New mortgage rules coming January 1, including stress test


Previously only those with less than 20% down were tested, but now all borrowers will be.

Canada’s top banking regulator has published the final version of its new mortgage rules, which include a requirement to “stress test” borrowers with uninsured loans to ensure they could withstand higher interest rates.

The Office of the Superintendent of Financial Institutions (OSFI) released new guidelines for the mortgage industry on Tuesday. The regulator floated a similar version of these rules earlier this summer in draft form, but Tuesday’s release makes them official as of Jan. 1.

Among the major new rules is a requirement to stress test uninsured borrowers. Previously, only insured borrowers had to undergo such a test.

By law, borrowers with a down payment of under 20 per cent for a home must purchase mortgage insurance. Borrowers pay an insurance premium, but the beneficiary is actually the lender, because the insurance protects the loan giver in the event the borrower defaults on the loan.

And the insurance premiums can easily be into the thousands of dollars, on top of the cost of a home, ranging from 0.6 to 4.5 per cent of the mortgage, depending on the size of the down payment and the price of the property.

The Canada Mortgage and Housing Corporation is far and away the biggest mortgage insurer in Canada, although it competes with private rivals Genworth Financial, Canada Guaranty and a few others.

On a $500,000 home with a $50,000 down payment, the CMHC says a borrower would be charged an extra $13,950 to insure the $450,000 mortgage.

The vast majority of first-time borrowers have to purchase mortgage insurance, and they have been obligated to undergo a stress test of their finances since last year.

Anyone who puts down more than 20 per cent of the value of a home doesn’t have to pay such insurance, and is known as an “uninsured” borrower — the people affected by the new rules revealed October 17.

The stress test itself consists of ensuring the borrower would be able to pay the loan if interest rates become higher than they are today.

According to the Bank of Canada, the big banks currently have an average five-year posted mortgage rate of 4.89 per cent. But it’s not difficult to find a lower rate by shopping around. (Rate comparison website calculates that many lenders are offering five-year mortgages below three per cent, as does rival and many others.)

The stress test is designed to simulate a borrower’s financial situation by assuming they would have to pay back the loan at the posted average — not whatever deal they were able to negotiate. So under OSFI’s new rules, borrowers would be stress tested at either the five-year average posted rate, or two per cent higher than their actual mortgage rate — whichever one is higher.

Notably, the new stress test rules won’t apply to mortgage renewals as long as they are with the borrower’s existing lender.

The regulator published a draft of its new rules over the summer, before consulting with stakeholders about any changes that need to be made. The regulator said it received more than 200 submissions from people in the industry and members of the public about the rules as they were proposed in July.

The idea’s critics, including many in the real estate industry, said imposing a stress test on all buyers would put a chill on the housing market at a time that it can ill afford it.

But OSFI is pressing ahead anyway with changes it describes as “vigilant.”

“These revisions reinforce a strong and prudent regulatory regime for residential mortgage underwriting in Canada,” said Jeremy Rudin, OSFI’s superintendent.

TD Bank economist Brian DePratto agrees with that assessment, noting “on balance, these changes should help enhance the resilience of the Canadian banking system in a rising interest rate environment.”

But that’s not to suggest there won’t be pain to be had because of them. DePratto estimates that expanding the stress test to all buyers will depress demand for housing by about five or 10 per cent, and there may be a mini-rush to get in before the new rules come in in January.

He believes the housing market’s reaction to the last stress test rules in 2016 are a good example of why the regulator felt compelled to act again: As of August, insured mortgages were down 4.5 per cent in the 12 months since they were subject to a stress test.

Uninsured mortgages, meanwhile, grew 17.3 per cent — which suggests homeowners were doing anything they could to get their down payments above the 20 per cent threshold, and away from being locked out of an insured mortgage from failing a stress test.

“Estimates peg the uninsured market at roughly 80 per cent of activity recently, so this measure will bite, arguably more than past changes in the priciest markets,” Bank of Montreal economist Doug Porter said.

