By now you’ve no doubt heard about the January 1, 2018 mortgage rule changes. And by now you’ve asked yourself this question: how is this going to affect me as a seller? Are people no longer going to be able to buy my house?
We want to give you the right information, and assure you that while these mortgage rule changes are important, they’re not as scary as they seem.
What Are the New Rules?
The biggest change is for buyers with a downpayment of 20% or more. They now have to qualify for a mortgage based on a rate that is 2% higher.
This is calculated by adding 200 basis points to the current mortgage rate, and comparing it to the benchmark rate set by the Bank of Canada (currently 4.89%). Whichever rate is higher is the one that will be used.
This means that buyers will actually be able to afford approximately 20% less house in 2018 as they did in 2017, if the need to put down 20% or more.
Those putting down less than 20% are under an insured mortgage, and will not be affected by this stress test.
Should I Be Worried About the Rule Changes?
It’s understandable to be worried about any changes that are coming your way, but it’s important to remember that Ottawa’s real estate market is incredible strong right now. As a seller, you’re in great shape; there are a lot of people looking to buy.
While there will be some changes in the market once these rules take effect, you don’t have to worry about not being able to attract buyers or selling your home at the this time of year.
The important thing is to make sure that the buyers who do approach you with an offer are pre-approved under the new rules (not the old ones).
Our agents make it a point to check the buyer’s status before putting your listing on hold. If they put it on hold, and the buyer ends up not being able to buy your home, this can create some problems.
- You’ve lost time and money talking to someone who wasn’t able to buy your house, missing all the people who did get re-pre-approved.
- Other buyers may get the impression there’s something wrong with your home when they see it’s put on hold, but then comes back on the market. Most won’t even consider a buyer problem as the cause.
This is good advice for you too, because you’re most likely purchasing a new home (if you haven’t already). Make sure to get pre-approved under the new rules to make your buying process smoother, and save time looking at the right properties.
So when it comes to the question “are people going to be able to buy my house,” the short answer is yes. You don’t have to stress about the stress test. Just keep yourself informed, have up to date information, and ask your agent or mortgage broker any questions you might have.
Specific Buyers Have Specific Wants – Mortgage Rules Won’t Change That
In Ottawa’s market, we have a wide variety of buyers, all looking to find their perfect house from the limited supply we have. A change in the mortgage rules won’t change what people want in their new house.
There are some features that almost all homebuyers want, like a great location. But there are some specific to the different types of buyers.
First time homebuyers will be the group most affected by the stress test change, but that doesn’t mean they’ll put off entering the market. They’ll still be looking for a move-in ready home that’s not too big, and doesn’t have a lot of upkeep.
Second-time (or even third-time) home buyers will have different priorities. They may be looking for a larger home to raise a family in, or with better finishings.
Downsizers will be looking for a home that’s smaller and more senior-friendly, as they are getting older. Finally, DIY-ers will be looking for a home they can make their own, and won’t mind if there are a few things that need to be updated or changed (this group is pretty rare these days, however).
In short, there is a buyer for your home; we just have to make sure we attract buyers looking for the features your home has.
Should You Adjust the Price?
Correct pricing is essential for selling your home. The price of your home is determined by careful research and appropriate market data. Without it, you could run into a lot of problems.
Different market factors will affect the value of your home, but the important thing to do is make sure your home is properly inspected and appraised by a professional. And remember; there are lots of buyers in Ottawa – some are even coming in from the GTA!
If you’re worried about the price of your home, talk to one of our agents about your concerns. We use carefully collected data and industry experience to value your home and give you an accurate, honest price.
Our Realtors Will Find the Right Buyer for Your Home
It’s okay to be worried; after all, you’ve been hearing all this news about mortgage rule changes, with no real idea of how it’s going to impact your home sale.
Our agents will have answers to your questions, and we’ll be able to help you sell your home at the right time for the right price to the right person.