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Mortgage Broker News | 19 Jan 2011, 10:00 AM Agree 0
A new study released by CAAMP concludes that very few Canadians face unaffordable increases in mortgage costs and Canadian lending criteria are already tight.
  • Whatever | 21 Jan 2011, 04:47 AM Agree 0
    There you go Mr.Carney, green light to increase interest rates - nothing to worry about according to CAAMP! Same with you Mr.Flaherty... please be more bold next time - I dare you to reduce the max term to 25 years and simultaneously increase the min downpayment to at least 10%. All is well in bubble land, nothing to worry about - CAAMP says so!
  • Brad Balmer | 21 Jan 2011, 10:55 AM Agree 0
    On the surface, it appears to me that the study's conclusions are based entirely on what may happen in the short term and only then without factoring in what consumers debt may grow additionally between now and then. What is the time frame this study looked at anyhow?

    I haven't read the study so I don't know if there is any support provided to justify the projected rate increases referred to and the projected timing of those increases. There is also no mention in the article at least, about what interest rate increases for other consumer debt facilities are projected at and the impact there.

    Flaherty et al are charged with the responsibility to address the longer term challenges Canadians may face. I don't think I'm alone in thinking that the approaches Flaherty has taken (after getting buy in from the lenders) with respect to mortgages are well thought out and good for Canadians now, and down the line. These moves he's making, in part, also have a lot to do with helping to address his concerns around a projected underfunded CPP that we'll face long after he's out of office and collecting his MPP.
  • Vancouver Broker | 21 Jan 2011, 11:39 AM Agree 0
    The real issue here in my opinion is that no matter how prudently the lenders are required to lend their mortgage money, the same client can turn around and get 50k in credit cards and finance a vehicle afterwards without regard to affordability. So my mortgage ratios might be perfect, and the client can easily afford their payment, and still find themselves in financial difficulty.

    The only thing Flaherty accomplished here is forced new buyers to pay more for the same mortgage - credit card offers will still come in the mail and tempt the consumer with 18% easy money.

    I think the major point of the study is to re-inforce the ideae that the vast majority of mortgage defaults in Canada are/will be due to 'life events' such as loss of job or whatever, and not rising interest rates.

  • obvious | 21 Jan 2011, 11:59 AM Agree 0
    Well let the government screw the poor bastard that took the CMHC deal at 40 year am and 100% financing less than 4 years ago.. Finally just gaining their purchase value back....Insurers put that product in place to entice 1st time home buyers, now they are fully prepared to screw them out of their home that they have paid on for the last 4 years when their renewal comes up in 1 year, and they no longer of two things happen... they list and try to sell in what will be a flooded market, (because they dont have 15% equity yet) or they renew at the crap ass posted rate that thier lender offers, an increase the household out flow considerabley... good way to screw everyone..
  • Michelle Brienza | 22 Jan 2011, 12:27 AM Agree 0
    I'd like to read the study in further detail. At time of approval for the mortgage, clients ratios are always in line or they wouldn't get the mortgage! Most of the buyers are FTHB and they usually need more furniture, basic tools to maintain the home & basic cosmetic renovations. My experience shows this usually sets them back about $15,000 in the first year. If that couple are now having children, this is where the real debt starts to creep in.
    These changes are not for the short-term, they are long term too. With all this debt, Canadians can't save enough into their RSP's and the REAL ISSUE here is the Canadian Pension Plan....will pensioners in 30 years from now get a pension? The government needs for Canadians to save for retirement and keeping equity is just one small piece to the big puzzle.
  • Phil from Freeport | 22 Jan 2011, 02:07 AM Agree 0
    When I was in University I took a Stats course. One of the required readings was a book called "How to Lie with Statistics"...looks like CAAMPs "satitician" studied that book well.
    What about the other 75% of mortgages funded in 2006 to third quarter of 2008, when lending guidelines were not as strictly adhered too? Head is in the oven, feet are in the freezer, "on average" evertything is just fine.

    Cutting 35 year amort to 30 puts a few less people in the home buying line. However, it puts significantly less money in interest in the bank's pockets.The less money in a bank's pocket the more equity a home-owner can build in their property &/or more money a consumer has to buy other goods & services which stimulate the over all economy. It stabilizes the real estate & mortgage markets because the more equity a borrower has in a property, the more likely they are to make life-style adjustments to keep from losing the property.
    If CAAMP wasn't so heavily funded by the banks & CMHC, their studies might have more credibility.
  • vittorio oliverio | 22 Jan 2011, 04:18 AM Agree 0
    Here is what I would like to see. - the real reason behind the refinancing their house.
    on the surface it gives the impression that people have nothing better to do than redo their mortgage so they can buy their new car, or boat.

    But if we did a study to see why people are refinance you will see a different story. You will notice that people take their debt very seriously and they want to payout debt, However they do not want to pay a 18-30% so they do the most logic thing, redo their mortgage so they can get a lower rate and payout debt.

    Also people refinance for many other reasons, for example 30% of our clients refinance to invest this is not bad, their are looking after their long term goals.

    So lets stop getting on the bandwagon and work with our clients to show that mortgage broker know what they are talking about and that the government should be talking to brokers who truly have the client best interest on hand
  • James in Whitby | 23 Jan 2011, 04:46 AM Agree 0
    Change all you want in the mortgage area, its a loss leader for the big banks anyways. As long as their sales forces are still cramming credit cards and lines of credit down the throats of their customers while encouraging skip a payment features to "help them" instead of educating them on the wise use of credit nothing is going to change. I say well done to the bank lobby groups who have bamboozled the feds once again.
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