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Mortgage Broker News | 29 Dec 2010, 11:28 AM Agree 0
Prime Minister Stephen Harper hinted the government may adjust mortgage rules in 2011 to help Canadians avoid going deeper into debt.
  • gar | 30 Dec 2010, 10:16 AM Agree 0
    The sooner Harper tightens the mortgage rules the better.the greed of the financial institutions will lead us down the path of the U.S. foreclosure after foreclosure.Then it will be our turn to have to bail these greedy bloody banks out and the only losers are the taxpayers.Do It Now
  • Elfie Hayes | 30 Dec 2010, 12:21 PM Agree 0
    We need to stop asking the government to regulate everything we do. I disagree with the above comment. If you read the news you'll know that Canadian conservatism is what saved our butts in this recession and for my money I don't want a weak Prime Minister putting more laws in place that restrict how we can help Canadians obtain home-ownership. With a foreclosure rate at les than 1/2 of a percent we are not even beginning to compare to the Us. CMP just reported that 80 % of Home Owners in Canada have more than 80% equity and 35% of Home Owners either increased their monthly payments or made lump sum payments in the past year. I hardly think that should make us run to the Government for help! Also Read page 12 of Dec CMP by Scotia Economics. Canadians can carry a home for the price of rent in most cities in the country because of the low interest rates. Canadians are also saving more than they were prior to the recession. Being informed about the marketplace will indicate that your comment is a bit hysterical. The Sky is not falling!
  • Rita | 31 Dec 2010, 05:06 AM Agree 0
    If I want to live in a communist country I would move to Cuba. We need to stop giving our government the power to rule on our every move..............
  • Dave | 31 Dec 2010, 05:06 AM Agree 0
    If you take a look at the debt , I wonder why Harper wants to pick on mortgages. The average mortgage interset rate is 4-5% right now. Credit cards are sitting at 16-24%.
    Shouldn't we be looking at limiting high interest debt before we look at mortgages as a place to lower debt?

    I think that priorities are all turned around. Credit card and car loan debt need to be tackled first. As was mentioned above, most Canadians have lots of equity in their homes and so this is not the problem. Let's focus and keep Harper out of this
  • Dave Trithart | 31 Dec 2010, 05:11 AM Agree 0
    I completely agree with the last few comments. The risk that Canadian consumers have going forward lies in the amount of consumer debt that Canadians are carrying, not their mortgage debt. If the Government feels the need to yet regulate our lives more than they already do, focus on what is important and quit being dictated by the big banks who make a fortune on this consumer debt.
  • Richard | 31 Dec 2010, 05:12 AM Agree 0
    The problem is not the lending guidelines at all, and I agree we do not need to be saved from ourselves. Start clamping down on Mortgage fraud, that is a far far bigger problem. Document manufacturing, misrepresentation of facts, and other means of "qualifying" the non qualified are contributing to delinquency and losses more than the mortgage qualifying guidelines. People legitimately buying homes CAN afford to do so. Any further limiting of mortgage borrowers will seriously hurt a very fragile Real Estate market, and the mortgage market.

    How about actually prosecuting those that get caught???? There is a novel idea for FSCO!!

