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Canada’s top banking regulator is changing the rules that cover certain types of home loans to make sure that lenders and borrowers are able to stay on top of their obligations at a time when the country’s housing market is looking vulnerable.

The Office of the Superintendent of Financial Institutions (OFSI) is implementing new guidelines for certain types of real estate loans, including shared equity mortgages, reverse mortgages and conventional mortgages that are paired with revolving credit lines.

The biggest change targets so-called combined loans, which are conventional mortgage loans paired with revolving lines of credit known as HELOCs that home owners can dip into as they see fit, without being obligated to pay that portion back on any sort of schedule.

The new regulations will kick in once a readvanceable loan exceeds 65 per cent of the underlying home’s value. Currently, an owner can technically borrow up to 80 per cent on such a loan, but the new rules will functionally ratchet that ceiling down to 65 per cent by forcing the borrower to start paying back some of the principal if they go above that line.

If that happens, the change will make it so that once the loan’s value exceeds 65 per cent of the home, the loan “will operate more like a traditional mortgage where the borrower makes principal and interest payments until the [loan gets back below] 65 per cent,” an official told CBC News at a technical briefing.

The new rules won’t be in force until late 2023, but OSFI says that as things stand now, data from the Bank of Canada suggests there’s $200 billion worth of HELOC that is currently outside of that 65 per cent threshold. That’s out of $1.8 trillion of total housing debt.

Consumers will not see an increase to their monthly payment requirements as a result of this change, the official said, and the changes will not impact new home buyers.

Changes to shared equity and reverse mortgages

The regulator is also tinkering with the rules for shared equity mortgages, and reverse mortgages. Shared equity mortgages are programs that pair home buyers with third parties to help them come up with cash for a down payment, in exchange for an equity stake.

The federal government rolled out a government-backed shared equity loan program in 2019, and non-profit and other community groups have since rolled out a version of them. OSFI’s announcement on Tuesday isn’t a new rule change so much as it is a clarification of existing requirements: that such products must in fact be legitimate equity stakes — not simply another loan — and that they must be “on equal footing with the borrower’s equity,” the official said.

The final announcement governs so-called reverse mortgages, which allow home owners to access the equity in their homes up front, without having to sell. The popularity of such loans has exploded in recent years, largely because they typically do not require any part of the loan to be paid back until the owner decides to sell.

The new guideline caps the amount that a homeowner can take out on a reverse mortgage at 65 per cent at origination.

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Misunderstandings regarding rising interest rates are creating anxiety and stoking uncertainty amongst Canadian homeowners and prospective buyers, a new survey shows.

The TD Real Estate survey found that 26% of Canadians don’t have a good understanding of the impact of rising rates, while 38% are confused about what the hikes mean for them. Nearly 40% don’t know the difference between variable and fixed interest rates.

Thirty-one per cent of respondents believe that interest rates don’t impact them or their mortgage.

Conducted between May 20 and 25, the national survey included responses from 2,000 Canadians aged 18 and older.

“Rising interest rates affect all Canadians, especially those who are looking to become homebuyers in the near future, and those up for renewal,” said Frank Psoras, senior vice president of real estate secured lending at TD.

Despite the uncertainty brought on by rising interest rates, 58% of current homeowners expect to take some form of action with their property within the next year. Forty-two per cent plan to renovate, while 13% are likely to sell.

The survey found that many prospective buyers are willing to compromise to get into the housing market. Twenty-six per cent said they’d give up on the overall size of a home in order to make a purchase, while 29% said they’d sacrifice outdoor space.

Of those who are hoping to buy a home in the next year, 76% say they are worried about the impact that rising rates will have on what they can afford, while 27% admitted to not knowing or understanding many of the costs associated with buying a home.

“In today’s dynamic market, understanding the impact of rising interest rates is critical to establishing and maintaining financial health, regardless of where you are on your home journey,” Psoras said.

Psoras encouraged current and prospective buyers alike to meet with a mortgage specialist or financial adviser to get a clear picture of what they can afford and make sense of the “complex and evolving” real estate market.

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One of Vancouver’s most low-key, under-the-radar patio parties is returning this summer.

The Bentall Centre’s Neighbourhood Patio pop-up offers live music, art, food, and drinks on select afternoons and evenings through the summer.

The pop-up is organized through a partnership with North Point Brewing, Liberty Wines, Granville Island Brewing, and Musos Entertainment.

In addition to DJs and live music, the temporary summer patio will offer a chill space to enjoy sips and snacks right in the heart of Vancouver.

The events will occur every week on Thursdays, Fridays and Saturdays from 3 to 10 pm until August 27.

A table must be reserved on their website, where you’ll also be able to find a a full music schedule.

Neighbourhood Patio at Bentall Centre
When: June 23 to August 27, from 3 pm to 10 pm
Where: The Breezeway at Bentall Centre, 595 Burrard Street, Vancouver
Tickets: Reserve a table online

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