Categories for Rate Regulation

We May Again See Mortgage Insurance for Properties Over $1 Million

In 2012, Canadians lost the ability to buy $1 million+ homes with less than 20% down. The Finance Department put the kibosh on it, in its hotly debated quest to “reduce taxpayer risk.” But now, there’s hope that well-qualified borrowers will once again be able to buy a 7-figure shack with just 10% down. Genworth Canada, the nation’s biggest private...

10-Year Rates Can’t Close the Gap

The difference between a lender’s cost to lend for 10 years versus five years is near an all-time low. Yet, 10-year rates remain too high to attract much interest. This chart below is one example of how competitive basic 10-year funding costs have become. It shows a long-term view of Canada Mortgage Bond (CMB) yields. Lenders use CMBs to fund insured 5-...

Morneau to Review Mortgage Stress Test Improvements

For two years, the federal government and regulators have been talking up the virtues of their mortgage stress test. So, imagine the surprise today when the Prime Minister asked the Minister of Finance to: “Review and consider recommendations from financial agencies related to making the borrower stress test more dynamic.” The request came in a mandate letter sent by Trudeau’s...

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...