In practical terms, the stress test would mean that a potential buyer of a $1 million home with 20 per cent down would see their purchasing power knocked down by about 15 per cent, he estimated.

“These changes in mortgage rules represent a further tightening of the screws for the housing market.”

Mortgage broker Kim Gibbons with Mortgage Intelligence said she thinks the new rules are a little too strict.

“In the mortgage world, a lot of people are talking about how it’s too stringent and the government is tightening up far too much, considering what the delinquencies are in this country for mortgages,” she said in an interview.

“And I know that they want to cool the market, but this might put a halt on it.”

“I think it’s going to be a busy November and December. And I think after that, it’s going to cool the market a bit,” she said.

In addition to the stress test, the new rules would require lenders to have more scrutiny around the loan-to-value ratio of the loans they give out, to ensure they are not giving out mortgages that are too large compared to the underlying value of the home.

There’s also new limitations on so-called co-lending or bundled mortgages that aim to ensure lenders don’t flout rules designed to limit how much they can lend.

Spring Maintenance

Spring’s the perfect time for taking care of outdoor maintenance!

The arrival of warm weather signals fun in the backyard with friends and family. The last thing you want to deal with are unexpected home repairs so here’s a list to help keep you on track:

1. Clear away debris and dead foliage from any flowerbeds.

2. Inspect hose connections to ensure there are no leaks.

3. Replace damaged window screens and any weather stripping.

4. Clean your fireplace and/or wood-burning stove and flue.

5. Make sure your lawn mower, weed wacker and other tools are in good working order.

6. Clean and repair your patio furniture and inspect your deck for loose or rotten boards.

7. Trim back shrubs and vines that are growing near your air conditioning unit and dryer vent.

8. Inspect and clean your gutters and make sure downspouts drain away from your foundation.

9. Patch up any cracks you find around foundation and driveways before they spread further.

10. Inspect your roof for cracked or missing shingles and trim branches that hang over the top of your roof.

Proactive home maintenance helps prevent small issues from getting out of hand. Your home is a huge investment and minimizing repair bills will help you realize your highest rate of return. When you’re done, you’ll be able to relax and enjoy the lazy days of summer knowing that everything’s been taken care of!

Source: Pillar to Post Newsletter (

Pets and Condo Living


There are many reasons for a condominium to have rules regarding pets. For example:
– Buildings with shared air flow systems can have problems with pets for occupants with allergies.
– Pets can disturb fellow occupants with noise, damage common property with digging, scratching or chewing fences and killing grass, etc. All owners pay for maintenance of common property, even those with no pets.
– Pets in a building can impact a sale. Buyers either want pets or no pets.
– The type of pet allowed in the condo needs consideration as there are shared spaces that escaping pets could access.
– Pets are family to many people.


– The bylaws of the condominium will detail the requirements for pet approval, define the type, number and possibly size or breed of pet that will be approved.
– Bylaws will prescribe the remedy for a problematic pet, the requirements for a deposit (if any), and any requirements for registration, vaccinations, Municipal Licensing, photos, etc.


– Contact the property manager or if there is no management company, contact the Board contact for the required application forms and criteria.

– Bylaws are enforceable as written.
– The bylaws vary from one condo to the other, never assume you know the pet bylaw.
– Obtain pet approval before you waive sale conditions.

Source: Condo Check email newsletter,

Radon: Why it Matters

Any home can have a radon problem – old or new homes, well-sealed or drafty homes, homes with or without basements. It is estimated that nearly 1 in 15 homes in the U.S. and Canada has an elevated level of radon. Prolonged exposure to unsafe levels of radon can create an increased risk of lung cancer; in fact, radon is the second leading cause of lung cancer after smoking. Lung cancer caused by avoidable radon exposure is preventable, but only if radon issues are detected and mitigated prior to prolonged exposure in homes and buildings. There is real risk in not knowing if a home has a high level of radon.

Radon is a naturally occurring odorless, colorless, radioactive gas formed by the ongoing decay of uranium in soil, rocks, sediments, and even well or ground water. While radon that escapes into the atmosphere is not harmful, dangerously high concentrations can build up indoors, exposing residents to possible health risks.