  • Jason | 31 Dec 2010, 05:13 AM Agree 0
    I agree with Dave! It's the credit cards and unsecured personal loans that are putting people in debt! How many times as a mortgage broker have you had to say to a client, " It's not the purchase price(home) that is the problem you have to get your cc debt down!"
  • K.Hoehn | 31 Dec 2010, 05:15 AM Agree 0
    Reducing the amortization guidelines from 40 years to 35% and eliminating the 0% down mortgages, in addition to using higher interest rates to qualify for a mortgage has already forced the "high risk" applicants out of the marketplace. We are using sound principals to qualify new mortgage applicants, in keeping with our Canadian conservative approach to spending. I do not believe there is any burgeoning threat to more potential mortgage default.
  • Gale Tracey AMP | 31 Dec 2010, 05:17 AM Agree 0
    You may want to Google "Sub Prime Crisis in US" to read about exactly what caused it and Canadian financial institutions can in no way be compared to Wall Street greed and unlicensed unexperienced mortgage brokers working for crooks in the Us. Canadian Financial institutions have already proved their fiscal responsibility and we no longer have the number of subprime lenders we had a few years ago. The banks are capable of making their own policy without the government having to step in to do it for them. Canadians are very conservative in their mortgage dealings and try to paydown whenever they can to achieve free and clear status although it is not always the best strategy. In Canada we have licensed Mortgage Brokers or Accredited Mortgage Professionals who advise their clients and ensure that they can afford their purchase/refinance. CMHC and Genworth are also very strict in policy as another safeguard. We are doing just fine without government intervention.
  • | 31 Dec 2010, 05:19 AM Agree 0
    I totally agree with Elfie. I am tired of hearing comments about greedy banks in Canada. If you had to loan out $300,000 of your own money, do you think that you would evaluate the client's situation before doing it? Of course you would. And as far as the Government, who do you think is responsible for CMHC being praised around the world for its tight guidelines and policies for default insurance....hmmmm.....
    So please understand that the sky is not falling, that Banks are not being overly greedy, and that the Government is monitoring and actually helping the situation.
  • Gecko | 31 Dec 2010, 05:19 AM Agree 0
    Harper is not changing the mortgage rules, all he is saying if they need to change they will. As of right now they don't need to change. With our normal foreclosure rates, and don't forget Canadians are saving twice as much since the all time low in 2006. We are not in such a bad spot, and most professionals, and economists seem to agree that a housing bubble does not exist.
    What the issue the government and the BofC is having is the fact that they cannot increase interest rates at this time due to the current global economic uncertainty. However, with these low interest rates Canadians will tend to borrow more, and spend more. Therefore, what can the government do? Raise taxes? Or use the media to warn Canadians that we are not out of the clear, and if we are not careful, then changes will have to be made. Or we may will be in trouble.
  • John Benstead | 31 Dec 2010, 05:20 AM Agree 0
    If one wishes to adopt a pessimistic stance on the Canadian economy I would suggest pointing towards the increased stranglehold banks’ credit cards are having on Canadians. Investing in housing has proven very profitable for Canadians in the past and several studies have highlighted the intangible benefit of investing in a house, most notably an ability to force individuals to save. There are no such positives that come from credit card debt. The Governor may well look to decrease amortization schedules and increase qualifying interest rates to stem these debt rates but I believe if people want to address the situation of growing debt we should be looking to make low interest rate mortgages MORE accessible to people looking to refinance their high interest rate credit card debt.

    The credit card versus the mortgage reminds me of some sage advice I heard, close to 40 years ago. "They should make marriages a lot tougher to get and divorces a lot easier" Where is Harper or Carney when Canadians are opening new credit cards at up to 28.8% interest.
  • Alex | 31 Dec 2010, 05:21 AM Agree 0
    Just need to comment on Elfie Haye's comment above. 80% of Canadian Homeowners have more than 20% equity in their homes (not 80% equity). Therefore 80% of Canadian Homeowners sit with 75-80% encumbered on their home. That changes the landscape to that comment because for these Canadian Homeowners to obtain this 20% equity they must obviously go through an insured program in which of course the Gov't has every right to govern.
  • steve | 31 Dec 2010, 05:27 AM Agree 0
    i know that it was to easy for people to own a house .i agree with mr,harper mortgages should be made harder to obtain
  • Ted Jones AMP | 31 Dec 2010, 05:40 AM Agree 0
    2010 was a very interesting year with the financial markets and especially with the interest rates. 2011 promises to be even more interesting! Mark Carney, the head of the Bank of Canada and now Mr Harper are eluding to more changes and tightening in the qualifications for Canadians who wish to purchase a home next year. Although this may sound like a good idea, especially to the Federal Government over concerns for personal debt levels, the real changes need to directed to the financial institutions on their willingness to grant unsecured debt. The greatest concern in my opinion comes from Credit Card usage at "introductory low rates" that rise to 19 -21% after 6 months, rather than from mortgaging to purchase a home or refinancing. Bankruptcy and credit difficulties arise from "unsecured" debt not home ownership. If a person who has a $25,000 Visa at 1.9% introductory rate pays only $40 per month. However when the introductory rate converts to the regular rate of 19.9%, their payments increase $415 per month (interest only).

    On the other hand, a mortgage for $350,000 at Prime -.75% (2.25%) would have payments of $1200 per month. If prime increases by 2%, the mortgage payment increases to $1590. An increase of $390! If you allow for the fact that most Canadians have 3 or more credit cards and Lines of Credit with aggregate limits exceeding $25000, you can see that the greatest risk to Canadians is not their mortgage debt load but rather the unregulated lending that Canadian banks enjoy with their credit cards. But that type of regulation would "cut" into bank profits.
    The Harper Government will not do the right thing.
  • Mike Havery | 31 Dec 2010, 05:49 AM Agree 0
    The government will save us from ourselves. Sure they will. Trust them.
  • Jeremy From Calgary | 31 Dec 2010, 05:50 AM Agree 0
    Harper is an idiot! Doesn't he speak with Flarehty? A couple of weeks ago Flarehty said he wasn't tightening any rules and any tightening would be left to the banks to do.

