September 16th, 2014

Bankruptcy Trustee Advocates 10% Down

A minority of housing commentators have pushed for bigger down payments ever since the credit crisis. Bankruptcy advisor Douglas Hoyes is adding another voice to that chorus.

According to his firm’s data, out of 2,030 insolvent homeowners he analyzed:

  • 9 in 10 had less than 20% equity
  • 7 in 10 had less than 10% equity
  • 2 in 3 had no equity at all

That’s enough to make him champion a 10% minimum down payment rule.

But is it enough to justify one?

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September 13th, 2014

How Brokers Operate: Some Stats

Mortgage-Brokers-Personal-ServiceThe vast majority of mortgage brokers recommend suitable mortgages, according to a new report from the Mortgage Broker Regulators’ Council of Canada (MBRCC). That’s vital because, as MBRCC Chair Kirk Bacon states, “Unsuitable mortgages can have a devastating financial impact on borrowers and their families.”

To find out how brokers operate, regulators surveyed 1,113 of them in Ontario, Alberta and Newfoundland. They discovered practices that were mostly reassuring, with a few stats you may find surprising.

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September 8th, 2014

Oliver Meets With CAAMP

Finance Minister Joe Oliver met with the Canadian Association of Accredited Mortgage Professionals (CAAMP) on Friday. The meeting covered a range of mortgage hot-topics.

CAAMP President & CEO Jim Murphy tells CMT, “CAAMP’s key messages were to provide consumer choice, for example the need to support smaller lenders and monolines, a view that we have had enough regulatory changes and the economic importance of housing and real estate finance in terms of jobs and tax revenues.”

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September 6th, 2014

Q3 2014 Bank Earnings – Mortgage Morsels

Bank-roundupA slower-than-anticipated spring housing market couldn’t keep Canada’s banks from posting another blockbuster quarter.

Activity picked up over the summer months, translating into across-the-board gains in year-over-year income. At most banks, however, margins are still facing headwinds due to the continued “competitive and low interest rate environment,” as RBC puts it.

Of particular note were retail-focused lenders BMO and CIBC who both posted above-market mortgage growth. Unfortunately, there’s no telling how lucrative that growth was since the banks don’t detail their mortgage profitability. Both banks have invested heavily in retail mortgage origination to make up for lost broker-generated volume.

In any event, as we do every quarter, CMT has dug through the Big 6 Banks’ quarterly earnings reports, presentations and conference calls and pulled together these mortgage tidbits. The most notable observations are in blue.

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September 4th, 2014

Collateral Pitfalls Disclosed

Collateral-MortgageBanks are improving their disclosures on the drawbacks of collateral charge mortgages.

Effective January 31, 2015, the Department of Finance says banks will start warning individual consumers about the implications of collateral charge mortgages “before entering into the mortgage loan agreement.”

The DoF says “consumers require sufficient information in order to more clearly understand the costs and consequences of a collateral charge mortgage relative to a conventional mortgage.”

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September 3rd, 2014

The BoC Sits Tight…Again

Prime rate has been entrenched at 3% for four years now, the longest stretch of flat rates since the 1950s. And the BoC gave no hint of change at today’s rate meeting.

Here’s the gist of its statement from this morning:

  • The BoC attributed the recent inflation upturn to “temporary” factors
  • “…The housing market has been stronger than anticipated,” it says (no doubt mortgage policy-makers are watching home prices like hawks)
  • The bank believes our economy could run below capacity for “the next two years”

But it’s usually the last paragraph that matters most in BoC statements, and the key line from that paragraph was:
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News on Canadian mortgages, mortgage brokers, and mortgage rates.