Radon can migrate into the home in several ways. Openings or cracks in basement walls, foundations or floors are common avenues. Sumps, basement drains, and spaces between gas or water fittings can also allow radon into the structure. Other entry points can include gaps in suspended floors and cavities within walls.

Homeowners are encouraged to request that radon testing be added the home inspection process. If an elevated level of radon is detected, steps can be taken to reduce the concentration to or below acceptable levels inside virtually any home. This can include a relatively simple setup such as a collection system with a radon vent pipe, which prevents radon from entering the home in the first place. Professional mitigation services can provide recommendations for a home’s specific conditions.

Source: Pillar to Post e-Newsletter

Ferns Detox Indoor Air

Want to improve the air quality in your home? Decorate with ferns. Horticulture experts say potted ferns help purify indoor air by filtering out common household pollutants.

Here’s how to keep your family breathing easier:

1. Pick your plant. There are many types of ferns, but these easy-to-find varieties do well indoors. If you would like a tall fern, try the bird’s-nest. Prefer a plant potted in a hanging basket? The Boston fern is best. For a plant that fits in small spaces, the little button fern is perfect.

2. Water often. Ferns are thirsty plants, so it is a good idea to keep them consistently watered, making sure the soil stays moist – but not wet.

3. Add humidity. Ferns thrive in normal house temperatures and indirect light. To up humidity for ferns, double-pot your plants in a set of plastic containers, filling the area between them with pea gravel. Keep the gravel moist, and your plants will be good to grow.

Source: Pillar to Post Newsletter //

Garage Door Safety

Overhead garage doors may be the largest moving object in most homes and can weigh up to 400 pounds. For safety, homeowners should be sure that it’s up to date and kept in proper working order.

Older garage doors often lack some of the safety features required in newer installations. These include spring systems designed to prevent flying metal in case of spring failure, and automatic openers that can operate in reverse if the door closes onto an obstacle. Automatic openers must also have sensors, usually a pair of electric eyes, that will stop and reverse the door if a person or pet moves across its path. It is sometimes possible to retrofit existing systems to include these sensors without replacing the entire system. Children should be taught that the garage doors are dangerous, and that toys, bikes, etc. should never be left in the way.

There is also the issue of power outages and how to get the door open. For several decades, automatic openers have featured an emergency release that will disengage the opener, allowing the door to be opened by hand. In most cases it will be a short red cord that hangs down close to the center of the door, inside the garage. Homeowners should learn in advance how to operate the release in case they need to get a car out of the garage during a power outage.

Maintaining the door is important for safety and for quiet, smooth operation. A garage door specialist can provide periodic maintenance, or homeowners can do much of this themselves including lubricating the springs and hinges. The track itself, where the wheel run, should never be lubricated for safety reasons. A professional can also check the door balance and alignment and make any needed adjustments.

When moving into a home, the new owners should change the remote control code immediately for security purposes, just as they would re-key or change the home’s door locks. If the remote is not reprogrammable, chances are it’s an outdated system and should be upgraded for safety reasons. A garage door and opener, with proper maintenance, will help ensure safe operation and should last for many trouble-free years.

Source: Pillar to Post e-Newsletter

Fall Home Maintenance

Article courtesy of Pillar to Post e-newsletter. 

The days are getting noticeably shorter, and maybe there’s a nip in the air – fall is definitely on its way. Now is the perfect time to get your home in shape before winter rolls in, while the weather is still pleasant enough for spending time outdoors.

Seal it up: Caulk and seal around exterior door and window frames. Look for gaps where pipes or wiring enter the home and caulk those as well. Not only does heat escape from these openings, but water can enter and may eventually cause structural damage and mold problems.

Look up: Check the roof for missing or damaged shingles. Winter weather can cause serious damage to a vulnerable roof, leading to a greater chance of further damage inside the home. Although you should always have a qualified professional inspect and repair the roof, you can do a preliminary survey from the ground using binoculars.

