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...
“You usually need to be in a recession to see household credit rising this slowly.”—Ben Tal, CIBC Here’s something everyone in the mortgage industry already knew, and CIBC just re-confirmed. The government’smortgage stress testshave caused most of Canada’s lending slowdown since 2017. That’s the conclusion of CIBC Economics. As a result, the bank’s widely-respected econo-wizard Benjamin Tal concludes, “…Regulators should...
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 speechlast 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...
For more than a year we’ve speculated that new rules will be adopted, making it tougher to qualify for a HELOC. How could they not? The Bank of Canada, OSFI, CMHC and FCAC have all been warning about HELOC risk for months. And when multiple government agencies target a financial product, change is a’comin. And now it’s here. Banks are...
We’ve said it many times over. OSFI’s imposition of a stress test on borrowers switching lenders is potentially the most short-sighted government mortgage policy in Canadian history. See: “Mortgage Renewals Now More Costly — For Those Least Able to Pay“ The policy keeps borrowers—who have proven their ability to handle their mortgage—from switching lenders to reduce their interest bill. These...
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...
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)...
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