AIG today announced that they will follow the Finance department suggestions as of October 15th, 2008.  

"We view this as a prudent approach taken by the government to support the long-term health and sustainability of the Canadian housing market," said Andy Charles, president of AIG United Guaranty Canada. "We support this direction and will amend our product line-up to reflect the new policy set out by the Department of Finance, commencing October 15, 2008, for all government guarantee mortgage insured loans."

After all the bad news lately, particularly in Calgary and Edmonton, I fund a news report that actually shows that home prices will actually rise overall in Canada by 3.5%.  Thanks to Saskatchewan and a surprising holding of value in ontario despite their economic woes.Here is the article:

The dramatic rise in Canadian housing prices experienced over the past two years is over, but average prices will still increase 3.5 per cent this year, according to Royal LePage Real Estate Services.

Thursday’s report from Royal LePage report followed the news Tuesday that average house prices in June fell compared with a year ago for the first time since early 1999, according to the Canadian Real Estate Association.

Royal LePage said the April-June quarter was “solid,” with higher prices in most of the country.

While prices are forecast to move higher, the country’s largest real estate company predicts the number of transactions this year will decline by 11.5 per cent to 461,000 units.

It attributed the slowdown to jitters among prospective buyers because of economic uncertainty, along with an easing of pent-up demand.

In the second quarter, the average price of detached bungalows rose by 5.6 per cent from a year earlier to $351,587. Two-storey properties increased 5.2 per cent to $418,943.

“After several years characterized by a persistent shortage of listings, home buyers have felt the pressure of bidding wars and take-it-or-leave-it counter offers ease during 2008,” stated Royal LePage president and CEO Phil Soper.

“Home sellers have had to come to grips with the longer time it is taking to sell properties, but can take comfort in a market that continues to support reasonable price increases.”

The survey of 17 cities across the country found lower prices in two major markets – Edmonton and Calgary.

In Edmonton, the average price for a bungalow dropped 14.5 per cent while an average Calgary two-storey dropped six per cent.

The greatest price increase was in Regina, which has seen home values surge as higher commodity prices have driven the regional economy.

In Regina, all types of housing saw higher prices, even though inventory of homes increased five-fold, the survey said.

Tuesday’s report from the Canadian Real Estate Association said the 0.4 per cent June price decline reflected a slowing economy and a pullback from the huge runup in prices in recent years in Alberta’s energy-powered housing market.

Here’s the latest on the “end” of government-backed 40-year amortizations and 100% financing:

• Borrowers with only 5% down will reportedly still be able to add insurance premiums to their mortgages. 
• Cash back mortgages are still expected to be available from certain lenders.  This may allow for the possibility of 100% financing, albeit in a far more expensive manner.
• High-ratio interest-only mortgages and lines of credit will no longer be insurable and will likely dwindle from their current small numbers.
• Canada’s 2nd biggest mortgage insurer, Genworth, has made it official that it will follow with the federal governments new amortization and financing limits.  
• Insurers AIG and PMI might not bow to the pressure.  There are news articles confirming they may be hatching a plan to keep 40-year amortizations and 100% financing alive.  The National Post reports it may involve a 95% insured 1st mortgage and an additional 5% non-insured securitized portion.
• PMI Canada, is meeting with the Department of Finance at the end of this month to discuss some possibilities.
• TD is the latest lender to immediately kill 40-year ams and 100% financing.

I have to admit I was completely surprised when the banks so quickly adopted the governments stance on the changes.  This will effectively take those banks out of the market that I believe will see an increase between now and October due to buyers rushing to buy homes prior to the changes taking hold.  This is great news for mortgage brokers as they will enjoy market dominance as the only conduit to these products that will be in demand.

After all the bad news lately, particularly in Calgary and Edmonton, I fund a news report that actually shows that home prices will actually rise overall in Canada by 3.5%.  Thanks to Saskatchewan and a surprising holding of value in ontario despite their economic woes.Here is the article:

The dramatic rise in Canadian housing prices experienced over the past two years is over, but average prices will still increase 3.5 per cent this year, according to Royal LePage Real Estate Services.

Thursday’s report from Royal LePage report followed the news Tuesday that average house prices in June fell compared with a year ago for the first time since early 1999, according to the Canadian Real Estate Association.

Royal LePage said the April-June quarter was “solid,” with higher prices in most of the country.

While prices are forecast to move higher, the country’s largest real estate company predicts the number of transactions this year will decline by 11.5 per cent to 461,000 units.

It attributed the slowdown to jitters among prospective buyers because of economic uncertainty, along with an easing of pent-up demand.

In the second quarter, the average price of detached bungalows rose by 5.6 per cent from a year earlier to $351,587. Two-storey properties increased 5.2 per cent to $418,943.

“After several years characterized by a persistent shortage of listings, home buyers have felt the pressure of bidding wars and take-it-or-leave-it counter offers ease during 2008,” stated Royal LePage president and CEO Phil Soper.

“Home sellers have had to come to grips with the longer time it is taking to sell properties, but can take comfort in a market that continues to support reasonable price increases.”

The survey of 17 cities across the country found lower prices in two major markets – Edmonton and Calgary.

In Edmonton, the average price for a bungalow dropped 14.5 per cent while an average Calgary two-storey dropped six per cent.

The greatest price increase was in Regina, which has seen home values surge as higher commodity prices have driven the regional economy.

In Regina, all types of housing saw higher prices, even though inventory of homes increased five-fold, the survey said.

Tuesday’s report from the Canadian Real Estate Association said the 0.4 per cent June price decline reflected a slowing economy and a pullback from the huge runup in prices in recent years in Alberta’s energy-powered housing market.