Brokers in one major market are noticing more conservative lending practices among monoline lenders, forcing players to send more deals to the banks.
Monoline lenders in Alberta are becoming more strict with income qualification in the wake of the plummeting oil industry.
“Lenders in Alberta don’t want to use the full two year average for income (anymore) and they often only want to use 25 per cent of bonus or overtime income (for qualifying),” Jean-Guy Turcotte of Dominion Lending Centres Regional Mortgage Group, a broker based in Red Deer Alberta told MortgageBrokerNews.ca. “More of the monolines have been cutting back on income allowances.”
As a result, Turcotte admitted he has had to send more deals to the big banks, which have been less conservative with underwriting in the wake of falling oil prices.
“And it’s the investors pulling the strings, not the underwriters,” Turcotte said.
It’s understandable that mortgage lenders are becoming more conservative.
Between January 1 and May 7 of this year, Alberta employers notified the province of plans to terminate 9,342 jobs, according to Global News.
And according to Jason Gilmore, a StatsCan analyst, 13,000 jobs were axed in the province’s energy sector between September 2014 and January 2015.
Add that to the fact that at least one mortgage default insurer believes delinquencies are expected to spike in Alberta.
“Our expectation is we’ll start to see [mortgage delinquencies] potentially in the second half of this year, so third quarter, fourth quarter it will start to pick up,” Stuart Levings, chief risk officer with Genworth MI recently told Business News Network.
However, not all Alberta-based brokers are noticing the same trend.
“I haven’t noticed any changes like that,” Calgary-based Matt Leggett of CanWise Financial told MortgageBrokerNews.ca. “All the non-bank lenders I have dealt with still consider bonuses and two year average income.”
“Lenders in Alberta don’t want to use the full two year average for income (anymore) and they often only want to use 25 per cent of bonus or overtime income (for qualifying),” Jean-Guy Turcotte of Dominion Lending Centres Regional Mortgage Group, a broker based in Red Deer Alberta told MortgageBrokerNews.ca. “More of the monolines have been cutting back on income allowances.”
As a result, Turcotte admitted he has had to send more deals to the big banks, which have been less conservative with underwriting in the wake of falling oil prices.
“And it’s the investors pulling the strings, not the underwriters,” Turcotte said.
It’s understandable that mortgage lenders are becoming more conservative.
Between January 1 and May 7 of this year, Alberta employers notified the province of plans to terminate 9,342 jobs, according to Global News.
And according to Jason Gilmore, a StatsCan analyst, 13,000 jobs were axed in the province’s energy sector between September 2014 and January 2015.
Add that to the fact that at least one mortgage default insurer believes delinquencies are expected to spike in Alberta.
“Our expectation is we’ll start to see [mortgage delinquencies] potentially in the second half of this year, so third quarter, fourth quarter it will start to pick up,” Stuart Levings, chief risk officer with Genworth MI recently told Business News Network.
However, not all Alberta-based brokers are noticing the same trend.
“I haven’t noticed any changes like that,” Calgary-based Matt Leggett of CanWise Financial told MortgageBrokerNews.ca. “All the non-bank lenders I have dealt with still consider bonuses and two year average income.”
