The volume of Canadian mortgages was up 10.6% in January YOY. (TD)
On other other hand, CIBC says: “With the average size of mortgage falling by 5%-10% due to declining home prices, this means that over the next twelve months we might see very limited and potentially no growth in the overall mortgage market. With the 5-year mortgage rate approaching all-time lows, refinancing activity is accelerating. We expect this trend to continue for at least six more months.”
Banks have been securitizing more mortgages and leaving less on their balance sheets. TD, for example, saw its balance sheet mortgage assets decrease $5 billion in the last quarter as it sold off more of its mortgages to investors and the government. TD says it securitizes residential mortgages “to enhance its liquidity position, to diversify sources of funding, and to optimize the management of the balance sheet.” (CAAMP)
CLAF—the government’s interbank lending guarantee–is now available to banks, but it may not be too popular. "I don't think anybody feels that they need it," said TD economist Don Drummond. "There is a fairly steep price associated with it — so you would have to be fairly desperate to want to use it." (FP)
Lender Equitable Trust reported record earnings last week, up 23.9% YOY. Single-family mortgage originations grew 7.8% while commercial mortgage volume fell sharply.
Canada’s #1 reverse mortgage lender, CHIP, has applied to become a bank. CHIP hopes to start its bank in Q3 2009. (Investment Executive)
Home Trust’s earnings last quarter were up 19.9% YOY. Mortgage originations were up 11%. CEO, Gerald Soloway, says: “We are more confident lending on current house valuations that are 10% to 15% lower than their recent historic highs. As a result, we are cautiously returning to lending at our traditional lending criteria and over time a larger portion of our mortgage originations will remain on our balance sheet.” (CNW)
Xceed’s net income last quarter was $1.8 million. It seems the company is executing its turnaround from the 2007 ABCP disaster reasonably well. However, CEO, Ivan Wahl, said: “The level of fundings in the 2008 fourth quarter significantly lagged the target that we have established. This reflects both the weakening economy in Canada and the fact that we are still developing our relationships with mortgage brokers across the country.” Wahl also said it is still “not possible for Xceed or others to securitize uninsured mortgages, as we did in the past. We hope that new financing vehicles eventually will be created that will enable us to return to our past focus of offering non-traditional mortgages to those Canadians who should be able to access such funding to buy homes.” (CNW)
In 2006, CIBC World Markets said: “Overall, look for originations in the non-conforming market to rise by an annual average of 20% in the coming five years — more than double the pace expected for prime mortgage lending.” Well, the subprime blow-up has completely derailed that possibility. Many think it will now take several quarters for any significant growth to return to Canada’s subprime market.
CAAMP’s Ontario Mortgage Symposium & Trade Show is Wednesday March 11 at the Pearson Convention Centre in Toronto. More info…(PDF)
Reverse mortgage growth was minuscule at CHIP in 2008: 2% versus 2007. CHIP’s average LTV is 36%. More…
Here’s a recap of certain lender moves from the last month or so:
TD has enhanced its Mortgage Payment Extension Policy for customers who are experiencing temporary financial hardship. TD mortgage customers may request to defer the equivalent of up to four monthly mortgage payments over the term of their mortgage. Interest accrues on these deferred payments. This option is not available to those in arrears. TD customers must contact their branch for more information.
Merix Financial increased its minimum Beacon scores for BFS borrowers last month. An “increase in (BFS) delinquencies” was reportedly the reason for the move. BFS borrowers now require a 700 credit score at Merix for LTV’s over 90%, and 680 for 65.01% to 90% financing. Merix also no longer finances clients who’ve had a bankruptcy.
Merix has added a “skip a payment” option to its mortgages.
Bridgewater “temporarily” suspended its cash-back mortgages.
MCAP upped its minimum Beacon to 680 (from 650) for BFS and 100% commissioned borrowers who want to borrow up to 90% LTV. For salaried borrowers, the beacon score requirement is also now 680.