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2015’s Effects Carry Over

iStock_000032469126_MediumThe events of 2015 were another reminder that the mortgage market never stops evolving, especially when it comes to policy-making. CMT’s Top 5 stories of last year (listed below) told part of that tale.

We saw:

  1. Ottawa raise the minimum down payment
    • Long-term effect: Minimal in major housing markets; somewhat negative for higher-end homes in smaller markets.
  2. FICOM propose to reveal broker compensation
    • Long-term effect: Potentially, a small reduction in broker income, a minor advance in consumer protection and little or no improvement in borrowers’ ability to choose the best mortgage. More
  3. Home Trust terminate rogue brokers
    • Long-term effect: A meaningful tightening of anti-fraud measures industry-wide.
  4. The Bank of Canada cut rates (twice)
    • Long-term effect: Ongoing support for elevated home values in hot markets and a continuance by the banks of only partially matching BoC rate cuts.
  5. The Liberals take over Parliament
    • Long-term effect: Only minor housing policy changes for the foreseeable future.

The first three events will make life slightly more challenging for brokers in 2016, but not enough to complain about. If the economy and oil don’t rebound, however, the bigger challenge (for mortgage volumes) may potentially come from wider mortgage funding spreads, growing debt loads, higher unemployment and higher arrears.

Admittedly, that’s a somewhat dreary forecast. In weather terms, it’s like expecting light rain. But we’re hoping for sun.