rbc says mortgage regulation needed to control house prices

The Latest in Mortgage News: OSFI to Re-launch Review of the Uninsured Stress Test

Canada’s bank regulator has announced it will restart a review of the stress test rate on uninsured mortgages.

The Office of the Superintendent of Financial Institutions (OSFI) said it will “resume its policy work on the minimum qualifying rate for uninsured mortgages by issuing a new consultation [Thursday] at noon (ET).”

Uninsured mortgages (generally those with more than a 20% down payment) are currently stress-tested on the higher of the borrower’s contract rate plus 200 bps, or the benchmark rate, which is currently 4.79%. Based on today’s rates, that means most uninsured borrowers are being stress-tested at 4.79%.

OSFI had initially started a review of the stress test in January 2020, but postponed the process as its priority shifted to dealing with the effects of the pandemic.

At the time, OSFI said the new formula for the qualifying rate would be “based on rates from mortgage applications submitted by a wide variety of lenders, which makes it more representative of both the broader market and fluctuations in actual contract rates.”

While the stress test rate has been criticized for being unreasonably high compared to today’s contract mortgage rates, that hasn’t stopped the red-hot real estate market that’s taking place across the country.

Toronto Home Sales Up 97% in March; Prices Post Double-Digit Gains

March marked the third consecutive month of record home sales in the Greater Toronto Area and another month of double-digit price gains.

The GTA saw a near doubling of home sales in March from the previous year (97%) to 15,652 sales, according to new data from the Toronto Regional Real Estate Board (TRREB). Meanwhile, the MLS Home Price Index Composite Benchmark rose 16.5% to an average selling price of $1,097,565.

With demand exceeding the current housing supply, TRREB said double-digit price gains can be expected to continue.

“With sales growth outstripping listings growth by a large margin, including in the condo market segment, competition between buyers in some market segments and the potential for doubledigit price growth could continue without a meaningful increase in the supply of homes available for sale,” TRREB Chief Market Analyst Jason Mercer said in a release. “This will become more apparent as population growth resumes over the next year.”

Meanwhile, here are the March results from the Real Estate Board of Greater Vancouver:

  • Home Sales: 5,708 (+126% year-over-year)
  • Benchmark price (all home types): $1,123,300 (+9.4%)
  • Benchmark price (detached home): $1,700,200 (+17.9%)
  • Benchmark price (apartment home): $715,800 (+3.7%)

BluMortgage CRM Integrates with Velocity and Filogix Expert

A Canadian provider of consumer relationship management software (CRM) has announced a new partnership that will see its systems integrated with both Velocity and Filogix Expert.

BluMortgage, which provides a CRM tool specifically built for mortgage professionals, said this integration with two of the industry’s key deal origination systems will further enhance pipeline management for brokers and provide a more seamless transfer of data.

“We believe that how you manage your clients should be independent from how you submit deals to the lender,” said Tom Hall, co-founder of BluMortgage. “With these integrations, along with our existing integration with Lendesk, BluMortgage CRM is a truly agnostic solution to whatever tools and processes a broker is already using.”

Hall says the BluMortgage CRM tool provides powerful analytic capabilities while enabling custom sales and marketing options.

rbc says mortgage regulation needed to control house prices
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