Categories for Mortgage Rate Research

HELOC Growth Isn’t What Everyone Thought

It turns out home equity lines of credit (HELOCs) aren’t growing as fast as previous government reports suggest. Prior regulatory filings showed HELOC balances increasingly at roughly double the pace of mortgages. Now, a new report from the Bank of Canada confirms the opposite. “The total balance of HELOCs contracted by 1% year-over-year…” in the fourth quarter of 2018, it...

Fair Penalty Lenders: Which Lenders Have the Lowest Mortgage Penalties?

Which lenders have the best (lowest) mortgage prepayment penalties? It’s a question we’re asked continually. So we’ve now created a list of them. If you want to know if your lender will treat you fairly (i.e., charge you a reasonable penalty for breaking your mortgage early), read on. What’s a “fair penalty?” A fair penalty is a mortgage prepayment charge...

OSFI’s Stress Test – How We Got Here – Part I

Never before has Canada’s banking regulator received so much pushback on a mortgage rule. OSFI has felt such heat from its controversial “B-20” stress test, that it’s started a campaign to defend its position—e.g., this speech last Tuesday (video) and this one last Thursday. From that and from what we know of regulators’ non-public comments, one thing appears clear. The government has...

Mortgage Growth Ain’t What it Used To Be

And that’s as the government intended. Albeit, the deceleration may be less pronounced than some might expect, given all the recent headlines about this year’s real estate slowdown and mortgage rule tightening. Here are fresh new mortgage stats from CMHC and Equifax (as of second quarter of 2018): Number of active mortgages: 5.98 million This number essentially stayed the same...

The Odd Spike in Insured Variable-Rate Mortgages

Something unusual has happened in the high-ratio mortgage world. Homebuyers with less than 20% equity are gravitating to floating-rates — more than ever in recent history. New data from the country’s top default insurer (CMHC) shows that almost a third of transactionally insured borrowers (31.3%) chose a variable- or adjustable-rate mortgage from July 1 to September 30. Jargon-Buster: “Transactionally insured” just...

Variable vs. ARM: One’s Not Better Than the Other

Many don’t realize that there are two flavours of floating-rate mortgages: The adjustable-rate mortgage (ARM) Its payment rises and falls with prime rate The variable-rate mortgage (VRM) Its payment doesn’t change when prime rate changes The only exception is when rates soar so much that you’re not paying all the interest. Then the payment generally rises to cover the interest...

Your Tech Habits May Someday Get You Approved (or Declined) for a Mortgage

When you go online, you leave a trail of digital bread crumbs. And if new research catches on, mortgage lenders could someday use those crumbs against you (or for you). The U.S. National Bureau of Economic Research (NBER) has published a study showing that creditworthiness is linked to a borrower’s “digital footprint.” NBER studied nine digital footprint variables: the borrower’s...

Confusing Data on Online Rate Shopping

There’s still way too much inefficiency in the mortgage research process. That is, if we’re to believe the latest CMHC data. Three out of four homebuyers used websites to gather mortgage-related information, says Canada’s housing agency. But, among those, only 20% of first-time buyers, 24% of repeat buyers and 23% of renewers used “interest rate comparison” websites. It’s bad enough...

The Flex Down Payment Mortgage. One to Avoid.

Oh the lengths people will go to squeeze themselves into a new property. That includes putting their home, or at least part of it, on their credit card. Yep, believe it or not, some lenders are more than happy to let you borrow your down payment off a credit card. And government-backed default insurers support it. That’s despite Ottawa outlawing...

Canadians Can’t Predict Interest Rates. But They Try.

Two-thirds of consumers expect interest rates to rise in the next 12 months, according to a new report from Mortgage Professionals Canada. Only a measly 2% expect rates to fall. But that’s not as surprising as it seems. There is a built-in bias towards higher rates and there has been for years. “Through the entire history of this question, Canadians...