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As the Canadian government tries to help first time buyers it seems as if their efforts are shortly overturned by major banks increasing their mortgage rates. It seems as if first time buyers are unable to catch a break in the cut throat realty market within Toronto. Currently in Toronto first time buyers don’t have to pay the land transfer tax on anything $400,000 or less. However with the average home price at just above $770,000 this helping hand from the government is practically useless for anyone looking for their “white picket fence home”.

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First-time buyers in Toronto's hot property market must be wondering when they will catch a break.

A second major bank announced Tuesday it was raising its mortgage rates - a day after the province introduced a tax refund designed to help first timers step on to the property ladder.

Although the two events are unrelated and mortgage rates remain extremely low overall, housing experts agree the economic environment is stressful for house hunters.

The Royal Bank said Tuesday it's raising its special offer for a five-year fixed rate mortgage to 2.94 per cent, an increase of 30 basis points. Effective Thursday, the lender is also raising its rates on some other mortgages.

RBC's announcement comes about two weeks after TD raised its mortgage prime rate to 2.85 per cent from 2.7 per cent.

The Royal Bank increase is tied to turmoil in the bond markets following the U.S. election. It's not clear if the bond market has bottomed out or if rates will come back down, said mortgage agent Jason Friesen of Verico Premiere Mortgage Centre.

"It's going to be a bit touch-and-go. Even economists could not have seen any of this run-up on bonds until after November 8th when Trump was announced the winner," he said.

Meanwhile, the provincial plan to double the refund on the land transfer tax - from $2,000 to $4,000 on the price of a home over $368,000 - was designed to make buying more affordable. It is expected to make the most difference outside the super-heated Toronto area market.

But even in Toronto, the only Ontario city with a municipal land transfer tax, the relief will be helpful for first-time buyers scratching together a down payment under the federal government's more stringent mortgage qualification rules, said Friesen.

On a Toronto home priced at $800,000, the full land transfer tax -- provincial and city combined -- would come down from $24,200 to $16,475 with all first-time buyer refunds, including the new one being introduced by the province.

But that buyer would also need a bigger down payment. Instead of coming up with a minimum 5 per cent down, the consumer would have to put 5 per cent on the first $500,000 and 10 per cent down on anything above that.

Five per cent on an $800,000 place would have been $40,000, but under the tougher new mortgage rules, the minimum down payment would be $55,000.

"So any additional money saved with the land transfer taxes can help make it that much easier to qualify," said Friesen.

Every little bit helps when you're trying to buy that first home. But the land transfer tax refund won't help first-time buyers manage their monthly cash flow after their purchase, said Bill Whyte, senior vice-president at Meridian Credit Union.

"(The province) should think about reducing things like electrical bills for the first couple of years; or residential home taxes, so each month (home buyers) actually have some cash flow to either do some savings or expenses," he said.

Nonetheless, mortgage rates remain extremely low - under 3 per cent - even with the new bank rates, said Whyte.

Even first-time buyers, who are forced to take longer amortization periods, "can do it because of the low-interest rate requirement," he said.

First-time buyers shouldn't look to the city to match the province's move, said Councillor Gary Crawford, who chairs the city's budget committee.

"There are no plans at this time for the city to do any type of reduction in the municipal land transfer tax," he said in an email.

In Toronto, first-time home buyers don't pay the municipal land transfer tax on homes that cost $400,000 or less. On homes priced over $400,000, there is a 2 per cent land transfer fee but first-time consumers qualify for a $3,725 rebate.

The average Toronto home price rose to $770,480 in October, including single-family houses and condos. A detached home in Toronto was about $1.3 million.

Toronto-area realtors were skeptical that the higher tax refunds would make much difference to buyers looking to own the Canadian dream of three bedrooms and a yard.

But it could mean more in the hot and increasingly competitive condo market, said Chris Cansick of Bosley Real Estate.

"If they're looking at the one-bedroom, one-bathroom, that tax bill is going to be a lot lower and that $2,000 is going to represent a much larger portion of their tax bill," said Cansick.

The government has to be careful, he said, "not to put first-time buyers in a position where they're going to over-leverage and add to this so-called bubble, which makes the overall economy more volatile."

Blair Mackey, an Oakville-based Royal LePage agent, called the province's move "a token gesture that won't make very much difference - certainly not in the hot markets in the Toronto area."

The provincial Liberal government estimates that half of Ontario first-time buyers won't have to pay any land transfer tax under the new rules.

According to a report Tuesday from the Canadian Real Estate Association (CREA), the hot Toronto-area housing market helped the number of homes sold across the country last month reach a record. There were 42,473 residential properties sold in October, up 2 per cent year-over-year, it said.

The actual national average price for a home sold in October was $481,994, up 5.9 per cent compared with a year ago.

Excluding Greater Vancouver and Greater Toronto, the average price was $361,012. Price gains in Greater Toronto averaged over 19 per cent, compared with the same period last year.
Files from Canadian Press
Clarification - November 23, 2016: This article was edited from a previous version to make clear that the $24,200 is the overall land transfer tax for a buyer on an $800,000 home. The $16,475 would include all first-time buyer rebates once the new provincial rule goes into effect in January.

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First-time home buyers face stressful economics | The Star

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First-time buyers in Toronto's hot property market must be wondering when they will catch a break. A second major bank announced Tuesday it was raising its mortgage rates - a day after the province introduced a tax refund designed to help first timers step on to the property ladder.

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While things may be looking up for the Canadian economy in the coming years it may not all be bright for our economic future. Analysts from the OECD now believe that the growing property values in the Toronto and Vancouver are leading to an overvalued housing market. The result of these glorified housing prices may lead to the federal government stepping in to adjust housing prices. In return this will lead to an increase in mortgage rates and increased unemployment.

