“The real frustrating thing out here is there has been real tightening of policy from the lenders,” Dave Trithart, broker/owner of Dominion Lending Centres
Financial Link, told MortgageBrokerNews.ca. “One lender recently came out with a policy change and now they will only use half the overtime and bonus income over the past two years (for qualification); in the past, they used the average for the prior two years.”
According to Trithart, the change significantly impacts client qualification.
“People will not qualify for as much house under this new change,” Trithart said. “And what impact will it have on home prices?”
Trithart shared with MortgageBrokerNews.ca the email from the lender explaining the policy change.
“Due to possible volatile market conditions, [we have] made a few changes to our loan qualifying criteria,” the lender wrote. “50% of the 2 year average for overtime, commissions, bonuses, shift differential and vacation pay for Full Time or Permanent Part Time borrowers (verified by year end pay advice for the most recent 2 years).”
It’s unwelcome news to brokers in oil country who have had a rough year due to sagging oil prices and the impact it has had on the real estate market.
Sales activity is down 20.7% year-to-date, as of September, according to recently released statistics from CREA. Further, dollar volume is down 21.9% year-to-date.
Alberta brokers have more than just dwindling home sales to grapple with, according to one broker who is experiencing tightened lending standards.