Clock Ticking on 80% LTV Vancouver Refis?

If you live in Vancouver and were thinking of refinancing to 80% loan-to-value, you might want to accelerate those plans.

Perhaps you’ve seen this tipsy little chart of Vancouver average home prices. In the case of detached homes—which spark the biggest headlines and arguably contribute the most to market psychology—prices have just collapsed $294,000 (17%) in one month.

Vancouver Average Price



Now, Couver’s ever-optimistic home bulls contend that averages are skewed thanks to high-value sales. They urge us to concentrate on the HPI index, not average prices. Whatever.

All this author can say after 18 years of studying price charts is that this one is scarytown. It’s more than enough to make some skittish homeowners hit bids, at least in the short term.

Hence, the advice: If you need to tap your equity (refinance) to the tune of 80% loan-to-value, or get an 80% LTV credit line for future borrowing needs, you should be filling out your application as you read this.

When home prices do what they did last month, appraisers become more conservative. Anecdotally we’re already hearing about North Shore and West End/West Side appraisals coming in softer than expected. And lenders and insurers could also be fast to react, by tightening up internal underwriting criteria and cutting back loan sizes.

Now, lest anyone get the wrong idea, nobody reading this should run out and refinance for refinancing’s sake. This is solely an alert for prudent Vancouver owners who A) must refinance anyway, and B) plan to live in their home a long time. For those folks, waiting a few extra months to close could potentially result in their loan amount being cut back by the lender.

Of course, this discussion is academic if the GVA quickly rebounds. Stranger things have happened. In fact, in the back of my mind I almost wondered if Vancouver’s real estate board misplaced a decimal point when publishing that historic $294k print.

A stunning one-month move like that can scare the bejesus out of weak-handed homeowners. So, watch the number of new listings and expedite your refinances, Vancouverites…just to be safe.

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  1. Comment avatar

    Brian Poncelet,CFP    

    Hey Rob,

    Long time! I was in Vancouver in August (first time in 20 years). The prices are insane! I used live in North Vancouver and from what I could see a lot is about $2,000,000.

    I saw an article about people in mid 50’s plus selling their house and buying a house on Vancouver Island with a $1000,000 plus after buying.
    My folks moved to Qualicum beach last year so the story on Bloomberg was very timely! (story about Qualicum beach is near the end) Also the fact Bloomberg is from New York tells you this is getting everybody’s attention.



    1. Robert McLister    

      Hey Brian, Good to hear from you. I suspect those island migrants have exhibited inspired timing.

      Comment avatar

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