Many mortgage brokers anticipating a deluge of clients eager to beat the mortgage rule changes were disappointed by the actual number of customers who came knocking at their doors last month.
“There was a small spike in June but nowhere near what we had expected,” said John Dearin, a broker with Dominion Lending Centres Mortgages and More Ltd., in St. John’s.
He’s not alone.
Last month several brokers told MortgageBrokerNews.ca that the period before the deadline would be a good opportunity for mortgage firms to inform their clients as well as line up new business before the rules came into forced.
It was widely speculated that borrowers, especially first-time home buyers who face the prospect of being shut out of the market by the loss of the 30-year amortization, would be rushing to their brokers to seal a deal weeks before the deadline.
In Newfoundland, and other parts of the country, no such stampede occurred.
“What actually surprised us was the large number of clients who came on Monday right after the rules came into effect,” Dearin said. “I think they feared the rule change was just a prelude to a sledgehammer that could come down within the next few months.
“Some buyers anticipate tighter regulations down the line -- (like being) required to put in 10 to 15 per cent within the next four months.”
A lack of media coverage could be a reason behind the lukewarm reaction from borrowers, according to Terry Kilakos, a chartered Mortgage Broker and owner of VERICO North East Mortgages in Montreal.
“Basically what happened was that a lot of people were caught by surprise. They were not even aware that changes were coming down,” he said.
His theory dovetails with the results of a poll conducted this week by Pollara for the Bank of Montreal.
According to Pollara only half of the survey respondents were familiar with the changes.
This was in contrast, Kilakos said, to what happened in 2008 when the government lowered the amortization cap from 40 to 30 years.
“People were well aware of the new regulations but dragged their heels for months. Then several weeks before the deadline brokers received a deluge of calls.
Kilakos is now advising his clients “not to panic,” the Quebec-based broker said. “Markets like Toronto and Vancouver and other high-priced markets will likely feel the brunt of the effect.”