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A Case Where Banks Lose & Credit Unions Win

Canada’s new “B-20” mortgage stress test will be a tectonic shift for the roughly 1 in 6 borrowers it affects, starting January 1. It’s going to force higher-indebted creditworthy borrowers to either: reduce their loan amount, seek help qualifying (e.g.,...

No Rate Change Today

If you have a mortgage that floats with prime rate, the constant chatter about rate hikes may be unnerving. Well, now you can take a breather—because the Bank of Canada has taken a breather. The Bank left rates alone today and hinted that...

Stress Testing May Start Sooner

On Tuesday the government announced a January 1, 2018, implementation date for its new uninsured mortgage stress test. In that announcement it said something else that many glossed over: “Where possible, federally regulated financial institutions are expected to comply with the principles and expectations...

Key Mortgage Rule Clarifications from OSFI

Below are important clarifications on Canada’s new B-20 mortgage rules. Most of this stuff was not explicitly discussed in OSFI’s announcement yesterday. But if you’re getting a mortgage or HELOC, it’s need-to-know info. Amortization Limits:  One way to partially mitigate the new stress test...

OSFI’s Mortgage Stress Test: What Happens Next

We all knew it was coming, but now the reality sets in. The ruler of Canadian banking (OSFI) has solidified a rule change that’ll impact more mortgagors than any rule we’ve seen to date. Here’s a synopsis I wrote for the Globe and Mail if you need...

BoC Hikes Again. So Long Sub-2% Mortgage Rates

For now, the days of sub-2% everyday mortgage rates are officially over. Wednesday morning’s slightly surprising 1/4-point Bank of Canada hike was the nail in that coffin. The ensuing 1/4-point bump in prime rate will push all remaining mortgage rates above the psychologically key...

What is the Mortgage Qualifying Rate?

Lenders want to make sure you can afford higher mortgage payments if interest rates soar. So does the government. That’s why regulators created the mortgage qualifying rate (MQR) — a.k.a., “benchmark qualifying rate” or “benchmark interest rate.” The MQR is the interest...

Prime Rate Jumps: What You Need to Know

In just the latest reminder that banks value profit above PR, each of the Big 5 have hiked prime rate by a full 1/4 point. That means the rate variable mortgages are based on rises to 2.95% on Thursday, at most big lenders. Some had speculated (hoped) that...

Not One and Done

The kingpin of Canadian interest rates has officially made it more expensive to borrow — for the first time since 2010. By boosting its overnight rate target 1/4%-point this morning, the Bank of Canada is jacking up interest costs roughly...

The New Stress Test: Still Scratching Our Heads

Canada’s banking overlord, OSFI, is proposing a new 2-percentage-point (200-bps) “stress test” for people getting uninsured mortgages. Unlike the current stress test, which is based on one rate (the Bank of Canada posted 5-year, currently 4.64%), this new one is a frequently...