Federal Election 2019 / Mortgages / Stress Test / First-Time Home Buyers /Liberals/Conservatives/NDP

Federal Election 2019 / Mortgages / Stress Test / First-Time Home Buyers /Liberals/Conservatives/NDP


Welcome to MONEY with MARK ALBERT. Glad you’re with me today. Today we’re going to talk about the federal elections are
coming up because there are three parties, three of the main political
parties, that are taking positions on the mortgage industry in Canada. So this is
going to be an ongoing debate, so I’ll be updating videos as time moves on leading
up to the October 21st 2019 election. So we’re looking at all three
parties and so basically three of the parties have, the liberals, conservatives, and NDPs, they all have platform positions on this. The Green Party I went through
their whole platform I didn’t find one word on mortgage, one word on stress test, nothing
like that. So they’re not in it but they may develop a strategy in keeping with
what’s going on here eventually because I think it’s gonna be a big issue big
topic. So it’s gonna be these three parties. We’re gonna focus on the
mortgage mortgage industry, stress test, first-time home buyers, kind of making
homes affordable is also a part of it and I will mention that there will be
update videos as time moves on, so if this something you’d like to get updates
on please subscribe below. So I think things are going to intensify. I
personally believe that the mortgage issues that are going on right now,
affordability of homes, people getting homes, first-time home buyers not being
able to get in the market, it’s a big deal. The stress test is a big big deal
and I think it’s gonna be a massive election issue that’s why I’m doing this
video because I think it’s important for us to be educated on this stuff. Please
note that I’m taking a nonpartisan position on this, I’m just basically
presenting the facts so that’s what we’re gonna do. We’ll start with the
Liberals first. Now what the Liberals I did about a ten minute video on
everything we’re talking about here with more depth so if you want to figure out
in more depth what the Liberals are proposing on this concerning the
first-time home buyers and the home buyers plan, there’ll be a link below
with that video there. So basically they’re looking at a shared equity
mortgage with CMHC, which is basically a crown corporation of the government
Canada and and in that situation for first-time home buyers if you put 5% down
and it’s a newly constructed home, so a pre-build, we’re basically gonna have 10%.
You put 5% they put 10%. You can put more than 5% but they’re gonna put 10%. So if
it’s an existing home they’re gonna put 5% down and then of course the loan
needs to be paid back to CMHC. There’s a lot of details that aren’t yet known to
us, those will come eventually. Now you have to have a household income of
$120,000 or less to qualify. So that means that there’s people who basically will
not be able to qualify if your household income is larger. And it’s basically four
times, the way you do your math is this; whatever household income is, multiplied
by four and that tells you the size of the mortgage you can qualify for, an insured
mortgage. So if the household income is $120,000 basically the size of the
mortgage can be more than $480,000 Okay? And the program is expected to start, it’s interesting and I think it’s very political, so the election is October 21st they want to start this program in September right
close to it. So and I think that that I think that they may feel that will give
them the kind of the edge. Now, They’re already in power they could implement
that program right now, they’re majority government liberals so they can
implement it now if they want out first-time home buyers get in the market
now but they’re gonna wait. So we’ll see if it starts then or not. If they don’t
get in the Liberals don’t get in then this program probably not going to
happen because the other two parties two main parties they have their own
approach to mortgages. Okay? So the Liberals they want to modernize
the home buyers plan. Now the home buyers plan all it is is up to $25,000 of your
RRSPs you can pull it out, as an interest-free loan, and apply it to
either your down payment when buying a house if you’re a first-time homebuyer
or any other costs associated with moving in that house, legal costs and so
on. Okay? And that’s the current plan and
what they want to do is they want to increase that by $10,000 so that it
goes so you can pull up to $35,000 So of course that must be paid
back within fifteen years for it to remain interest-free. So a couple they
could both pull $35,000. Now the challenge I find with this, and I
said on the last video I did and the link for that one will be below as well,
is that most first-time home buyers that I have ever met with over the years
helping them with their finances they don’t have $35,000 sitting there in an RRSP. Most don’t. And so I don’t I’m not too convinced that the
impact from moving to $25,000 to $35,000 is gonna have any significant impact. There’s only so many thousands of people every year
that are first-time homebuyers getting in the market. So that’s the Liberals. One
thing about them disappointing to me actually was that they’re not touching
the stress test. They’re keeping the stress test in there and that stress
test is is economists and and the economists within the banking sectors the
different big banks they’re talking about how it’s hurting the industry
hurting the economy hurting first-time homebuyers but also hurting people who
have established mortgages and they want to renew their mortgage and switch they
can’t switch from this bank to that bank because then the stress test applies and
it’s hard to to leave to go shopping when you go to renew your mortgage. So
people feel they’re held hostage in a situation like that. So that’s the
Liberals some people like it, others don’t feel great about it and this has
been in the media for you know several months now. So now let’s look at the
Conservatives. So on the stress test they’re playing to remove the stress
test on mortgage switches. So that means that if you have a mortgage with this bank and you’re you’re in a five year fixed mortgage or five year variable mortgage and you want to renew you have to renew well you don’t want to
renew with that Bank for whatever reason you want to switch and move it to
another Bank. They’re saying we’re gonna remove the stress tests on that
type of transaction. Now this is big because, there’s another video I did on a
mortgage market update back in February and in that video, and I’ll put that link