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The projected strengthening of Canada's economic growth over the next two years could be thrown off course by a potentially "disorderly" housing market correction, especially in the Vancouver and Toronto real estate markets, a new report from the Organisation for Economic Co-operation and Development warns.

The Paris-based OECD projects that Canada's economy will increase to 2.3 per cent in 2018, from 1.2 per cent in 2016. But, while non-energy exports, business investments and an increase in private consumption are expected to lead that growth, the OECD says a major housing market correction is the "main downside risk" to those projections.

The "over-valued" Toronto and Vancouver markets are the most likely targets, the report says.

"This could result from an external shock that results in higher mortgage rates and/or unemployment, making it difficult for some financially stretched households to service their mortgage commitments," the OECD says.

Such a correction would reduce residential investments, private consumption and, "in an extreme case could threaten financial stability," it says.

The good news, according to the OECD, is that Canada's economy is growing steadily outside the oil and gas sector. The report says that individual spending is "robust," thanks partly to the introduction of the income-tested, non -taxable Canada Child Benefit in July. The report also notes continued investments in real estate developments, booming house prices in Ontario and British Columbia and an upturn in exports and business investments.

Overall, the OECD offered a positive world economic outlook, buoyed by activity and planned stimulus efforts in the United States and China.

The OECD raised its forecasts for global growth to 3.3 per cent for next year, up from 3.2 per cent in its previous outlook.

With files from The Associated Press

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Canada at risk of 'disorderly' housing market correction: OECD

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The projected strengthening of Canada's economic growth over the next two years could be thrown off course by a potentially "disorderly" housing market correction, especially in the Vancouver and Toronto real estate markets, a new report from the Organisation for Economic Co-operation and Development warns.

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Mortgage rates are a very complicated topic but this video is just a simplified way of looking at the overall scheme of things. When you are borrowing money from the bank you pay interest to the bank and the bank pays interest to the government. The amount the government is charging the bank will affect the mortgage rate they are offering. The bank wants to make as much money as possible so if the government is charging a higher rate then the bank has to charge a higher rate as well. If the government lowers their rate it gives the bank the flexibility to lower their rates if they would like to. Keeping in mind that banks want to make as much as possible so this could be having lower rates to attract more consumers.

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Finance & Capital Markets | Khan Academy

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Mortgage Information : When Do Mortgage Rates Fall?

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Mortgage rates fall when the federal reserve lowers their rates to lend money to banks, in turn creating lower first mortgage rates for borrowers. Get a loan when mortgage rates are low with advice from an experienced mortgage broker in this free video on personal finance.

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This video describes the key differences between a fixed and a variable mortgage rate. It highlights that fixed mortgage rates are predetermined and let you know what your exact amount owed will be on each payment. On the other hand a variable interest rate fluctuates with the current economy. That means that your amount owed each payment may become less if the current rates are dropping. While this may seem like a good deal the reality is that mortgage rates have been steadily increasing since the early 2000’s. That being said rates do fluctuate during these times meaning you may be able to lock in your variable mortgage rate lower than  your original rate.

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Fixed Mortgaged vs. Variable Mortgages - TD Bank Canada

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What mortgage option works best for you? Find out the difference between a fixed interest rate mortgage and variable interest rate mortgage.

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Welcome to our page on mortgage rates and how they are effected by the economy. Throughout the page you will find helpful videos and website to help you understand mortgage rates and how they work. They range from what the numbers are to explaining how they are implemented. They are also diagrams helping to show things like the history and how interest rates, debt and housing prices are all related. We hope after going through our page you will have a better understanding of mortgage rates and the housing market in Canada.

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This graph shows the history of 30 year, 15 year and 1 year mortgage rates. As you can see they are all declining with time, some more than others but all the same trend.

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This graph is not specific to mortgages however we feel it is a good diagram to show how interest rates and debt correlate. As shown in the graph when interest rates are higher debt is lower because people don't have the money to take out big loans because they would be paying so much in interest. On the flip side when interest rates are lower debt is higher because people can take out bigger loans and pay less interest.

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This graph show the correlation between home prices and long term mortgage rates. As mortgage rates decrease home prices have been increasing due to the fact that people can afford to buy more expensive homes.

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This video is ideally here to help you understand mortgage rates, how they are implemented and how they affect the overall cost of your home. As explained in the video mortgage rates are essentially an interest rate charged on the amount of your mortgage (loan). The higher the mortgage rate the more the overall cost of your home will be and the higher your monthly payments will be. This is why it is so important to pay attention when purchasing a home to the rates and how they will have an affect on your payments and they cost of your home.

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Mortgages and Interest Rates Explained   (Mortgage)

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Mortgages and Interest Rates Explained nhu loan zombie loan loan chau loan modification loan mods minh tuyet kim loan student loan debt nguyen ngoc loan loan zombie loan opening cat tien bao han phim dai loan student loan boz scaggs linsey loan nhu quynh zombie loan amv zombie loan 12

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Finding the best mortgage rate can be quite the hassle. While most banks offer you close estimates through their online websites, they aren’t always as accurate as what you get in reality. This can be largely based on the area you’re in and the state of its economy. This can make finding the best mortgage rate a time consuming hassle. This is why Websites like Ratehub have become so successful. Ratehub is a website designed to help you find the best mortgage rates based on your planned duration and area of residence.

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Best Mortgage Interest Rates - Find Today's Lowest Variable & Fixed Rates

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Compare fixed and variable mortgage rates with different terms, conditions and prepayment options. Get the best mortgage interest rate.

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Mortgage Rates and How They Fluctuate with the Economy

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Mortgage Rates and How They Fluctuate with the Economy

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By Dominique Welling and Andrew Stevens