Mortgage Rates & Mortgage Broker News in Canada

CAAMP’s Spring Mortgage Report 2012

For mortgage and real estate buffs, CAAMP's semi-annual reports are among the best of the best sources of market stats.

This year's survey seemed to have more data than ever, including insights on the:

• speed at which borrowers prepay their mortgages 
• potential effects of a 10% minimum down payment
• market share of brokers (which is up)
• ratio of people who miss payments.

As usual, we've distilled the data down to bite-sized nuggets. If you're pressed for time, stats of special importance are highlighted.

If you want to read the report with full context, here is the link: Spring Mortgage Report. A summary follows below (our comments in italics):

More Speculation on HELOC LTVs

We’re hearing from multiple sources that a 65% loan-to-value maximum is now a done deal for HELOCs.

The HELOC LTV limit is currently 80%.

Most (but not all) banks are reportedly supporting the measure. Although, bank execs are known to say different things in private than they do in front of regulators.

If the above is true, three major questions remain:

Q1 2012 Market Share: Broker Lenders

The volume of mortgages closed by brokers dropped 4.2% in the first quarter, versus Q1 2011.

Interestingly though, the dollar volume of applications submitted in the first quarter rose 19.6%. We'll see if that leads to a strong Q2, or if it's reflective of higher-than-normal cancellations.

The above data comes from Davis + Henderson’s latest lender market share report. Below are the first-quarter performances from the top 10 lenders in the broker market.

Rates are Falling. Keep it on the Down-Low

Over the last two months, there’s been an eerie sentiment shift in the rate market.

In March, the BoC's hints of tightening drove yields to 7-month highs. Financial markets almost guaranteed rate hikes by December.

Now, a tsunami of fear out of Europe has pushed borrowing costs to unsettling levels. The most glaring example is Canada’s 10-year yield, which made an all-time low today. What's more, OIS traders have now completely priced out any chance of BoC hikes in the next 12 months.

The upshot: Lower yields mean lower fixed-rate funding costs. As a result, we’re starting to see alluring rate cuts. Just don’t count on the flashy national mortgage wars we saw in March.

The Housing Indicator to Watch

National home prices are inflated by almost every measure, including: median price/median income, prices/rents and prices/GDP.

In this week’s Globe column, we look at the one demand-related gauge of housing cost that matters most. And its readings are anything but unreasonable (for now).

More: Expensive housing? Not by a 20-year comparison

New Mortgage Restrictions Approach

Many of OSFI’s proposed mortgage underwriting guidelines may be coming soon to a bank near you.

An OSFI spokesperson told us on Wednesday, “We are still aiming for a late June (or) early July release.”

RBC Shaves its Benchmark Rate by 10 Bps

At long last we have a Big 6 Bank lowering advertised fixed rates.

RBC trimmed its 5-year posted rate to 5.34% today. It’s the first drop in posted rates in 16 weeks.

The move coincides with falling bond yields. The 5-year government yield has tumbled 30 bps in the last month, reducing fixed-rate funding costs throughout the industry.

Other banks will likely follow RBC’s lead and cut their own rates—with the exception of Scotiabank. Scotia’s 4.99% 5-year posted rate has undercut the other major banks for weeks.

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Rob McLister, CMT

2012 CMHC Mortgage Consumer Survey

In the past year, more people have been:

• researching mortgages online 
• using mortgage brokers, and 
• making extra mortgage payments.

Those are some key findings from this year's CMHC Mortgage Consumer Survey.

This always-intriguing report also highlights continuing trends in online interaction, particularly:

• the emergence of social media as a tool used by mortgage consumers, and
• growth in do-it-yourself mortgage research.

Here's a sampling of important findings (italics ours; key data highlighted):

Yields Double Back

If you forgot that interest rates are unpredictable, last week’s bond action was a fresh reminder.

The mid-March spike in bond yields has turned into another head fake. (Government bond yields generally lead fixed mortgage rates in the short term.)

On Thursday, the 5-year government yield sank to 1.388%, a fresh 3-month low. (Source: Bloomberg)

CMHC’s Kinsley “Welcomes” OSFI Oversight

On Thursday, CMHC head Karen Kinsley spoke before a Senate committee about changes that will impact the nation’s largest mortgage insurer once Bill C-38 becomes law.

Those changes include:

• New supervision by Canada’s financial regulator, OSFI
• A revised mandate, and
• Changes to CMHC’s role in the covered bond market.

(For more on these issues, see: CMHC & Covered Bonds - The Impact.)

Regarding CMHC’s new watchdog (OSFI), Kinsley told senators: