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Mortgage Broker News | 04 Oct 2016, 08:15 AM Agree 0
The Finance Minister announced three new housing measures meant to ensure stability in the housing market, but one of those – the amended stress test requirements – could impact monolines more so than big banks, according to one veteran broker
  • LanceH | 04 Oct 2016, 09:40 AM Agree 0
    Rates aren't going anywhere, it's bogus bogeyman!! As one Agent noted on CBC, this will create a whole generation of renters in the GTA and beyond. I also think the risk to CMHC is over-stated. We need to start pushing for a reversal of this item straight away! And Butler is right that this will wreak havoc on mono lines, and equally important, the competitiveness in the market. Not good, not happy!
  • Arman | 04 Oct 2016, 10:02 AM Agree 0
    this is stupid. just creates extra cost to lenders and puts the buyer at a disadvantage.
  • Kim Gibbons | 04 Oct 2016, 10:04 AM Agree 0
    Hi LanceH, I was on CBC last night and yes, this will push first time homebuyers into renting for longer. With vacancy rates all all time lows in Toronto and Vancouver, and with Air BNB gobbling long term rentals we are seeing already multiple offer situations for rental units - this will make the situation worse and push those that want to stay in the city outside to an area where there are units available and that the rent is affordable. Not a good situation. Not to mention what it will do to the monolines, this industry and a reduced choice for Canadians.
  • DM | 04 Oct 2016, 10:09 AM Agree 0
    below is the rates and terms from Bank of America. their rates are determined by Bond Yeild Spreads just like us. due to our system of TERMS being 1 to 5 years of course we need stress tests. Maybe if we actually did right by the consumer and the term was 30 years 0r 15 year terms we would not be having these rule changes constantly.

    Today's low mortgage rates†Today's low mortgage rates
    Rates based on a $200,000 loan in ZIP code 94601

    Rate layer
    APR layer
    Points layer
    Monthly payment layer
    30-year fixed layer
    Rate3.375%
    APR3.558%
    Points0.845
    Monthly Payment$884
    15-year fixed layer
    Rate2.750%
    APR3.082%
    Points0.897
    Monthly Payment$1,357
    5/1 ARM layer variable
    Rate2.500%
    APR3.476%
    Points0.687
    Monthly Payment$790
    About ARM rates
    Mortgage rates valid as of 04 Oct 2016 08:50 am Eastern Daylight Time and assume borrower has excellent credit (including a credit score of 740 or higher). Estimated monthly payments shown include principal and interest only. 5/1 ARM interest rate and payment subject to increase after 5 years. Select the About ARM rates link for important information, including estimated payments and rate adjustments.
  • Amber | 04 Oct 2016, 10:10 AM Agree 0
    One thing that have been admitted is that the real estate industry has been propping up our economy. I guess that was a bad thing. Lets create further chaos. That sad part is that many of the people that move to Canada come so that they can buy homes and create a better life for their family. The higher interest rate qualification probably just took owning single family homes out of their future!
  • Paul Mangion | 04 Oct 2016, 10:14 AM Agree 0
    I agree with LanceH. Rates aren't going anywhere and neither is the economy. Unless we get some politicians that are pro employer and give them the policies they need to thrive nothing is going to change. Welcome to the new norm. Maybe they should stop supporting the higher prices or set a ceiling on year over year increases. Then when nobody can buy the home the prices will have to go down to a match a reasonable increase.
  • TWH | 04 Oct 2016, 10:22 AM Agree 0
    A Question for all MBs to ponder as it applies to your income.

    "When a homeowner moves banks for a mortgage renewal is a NEW MORTGAGE created?" You all know the answer!
  • Geblo | 04 Oct 2016, 10:38 AM Agree 0
    Looks like everybody commenting on this so far focuses on the short term. If this keeps the appreciation in the RE market down, then the affordability of housing in the long term will improve. The payments on a loan obtained in 5 years will be lower and it will be easier to qualify your buyer for a mortgage at higher rate than it would have been to qualify the same buyer had nothing been done to slow down the market. You are trading short term pain for a significant gain in the long term.
  • John Gimblett | 04 Oct 2016, 11:00 AM Agree 0
    I suspect it won't be long before the qualify rate is amended to something in the 3.5% range. This could happen when the thousands of investors that have unconditionally purchased condos and new houses for delivery in the next 5-24 months without financing. Will they walk on their deposits when real estate corrects 10-20%? Interesting times!
  • Dave | 04 Oct 2016, 11:31 AM Agree 0
    Next laws that need to change are for Air BNB. As mentioned by many here, more first time buyers will now be renters. 99% of people in Canada under 35 or so wont be able to save 20% downpayment for a property, at least not in GTA or Vancouver.

    Air BNB is a disaster for the long term rental market availability and condos are being swarmed by parties at 3am with 50 people in a unit lol . Government needs to step in asap.
  • steve | 04 Oct 2016, 11:57 AM Agree 0
    Biggest issue with this is that CMHC was set up to help struggling people get into their own home. Now the program only helps the rich. Rents WILL rise and housing prices will rise and rich people and landlords scoop up real estate. Demand doesn't change unless you build more houses.
  • Frank L | 04 Oct 2016, 12:15 PM Agree 0
    Am I also understanding it correctly that now, MI will only be for owner occupied properties even on the conventional side? Meaning monolines who currently insure all mortgages, but more specifically rentals (most with client paid MI premiums from 65-80% LTV) won't be able to do rentals at all anymore?

    If this is the case, I may need to reconsider some of my lender relationships as Major Banks may be the only source of A financing for many files (seems like we're going backwards, doesn't it?)
  • Ron Butler | 04 Oct 2016, 12:27 PM Agree 0
    Here's the big issue: monolines, small banks and trusts can only lend on 25 year amortization, 30 years is gone. Only the Big 6 banks and credit unions will be left at 30 year amortization on "A" mortgages. This is as big a threat to the broker space as the crisis in 2008. Sure, we can send deals to the 3 big banks in our channel but if one or more of them decides to leave the channel in 2017 then put a fork in all of us, we are done. You cannot compete with the 6 richest companies in Canada if they have a key product you have no access to. 30 year amortization customers are 65% of conventional purchase business, 80% of debt consolidation business, try operating with that built-in disadvantage.

    People will say "don't worry the banks are still here" I tell you this: the only real partners a mortgage broker has are the lenders who depend exclusively on mortgage brokers for distribution, anyone else is just a great ally until the CEO changes their mind one day. CIBC was the biggest broker lender and they walked away from us with out a second thought.

    Everyone should contact their Associations, call and email their network and super broker bosses, if you know someone in the media contact them, alert all your social media groups. Taking 30 amortization away from all the "A" lenders except the Big 6 banks is a mistake pure and simple, bad for competition, bad for homeowners, bad for keeping mortgage rates low, bad for everyone.
  • Ryan Kirwan, HQ Mortgages Inc. | 04 Oct 2016, 01:27 PM Agree 0
    This was inevitable.

    Something had to give.

    I think this is the slowest possible way for the government to reduce the absurd housing prices without creating chaos. If this qualifying rate would of ALWAYS been around, maybe we wouldn't be talking about this right now.

    As a monoline lender, this is not good - short term AND long term. In the short term, as a mortgage broker, realtor, appraiser, house inspector and yes even lawyers, this is not good.

    Will be a very interesting next couple of years for online rate sites... less competition, means less revenue.

    Also, it seems like the knee jerk reaction is to RUN OUT AND BUY A HOUSE in the next 13 days! That is the last thing I'd be doing right now! With this new policy, housing prices WILL fall in the next 2-4 years. Meaning if you purchase a home now with 5% down payment, in 2-4 years time, you'll owe more than what your house is worth! If you do decide to purchase a house, you better make sure its a home you'll be staying in for at least the next decade!
  • John Greenlee | 04 Oct 2016, 01:46 PM Agree 0
    Ron Butler is absolutely right.

    There is a key disadvantage that we as Broker/Agents now face with losing the 30 Year Amortization on Low Ratio Mortgages. Hopefully OSFI's amendment to the B20 Rules will force banks hands in that department, otherwise there will be a significant shift in the Broker world.

    That said, I do believe that there is also a hidden advantage here and that is sound advice from a broker. I believe, now, more than ever it will be important for buyers to talk to a broker to find out about their mortgage needs.

