Which broker lender will feel the CMHC pinch?

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Brokers are already positing their own theories on which lenders will be hardest hit by CMHC’s move to cap access to government guarantees for securitized mortgages.

“Many of the biggest monoline players use big six bank money and the big six will definitely feel the effects of this change,” said Ron Butler with Verico Butler Mortgage. “It may take some time to find out how this change plays out. Realistically the era of incredibly low rates is likely transitioning to pretty low rates.”

If monolines are sourcing their funds through the big banks, it will soften the impact, said another broker.

“It comes down to where your money comes from,” said Dustan Woodhouse with Dominion Lending Centres Canadian Mortgage Experts.

However, according to Woodhouse, while the impact may be lessened for some, the effect will still be felt.

“Banks’ money comes from depositors which will have less impact than on the monolines who get their funds from banks,” added Woodhouse. “It won’t have the same impact on banks as monolines.

They have limited amounts of funds to lend out.”

The jury is still out on how the limits will impact everyone else.

“Everybody will be affected. It will cost more for the banks to sell mortgages, so the rates will increase probably in the 0.65% range,” said Skye McLean with Argentum Atlantic (HS) Financial. “I don’t see how no one will be affected.”

 “Overall they’re trying to control the housing so it doesn’t keep inflating. It might slow it down because it will affect the affordability, which will affect the consumer as well,” added McLean.

And brokers, themselves, may feel the effects as well.

“I hope I won’t be too affected, but I might be. If the market slows down, everyone will be affected by a decrease in their volume,” said McLean.

  • Walid Hammami on 2013-08-08 4:51:13 PM

    I am not sure if you know thhis but RBC is able to borrow from the US with better rates than canadian insure MBS. This gave them an edge that they used to be more competitive and still keep some healthy margin. RBC will win this game for the moment until the others adjust.

  • Frank Bava on 2013-08-11 5:52:54 AM

    The real concern is why does the Canadian Government (CHMC) now think its too risky selling mortgage insurance. The LTV they are insuring has reduced over the past year and they insure many mortgages for lenders that back door insure all their mortgages. To me it looks like CMHC is concerned about the financial markets and what may be on the horizon if we are headed for a significant recession. Brokers and Realtors are not seeing an overheated housing market so why the concern at CMHC. Its not that they are providing a free service.

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