    Our Government is the puppet while the Canadians banks are the puppet master pulling all the strings. Grow a set Harper!
  • Elaine | 31 Dec 2010, 05:51 AM Agree 0
    Instead of picking on mortgages, why doesn't the government regulate the credit card holders. There will always be foreclsoures, no matter what. A loss of jobs can cause this, as well as irresponsible people that are in debt up to their eyeballs from credit cards and unsecured Lines Of Credit. Make these credit card companies accountable for dangling a big fat carrot to everyone. The government should cap a limit of $1000 and an interest rate of 2% with those credit card holders. Also, the gov't should pay for classes to teach consumers how to pay for these things, and stop allowing these card holders to dish out cards to kids in university with no jobs!
  • The Davo | 31 Dec 2010, 05:54 AM Agree 0

    The level of misinformation and nonsense in some of the above comments is mind boggling. Know something about the topic you are commenting on before you offer your thoughts and your fear mongering.

    About half of the homes in Canada are mortgage / debt free. Canadians actually have enormous home equity and our situation in no way parallels the US.

    The ease of buying a house in Canada is roughly the same as it was at the end of World War II. That is when CMHC came into existence and it was possible to get a house with only 5 % down (identical to today's downpayment). Rates are probably lower and we now have 35 year amortization so it may be somewhat easier but the people getting houses are not a risk.

    Our foreclosure / arrears rate on mortgages in Canada was approx 4 / 10 % of one percent at its worst. By contrast, the same rate in the US was 10 % or 25 times higher. Every 10th house in the US is behind on its payments vs every 250th house in Canada.

    Our rules surrounding mortgages reflect our country's history of having a small amount of regulation in order to keep the mortgage industry from going off the rails as it did in the US. We don't need the Wild West system they had there (ie no system / no regulation) and we are in no way headed towards Communism because of the small amount of regulation we have.

    The federal government has been carefully tweaking our mortgage rules since the melt down in the US (eliminating 40 yr amortization and zero down). It has probably slowed housing sales somewhat but has shored up the reliability of our systems.

    They have also tweaked the rules around refinancing house loans so that people can pay out their credit cards with their home equity. They may need to tweak this further if people continue to pile up credit card debt and bail themselves out with their home equity.

    I agree that the government needs to look at credit card debt and the rates that are charged on credit cards. They also need to look at pay day loan operations. The interest being paid by consumers for both services is often absurd.

  • Jerry | 31 Dec 2010, 06:04 AM Agree 0
    Leave the amortization periods alone - but lose the short term mortgages.

    Anything less than a 5 year Interest Rate Term is just asking for trouble, and susceptible to bank & government rule and rate manipulations.

    We need to get rid of this DAY TRADING mentality people have of real estate.

  • Jerry.. again | 31 Dec 2010, 06:09 AM Agree 0
    10 year rates should be cheaper then 6 month rates

    6 month rates are SUCKER RATES setting people up for failure

    Kill the SUCKER RATES and demand lower rates for longer terms !!!!
  • Spidey | 31 Dec 2010, 06:21 AM Agree 0
    Maybe Harper and his boys are getting cut of the card Business...tingling
  • Expert | 31 Dec 2010, 06:25 AM Agree 0
    Passed = correct or approved, past = history. The world class stability and integrity of our Canadian Financial Institutions AND their ability to provide our citizens with sound mortgage products is not only the envy of such countries as the US but is THE PRECEDENCE for those in repair. Statements such as above can only be deemed as fear mongering or perhaps selfishness that only wishes to either stagnant our country’s growth or keep young families and citizens alike from becoming home owners and build wealth.

    NOPE...Harper needs to KEEP OUT!!! Our institutions were and still are global flag ships, when everyone else operated with reckless abandonment OUR Institutions maintained an entirely different path. I would go as far as to say when Harper and his Minister did step in the last time he was ONLY propaganding and trying to associate his name to something that not only didn’t need fixing but knee jerked on something he knew nothing about. Clearly our Canadian Banking Executives and powers at be avoided the ill fated practices of those in the US that led up to their bank failures…wake up! took years of a US bubble to build and finally deliver their crippling demise and then Harper finally wakes up and says OH!, I guess I better say something here… it was all in good hands to begin with. I just love the bs of political propaganda…”we stepped in before and we will step in again”…bah!...we didn’t need ya buddy AND if we did you would now be accused of being a Prime Minister that did too little too late…Harper cant share in that trophy…sorry!
    As Elfie has so clearly defined the compelling stats and data, we MUST stay the course and realize when other global markets went into crisis we NEVER did...AND as these other global markets struggle to repair WE have GROWTH. The US alone currently has 4million vacant homes from foreclosures and it is highly anticipated they will take back another 4million in 2011....ummm vs. our LESS than .5 percent...??!!

