Low mortgage rules likely to push up home sales in Alberta
How mortage rules are garnering higher sales for homes
According to the national housing agency of Canada, the sales of homes in Alberta will be healthy throughout the second half of 2012, as a result of favorable economic conditions. An official statement from the Canada Mortgage and Housing Corp. on Monday stated that several factors including steady immigration level, lower unemployment, low mortgage rules and low interest rates have led to the fuelling of the real estate industry in Canada. These factors led to lesser number of people putting in claims during the first half of the year under its mortgage insurance programs.
If agency sources are to be believed, the mortgage rules will remain low throughout the year, between 4.1 per cent and 5.6 per cent, and then will head for an increase in 2012.
According to CMHC regardless of the fact that some banks have increased their variable rates recently, the rate mortgages will touch historical lows during the year. CMHC said in a statement that going forward one can expect the prices of homes listed on Multiple Listing Service to increase as there will be a balance in the supply and demand of resale homes.
A report from CMHC shows that the changes that the federal government has brought about in mortgage rules have facilitated the reduction of mortgage interest payments. This, in turn, has given Alberta residents a power to build faster equity in their homes. With an improvement in arrear levels, Canadians can now easily pay off their mortgages. The claims for mortgage insurance have also decreased reasonably.
New rules were introduced by the federal government in March, which have led to a decrease in amortization period to 30 years. The maximum borrowing limit for Canadians has also been increased to 85 per cent of the house value. As soon as these new rules came into effect, the number of Canadian mortgage insurance buyers fell by ten per cent.
The predictions about the real estate market of Canada are quite contrary to the recent figures of the United States that show that the stumbled housing market in the country is still finding it hard to revive itself.
While a reading of 100 on the sales agreement index is considered to be a sign of healthy economy, a report of the US National Association of Realtors shows that this reading came down to 89.7 per cent in July 2011.
The report from the association also stated that majority of buyers cancelled their contract when they came to know that the actual cost of the houses they had bid for was pretty low.