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Improving your credit score
Mortgage Professionals are experienced helping clients with a wide range of credit scores so we can find you a mortgage product even if your credit is far from perfect.
The good news about your credit score is that it can be improved:
- Stop looking for more credit. If you’re frequently seeking credit that can affect your score as can the size of the balances you carry. Every time you apply for credit there is a hard credit check. It is particularly important that you not apply for a credit card in the six months leading up to your mortgage application. These credit checks may stay on your file for up to three years.
- If your credit card is maxed out all the time, that’s going to hurt your credit score. Make some small monthly regular payments to reduce your balance and start using your debit card more. It’s important that you try to keep your balance under 30% or even 20% of your credit limit.
- It’s also important to make your credit payments on time. People are often surprised that not paying their cell phone bill can hurt their credit score in the same way as not making their mortgage payment.
- You should use your credit cards at least every few months. That’s so its use is reported to credit reporting agencies. As long as you pay the balance off quickly you won’t pay any interest.
- You may wish to consider special credit cards used to rebuild credit. You simply make a deposit on the card and you get a credit limit for the value of that deposit. They are easy to get because the credit card company isn’t taking any risks.
Contact a Dominion Lending Centres Mortgage Professional if you have any questions.
Dominion Lending Centres – Accredited Mortgage Professional
Tracy is part of DLC Forest City Funding based in London, ON.
Canadian Home Sales Slide In January Led By Greater Golden Horseshoe
It is no surprise that housing activity slowed in January following a pulling-forward sales surge as homebuyers hurried to purchase before the mortgage rule changes in 2018. The January 1 implementation of the new OSFI B-20 regulations requires that uninsured mortgage borrowers be stress-tested at a mortgage rate 200 basis points above the contract rate at federally regulated financial institutions.
Statistics released today by the Canadian Real Estate Association (CREA) show that housing activity retreated to the lowest monthly level in three years in January. Sales were down in three-quarters of all local markets, including virtually all major urban centres. Many of the larger declines in percentage terms were posted in Greater Golden Horseshoe (GGH) markets, where sales had picked up late last year following the announcement of tighter mortgage rules coming into effect in January.
Actual (not seasonally adjusted) activity was down 2.4% from January 2017 and stood close the 10-year average for January. Sales came in below year-ago levels in about half of all local markets, led by those in the GGH region. By contrast, sales were up on a year-over-year (y-o-y) basis in the Lower Mainland of British Columbia and Vancouver Island, the Okanagan Region, Edmonton, Montreal, Greater Moncton and Halifax-Dartmouth.
According to the CREA President Andrew Peck, “The piling on of yet more mortgage rule changes that took effect starting New Year’s Day has created homebuyer uncertainty and confusion. At the same time, the changes do nothing to address government concerns about home prices that stem from an ongoing supply shortage in major markets like Vancouver and Toronto. Unless these supply shortages are addressed, concerns will persist.”
New Listings Fall Sharply
The number of newly listed homes plunged 21.6% in January to reach the lowest level since the spring of 2009. New supply was down in about 85% of all local markets, led by a sizeable decline in the GTA. Large percentage declines were also recorded in the Lower Mainland of British Columbia and Vancouver Island, the Okanagan Region, Hamilton-Burlington, Oakville-Milton, Kitchener-Waterloo, London and St. Thomas, Kingston and Ottawa, closely mirroring the list of markets that saw the most significant sales declines in January.
With new listings having fallen by more than sales, the national sales-to-new listings ratio tightened to 63.6% in January compared to the mid-to-high 50% range to which it held since last May.
A national sales-to-new listings ratio of between 40% and 60% is generally consistent with a balanced national housing market, with readings below and above this range indicating buyers’ and sellers’ markets respectively. That said, the balanced range can vary among local markets.
Based on a comparison of the sales-to-new listings ratio with its long-term average, a little over half of all local markets were in balanced market territory in January 2018. The ratio in many markets moved one standard deviation or more above its long-term average in January due to large declines in new supply.
The number of months of inventory is another important measure of the balance between housing supply and demand. It represents how long it would take to liquidate current inventories at the current rate of sales activity.
There were 5 months of inventory on a national basis at the end of January 2018, which is close to the long-term average of 5.2 months.