    With a market, that at best just had a hole poked into the balloon, that is uncertain our advice will be paramount. All of those who are buying with less than 20% down will now need to be told about how products work even more so than before, why? Because everyone will be qualified the same. This will open up opportunities for Brokers.

    Yes, in the short term, we may lose some deals here to banks if they aren't held to the same rules that monolines are. However; I am sure that there will be opportunities opened as well, including the advantage of having access to B lenders and Private Funds.

    Every action has a reaction, looking for the opportunity will serve us all best.

  • Carsten Schuett | 04 Oct 2016, 02:36 PM Agree 0
    Yes, this new stress test will bring down the demand for houses because a lot of people will not qualify anymore. The low income buyers will not qualify anymore (ever) even if they have no other debt load. This will drive up the rental demand and rental rates. Just creating another affordable housing crisis. This whole "tightening" does not create one more housing or rental unit (population growth / housing demand) that is really driving the price increases in GTA or Vancouver lower mainland.
    I think an adjustment of the GDS & TDS would have had better results for the whole situation of Canadians loading up with debt.
  • Scott Tremblay | 04 Oct 2016, 03:20 PM Agree 0
    Fantastic discussion and all very valid. We all need to put this info forward to our MP's, associations, the public. I don't think the impact of these changes were properly looked into. Losing all respect for the finance minister with these thoughtless changes.
    From Saskatoon
  • Richard Fournier | 04 Oct 2016, 04:21 PM Agree 0
    Hi everyone. I run a real estate team in Barrie. Question: Does this qualifying rate apply to firm deals that close after October 17th? Can these deals fall through?? Also will the banks have to follow and qualify low ratio at the posted rate as well? Great info everyone and thank you in advance.
  • Anthony C. | 04 Oct 2016, 04:37 PM Agree 0
    Disadvantage...ha! We are going to see plenty of layoffs coming around New Year 2017, and we can thank the feds (Morneau the idiot and Trudeau the fool) as these two dummies were better suited to the private sector. The banks will come out shining as they shore up the market share from this maneuver.

    Why on earth did they not raise rates last year by half or a point, rather than lowering them...stupid, stupid, stupid. Mexico can do it, all of Central and South America can do it, India, Australia, the E.U. all are doing it, but no, we lower rates and rob the depositors who get nothing in return...the whole system is insane.

    Instead of cooling the market gradually by increasing rates, they cut the legs out from under us all with bullshit policy changes.

    Our federal government is run by a bunch of gutless communists. Why would the BOC be buying its own paper...if you know the answer, then you really know how things are run in Canada. Carbon tax...ha...what a Robin Justinhood scam...we pump out 2% of the world's carbon and now we are getting whacked to pay for China...?!!!

    Welcome to the effect of artificially suppressed interest rates and cheap money...this is the fallout folks and its going to get really ugly and soon.
  • Mortgage Broker | 04 Oct 2016, 04:53 PM Agree 0
    Mr. B is right, CIBC walked away and so did BMO. Never put all your eggs in one basket but now being forced. This is the CDN way - monopolize, instead of the free market.
  • Jennifer Rossides | 05 Oct 2016, 11:39 AM Agree 0
    It is astounding that such a major decision was made without industry consultation. The government nor the consumer or media has any idea what is really going on with the "credit crisis" - it is the unsecured credit that is killing Canadians. The BANKS have done a great job at lobbying the government to further secure their positions of strength without educating them on the real issue and how it began.

    The big banks started all of this in the late 90's when they started giving big discounts in order to compete with one another thereby reducing rates/making borrowing affordable and reducing their return on equity. They created the credit crisis whey they decided to give credit out like candy for the next 20 years. The average rate on a credit card is 18.99%. Consumer reports say the average consumer has 21k in credit. There is no way this includes car loans/leases who will all see with 0 down and 84 month repayment. The big banks are making their money from credit not mortgages.

    The repercussions to the economy are frightening
  • Catherine | 05 Oct 2016, 02:39 PM Agree 0
    Well said Ron Butler! We will be doing this!
  • Shawn Selanders | 06 Oct 2016, 03:00 PM Agree 0
    Please consider signing this petition.

    http://www.ipetitions.com/petition/reconsideration-of-mortgage-rule-change?utm_medium=email&utm_source=email&utm_campaign=Send%2Bto%2BFriend
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