Brokers have experienced a lender backlog and while the reasons vary, many agree it is due to underwriters having to adapt to recent rule changes.
“Tightening from OSFI has caused underwriting delays: Lenders are experiencing delays due to having to adapt to new rule changes,” Sam Himyary of Mortgage Brokers Ottawa told MortgageBrokerNews.ca.
Himyary is talking about OSFI’s B-20 guidelines that were released in 2012 and whose affects are still being felt today as more stringent rules has caused for more complicated underwriting, according to brokers.
“When limits and rules are changed files often require a second signature,” Chris Spanos of Dominion Lending Centres
Home Financial Inc. told MortgageBrokerNews.ca. “So more than one pair of eyes has to look at a file and sign off on it, which essentially adds another step to the process.”
Of course, many industry players realize these underwriting log jams are also due to seasonality issues.
“Backlogs are just part of the nature of the market; the majority of the time they are due to high volumes, especially at the end of the month because of a lot of closings,” Ravi Gosal of Dominion Lending Centres Mortgage Village told MortgageBrokerNews.ca. “The backlog is also due to the high volume of files submitted in the spring.”
For his part, Spanos agrees. Though he also believes unusually competitive rates are playing a role as well.
“It’s rate-driven as well; when there are a number of announcements – such as the ones we saw from BMO (who offered a sub-three per cent five-year fixed rate) and Investors Group (1.99 per cent, three-year variable) – it creates awareness out there,” Spanos said. “Clients will call you out of curiosity and if rates were higher right now I’m not so sure it would be as crazy as it is right now.”