Categories for Rate Regulation

Mortgage Stress Test Changes in 2019

“There’s no doubt that mortgage rate declines since the start of this year have contributed to stabilize Canada’s housing market,” said RBC economist Robert Hogue in a report last week. That might be news to some, given the rates used to qualify borrowers for approval have barely moved in 2019. We asked Mr. Hogue to share what he sees and he...

First-Time Home Buyer Incentive. A Bridge to Nowhere?

If you’ve been waiting for details about the First-Time Home Buyer Incentive (FTHBI) program, hoping it would help you qualify for a mortgage, you may be disappointed. The government finally showed all its cards with the FTHBI scheme and we can’t find a case where it would actually improve someone’s buying power—i.e., bridge the gap between high home prices and what...

Scheer Promises to End Mortgage Stress Test on Switches

One of the worst mortgage policies in Canadian history could come to an end by next year. That is, if the Conservatives win the October 21 federal election. Conservative Party leader Andrew Scheer summarized the problem for the Canadian Home Builders’ Association on Friday, saying: “If you want to switch lenders you have to go through the stress test. But if...

Save for 4,635 Days. Beat the Stress Test

Just failed the mortgage stress test and feeling down? Have no fear, a bigger down payment will get you to the mortgage promised land. By putting down more, you’ll lower your debt ratio and be passing the stress test before you know it…as long as you don’t expect a mortgage before 2031. That’s how long stress test flunkies would have...

Rate Nuggets: The Nosedive in Refinancing

Mortgage regulation and higher rates changed the game in 2018, lowering the amounts borrowers could qualify for by up to 20% and reducing the incentive to renegotiate for a better rate. That had clear implications for refi volumes. Using Teranet‘s 2018 Ontario data as a guide, the number of borrowers: refinancing with their existing lender plunged 36% (vs 2017) switching their...

Could CMHC Close This Stress Test Loophole?

It’s no secret. Many homebuyers that had no trouble qualifying for a mortgage in 2017 are finding big challenges in 2019. As we wrote yesterday, the government’s harsher mortgage “stress test” is a key reason why. The problem is exacerbated by the banks’ refusal to lower their posted 5-year fixed rates, despite a 55-basis-point drop in the 5-year bond yield...

It’s Time to Rethink the Stress Test: CIBC

“You usually need to be in a recession to see household credit rising this slowly.”—Ben Tal, CIBC Here’s something everyone in the mortgage industry already knew, and CIBC just re-confirmed. The government’s mortgage stress tests have caused most of Canada’s lending slowdown since 2017. That’s the conclusion of CIBC Economics. As a result, the bank’s widely-respected econo-wizard Benjamin Tal concludes, “…Regulators should...

RRSP Home Buyers’ Plan Repayment Rates…Dismal

Drain your RRSP further to buy a new home. That’s what the government is encouraging with its newly increased RRSP Home Buyers’ Plan (HBP) limit, which just rose from $25,000 to $35,000. You’ll probably draw your own conclusion as to whether that’s a good idea. We support it in limited cases, with caution. In fact, yours truly used it to...

First-Time Home Buyer Incentive Fail

Summary: The CMHC Shared Equity Mortgage comes up short, based on the info the government has graced us with thus far. Some of these projections may change, however, as the government releases more information on the programs. OK, someone please tell us our numbers¹ are wrong, because from where we sit the First-Time Home Buyer Incentive (FTHBI) just announced by...

Ottawa’s Mortgage Stress Test. Who Do We Believe?

The two top policy-makers in Canada’s mortgage market don’t seem to be on the same page—at least not with what they’re feeding the public about the mortgage “stress test.” Observe these two statements about why the stress test—which is part of banking regulator OSFI’s contentious “Guideline B-20″—was implemented: Bill Morneau, Minister of Finance: “…We wanted to make sure that [home]...