The two top policy-makers in Canada’s mortgage market don’t seem to be on the same page—at least not with what they’re feeding the public about the mortgage “stress test.” Observe these two statements about why the stress test—which is part of banking regulator OSFI’s contentious “Guideline B-20″—was implemented: Bill Morneau, Minister of Finance: “…We wanted to make sure that [home]...

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...

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...

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...

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...

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...

Most consumers are underinformed about HELOCs. 27% of HELOC holders are only making interest-only payments most/all of the time. Too many HELOC holders may be using them to overspend. Those were key findings from today’s Financial Consumer Agency of Canada (FCAC) report on HELOCs. HELOCs have been the single-biggest contributor to rising non-mortgage household debt over the past 15 years—”more than...

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...

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...

One in four borrowers will renew their mortgage this year, estimates the Bank of Canada. Some of them are about to find renewing a whole lot trickier and potentially more expensive — thanks to two important rule changes: #1.  The Much-Publicized Stress Test As most of you now know, on January 1 the government (OSFI) made it harder to get...