Every time a bank cuts 1- and 2-year posted rates, it raises the chances of customers paying bigger prepayment penalties for discharging a mortgage early.
Slow Rebound: The implications of lower immigration, a “record amount of supply set to hit the market,” lack of a falling stress test rate and high prices relative to incomes are this, says Capital Economics: “…Unlike following the Global financial crisis, neither home sales nor prices will fully recover for years.”
Speculation on HELOCs:HELOCs account for 17% of the Big 6 Banks’ mortgage portfolios. And now some are speculating that banks will pull back on HELOC lending. (Reuters Story) Banks say there’s been no “notable” increase in HELOC borrowing thus far, but certainly there’s been an increase. If you’re a HELOC borrower who wants to keep the credit taps flowing, the points to remember are this: Don’t let your credit score slide, and hope your home value doesn’t plunge (lenders monitor both, among other things). And never, ever miss your monthly HELOC payment, even accidentally.
Past the Tipping Point: After years of trying to convince consumers to bank online, “…Banks are finally seeing record shifts into digital banking,” notes Barclay’s analyst John Aiken. The head of the Canadian Bankers Association says, “When we’re trying to discourage people from going anywhere physically and doing as little as possible face to face…digital [banking] options are not only resilient, but they’re providing customers flexibility to do whatever they need to do from home.” Mortgage renewals, for example, are now routinely being handled online by most of Canada’s biggest lenders.
Regulatory Pause in Order: Due to “the policy costs, such as lost access to credit by borrowers and lost residential investment growth,” C.D. Howe recommends no more mortgage tightening in the near term. The recommendation, part of a report to be released tomorrow, is based on four financial stability indicators that can “anticipate future crises:” the house price-to-rent ratio, the price-to-income ratio, the debt-servicing ratio and the household credit-to-GDP ratio.