    Harper just set your attention on properly protecting and leveraging$$ our natural resources and how about this idea....set up a Canadian consortium of Financial Industry Professionals whereby OTHER Countries PAY US to consult and stick handle their way out of their mess. We need to encourage and educate Harper on many of our World Class abilities and resources and then turn those into dollars and cents/sense for the Canadian economy.

  • Chris | 31 Dec 2010, 07:59 AM Agree 0
    When will "Daddy Government" stop telling me how to run my household. It's nice that Harper feels he should help Canadians with their housing but don't forget he gets a free house. Less than 1/2 of 1% of all the mortgages in Canada are currently in arrears. Get serious about running the country ... focus on that job ... reduce our taxes ... keeps interest rates low ... invest in Canada and leave how I run my home to me
  • Chris | 31 Dec 2010, 08:04 AM Agree 0
    For those of you advocating for longer terms answer one question ... How come almost 80% of 5 year terms never make it to maturity?

    A lot can happen in five years and the banks know it - that is why they push the five year and longer term because they know that in 80% of the cases they will get a nice penalty cheque. That is why the shorter terms are vital in giving the client the proper product for their situation.

    I agree 100% with the "Sucker rate" on the first 3 months of the variable - that type of advertising should be banned.
  • capitalist | 31 Dec 2010, 08:23 AM Agree 0
    I'm amazed as I read these comments the number of people "presumably mortgage brokers - who play the all too familiar card of accusing the government of "skewing the market" and "over regulating" and even some fool suggesting its a communist move. Two points to remember.

    1. We all just witnessed a total absence of any regulation in the USA just cause the largest real estate meltdown, credit crises and "great depression. So sell "crazy" south of the boarder dick chaney - we,re not buying it up here.

    2. If the free market was left "unregulated" by government then the most the "free market" would lend on a home in canada would be about 75 to 80 percent over 25 years at higher rates that reflected true risked based pricing. Its the government that has artificially inflated our market with non market viable financing options insured by cmhc ( read canadian taxpayers). So the knife cuts both ways. Government giveth and taketh away.

    Come one mortgage brokers - the housing and finance industry exist to shelter canadians, not pay your exhorbitant commissions. A little good advice would strengthen your credibility. Watch out for google mortgage - coming soon to a consumer near you.
  • Jason | 31 Dec 2010, 09:27 AM Agree 0
    Lots of good comments. However, the Government will continue to control the ONLY thing they have control of and that is the mortgage industry. They are powerless against the Credit Card companies. Lets face it, the credit card companies will fight back and have much deeper pockets than the Canadian Government. They won't have the money to battle to big card companies. Even if CC rates decline...fees charged to the retailer and eventually the client will go up. The Government is also worried a little, because they cannot afford to bail out if...and a big IF we ever needed it.
  • Roberto | 31 Dec 2010, 10:54 AM Agree 0
    Our Canadian mortgages are already conservative yet reasonable. In fact, seemed to be the model of our US counterpart given the latter’s too aggressive nature that resulted into kaput. While our Canadian mortgages are healthy and safe.

