Categories for Rate Regulation

New Regulation Could Boost Mortgage Rates

So many factors can cause you to pay a higher mortgage rate. One of the least transparent is government regulation. Since 2008, Ottawa has layered mortgage policy upon mortgage policy, thereby boosting lender funding costs an estimated 25-50+ basis points depending on lender and mortgage type. These changes include the removal of insurability on various loan types (default-insured mortgages are...

OSFI’s Stress Test, Part II – Sensible Fine-tuning

In a speech last week, Canada’s banking regulator brushed off the “unintended consequences” of its controversial mortgage stress test with one sententious comment: “…The answer to this important problem…cannot be more consumer debt, fuelled by lower underwriting standards.” — OSFI Assistant Superintendent Carolyn Rogers She could not have been more right. More slack in “underwriting standards” was the last thing...

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...

Are 30-year Insured Amortizations Coming Back?

The Department of Finance is considering a return to 30-year amortizations on insured mortgages, says the Canadian Homebuilders’ Association (as reported in the Globe and Mail). The last time we had 30-year amortizations on insured mortgages was 2012. This time, however, only first-time buyers might get access to them. Called “extended amortizations,” 30-year payback periods are still available to anyone getting an...

Could Ottawa Up the Default Insurance Limit?

If we were betting types, we’d wager that in coming months the government makes it possible to mortgage a 7-figure property with just a modest down payment. Here’s why. At the moment, there is a $1 million property value limit if you want to buy a house with less than 20% down and get the best mortgage rates. That price...

Ottawa Considering a Mortgage Stress Test for Private Lenders: Reuters

Imagine if 250,000 to 350,000+ homeowners couldn’t get cost-competitive private mortgages anymore. That’s the potential result if the feds impose a mortgage stress test on private borrowers. And they’re considering just that, according to a Reuters report today. At this point there are more questions than answers, like does this apply just to mortgage investment corporations (MICs) or to all...

Relaxed Mortgage Rules in 2019?

Those who think the government went overboard on mortgage tightening may have a glimmer of hope. In a presentation Wednesday, Stuart Levings, head of Canada’s largest private default insurer, Genworth Canada, said the company will be urging policy-makers to improve housing access, particularly for younger homeowners. “The only reason we think there’s an opportunity is because it’s an election year,”...

HELOC Rule Changes: More Significant Than You Think

Were TD’s bombshell new HELOC rules inspired by the government’s master plan? You be the judge. Our take: HELOC rule changes are about more than just stopping speculators from funding secondary properties. And TD’s move is just a precursor. Regulators won’t come right out and say it, but people we talk to are certain that OSFI and the Department of Finance...

OSFI Dismisses Renewal Impact of B-20

We’ve said it many times over. OSFI’s imposition of a stress test on borrowers switching lenders is potentially the most short-sighted government mortgage policy in Canadian history. See: “Mortgage Renewals Now More Costly — For Those Least Able to Pay“ The policy keeps borrowers—who have proven their ability to handle their mortgage—from switching lenders to reduce their interest bill. These...

HELOC Growth Doubles Mortgage Growth

Home equity line of credit (HELOC) balances are growing more than twice as fast as mortgages, shows a new report by CMHC. That will certainly raise more eyebrows in Ottawa. The government has been closely surveilling HELOC risk for a few years now. Their concern: homeowners are relying too much on HELOCs, taking on debt that’ll slow their consumption in the future...