Categories for Rate Regulation

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...

Switch Tricks (For a Better Deal)

Big news here for people wanting to switch lenders with a mortgage that was previously refinanced. Until recently, it hasn’t been possible to move your mortgage to a new lender and get ultra-low default insured rates if you had previously refinanced that mortgage. That was due to an interpretation of the insurance rules implemented by the Department of Finance in 2016....

Stress Test Consequences Adding Up

New data has more than a few observers second guessing Ottawa’s latest mortgage clampdown. RE/MAX’s 2018 Spring Market Trends Report quantifies the by-products coming from one of the biggest mortgage rule changes ever, the uninsured mortgage stress test. The data beg the question, are the side effects worse than the government’s medicine? More Buyers Are Being Hamstrung One in four...

History of Mortgage Rule Changes

The most extraordinary thing about Canadian real estate is how it has shrugged off rule change after rule change in the mortgage market. We’ve seen governments impose over 60 housing finance restrictions since 2008, the height of the global credit crisis. These policies shrank the number of qualified borrowers and inflated mortgage costs. And yet, far from collapse, the market is...

HELOCs: The Next Lending Crackdown?

HELOC balances appear to be surging at their fastest pace in five years—even faster than mortgages, reports Bloomberg. That’s got ever-vigilant regulators raising an eyebrow. And it’s got certain lenders we talk to expecting HELOCs to be the next area of mortgage rule tightening. Under the Microscope Currently, 2 in 5 secured residential loans in this country (roughly 3 million)...

Reprieve from Lender Loss Sharing

If you like low mortgage rates, there was good news from Canada’s housing agency Wednesday. CMHC CEO Evan Siddall said a proposal to have lenders potentially share losses when insured borrowers default is now on the back burner. This Department of Finance scheme was sold as a way to encourage more prudence in lender underwriting. But it also threatened to...

The Mortgage Market Post B-20. Are the Wheels Coming Off?

Not exactly. One month after the mother of all mortgage rule changes, the wheels are still turning in Canada’s real estate and mortgage market. They’re just turning slower. But make no mistake, OSFI’s mortgage stress test has changed the landscape—for both borrowers and lenders. Here’s how: Fewer Mortgages Our best anecdotal guesstimate after speaking to a sampling of federally regulated...

Mortgage Rules 2018: Credit Unions & The Stress Test

We’re one week into 2018, OSFI’s new mortgage stress test is live and the earth is still spinning on its axis. But that axis is now tilted…in credit unions’ favour. If you’re a mortgage shopper who’s been turned down by a bank—courtesy of the aforementioned new mortgage rules—then credit unions want to talk to you. Credit unions aren’t bound by...

B-20 Backfire

Big-city home values were out of control. The real estate market needed de-risking. But the solution policy-makers gave us (the B-20 mortgage guideline) was imperfect, very imperfect. What’s About to Happen Effective January 1, 2018, the banking regulator (OSFI) will force the vast majority of low-ratio mortgage applicants to prove they can afford a payment based on a rate that’s...

BoC Stands Pat. Prepare for B-20

Not much to see at today’s Bank of Canada meeting. It was another yawner as prime rate held at 3.20%. Among the few takeaways: The Bank stated: “While higher interest rates will likely be required over time, Governing Council will continue to be cautious…” Interpreted this means: Higher rates are on their way, between now and when we die. If...