Brokers call for region-specific lending rules

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The general consensus among brokers is that government tinkering with lending rules is an unwanted annoyance; but do brokers in smaller markets have it worse than others?

“There has been a boom that just never went away in Vancouver and Toronto but here in the Maritimes, housing worth hasn’t gone up,” Kent Farnsworth of Mortgage Alliance Simply Mortgages told MortgageBrokerNews.ca. “We’re painted with the same brush where business is booming and the national state of the economy is affecting these markets a lot more than smaller ones.”

Based out of St. John Newfoundland, Farnsworth would like the government to regionalize lending regulations. The tightening lending rules are meant to cool out-of-control housing markets but one unwanted affect is slowing markets that could actually use a boost.

“A year ago I could have approved somebody with decent credit and a gifted down payment – I could get a mortgage approved,” Farnsworth said. “Now they’re slowing it down and I can understand why they’re doing it in larger cities but it doesn’t make sense to scrutinize the buyers as much in smaller markets.”

And similar sentiments are shared by brokers in smaller markets around the country.

“You can’t paint Midland Ontario with the same brush you paint Toronto with – it’s a total different environment,” Garry Dicks of Dominion Lending Centres Midland Mortgages said. “Look at pricing in large markets and pricing in our market; our market is flat. You look at Flaherty changing all the rules to slow the market down and we didn’t have an accelerated market. We didn’t need any slowing.”

According to Dicks, it isn’t just the government who has implementing business-stifling mandates, it’s the lenders as well.

“It’s not just federal and provincial legislation that are deterrents. With lenders, if you’re dealing with B-lenders, they’re all cutting back loans,” Dicks said. “The rules aren’t any stricter in smaller markets, it’s that the lenders are looking at the loan to value and restricting you – they normally do 80 per cent in the GTA, they won’t even lend 75 per cent of the property in Midland.”

  • Ron Butler on 2013-11-08 7:06:40 AM

    Just like the 88 year old grandmothers and 9 year old kids who go through the X-ray machines at the airport, it's the way government's works. One size fits all whether it makes any sense or not.

  • Halifaxbroker on 2013-11-08 7:34:10 AM

    I am a broker in Halifax and I agree with Kent. The changes Flaherty imposed on the mortgage market has crippled us in this market. A one size fits all approach definitely is not working - although I don't think they care. I have brought this up with the local MP in hopes that some changes will come - but I won't hold my breath.

  • Western Broker on 2013-11-11 6:08:20 PM

    Outside of the recent changes, the regional differences spread into the markets and their growth, taking away the refinance business for some areas (slow growth), and allowing others the opportunity to capture the available equity, because of their market. I think a slow market should be given consideration for refinances to 90% again, with criteria on the proceeds to help them better their situation (paydown unsecured debt). The markets that experience the growth can cope with the 80% refinance limit because they have the equity to work with.

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