Categories for Rate Regulation

The Time for Higher Deposit Insurance Limits is Now

It’s become easy to move your money from one financial institution (FI) to another online. Major banks hate it. Small FIs love it. The internet lets upstarts swipe market share from the big boys with little more than a great rate and some media coverage. It’s a formula that will increasingly siphon deposits from well-capitalized household names (the Big 6 Banks)...

Opinion: First-Time Buyer Program Disappoints, Surprising Almost No One

The First-Time Home Buyer Incentive can’t be considered a dud, yet. But it’s surely not impressing anyone. One of its champions, CMHC CEO Evan Siddall, said only 2,000 applications have been approved for the program since it launched on September 2, 2019, reports CMT. That means it’s running at 50% capacity, he estimates. Meanwhile, one of the private insurers tells...

Liberals Win. The Mortgage Impact

For young homebuyers wondering what mortgage offerings politicians will gift them post-election, the answer is now clearer. The Liberal win in Monday’s federal election suggests first-time buyers will likely see a more flexible First-time Home Buyer Incentive (FTHBI). That was the Libs’ key election promise on the housing file. “We will…increase the qualifying value to nearly $800,000 in the places where...

Could the Stress Test Exacerbate the Credit Card Problem?

Mortgage debt has been in the crosshairs of federal regulators for years. But considerably less attention has been paid recently to unsecured debt—i.e. credit card—balances for which have been growing at an alarming pace. And with the 2016/2018 mortgage stress tests crimping the amount homeowners can borrow at low rates, it’s likely that even more Canadians will be forced to...

The Conservative Housing Affordability Plan – Is it the Answer?

The latest party trying to win your vote with promises of housing affordability is the Conservative Party of Canada. Here’s a quick look at what it announced Monday… Idea #1 Conservative Proposal: “Fix the mortgage stress test to ensure that first-time homebuyers aren’t unnecessarily prevented from accessing mortgages and work with OSFI to remove the stress test from mortgage renewals to...

Rates Hit 2-Month High + Other Rate Nuggets

Bond Bloodbath It was a grisly Friday the 13th in the bond market. Investors ran from bonds like they were being chased by Jason Voorhees with a chainsaw. U.S. 5-year bonds crashed (yields soared 12 bps), which drove Canada’s 5-year to a two-month high. For non-bondy types, bond selling drives up rates since the two move inversely. Catalysts for the carnage...

The FTHBI Becomes More Useful (to First-Time Buyers)

It didn’t take the government long to propose changes to the First-Time Home Buyer Incentive (FTHBI). Just 10 days after the program launched, and following criticism that the Liberals’ new program didn’t address housing needs in high-priced markets, the Libs have tweaked it. Effective this November, if you live in one of three high-cost regions, qualifying for the program may...

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...