Daniel Johanis, a Toronto-based mortgage broker with DLC Mortgage Centre, is convinced credit unions are the panacea to the latest incarnation of B-20, but he believes the word hasn’t gotten out as effectively as it could.
“Maybe part of it is education,” he said. “A lot of people aren’t familiar with them, from my experience with realtors. But they also aren’t aware that there is a different set of guidelines, like provincial regulations.”
Additionally, poor familiarity with credit unions has bred both indifference and circumspection. But Johanis says they can work miracles.
“Clients are wary because they’re not sure how credit unions are structured, or they think there are limitations on the products they’re able to afford. But they have programs for non-income qualifying clients who won’t pass the stress test. They’re more flexible.”
The seeming cure-all presented by credit unions could become subject to greater scrutiny. In fact, Quebec has all but assured credit unions in the province will have to follow the same rules as big banks. However, in Ontario credit unions like Meridian are riding a tidal wave, although Johanis wonders for how much longer.
“It’s a matter of if the loophole [that credit unions present] is closed and also the fact that credit unions only have so much money,” he said. “Some credit unions are taking on more volume, so it’s taking longer to get deals approved. It could be challenging when we have financing deals in place on offers.
“I’ve had a couple of clients who had to reassess. With credit unions, we can’t put too much pressure on them because they’re trying to adapt to the demand put on them, but they’re definitely communicating and trying to work through their backlog, so they’re doing the best they can right now.”
That demand may soon burst at the seams. In addition to last month’s variable rate increase, more are expected. One source told Mortgagebrokernews.ca that Bank of Montreal thinks the rate will increase 1.25% over the next couple of years.
In the interim, Canadians are having difficulty deciphering their financial standing, with many stepping away from the housing market.
“I think the landscape is a little more challenging this time around [with B-20],” said Johanis. “I don’t know if it’s worse [than October 2016’s B-20 announcement], but I think a lot of brokers saw it coming. It’s challenging in the sense that people are at the higher end of affordability and they’re taking a step back and reassessing their overall purchasing power when it comes to buying property. If they really want a place they’ll find an alternative source, like private money or credit unions.”
For how much longer remains to be seen.