    What is DIFFICULT for me to understand are Payday Loans - who in effect are charging interest rates (or,fees or, whatever semantics they want to term it) in the range of 135% to 8395% annually but are impune to section 347 of the Criminal Code governing the maximum rate of interest a lender can charge (which is under the jurisdiction of the Royal Canadian Mounted Police). But they say Payday Loans are NOT under Federal regulation as it is under the Provincial jurisdiction (like here in BC apparently under the Business Practices and Consumer Protection Act)? So Criminal rate of interest has double standard? Maybe that is where Mr. Harper should put his foot down first.
  • MK | 31 Dec 2010, 10:54 AM Agree 0
    The government is only concerned with high ratio mortgages, which the government of Canada ultimately guarantees (CMHC 100%, Genworth and Canada Guarantee 90%). So long as the government backstops these mortgages, the government has the right to regulate. It wasn't that long ago that one must have at least 10% down and max. amortization is 25 years.
  • Vittorio | 31 Dec 2010, 11:05 AM Agree 0
    The government had no clue and they talk out of their you know what. It has been said, mortgages do not put people on debt they get people out. I would rather have a person who is 90% l/v ratio and have a good rate, than gave a person who has 30k or more in credit cards or loans at higher interest rate. Harper talk talk to mortgage brokers before you open your mouth. And than maybe you would have a better understanding on what is really happening.
  • Larry | 31 Dec 2010, 12:05 PM Agree 0
    People, people, listen to yourselves. You have every right to be concerned with such poorly considered bluster coming out of the mouth of our esteemed head of state. Like it or not, (and I for one, vote for the latter) the government will assert its right to regulate. But let's get serious. Despite Harper W's ineptitude, the government (especially a minority one) isn't going to shoot itseslf in the foot by fixing something that isn't broken. Harper the ever vigilant public-image seeker, is merely joining in on the chorus to keep front and centre of the sheeple. Methinks me smelleth an election brewing, eh?
  • Don Berthelette, Don B. Realty | 02 Jan 2011, 04:18 AM Agree 0
    Folks buying homes for 3 1/2 -4 -5 X's their total gross income are setting themselvs up for serious finacial problems down the road. When the kids get older & more spendable income is requied for their activities...who will be able to afford it? When it's time to change vehicles, furniture , upgrade will they afford it? When the house needs renovations..where will the cash come from? Finacial planniong is required & housing can't be the answer to constantly bailing one out by refinancing. That would only lead to poverty in retirement. Yes, credit card interest is too high, but debt load in too many cases is a result of being house poor. A banker should feel comfortable saying "yes" I can give you a mortgage, but you need to find a home you can afford. The marketplace will follow a buyer's lead when required.
  • David Davidson | 05 Jan 2011, 07:57 AM Agree 0
    We keep slapping ourselves on the back & claiming Canadian bankers are the best... bull feces!!!
    Since 2008,the Federal Govenment has bought $125 BILLION of Cdn Mortgage Backed Securities from Canadian chartered banks which represents over 12% of all residential mortgage money outstanding. Why? Because there was no "open" market for the MBS's, because nobody was buying them. So to keep the banks liquid, Flaherty & Co used Government money to buy the securities & keep Cdn chartered banks afloat....but there was no bailout.Much.

    Our banks were only fronting their money,closing the transactions, securitizing the mortgages & then flogging the MBS units. The faster the wheel went around more money they made....and there was alot of crap put on the books to keep that wheel spinning.

    In the grand scheme of things, like the world economy, the Canadian banking system isn't a drop in the bucket. Our system did not crash & burn because mortgage default insurance company is backed 100% by the Canadian to all those "free-enterpriser/capitalist/bankers/deregulators" back-right-off. The only reason your bank stock is not worthless toilet paper is because Joan/John Canuck taxpayer is guaranteeing the mortgages made by your banks.

    The next few years' write-offs & losses at CMHC & the banks will show you how good or bad Canadian bankers have been.
  • D.P. | 05 Jan 2011, 07:58 AM Agree 0
    Why is the Federal Government involved in the mortgage business?Can they find other segments where they may be of help!I guess they have to go with what is popular at any given moment in time.

    Well,one suggestion in which the feds may be able to help is to eleminate the INTEREST RATE DIFFERENTIAL!This would help over-burdened consumers save thousands of dollars in refinance fees.But why help the consumer/the banks need the money.Always remember the consumer is the problem not any of the credit institutions?

    May we suggest another concentration for the Feds?With all the rebates from auto manufactures,who do you think gets the money.Here'how it works -

    Consumers go to their local dealership in search of a new
    automobile.The dealership brokers the financing to any number of credit institutions.To keep the interest rate down from say 12% to 6% and the payments low,the credit institution claims the rebate of $5K to $10K while amortizating the loan over 7 years with a term of 5 years.Then the consumer because he knows nothing about contract law,finally reazlizes after 5 years,they do not own the vehicle.But have to pay a final payment of $10,000.00.However,if the consumer qualifies the final payment may be financed(how high an interest rate and payment over 2 years I wonder?)This means a auto listed for $20K which the consumer could own for $15K with true 0% financing will ultimitly cost the consumer $55K.

    But the dealership got kickback from the BANK.
    Who wins?
    Who's the crook?
    Think this is worth Mr. Harper's(or any PM's attention?
    Where would the broker end up in a case like this?

    The bottom line for governments of all levels is to put the consumer first.To most consumers,they go with what they are told because they know no better.
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