By Justin da Rosa
Thanks, CMHC! The latest move by the Crown corporation appears to have pushed a wave of fence-sitters into making purchases today fearful of tomorrow's rate increases.
“I’ve had five new deals in five days with people who were sitting on the fence – people hear the news and decide it’s time to move,” Steven Brouwer of Dominion Lending Centres Drake Entrust Mortgage Services told MortgageBrokerNews.ca on Friday. “People are deciding to refinance as well.”
Some other brokers who have yet to feel the effects are nonetheless prepared to deal with an onslaught.
“We haven’t seen it yet, but we discussed it in our meeting today and I think there will be a wave of demand coming,” Kevin Blue of Dominion Lending Centres Arrowsmith said last Friday. “Any negative news pushes people off the fence and into the market.”
A collective apprehension may be growing within the home-buying community due to the CMHC’s decision last week to limit each lender in its mortgage-backed securities program to $350 million in guarantees for August. The move is expected to increase the originations costs for large lenders.They are expected to then pass that on to consumers in the form of higher rates.
The CMHC step won a flood of press attention last week, keeping real estate agents across Canada hopping to close deals on homes that have in many cased languished on the market.
Brokers, once sitting on a mountain of preapprovals, have also benefited from the CMHC announcement.
But some have yet to notice any significant sales surge, suggesting it may be due to clients being out of the loop.
“I haven’t noticed anything,” said Andrew Lee of True North Mortgage. “I’ve talked to some clients and what CMHC said may put pressure on bond yields, but some customers aren’t tuned into what’s going on with it.”
As for the efficacy of the CMHC’s decision, Brouwer shared his thoughts: “Tightening up the market may not be a bad thing but they can’t continue to tighten for the long term. They have to think about how to control it consistently instead of making rash decisions.”