Rick Howe: Federal budget

Talking about the federal budget

Talking About Spring Home Renovations. Don’t feel like listening? Check out the audio transcript below.

This is a five minute business builder with Rick Howe, where your business comes first, on News 95.7.

Talking federal budget

Rick: [00:00:08] On Thursdays from time to time we welcome members of HRMs business community to the show and this afternoon we welcome back senior mortgage advisor Clinton Wilkins. Clinton, Good afternoon to you sir.

Clinton: [00:00:19] Thanks for having me Rick.

Rick: [00:00:20] Well thank you for coming back here today and lots to talk about here this morning.

Clinton: [00:00:23] It’s been a busy week in our industry.

Changes for first-time home buyers

Rick: [00:00:25] It certainly has, in the new budget of course has a couple of measures for first time homebuyers. There is a CMHC basically a no interest loan. They’ll give it between 5 and 10 percent.

Clinton: [00:00:38] That’s right.

Rick: [00:00:38] Toward the down payment of a home. And another measure in the budget as well that’s aimed at that first time homebuyers.

Clinton: [00:00:43] Yeah. The first time home buyers plan the RRSP limit.

Rick: [00:00:47] That’s right.

Clinton: [00:00:47] Has been increased from twenty five thousand to thirty five thousand. That started right away which is really exciting. Going into the spring market it’s the busiest real estate market typically all year.

Rick: [00:00:57] Oh really. Okay.

Clinton: [00:00:58] And I think it’s a great time for this to come out. There’s lots of first time homebuyers out there in the marketplace. We’re getting people pre-approved every single day. And the government thinks it’s going to increase first time homebuyers by about 40 percent.

Rick: [00:01:12] Well that’s significant.

Clinton: [00:01:13] That’s huge.

Rick: [00:01:14] Because the housing market is kind of I wouldn’t say it’s stalled but it’s been sluggish has it not?

The Halifax market

Clinton: [00:01:19] It’s been sluggish across the country. You know, we haven’t been so negatively impacted here in Halifax and I think a lot of that’s to do with, you know, we’ve had very steady growth. We haven’t had the double digit growth that they’ve seen in Toronto and Vancouver which is really great because we are a very healthy market.

Last year we saw about 4.5 percent increase in the prices and that’s definitely, you know, obviously impacting positively people when they’re selling. You know, I think that one of the challenges right now is a lack of inventory. So, you know, there’s not a lot of houses out there to buy. And I think what we’re going to see here in the spring market is the houses are going to go much quicker than maybe they have in the last few months.

Rick: [00:01:58] There’s been some concern, though, with these measures in the budget that it could drive up prices for homes.

Clinton: [00:02:03] I think it’s probably going to drive the price up. You know, it’s a supply and demand issue. And that really comes down to, you know, the question, should people buy now or should they wait? I think coming out of that winter market and going into the spring market, you know, I think it’s really good to get pre-approved up front. You know, if you’re looking to get into that homeownership I think pulling the trigger sooner than later. I think it definitely has a value.

Rick: [00:02:26] I want to hear more about this. First let me ask you that measures you mentioned the one of the measures in the budget is effective immediately.

Clinton: [00:02:34] That’s right the RRSP increase from the twenty five thousand to thirty five thousand.

Rick: [00:02:38] What about that other measure. The CMHC loan.

Clinton: [00:02:41] Yeah. The interest free loan that starting in September.

Rick: [00:02:43] OK.

Clinton: [00:02:44] So that wouldn’t necessarily impact the spring market. And there’s lots of interesting little tidbits from that loan. So, you know, maybe if you’re not quite ready to buy now.

Rick: [00:02:54] Yeah.

Should I get a pre-approval?

Clinton: [00:02:54] You know, I think getting pre-approved now and knowing what you need to do to be ready down the road I think definitely has a value. Although, the prices may be a bit higher in September and maybe there’s gonna be less inventory we don’t know. But for new homes, so new construction, CMHC would give it an interest free loan up to 10 percent of the mortgage amount for resale homes up to 5 percent.

There’s a few little caveats. The maximum mortgage amount and interest free loan can’t exceed four hundred eighty thousand dollars and the maximum income is one hundred twenty thousand. So, you know what it’s not gonna be super applicable I think to the Ontario and Vancouver markets but I think in Halifax it’s got to be a great value. And you know for those people that are thinking, you know, should I buy now or should I wait. I think that answer is always buy now is the right answer.

We don’t know what the inventory is going to look like in September. We don’t know what the prices are going to look like in September. And, you know, this interest free loan eventually needs to be paid back. There’s no payment requirements. There’s no interest. But even if you do get this interest free loan from the Canadian Mortgage Housing Corporation down the road, when you sell the house, or maybe when you refinance you’ve to you have to pay that loan back.

So although it’s free money in the sense of it’s not going to cost you anything. There’s no interest rate there’s no repayment. Eventually that needs to be paid back. So if you’re on the fence about buying now or buying later I think the right answer is buying now. Because I really do think the prices are eventually going to go up here. I think Halifax is on the verge of a boom.

Rick: [00:04:15] You mentioned the pre-approvals and we’ve got about a minute left here. So what do you have to go through for pre-approval?

Getting your pre-approval

Clinton: [00:04:20] So a pre-approval I think is huge and I think coming into the spring market I think anybody who’s considering buying a home I think getting a pre-approval is definitely the first step that you need to look at. You know, pre-approvals really look at three things. It looks at income, assets, and credit, and we look at all of those factors and what we’re able to do is actually get an approval contingent on a purchase agreement of a new home and that pre-approval really encompasses your qualifications so what can you qualify for and be the rate.

So oftentimes we’ll do a rate hold and that rate hold is good for up to 120 days. So you know what you’re going to borrow. You know, there’s lots of uncertainties out there in the market. You don’t know you know but you know what you can qualify for and we don’t know what’s going to happen with the rates and I think getting a pre-approval and getting a rate hold is super important before you start going to look at homes

Rick: [00:05:08] And you’ll be on with Todd this weekend answering some questions about this whole issue and others.

Clinton: [00:05:11] Yeah I’ll be on with Todd on Saturday at 10 a.m.. We’re going to do phone ins so if you’ve any questions specifically for us certainly give us a call. Tune in on Saturday. We’d love to answer your questions we’re going to talk more about pre-approval, we’re on top with the spring market, and I suspect we’re probably going to talk about some of these topics that came up in this federal budget, which is super exciting.

Rick: [00:05:29] All right, Clinton Wilkins. Thanks very much. That is Clinton Wilkins senior mortgage adviser.

Have any questions? Get in touch with us!