Clear it out: Clear gutters and eaves troughs of leaves, sticks, and other debris. Consider installing leaf guards if your gutters can accommodate them – they are real time savers and can prevent damage from clogged gutters. Check the joints between sections of gutter, as well as between the gutter and downspouts, and make any necessary adjustments or repairs.

No hose: In climates with freezing weather, drain garden hoses and store them indoors to protect them from the elements. Shut off outdoor faucets and make sure exterior pipes are drained of water. Faucets and pipes can easily freeze and burst, causing leaks and potentially serious water damage.

Warm up time: Have the furnace inspected to ensure it’s safe and in good working order. Most utility companies will provide no-cost inspections, but there can often be a long waiting list come fall and winter. Replace disposable furnace air filters or clean the permanent type according to the manufacturer’s instructions. Using a clean filter will help the furnace run more efficiently, saving you money and energy.

Light that fire: If you enjoy the crackle of a wood-burning fireplace on a chilly fall evening, have the firebox and chimney professionally cleaned before using it this season. Creosote, a byproduct of wood burning, can build up to dangerous levels and cause a serious chimney fire if not removed.


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2016 Real Estate Forecast

The REALTORS® Association of Edmonton released their annual housing forecast today at a seminar at the Northlands Expo Centre attended by 700 REALTORS® and business leaders. Chair Steve Sedgwick forecast that sales of residential homes in the Edmonton Census Metropolitan Area will remain relatively stable. A decline of about 2.3% from 2015 sales levels will result in less than 17,000 sales in 2016.

Edmonton CMA had a good year last year with all residential sales at 17,298. That is down 9% from 2014 but up over 1% from 2013. Sedgwick expects another solid year in sales of single family homes in the Edmonton area but with a small decrease of about 2.5%, as economic uncertainty continues. “The continuation of low oil prices and economic decline have made buyers cautious. While much of the decline is offset by record low lending rates, we don’t expect sales to pick up without a boost in our overall economy. That said, Edmonton has fared much better than many other places in Alberta. We expect continued growth and development in our city to continue to keep interest in our housing market strong.” explains Sedgwick.

Condo sales are expected to decline by a modest 2.7% throughout the region as the rental market eases up and migration slows down. The popular duplex/rowhouse category was strong in 2015 and looks to remain so through 2016 as more inventory comes available in this category. Duplex/rowhouses offer both affordability and an ownership model that appeals to many first time buyers.

Prices, as usual, will fluctuate through the year but the 12-month average price for a single family detached property is anticipated to decrease modestly about 2.7% as inventory grows. Condominium property average prices are projected to decrease at the same rate with many higher priced options keeping the average price inflated.

Sedgwick’s forecast was supported by four other speakers at the seminar including Todd Hirsch, Chief Economist, ATB Financial; John Rose, Chief Economist, City of Edmonton; Bruce Edgelow, VP of Strategic Initiatives, ATB Financial; and Christina Butchart, Senior Marketing Analyst Canadian Mortgage and Housing Corporation.

There are 3,300 REALTORS® operating in the greater Edmonton area which extends as far as Cold Lake, Wetaskiwin, Drayton Valley, Vegreville and Westlock.

A recent article in the Edmonton Journal stated that “Edmonton resale home prices will soften and sales will slide rufther in 2016 – but not as much as other places in Alberta battered by a faltering economy, says a forecast by the Realtors Association of Edmonton. ‘Edmonton and area has not felt the same effects of oil prices as the rest of Alberta has,’ Steve Sedgwick said Wednesday. ‘There’s a lot of exciting growth happening in Edmonton and we remain conservatively optimistic when it comes to our housing market.’

It’s an assessment backed by prominent economists, who say that Edmonton’s economy will slow in 2016, but not as much as other Alberta municipalities.

‘While you’re going to continue to see some very negative numbers and some very negative commentary about the province as a whole, people have to bear in mind that Edmonton is a bit of an island in the storm,’ said John Rose, chief economist for the City of Edmonton. Rose predicts a growth of 0.5 to one per cent for 2016 for the city and a slightly lower rate for the region.

