TD Bank CEO Ed Clark suggested yesterday that the government may let banks tighten lending standards on their own, as opposed to a government-mandated “major tightening” of mortgage rules.
“They’re worried that the Canadian economy is slowing down right now and [major rule changes are akin to] taking out a bazooka,” Clark told Bloomberg. He said policymakers prefer that banks “tweak” their own lending guidelines.
Continue reading "TD CEO Talks of Self-Regulation" »
There’s a growing air of uncertainty in the mortgage industry, one we haven’t sensed since the tail end of the credit crunch.
Regulators, media and politicians are waving the caution flag on housing and mortgages, and the foundation of our market (CMHC) is suggesting they’re running out of insurance room.
This has much of the industry in a risk minimization (“risk-off”) mode. In turn, mortgages that are not insurable, income-qualified and owner-occupied are now attracting more scrutiny.
Here’s what we’re hearing…
Continue reading "“Risk-Off” in the Canadian Mortgage Market" »
Many have now seen this National Post article.
The gist of it: CMHC is approaching its $600 billion government-imposed limit on issuing mortgage default insurance. That’s happening largely because of lenders’ enormous appetite for something called portfolio insurance (a.k.a., “bulk insurance”).
No one fully grasps the repercussions yet, but our sense is that the news is not great (at least in the short-to-medium term) for mortgage consumers, smaller lenders and brokers.
On the other hand, it may be healthy long-term for the housing market. Here’s why…
Continue reading "CMHC Insurance Limits: A Wake-up Call for Lenders" »
The Internet has made doing business possible across the farthest reaches of the globe. It’s not surprising then, that technology is fostering mortgage brokering across provincial lines.
More and more, we see out-of-province brokers advertising and quoting rates in other provinces. This is making the mortgage market more price-efficient and lowering costs for consumers.
While some brokers may resist this development (and disdain far-away brokers who compete in their vicinity), interprovincial brokering is here to stay and it’s a trend that’s growing.
Continue reading "Interprovincial Mortgage Brokers" »
The government would need to see “clear evidence of a bubble in the housing market” to impose tighter mortgage rules.
“We have not seen (that),” Finance Minister Jim Flaherty told reporters Wednesday.
It would take “dramatic surges in prices in some part of the country” to constitute a bubble, he added.
Continue reading "No Bubble, Says Flaherty" »
Canada’s lending industry is witnessing rock-bottom interest rates and unrelenting competition.
The former has fuelled borrowing volumes. The latter has been known, on occasion, to encourage looser lending criteria.
Together, the two can be destructive to a banking system and economy.
That’s why OSFI (Canada’s banking regulator) is being proactive. In a speech today, OSFI head Julie Dickson laid it out like this for financial institutions:
Continue reading "OSFI Issues “Early Warning” on Mortgage & HELOC Lending" »
Rogers Communications wants to add banking to its mix of wireless, cable and media holdings. The Globe reports that it already has a bank application with OSFI (Canada’s banking regulator).
At this point, Rogers appears to have no plans to venture into mortgage lending.
Its application adds to the list of 12 bank applications currently pending at OSFI.
Continue reading "Rogers Bank Adds to OSFI’s Inbox" »
We recently had a chance to run a few questions by Carolyn Rogers, CEO and Superintendent of the Financial Institutions Commission (FICOM), B.C.’s mortgage broker regulator.
Rogers shares her perspective into issues such as the duties of mortgage brokers, reciprocal provincial licensing and areas to be aware of when brokering online.
That discussion follows here:
Continue reading "Q&A With FICOM CEO Carolyn Rogers" »
IFRS. You’ll hear more about this acronym as time goes on. It stands for International Financial Reporting Standards and it’s basically a newly-adopted set of accounting rules.
The relevance here is how IFRS will impact Canadian mortgage rates.
The first effect of IFRS that we noticed was with Home Trust’s prime mortgage rates. Home’s “A” rates have soared to 70 basis points above the market. Home Trust President, Martin Reid, explained why.
