Lenders scramble out of former child actor’s property empire collapse and the Home of the Week: Canadian real estate news for September 27

Open this photo in gallery:

Here are The Globe and Mail’s top housing and real estate stories this week and one home worth a look.

Try The Globe’s business and investing news quiz

Lenders scramble to find way out of former child actor’s property empire collapse

The court-ordered breakup of former child actor Robby Clark’s insolvent 400-property real estate portfolio has devolved into a multiparty scramble to find value amid the wreckage, writes Shane Dingman. The unwinding of $144-million in debt Mr. Clark amassed before the collapse of his companies comes after attempts to market the properties as a package failed. Lenders were given a chance to make a bid to take over ownership of homes they lent money against – the credit bid allows lenders to convert, for example, a $125,000 mortgage they are owed into ownership of a home with an appraised value of around $150,000. But many lenders are facing huge bills, potentially in the tens of thousands, to help pay for everything from unpaid property taxes to legal fees during the insolvency.

Homeowners who switch lenders at mortgage renewal will no longer be subject to stress-test rules, OSFI says

The Office of the Superintendent of Financial Institutions (OSFI) said they will no longer require banks to apply the mortgage stress test on borrowers who switch lenders if they are simply renewing their loan, writes Rachelle Younglai. The change will make it easier for borrowers with uninsured mortgages to move to a different bank at renewal, and could motivate banks to offer cheaper mortgage rates in order to retain their current borrowers and attract new customers. The move is set to go into effect Nov. 21, according to OSFI, and will be in place as the federal government relaxes other mortgage policies. Currently, borrowers would have to submit to a new stress test if they want to switch to a different lender, even if they aren’t changing the time it will take to pay off their mortgage, or increase the amount of their loan.

Open this photo in gallery:

How will Canada’s new mortgage rules affect your plans to buy a home? Globe reporters answer your questions

On Sept. 23, reporters Rachelle Younglai and Erica Alini answered readers’ questions about the impact of Canada’s new mortgage rules on housing supply, inflation, the rental market and young buyers who are entering the real estate market. Readers asked whether the changes would drive up home prices, Canada’s growing housing supply issues, and what the new mortgage rules could mean for inflation.

Q: What young people can possibly afford mortgages in the million-dollar range? Are the new rules just “smoke and mirrors” or an opportunity for young Canadians?

Rachelle Younglai: Not many young, individual Canadians would be able to afford a mortgage in the $1-million range. Banks and other lenders typically will lend about four times your income. That means you would need a household income that is roughly $250,000 per year to qualify for a mortgage in that range.

But I don’t think the new rules are just “smoke and mirrors.” The 30-year amortization can make a difference in terms of your monthly mortgage payment. All first-time homebuyers will be allowed to take out an insured mortgage with a 30-year amortization starting Dec. 15. Some lenders have calculated that your monthly mortgage payments could be about 10-per-cent lower under the 30-year amortization versus the 25 years if your purchase price is closer to the nation’s average home price of $650,000.

But keep in mind that if you take out a 30-year mortgage, that you will be paying more in interest overall versus the 25-year mortgage. Basically, the 30-year amortization would make it slightly easier to pay your monthly payments, but you would be holding your debt for longer and would pay more interest overall.

Opinion: Critics question whether B.C. fund to protect affordable rentals is being used wisely

A new B.C. program that aims to protect existing affordable rental housing has been criticized by some commercial property brokers who say the property purchases made through the program are not the best use of taxpayer dollars, while others are critical of the location of the acquisitions, writes Kerry Gold. The Rental Protection Fund is an arm’s length initiative that uses a $500-million provincial fund to purchase older apartment buildings in the province to protect them from redevelopment into market-rate units, which displaces existing tenants. Some brokers have criticized the purchase of a few properties by the non profit, which appear to have been bought at a significantly higher price that the assessed value, and all owned by the same landowners.

Home of the Week: Multimillion-dollar renovation of Etobicoke Tudor house spared no expense

Open this photo in gallery:

57 Baby Point Cres., Toronto – Full gallery here

From the outside, the four-bedroom home looks like a classic Tudor-era Toronto home. But once inside, all pretense of classic styling disappears, and a sleek foyer with mid-century modern influences takes over. The previous owner undertook a multimillion-dollar renovation of the home, which included adding heated floors and driveway, automated security, sound, and lighting systems, and a complete redesign of the interior. The floors throughout the house are a soft-stained oak in a herringbone pattern, and the kitchen features a central island with bar seating and a wall of windows on the rear that look into the wooded ravine, and which open up completely with only an iron railing separating the room from the hidden pool deck below. In addition to the glassed-in private gym and sauna opposite the entrance to the pool deck, the basement also features full-size arcade games – a man cave by any other name.