Todd Hirsch, chief economist for ATB Financial, agreed Edmonton’s real estate market will endure an economic slowdown better than other Alberta markets because of its more diversified economy.

‘I do see the Edmonton real estate market faring generally in better shape than Calgary or Fort McMurray this year,’ Hirsch said. ‘It’s the centre of government, health care and education – broader sectors that support employment growth in Edmonton. I don’t see the downturn in the real estate market in Edmonton to be as severe as it will be in other parts of the province.’

Christina Butchart, senior marketing analyst for the Canada Mortgage and Housing Corporation, said the situation has shifted from a market that slightly favored sellers to a buyers’ market because of larger inventory and fewer sales.

Meanwhile, despite Alberta’s economic slowdown, the assessed value of the average Edmonton house has still gone up this year, said municipal officials this week. The typical single-family detached home is now worth $408,000, up 1.7 per cent from last year. The average value of condos, townhouses and duplexes went up 4.8 per cent.”

After reviewing the REA annual housing forecast, Don Cholak recommends selling sooner rather than later. “If selling in the next year, with a negative forecast in place, the sooner you sell, the better price you will receive. If you are planning on moving up in 2016, you stand to gain the most in this type of market. Lower price homes will not be impacted as much as the upper end market will be in 2016.”

6 things to consider when renting property


There are many factors to take into consideration when renting out a spare room or an unoccupied residence. Landlords and property managers want to attract respectful and dependable tenants, but in order to do so, they must go beyond just listing their property and hoping for the best.

Before they begin screening tenants or even setting up their listing, there are several steps your clients must take to avoid legal issues or nightmare tenants.

1. Get proper insurance

After deciding to rent out your property, notify your insurance company and receive proper insurance. Landlord’s insurance will protect you against damage to your property or any liabilities.

Should the property be damaged in a fire or storm, the insurance company will cover the cost of the repairs. However, many insurance claims do not cover damages caused by the tenant. Be sure to clarify in your claim with your insurance agent or inquire about adding on tenant insurance.

2. Be competitive about your pricing

Research the average pricing of rental properties in the market and set a competitive price. Avoid listing your property at the lowest rental price to attract more tenants; it will likely backfire because it will attract tenants who are only focused on price and who will leave in search of the next lower priced unit.

3. Understand landlord’s rights

It’s important that landlords know their rights and their tenants’ rights to avoid any lawsuits or legal issues. Canada Mortgage and Housing Corp. lists extensive information for each province on what landlords can and cannot do, including information on rent, pets and when a landlord can enter a unit when occupied by a tenant. Landlords should also consider joining a landlord’s association to stay up to date on changes to bylaws and regulations.

4. Photography goes a long way

The photos you select to post with your property’s listing can make a huge difference. Poorly lit photographs, whether they are too dark or over-exposed, can make a space look unappealing and unwelcoming. Photos that are blurry, grainy or low resolution can be difficult to make out and fail to properly showcase your space.

While a little bit of editing can make a photograph look more professional, over-editing can misrepresent your property. Prospective tenants won’t be pleased if they think your walls are snow white when they’re in fact light blue.

5. Maintain the rental property

If the rental property requires any repairs or is in need of a touch-up, be sure that they are conducted before viewings start. Prospective tenants are not going to be interested if the floorboards are dirty and damaged, or if the walls are in desperate need of painting. They also won’t be pleased if they rent out your property only to discover the heating is broken or the pipes need replacing. Create a space that is clean and comfortable; if you’re not comfortable living there, tenants won’t be either. After a tenant has moved in, be responsive and timely when they contact you should an issue arise.

6. Understand tax laws

Canada Revenue Agency requires that rental income is reported on your annual tax return, so it is important to know what can and cannot be deducted. Any reasonable expense – repairs or renovations, for example – incurred to earn your rental income can be deducted, but you cannot deduct the value of your own labour if you do the repairs or renovations yourself. If you’re unsure, the CRA provides a full list of expenses you can deduct, both current and capital, and what you cannot deduct.