5 million — leaving qualified buyers with a down payment of $75,000.
First-time homebuyers will also be eligible for a 30-year mortgage.
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B.C. mortgage broker Angella Calla said the changes are good news for would-be homebuyers.
“This will help those who haven’t had the opportunity to save as much as a down payment, the insured cap will help them get into the market, it will also help those looking to move up into the detached market,” she said.
“And the 30-year mortgage will help them with additional cash flow relief and affordability when they are getting into the market.”
The new mortgage rules follow 50-basis point cuts to the Bank of Canada key interest rate earlier this week and in October.
The combination of the cuts and the new rules could juice B.C.’s real estate market, which has seen a significant slowdown in the wake of the COVID-19 pandemic, said Randy Ryalls, managing broker at Port Moody’s Royal LePage Sterling Realty.
“From April to September we’ve seen quite low transaction volumes compared certainly to the pandemic years, when they were off the charts,” he said.
“We’re kind of in a position where we’ve got a couple of years of pent-up demand. People have been sitting on the fence for a while.”
Ryalls said the new mortgage insurance rules are significant, given finding a home for under a million dollars in the Lower Mainland.
“That does get it back into the territory for a lot of buyers,” he said. “It potentially could change our market quite a bit.”
Ryalls said the local market already saw a significant jump in activity after the interest rate cuts in October.
He said realtors are anticipating growing inventory and confidence heading into the new year, leading to an even bigger uptick in sales.
“We are expecting a pretty busy spring market,” he said.
“Buyers will be in a position where they do have to compete to buy properties in the Lower Mainland again.”
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