Mortgage Bytes

• The TSX got hammered again today--down 8.14%.  (Chart)  Twelve more days like this and the market will be at zero.
• In seriousness, the Toronto stock market is down 38% year-to-date. That's got more and more people now worried about a reverse wealth effect.  27% of Canadian wealth is in equities. With billions being lost in the markets, a certain percentage of people will likely be putting their home buying plans on hold--at least temporarily. Expect cottage and second home markets to be impacted disproportionately.
• On a positive note, TD says September's housing price drop was overblown. It should have been reported as a 1.3% decline--not 6.2%--TD says. (Globe)
• CMHC bought another $7 billion of insured mortgages last week.
  • Banks are lovin' it.  As Reuters writes, "it gives them access to lower-cost funding than they could otherwise obtain."
  • Finance Minister Jim Flaherty says "This program has no fiscal cost and there is no additional risk to the taxpayer."
  • Professor Pierre Lemieux from the Université du Québec in Outaouais isn't convinced.  In his editorial "No Free Financial Lunch," Lemieux feels Ottawa should rethink it's $25 billion mortgage buyback plan. (Financial Post)
• There's still no verdict from the Supreme Court on the Lipson deductible interest case.
• Wells Fargo still has 100% financing. You can even get it with a 40-year amortization. Don't get too excited though. The rate is waaaaay above the ~7.20% rate available on many cash-back down payment products (cash-back mortgages are another 100% financing alternative).  Wells seems to be positioning its 100% product to those who don't qualify for cash-back mortgages.  670-680 is roughly the minimum score for most cash-back down payment mortgages.  Well Fargo's minimum is 640.
• MCAP has "temporarily" suspended its Home Account and Home Account Plus HELOC products. It "expect(s) to bring these products back as soon as possible after market conditions improve."
• HSBC no longer does switches through the broker channel. Instead, it processes them as refinances and picks up some of the closing costs.
• Government sponsored mortgage backed bonds (MBB's) have become a critical source of funding for Canadian lenders. By default, all mortgages in a MBB must be insured. Sadly, some lenders have recently shied away from insuring with Canada's #2 and #3 insurers (Genworth and AIG) because of doubts about the financial condition of their parent companies. These doubts prevent certain lenders from reselling Genworth or AIG insured mortgages at sufficient returns. Is this rational? Possibly...possibly not. Should you as a borrower be concerned about having your mortgage insured by Genworth or AIG?  Absolutely not.
• Another reason the U.S. matters to our credit market:  Almost 1/3 of Canadian corporate financing comes from the U.S.
• Filogix has a big new release coming out for it's Expert mortgage origination software. Among the changes:
  • A warning before you're logged out (Finally! Now they just have to increase the timeout from 30 minutes to 90....okay we'll settle for 60)
  • Auto-save when Expert times out
  • An expanded navigation pane (we're eager to see if it requires tedious scrolling for those of us with small screen resolutions)