Whether they like the rule changes or not, brokers are facing what may be the busiest two weeks of the entire rest of the year, especially those dealing with first-time buyers in danger of being shut out of pricey markets
“We definitely had a flurry of activity before the last mortgage rule changes came into effect, and we’re going to have it again,” said Jonathan Tillger, co-owner of Dominion Lending Centres Mortgage Village in the GTA . “Really it is a time, an opportunity for brokers to get some business ahead of period where a lot of people may not be able to qualify and to buy because they won’t have the lower-priced inventory to fall back on.”
That scenario poses more of a challenge for brokers in Toronto and other high-priced markets where many clients are rely on 30-year mortgages and 5 per cent down to get into a home. Reducing their buying power means many simply have no cheaper property to buy.
The fear is they’ll have to continue to sit on the sidelines, waiting for a price correction that may simply fail to come to Toronto and Vancouver, worry brokers.
That may in fact be the government’s objective in finally moving on rule changes some economists have sought for months.
In addition to lowering the amoritization cap to 25 years for government-backed mortgage insurance from the current 30, Finance Minister Jim Flaherty will also cap refinances at 80 per cent of a home's value and set a $1-million ceiling for homes eligible for government-backed insurance.
Also effective July 9, it will restrict all would-be borrowers from mortgage insurance if their maximum gross debt service ratio exceeds 39 per cent and their maximum total debt service ratio rests above 44 per cent.
“We all have existing clients that we all need to be communicating these changes to and their potential impact,” said Brian Gentles, a Calgary mortgage associate with The Mortgage Group. “There are very likely people who are in the market looking right now that are going to be looking to buy now ahead of the changes.”
Clients looking for refis may not have the same sense of urgency, suggested Gentles, pointing to challenges many already face in meeting the current equity requirements associate with the 85 per cent Loan-to value ceiling.