Unintended Consequences of the Mortgage Rule Changes

Hello Everyone with Hamilton Real Estate Investments!!

I hope you all had a wonderful, thankful, restful weekend!

To kick off the weekend my charity, the Hamilton Basket Brigade, provided Thanksgiving dinners to 153 families or 728 men, women and children in Hamilton. These people were identified as people at risk of going hungry so we did what we could so these families could at least enjoy the holidays.

With my cousin, brother, wife and kids, we delivered halal chickens and groceries to two brand new Canadian families who just arrived from refugee camps. One family even has quadruplets, all age five!!! They were super cute when coming to the door to say thank you.

So this Thanksgiving edition of the Hamilton Basket Brigade, I am thankful for all of our donors: we can only feed as many people as you afford us to feed, especially our Diamond level donors: Scott Dilingham of CIBC and the Mercers.

Thank you to our volunteers, you are a key part of our vision of providing good people the opportunity to let their spirit grow. Your stories of the fun and joy you experience drives us to bigger and better basket brigades. Please continue to send them in or post to https://www.facebook.com/groups/HamiltonBasketBrigade/. Special thanks to Nancy for coordinating the finding of our families, and organizing the deliveries and delivery routes.

 

Thank you to St. Mary’s Church for donating the space and base of operations.

Thank you to FreshCo at 869 Barton St E, Hamilton for not only supplying us with the food and donations but assigning staff to help us load our rental truck.

Finally, thank you to our Board of Governors: Matt Green, Roger Auger, Maria Marcuzzi, James Maggs, Cherry Chan (CFO), Myself (President) who alone donated over $14,000 year to date and share my vision of showing thanks by taking action to make Hamilton a better place for those who are most vulnerable. As my favourite super hero said: “It’s not who I am underneath… but what I *do* that defines me.” ~ Batman

Unlike some other charities, 100% of the money donated goes to feeding the families.  The rental truck and Tim Hortons goodies was donated (by Auger Properties), the boxes donated (thank you Joe and Merrill), the venue was donated, the shopping bags were donated (thank you again FreshCo), the photography by Michael Uhrl (http://www.michaeluhrl.com/photography), the Accounting, legal fees for charity registration and incorporation fees (donated by Cherry Chan and by myself).

In case you missed out on the opportunity to be an agent of change, we do it all again this Christmas on December 17, 2016. Our website is HamiltonBasketBrigade.com. I hope you too become the change you want to see in the world (thank you Gandhi).

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Remember those new mortgage rules coming Oct 17^th that we discussed last week?

Here’s another article on the subject: http://www.bnn.ca/winners-and-losers-from-ottawa-s-new-mortgage-rules-1.581492

This may be an oversight or unintended consequence. From what I’m hearing from mortgage insider friends, one of the rules changes applies to INSURED mortgages and most investors think; well I put 20% down as I’m supposed to as an investor. But did you know many lenders (who are not the chartered banks) pay out of their pocket to purchase mortgage default insurance? Well some do, so we’re still waiting to hear from our mortgage insider friends what the fallout will be. A possible unintended consequence is a big benefit to the chartered banks. The media seems to think the biggest loser is the millennials and first time buyers. My close associates think houses in and around the 1-million-dollar price range (the average price in the GTA) will face less demand.

For investors of 2nd mortgages and bridge financing, you can expect a lot more deals coming available.

For Hamilton and St. Catharines investors, my best guess is we will see both less and more demand. Makes no sense right? Let me explain. Hamilton and St. Catharines are still extremely affordable compared to the GTA, so less local buyers can afford Hamilton and St. Catharines housing BUT more buyers from the GTA will be motivated to chase affordability and make the trip West down the QEW.

More home buyers will become tenants as they can no longer qualify for mortgages.

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Somewhat related, are you tired of people who don’t invest tell you we in Canada will face a similar melt down as our American friends did?  Then make sure to share this fun fact with them: “those in arrears for 90 days or more, stand at 0.28 per cent, or five times lower than those in the U.S., according to the Canadian Bankers Association”

Source: http://business.financialpost.com/personal-finance/mortgages-real-estate/canada-banks-insurers-rally-opposition-to-new-housing-rules

Even as crazy as the market is in Vancouver and Toronto, the national market still pays their mortgages.

Thanks for reading and happy Hamilton real estate investing everyone!

 

Erwin Szeto | MrHamilton.ca
Sales Representative, Owner of Hamilton Real Estate Investment Property
Rock Star Real Estate Inc., Brokerage
Ph: 905-361-9098

 

PS: If you are just starting out investing, start by spending more time with like minded people and take guided tour of Hamilton by joining us for the next Mr. Hamilton Inner Circle by clicking here!!!

PPS: If you can’t make it in person, check out our podcasts on iTunes, Google Play, or Stitcher!