Broker critical of lack of consultation regarding new rule

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"From the broker's perspective it seems that clarity on the details as they apply to a file are sinking in and pretty clear," according to one industry veteran.

“Based on the blow up I am seeing in Broker chat forums some clear details on the how where, when, how, and who are sorely needed and clarity around the absence of industry consultation in particular is important,” Dustan Woodhouse, a broker with Dominion Lending Centres Canadian Mortgage Experts, told MortgageBrokerNews.ca. “The 'trickle up' effect this could have on the market as a whole may have been underestimated.”

Brokers and industry stakeholders have not shied away from offering their opinion on what is being touted as a game changer for the mortgage broker industry.

The federal government announced a number of policy changes aimed at safeguarding the housing industry Monday – one of which will make it harder for many homebuyers to qualify for a mortgage.

A new stress test will require homebuyers taking out any insured mortgage to qualify for the higher of the contract rate or the Bank of Canada’s benchmark rate.

With the current BoC rate at 4.64%, that means, in some cases, clients will have to qualify for a mortgage that is more than double their contracted rate.

And while many have been critical of the policy, some see it as necessary.

“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,” Ryan Kirwan, a broker with HQ Mortgages, wrote in the MBN forum. “If this qualifying rate would have always been around, maybe we wouldn't be talking about this right now.”

Kirwan, however, did note the change will negatively impact brokers, realtors, and other industry stakeholders. 
 
  • Dave on 2016-10-05 8:34:58 AM

    Banks own the government , period.

    They wanted the monolines out and the liberals allowed it to happen.

  • James on 2016-10-05 11:19:46 AM

    If the BOC is going to implement a Qualifying Rate of 4.64%, apply it to all mortgages across the board to keep the playing field level.

  • Amber on 2016-10-05 11:33:48 AM

    In my opinion they just made class segregation very clear. These decisions will not affect the rich, the middle class just shrunk and the people working hard to be in the middle class just got a huge barrier put in front of them that home ownership isn't for them. The government just created the bubble they feared. So much for a soft landing!

  • steve on 2016-10-05 11:38:53 AM

    poor people will have to rent forever
    rich people get to consolidate gains
    No new houses will be built - why bother if no one can afford it based on new rules
    Mortgage Rates could fall if no one uses the available bond money
    Supply is always a driver of price and nothing has been done to increase housing supply

  • Chris on 2016-10-05 11:41:09 AM

    Dave ^ you are absolutely right.

  • Dave on 2016-10-05 11:49:47 AM

    We always hear about rising consumer debt. I agree it is an issue. The government keeps making it harder for people to purchase a home which is an asset that historically goes up I value. Yet the government never talks about the auto industry handing out loans to anyone that has a pules. Little to no consideration is given to debt servicing when handing out auto loans and household consumer goods loans. When will the Federal Government look at regulating auto loans? Can you imagine the Government taking on the auto industry. Time to stop just focusing on mortgages....

  • Anthony C. on 2016-10-05 12:09:25 PM

    @ Dave....you are so right on the money. The auto finance sector is a mess and nobody talks about it.

  • Tomas on 2016-10-05 1:25:02 PM

    I tend to agree that side swiping an entire industry is an extreme action by the government.

    That said, monolines were a competition "experiment" run by the government. As creator, is it not within the government's dominion to judge the results and adjust as they see fit?

  • Debbie on 2016-10-05 2:07:06 PM

    Auto loans - I recently had a client that had multiple oustanding R9's on all her credit cards and she had no job. But she was able to get a car loan without a co-signer. And the government is worried about mortgages??

  • Louise on 2016-10-05 2:07:53 PM

    The self-employed have always had to qualify on the BoC benchmark rate. So what's the problem with extending this to "employed" consumer? Isn't it better to protect the consumer from overextending themselves? than to see them lose their homes when the interest rates increase (which they inevitably will)? How in good conscience can the mortgage industry extend mortages to consumers at "their max" knowing full well that they won't be able to afford their mortgage payments on their current income when the rates go up? The government is protecting its citizens from an industry that is failing to do so.

  • Louise on 2016-10-05 2:09:49 PM

    The self-employed have always had to qualify on the BoC benchmark rate. So what's the problem with extending this to "employed" consumer? Isn't it better to protect the consumer from overextending themselves? than to see them lose their homes when the interest rates increase (which they inevitably will)? How in good conscience can the mortgage industry extend mortages to consumers at "their max" knowing full well that they won't be able to afford their mortgage payments on their current income when the rates go up? The government is protecting its citizens from an industry that is failing to do so.

  • Michele Hall on 2016-10-05 3:31:58 PM

    When will the government take not and see the issue is not all with mortgages , yes there needs to be some protection against rate increases agreed but then lower the mqr ... to put this change in place... or graduate the change ... into 2017 . They have still not addressed car financing and credit card debts. Car financing continues to roll in negative equity financing to 50% tds along with credit card debts ... no regulations on Cash money stores .... Then people are forced to use homes as ATM address the source of the issues first ... wake up government
    !

  • Paul on 2016-10-05 6:12:43 PM

    How qualifying client on posted rate with 5 year fixed term would increase the safety guard for consumers? This client's material and financial situation may have changed few times within that 5 year term. The posted rate qualification requirement for 5 year fixed term is irrelevant with regards to consumer protection. It's complete nonsense. The gov't by artificially suppressing demand still leaves out unsolved problem of supply. People need to live somewhere regardless if they be renting or paying mortgages.

  • Joe on 2016-10-05 9:31:48 PM

    Government is forcing more people to rent. In my area to buy a house was cheaper than paying the 1200 - $1,600 a month that the middle and lower class people have to pay for rent. They talking about the debt people carry people with equity can eliminate they're debt and have one payment now that you're taking away the chance for people to buy houses the debt will stay or will get higher. I was always under the impression buying a home was always the goal of Canadians. Buying a home is also your investment for the future. By stopping people to buy the home again your forcing them to pay more in rent then you would for a mortgage. And it takes away their money for the future when they retire. You want to lower the debt then allow people to use more equity to consolidate their debts to get rid of their debt. Like someone said earlier mortgages are regulated strictly auto loans anybody can get personal loans anybody can get. you want to control the debt control those loans as wellbut give all Canadians a fair chance to own they're own home and pay they're Mortgage instead of a landlords Mortgage and fill they're pockets . Stop letting the rich get richer at the expence of middle and lower class Canadians.

  • Eddie on 2016-10-06 12:05:48 PM

    They complain that Canadians have too much debt but the government has no problem contributing an extra $10,000-$15,000 in Insurance to the Principal that they have to pay interest on. What percentage is the Foreclosures, god forbid if insurance companies don't make record profits. Maybe the Department of Finance should look into passing Legislation with regards to our Privacy from banks and not allow them and Credit Card Companies to constantly tell you how much more credit you qualify for! They Need you in debt so their friends at the bank make their record profits. They Sell you cigarettes then complain how much they are spending on Cancer Treatments, Don't come near Alcohol with the mark up and tax revenue and send people to Alcoholics Anonymous. This is becoming a Nanny State and the Lobbyist have done their jobs well.

  • Casey on 2016-10-06 1:09:50 PM

    Big banks have tried their hardest to get rid of the brokers for years. This for sure takes away there competition. Watch now the rates will go up if everyone has to approve at the benchmark rate. They can easily raise the rat by 1% without any competition.

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