below you can look at that if you want, I mentioned that there’s about 6 million
households in Canada that have mortgages attached to their home. So that means
that up to 6 million households, which is a lot more than 6 million people because
each household usually has more than that, could have a positive benefit from
this. Because what’s going on is if I’m with this if I have a mortgage with a
particular lender that particular lender doesn’t necessarily feel that they have
to give you the best rate to renew today because they know you would have a hard
time transitioning your mortgage from them to another lender because of the
stress test. And so lenders very easily are taking advantage of people and these
people with mortgages often times, as I speak with them, they feel they’re
held hostage to their lender because they can’t switch they want to switch
but they just can’t because of the stress test. So this would help a lot of
people. So the Conservatives are also they want to review the current stress
test and the impact so that means that they may make some other modifications
there. Ok, so they’re committed to reviewing doing the full review. And they
have other measures of proving household affordability the details of that I’m
sure will come as we get closer to the elections. And it’s easier to shop around
as I mentioned when you renew your mortgage which is a benefit of removing
the stress test when people want to switch mortgages. That doesn’t mean they
have to switch but just makes it so much easier if they want to or wouldn’t need
to. Ok, so the Conservatives they also want to do this, and this is really
helpful for first-time homebuyers, so first-time homebuyers. If you go in and you put less than 20% down on your on your purchase, it needs
to be an insured mortgage so it’s insured by CMHC or Genworth stuff like
that. And then you can only have a 25-year amortization period well they’re
looking to bring back this 30-year amortization period so it’s going to
create smaller mortgage payments which means there may be more affordable for
you, it would make it easier to qualify under the mortgage current stress test but
also all mortgages there’s ratios that we have to help you qualify for, right? So
there’s TDS and GDS ratios and those ratios make it easier to qualify if in
certain situations you can have a 30-year amortization versus a 25-year.
Now someone does 30 years that doesn’t mean they can they can’t at renewal
renew and move over to a 25-year, 20-year amortization. Their circumstances
probably different then but often times to get into the market you might need
that. So it makes it easier to qualify for a mortgage and makes it easier for
first-time homebuyers. So there’s a good deal and you’re going to see in a bit
the the NDP’s that they got the same thought process on this. So the
Conservatives they’re gonna address a side supply side of housing right a lot
of details that we don’t know yet that will come I’m sure. They want to make it
easier for people to build more homes. They’re planning to work with provincial and municipal partners and the purpose of working tightly with them is to address
processes, red tape issues, timelines, things that hinder the moving forward
of building home units that may be more affordable allows individuals to
actually build homes a little bit with more ease. Okay? And the goal for them
would be that more homes would come to the market at a lower cost. So that’s the
kind of way and I hold this whole page right here I’m sure there’s a lot of
information we just don’t know yet that hopefully will come out as we get close
to the elections what they’re thinking and if it does I’ll do an updated
video. So let’s talk about the NDP. Now this slide here is basically the same as
as the Conservatives. So they’re looking to bring back a 30-year amortization on
insured mortgages as well it’s going to create smaller payments for people on
their mortgages makes it easier to qualify for a mortgage easier for
first-time homebuyers okay? One of the things that the NDP’s just stated that
they were going to do, is they’re going to build 500,000 affordable homes in the
next decade. And so the other ones are staying with that type of specifics in
terms of that volume of homes. But notice that time frame is like a decade and I
think this is very political. Oftentimes politicians do this they put out a big
number over this many years and it looks good, right? What we don’t know is we
don’t know the start to start time frames of these you know if they get into power
they gonna start that in their first term the first four years or as some
political parties do they they say they’re gonna do it over ten years but
they don’t implement it for the first four and then as they’re getting close
to the next election they’re saying oh and well yeah we’re doing this and then
they start the process right so then then it allows us to build some momentum
for them in the next election. We don’t know what cities. You know and and those
no one’s gonna give you those type of specifics at this point. You know this
percentage in Toronto, this percentage of Vancouver, this percentage in Calgary,
Ottawa they’re not going to get into that probably right now. So the NDP
they’re calling on CMHC to support co-housing as a mortgage option. Now what that is well we’ll wait and see, because they haven’t given any explanation that
I have seen in the media to define this. But I think it’s it’s more to do with
the affordable making home may be making your ability to live more affordable. And
and how that’s defined, but they’re the only ones that are talking about doing
that. All right. Now the NDP’s comes to mortgage stress tasks I haven’t seen
anything at all where they’re saying that they’re going to modify it at all. So the only ones you’re looking
to modify it to improve the mortgage stress stuff is the Conservatives. The
Liberals they’re pretty heavy on first-time home buyers right that’s their
big issue. And so we’re gonna give updates on this. Hopefully the Green
Party they have their views and I can add it on the next video update.
Listen thank you so much for being with me on MONEY with MARK ALBERT. Have
yourself a wonderful day and hopefully this has been helpful for you.
Take care.

One thought on “Federal Election 2019 / Mortgages / Stress Test / First-Time Home Buyers /Liberals/Conservatives/NDP

  1. Which Political Party has the best Mortgage Industry platform for this October 21, 2019 Federal Elections? Please comment below. If you share your thoughts please explain why you feel that way so that everyone can benefit from your insight.

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