Continue reading "IFRS & Mortgage Rates" »
With mortgage advisors increasingly using the web to advertise their services, it’s becoming more and more important to ensure the information being posted is accurate and not misleading.
This applies to all kinds of mortgage-related advertising, be it rates, promotions or specific services being offered.
Advertising by mortgage professionals is governed largely by:
- The Competition Act
- Civil cases involving false or misleading advertising can carry up to a $750,000 fine for an individual on a first order, and up to a $1 million fine for each subsequent order. Corporations could face fines up to $10 million on a first order, and $15 for subsequent offences.
Continue reading "Mortgage Advertising in the Internet Age" »
The government’s new mortgage rules are “credit positive for Canada’s banking system,” says ratings agency, Moody’s.
Ya think?
The banks wouldn’t have campaigned for these rules if they weren’t credit positive.
Continue reading "New Rules Good For Banks: Moody’s" »
As most know by now, the government will ban insured refinances over 85% loan-to-value on March 18.
This has raised a question about mortgages registered as a collateral charge (like those offered by certain banks [e.g., TD] and credit unions).
Moving a collateral charge mortgage generally requires a refinance. However, the Finance Department’s Monday announcement didn’t carve out an exception for them. Therefore, it appeared that some people might be prevented from switching lenders if their collateral charge mortgage had an LTV higher than 85%.
We’ve now received welcomed clarification on this policy from CMHC.
Continue reading "CMHC Clarifies Refinance Exception" »
Jim Flaherty says today’s new mortgage regulations—the 2nd major round of changes in 11 months—are meant to “(encourage) hard-working Canadian families to save by investing in their homes and future.”
He says the new regulations are warranted despite the fact that “Most Canadians are quite careful and use common sense in their borrowing...”
That said, there’s no doubt that debt risk has increased. Overall credit levels have climbed faster than income to worrisome proportions. Most agree it was wise for the government to step in and shield the economy from the minority of overborrowers.
Unfortunately, the government performed this debt surgery with a butcher’s knife instead of a scalpel.
Continue reading "More on Today’s Mortgage Changes" »
If CTV, the Globe, and the Post are right, Canadians can say goodbye to:
- Refinances up to 90% LTV
(Insured refinances are reportedly being cut to 85% LTV maximum)
- 35-year amortizations on high-ratio insured mortgages
(The maximum is reportedly being cut to 30 years)
These papers quote sources claiming the government will announce these changes today.
Continue reading "New Mortgage Rules to be Announced Monday, Say Papers" »
A National Post source claims the government may start requiring that 100% of condo fees be included in debt ratio calculations for insured mortgages.
Currently, lenders use only 50% of condo fees for qualification purposes. That’s because condo fees include things like property maintenance, insurance, contingency funds, and sometimes even utilities (like electricity or cable TV), all of which are not used in debt ratio calculations for free-hold properties.
Continue reading "100% of Condo Fees May be Used for Qualification: National Post" »
Higher mortgage rates and stricter mortgage rules are starting to take effect, though Canadians’ debt levels are still too high for comfort.
That was the message from Agathe Cote in her first public speech as a deputy Bank of Canada governor on Monday.
Here’s a sampling of key points from her address yesterday in Kingston, Ontario:
- The Bank of Canada’s rate hikes and government’s new mortgage restrictions, including more stringent qualifying conditions, higher down payment requirements on rental properties, and lower LTVs on refinances, are “beginning to have an impact” in moderating debt risk.
Continue reading "Debt Growth is Moderating, BOC Deputy Says" »
Avoiding Policy-made Crises
He’s referencing the potential rule tightening and new mortgage liquidity constraints that are making headlines.
Both of those factors could raise the cost of mortgages and adversely impact homebuyer demand. These are risks, he says, that could cause a natural housing correction to snowball into something worse.
Continue reading "Avoiding Policy-made Crises" »
Posted at 02:42 PM in Mortgage Commentary, Mortgage Regulations | Permalink | Comments (111)