Brokers anticipate Flaherty’s next move

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Analysts are worried those tighter mortgage rules have come too late to pull Canadians back from the brink of debt. So is checking in with industry leaders, asking for their take on what the federal government is likely to do next in order to slow the housing market.

Here's a sampling of that opinion, with mortgage professionals offering well-reasoned guesses on what's likely to be in the next round of tightening -- if, in fact, that tightening occurs.

“The next step could be increasing the minimum down payment from five per cent to seven or eight per cent or even 10 per cent. Another step could be to reduce the GDS/TDS ratios further and go back to 32/40. Either one of these moves will have a major impact on the market.”
     -- Ad Lakhanpal, mortgage broker, Mortgage Alliance

“The opinions from all industry associations have been well documented, OSFI and the federal government have extended too far with their mortgage rule changes. It is counter-intuitive to be tinkering with the strongest part of the Canadian economy which if/when housing slows down will certainly effect every other sector. If these numerous changes do not have the desired effect the Feds are looking for they may resort to raising the cost of borrowing by increasing interest rates.”
      -- Albert Collu, broker and president, IMBA and Argentum Mortgage Finance Corp

“More than likely (the government will) increase the down payment form five per cent to 10 per cent and or lower the GDS/TDS ratios.”
      -- Kelvin Seepersad, agent, Mortgage Intelligence

“This one may have the desired effect the Feds want, and as far as I am concerned these changes will have a tremendous cooling effect on the housing and mortgage market. The Feds should be focusing their attention on the unsecured debt of Canadians and get the lenders to revert to more instalment type of borrowing instead of revolving debt and keeping Canadians in a constant state of debt.”
        -- Kevin J. Power, president, Power Mortgages

“The next move will make purchases only to 90 per cent and qualify all deals on five year posted rates, regardless of the term chosen.”
       -- Allan Kates, broker and VP sales, Verico Northwood Mortgage

“The good news from the recent announcement that caught many of us off guard is that the minimum five per cent down payment option is still available to buyers as long as they purchase properties under $1 million. This is good news for first time buyers since many of them take advantage of this program especially in more expensive markets like Vancouver.

"I'm not sure the government needs to make any further changes at this time but should these changes not result in the desired effect we might see having to use the benchmark qualifying rate to qualify high-ratio borrowers on five plus year terms as well.”
        -- Scott Dawson, mortgage broker, Verico Paragon Pacific Mortgages

"It’s a tough call as the government may not be in position to make any more changes if the economy slows down and it’s going to be out of money?"
        -- Stephane Prevost, mortgage agent, Dominion Lending Centres Alliance


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  • Layth Matthews on 2012-06-28 3:05:35 AM

    I am fairly confident that when the net effect of these changes come to bear, the next move will be more conciliatory. By all means lower the amortization limits, but please don't prevent people from consolidating rapacious consumer debts into the mortgage. By reducing the refinance limits the government is throwing away the potential economic stabilizer benefits of CMHC and padding the pockets of the banks, who will pick up the slack at 20%.

  • Faye Drope on 2012-06-28 3:23:28 AM

    I think the next go round will be geared at unsecured credit. It used to be the norm that we took into account the amount of unsecured credit available and factored that into the debt servicing regardless of the amount that was utilized. If they go back to that you will see a major shift away from unsecured credit. In my opinion this should have been done first.

  • Stephane Prevost DLC Alliance on 2012-06-28 3:47:01 AM

    what i met by money is CMHC is running out of money as we know.

  • Paul Therien, CENTUM on 2012-06-28 7:04:24 AM

    In my opinion... CMHC should be focused on their mandate, which is to house Canadians. It is not to insure lenders against risk, nor to help someone put a fancy new kitchen in their home. I suspect you will see CMHC return to the original business model that they operated under - for good or bad - and that was making housing affordable to Canadians.

  • Kim Bowles on 2012-06-28 11:04:54 AM

    I agree with the comments on unsecured debt. If the feds truly wanted to get spending under control they should be dealing with lines of credits and reverting new credit lines back to 2 or 3 % of the outstanding balance 400 payment on 20,000 instead of 100.00 interest'. That would definitely make consumers think twice about spending, and reduce buying power. Also dealing with the 29% credit card companies. But this is the banks life line so it wont happen. Reducing refinances to 80% is to save face for CMHC because the headline for the Canadian economy would not be good if they said CMHC is maxed out and cannot lend anoymore. The banks are simply going to consolidate to 80% and then offer the clients an unsecured credit line for anything remaining. what ever happened to Financial planning responsibilities . It will be a very interesting year.

  • David O'Gorman on 2012-06-28 11:12:59 PM

    Maybe, in a back- handed fashion, Flaherty has addressed the LoC & credit card debt load issue by forcing consumers to understand they can not crank up c/c debt with the intention to consolidate it all into a new gov't insured mortgage. c/c delinquency will rise & lenders will have to tighten limits. Maybe it's "tough love" for consumers, maybe it is warning to the banks to tighten c/c guidelines before he drops a hammer on them with new tougher c/c regulations.

  • Russ Cameron on 2012-06-29 9:15:24 AM

    Govt are dealing with the wrong market.
    Mortgages are the cheapest money we can buy..we need housing, we need jobs, we need businesses to keep going.. these things employ people. what you need to deal with is placing restrictions..such as placing on the limits people can afford according to their income.. credit card rates are from 18% to 29% and many activite families live within a $20,000.00 limit all their lives.. that is where are problem is note #.19% in mortgages I'm a retirred bank manager I should know// thanks

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