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As we race into the holiday season a few brief notes for first time buyers of both 2015 and 2016.

Along with a tidbit on interest rates, always a hot topic.

First a mention of my sock project: Please check out ‘Beat Street Feet’.

to business…

Were you a first-time home buyer in 2015?

Did you buy your first home in 2015? If so the federal government has a program that just might put $750.00 back in your pocket, or half of that if only one of the two people on title is a first-time home buyer. To confirm whether or not you meet the criteria, be sure to research all the details on the Department of Finance Canada Website. Search under ‘First Time Home Buyers Tax Credit’.

Will you be a first-time home buyer in 2016?

The federal government recently announced changes to minimum down payments on properties priced below one million dollars.

Most headlines are oversimplifying and inaccurate. The change is not as simple (or painful) as a jump to 10% down on homes over 500K — this is not the correct math at all.

It is a sliding scale; the increase is gradual and marginal (i.e., a $675,000.00 home now requires a down payment of $42,500.00 or ~6.3% down — NOT 10%).

For clarity on the exact math please click here.

This move is not expected to cool either of the two markets targeted by this change, Vancouver and Toronto. The impact in Calgary could be noticeable, though. Calgary needed no measures to cool their market; quite the opposite.

However if you are a 5% (or thereabouts) first-time home buyer actively shopping at this time, make a note of these key dates.

Your transaction is not affected if:

  1. You wrote an offer and submitted for financing prior to Dec 11
  2. You write an offer and submit for financing between Dec 11 and Feb 14, 2016 and your completion date is prior to July 1, 2016

Your transaction is affected if:

  1. You write an offer and/or submit for financing on or after Feb 15, 2016
  2. You write an offer and submit for financing between Dec 11 2015 and Feb 14, 2016 with a closing date on or after July 1, 2016
  3. You wrote a presale offer prior to Dec 11, 2015 and did not submit for financing approval prior to Dec 11, 2015

It is the small group of presale buyers — who not only bought earlier this year or last year in projects completing in late 2016 and 2017, but also failed to submit a request for financing — that will be potentially blindsided by this regulation. Presale buyers are only protected if they submitted their offer for financing.

USA rate hike

The United States saw its first federal rate hike in nine years this past week, an increase of 0.25%. There is much fanfare around this being a message that the US economy is resilient and recovering. Perhaps so, but the increase is marginal and it will be the pace at which any further hikes are introduced that will tell the story.

Interestingly, this move acts for the Bank of Canada as a de facto rate cut. It will soften the Canadian dollar against the US.

This arguably lowers the chances of the Bank of Canada further reducing Prime at its next meeting.

Talk of interest-rate hikes from the Bank of Canada continue to include a 2017 date.

In other words, no action either way is expected anytime soon.

With this last bit of good news I will leave you to the festivities of the season. The feats of strength will begin in our home at 9pm sharp Dec 25, just as the turkey-and-eggnog doziness hit their peak.

All the best to your and yours.


Dustan Woodhouse