Year-End Bank Earnings – Mortgage Morsels

Bank-roundupSure, you paid out the nose in interest charges and assorted bank fees this year, but take comfort in knowing that you helped pad the Big 6 Banks’ bottom lines—to the tune of $33 billion of net income in 2014.

That enabled Canada’s banks to post a reasonably strong year, despite a modest spring housing market and the continued low interest rate environment.

On the mortgage end of things, loan losses were down and most of the majors saw their ratio of insured mortgages fall—not surprising given Ottawa’s push to de-risk its mortgage exposure. As of October, banks had grown their mortgage books by 4.8% year-over-year.

As we do every quarter, CMT has dug through the Big 6 Banks’ quarterly earnings reports, presentations and conference calls, and pulled together these mortgage tidbits. The more notable observations are in blue.


Canada Should Trail U.S. Rates

Canadian-US-mortgage-ratesThis week, the U.S. central bank put the world on notice that rate hikes are coming, possibly as early as spring.

While we shouldn’t hold our breath on that, it does raise one important question: How will the Bank of Canada respond if the U.S. does boost interest rates?

The answer is far from certain, but one thing can be said with confidence: the BoC will not respond in knee-jerk fashion.

Here’s why, and what it means for mortgage holders:


An Updated Look at Insured Mortgage Risk

We got a new profile of insured mortgage borrowers last Wednesday. It came from Genworth Canada’s Investor Day where the company briefed shareholders on the its current risk profile.

The nation’s second-largest default insurer says government changes have made its portfolio “much more resilient to any sort of housing correction or external shock,” and the facts that follow seem to back that up:


More Bad News for Small Lenders: Update 2

Since 2008, the Finance Department has announced one mortgage restriction after another, largely in an effort to wean lenders from government support. And just when you think there’s no more regulations to come, they tighten further.

The latest such measure came last week. On December 1, CMHC announced hefty fee hikes for guaranteeing mortgage-backed securities (MBS). And these are no piddly fee hikes. We’re talking 50-200% increases for government guarantees of MBS, and a 100% increase for Canada Mortgage Bond guarantees. That’s material given that roughly one-third of mortgages are funded by securitization.

Here’s why the powers that be are doing it, and what it could mean to mortgage consumers:


2014 CAAMP Conference Wrap-up

caampforumLast week, Montreal played host to CAAMP’s Mortgage Forum 2014, one of the mortgage industry’s most important gatherings of mortgage professionals. Dubbed by some as “a networking event on steroids,” the event played host to 1,200+ attendees. It also included 65 booths at the two-day Expo and 525 attendees at the Hall of Fame/Awards Night — both excellent showings by historical standards. In case you missed the event, here’s a roundup of conference highlights: