Jeffrey D. Sherman, Special to CMT
The function of Canada’s securities regulation is to protect investors. To help investors make informed decisions, regulated public markets require broad access to information on exchange-listed companies.
In the June 9 article entitled “A Threat to Private Financing,” it was noted that Ontario has restrictions on the sale of securities. These limit many investors to buying only publicly traded Mortgage Investment Corporations (MICs), and not private MICs. This is sound regulatory policy.
Last week CMHC eliminated some more mortgage insurance offerings. Effective July 31, for example, it will no longer insure amortizations over 25-years or $1 million+ properties with low-ratio transactional insurance. (More details here)
Canada’s largest insurer says this was a business decision. But most business decisions maximize profit and/or significantly reduce risk. These changes don’t necessarily do that, making it appear more like a political decision.
The government controls our existence. It tells us how fast to drive, at what age we can drink, how much taxes we pay and so on.
But it should never have the power to arbitrarily compel law-aiding businesses to raise prices. When it does that, the results are bad. And that applies to mortgage rates as well, as Finance Minister Joe Oliver wisely understands.
On Wednesday Oliver told BNN:
Wayne Strandlund, Special to CMT
Borrower choice and the success of mortgage brokers is tied to the availability of a wide variety of mortgage funds. Apart from conventional insured and uninsured mortgages, there are Alt-A and B, 1st and 2nd mortgages available through the private mortgage market.
For years, Mortgage Investment Corporation (MIC) lenders have provided billions of dollars of this private alternative mortgage financing. But under proposed regulations, this opportunity for borrowers and brokers will be severely curtailed, causing measurable economic harm.
Mortgage spreads can’t get much tighter, right?
DUCA Financial, Ontario’s 5th-largest credit union, has launched a strikingly competitive program for mortgage brokers. How competitive? We’re talking 5-year fixed rates currently priced just 115 basis points above the 5-year bond. That is unheard of pricing in today’s market.
If DUCA can maintain such spreads, the 60-year-old credit union could siphon hundreds of millions (perhaps billions) in mortgage volume from Ontario competitors.
The real story, however, is how DUCA can offer those rates.
The unusually harsh winter took its toll on the economy in the second quarter, and mortgage activity was no exception.
A number of "Big 6" banks posted tempered mortgage growth in Q2, a period that typically encompasses the busy spring market. But this spring got off to a slow start. Weather was partly blamed, but clearly other factors were at work (including modest economic growth and drag from mortgage policy changes).
As we do every quarter, we've gone through the Big 6 Banks’ quarterly earnings reports, presentations and conference calls and pulled together these mortgage tidbits. Admittedly, this quarter was rather dull from an industry insights perspective. The most notable observations are highlighted.
After Investors Group ended its headline-making 1.99% variable-rate promotion, we did a “post-game interview” with Peter Veselinovich, vice-president of banking and mortgage operations.
Going forward, it sounds like IG will be in and out of the mortgage rate market as opportunities permit. It will not be undercutting all competitors (like it did here) on an ongoing basis.
Here’s Veselinovich’s take on how the promotion went and what to expect from IG – mortgage-wise – for the rest of the year.
Every six months, CAAMP’s mortgage market survey gives us a pulse on mortgage activity. The theme of its latest report is understanding the “new normal” in the mortgage market.
Here’s one of the report’s key assertions:
“The (mortgage rule) changes made in 2012 were inappropriate: there was an issue of inadequate housing supply in a few communities that was resulting in excessive price growth in those communities. But, the policy response to these localized supply issues was to depress housing demand, which applies (unnecessarily) to all areas of Canada…“
CAAMP’s chief economist and report author Will Dunning suggests more focus should be placed on rectifying the “insufficient supply” in pricey housing markets, rather than impeding demand and economic growth through additional mortgage regulation.
Apart from commentary on mortgage policy, Dunning shares his usual array of intriguing findings. There’s new data on mortgage rates, refinancing, amortization length and more. Key points are highlighted below in green, with our comments in italics.
The Internet has changed mortgage shopping forever. Yet, some mortgage originators still don’t put much thought into it. Many are content to simply put up a website and hope for visitors.
That doesn’t cut it if you truly want to cultivate mortgage business online. Fortunately, however, there’s still time to act, says industry pioneer and Kanetix CEO Yousry Bissada. Online mortgage origination is “still in the early adopter’s stage,” he said on Monday, “But it’s coming.”
Speaking at VERICO’s annual conference in Las Vegas, his message was essentially this: “If customers can’t find you online, you don’t exist to them.”
Residential lending may have slowed, but commercial lending is going strong. Commercial mortgage balances grew 8% last year versus 2012, according to lender CMLS Financial. Commercial origination was up roughly 18%.
If you want to follow the commercial lending market, two solid sources are CBRE Capital Markets and CMLS. Here’s the latest market update from each of them…