The Aggregate Composite MLS® Home Price Index (HPI) rose by 7.7% y-o-y in January 2018. January’s annual price increase was the 9th consecutive deceleration in y-o-y gains, continuing a trend that began last spring. It was also the smallest y-o-y increase since December 2015. The MLS® Home Price Index (MLS® HPI) provides the best way of gauging price trends because average price trends are prone to be strongly distorted by changes in the mix of sales activity from one month to the next.
The deceleration in y-o-y price gains mainly reflects trends among GGH housing markets (the broad region surrounding Toronto) tracked by the index. While prices in the area have primarily stabilized in recent months, ongoing deceleration in y-o-y comparisons reflects the rapid rise in prices one year ago.
Apartment units again posted the most significant y-o-y price gains in January (+20.1%), followed by townhouse/row units (+12.3%), one-storey single family homes (+4.3%), and two-storey single family homes (+2.3%).
Composite benchmark home prices in the Lower Mainland of British Columbia continue to trend higher after having dipped briefly during the second half of 2016 (Greater Vancouver: +16.6% y-o-y; Fraser Valley: +22.4% y-o-y). Apartment units have been driving this regional trend in recent months, with single family home prices stable.
Benchmark home prices rose by about 14% on a y-o-y basis in Victoria and by about 20% elsewhere on Vancouver Island. These gains are similar to those recorded during the fourth quarter of last year.
Price gains have slowed considerably on a y-o-y basis in the GTA, Guelph, and Oakville-Milton; however, home prices in the former two markets remain above year-ago levels (GTA: +5.2% y o-y; Guelph: +10.9% y-o-y; Oakville-Milton: -1.2% y-o-y). Monthly prices in these markets have shown signs of stabilizing in recent months after having climbed rapidly in early 2017 and subsequently retreated.
Calgary benchmark home prices were down slightly (-0.5% y-o-y), as were home prices in Regina and Saskatoon (-4.9% y-o-y and -4.1% y-o-y, respectively).
Benchmark home prices rose by 7.2% y-o-y in Ottawa (led by an 8.1% increase in two-storey single family home prices), by 5.2% in Greater Montreal (led by a 6.2% increase in in two-storey single family home prices) and by 7.5% in Greater Moncton (driven by an 11% increase in one-storey single family home prices). (Table below).
Chief Economist, Dominion Lending Centres
Sherry is an award-winning authority on finance and economics with over 30 years of bringing economic insights and clarity to Canadians.
RRSP – Use home buyers’ plan (HBP) more than once
Under the home buyers’ plan, a participant and his or her spouse or common- law partner is allowed to withdraw up to $25,000 from his or her RRSP to buy a home. Before 1999, only the first- time home buyers are permitted to buy a home under this plan. Now a person can take an advantage of HBP plan more than one, two, three, four or more times as long as the participant in this plan fulfills all other conditions. The house can be existing or can be built.
Are you a first – time home buyer?
You are considered a first-time home buyer if, in the four year period, you did not occupy a home that you or your current spouse or common-law partner owned. The four-year period begins on January 1st of the fourth year before the year you withdraw funds and ends 31 days before the date you withdraw the funds.
For example, if you withdraw funds on March 31, 2018, the four-year period begins on January 1, 2014 and ends on February 28, 2018.
If you have previously participated in the HBP, you may be able to do so again if your repayable HBP balance on January 1st of the year of the withdrawal is zero and you meet all the other HBP eligibility conditions.
Qualifying home – a qualifying home is a housing unit located in Canada. This includes existing homes and those being constructed. Single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, and apartments in duplexes, triplexes, fourplexes, or apartment buildings all qualify. A share in a co-operative housing corporation that entitles you to possess, and gives you an equity interest in a housing unit located in Canada, also qualifies.
Repayment of withdrawal amount into RRSP
Generally, you have up to 15 years to repay to your RRSP, the amounts you withdrew from your RRSP(s) under the HBP. However, you can repay the full amount into your RRSP(s)
Each year, the Canada Revenue Agency (CRA) will send you a Home Buyers’ Plan (HBP) statement of account, with your notice of assessment or notice of reassessment.
The statement will include:
• the amount you have repaid so far (including any additional payments and amounts you included on your income tax and benefit return because they were not repaid);
• your remaining HBP balance; and
• the amount you have to contribute to your RRSP and designate as a repayment for the following year.
If you have any questions contact a Dominion Lending Centres Mortgage Professional near you.
Dominion Lending Centres – Accredited Mortgage Professional
Gurcharan is part of DLC Red River Lending Ltd. Team based in Winnipeg, MB.