The Ministry of Finance has remedied a significant regulatory oversight that precluded low-risk borrowers from insurable mortgage rates simply because they refinanced after a certain date.

“A communication was sent to all the lenders from CMHC and Genworth that, effective Monday [April 30, 2018], any refinance after November 2016 can be switched or transferred to a new lender and qualify for insurable mortgage rates,” said mortgage broker and Principal of Champion Mortgage Doug Adlam.

Borrowers who refinanced their mortgages after November 2016 could not qualify for insurable mortgage rates upon renewal, inauspiciously leaving them the options of remaining with their institution or moving onto a better one with no discernible rate advantage. However, Adlam and a small group of brokers, lenders and insurers lobbied the government to fix the flub.

“It’s a huge win for Canadians and it truly shows the benefit of mortgage brokers, lenders and insurers in the Canadian industry, who totally, completely and always look out for the best interests of Canadians,” said Adlam. “I really think Canadians forget what interest rates looked like before the brokering industry grew. Interest rates on average would be about 1.5% higher than they are today. It goes to show that, from day one, mortgage brokers have been trying to bring down the façade of posted interest rates.”

It isn’t often that government walks back its own fiat, and while no admission of blundering accompanied the communication that outlined the new rules, responsible borrowers will no longer be penalized.

“On the one hand, I am surprised because, typically, when they make a change they stand by it,” said Adlam. “On the other hand, the Ministry of Finance wants to ensure that Canadians are well-protected and ensure that people with those lower-risk loans who renew their mortgages have the benefit and the opportunity to seek insurable and, therefore, lower interest rate mortgages now and into the future. It’s just disappointing that there have been borrowers that had to renew into high interest rates while this initial oversight had to be reclarified.”

In a statement provided to Mortgagebrokernews.ca, CMHC—which, along with Genworth Financial and Canada Guaranty, pressed the Ministry of Finance for clarification on the rule—says purchase transactions are presently the only permitted loan purpose, although caveats do apply.

“A refinance loan, defined as an increase to the outstanding balance or extension of the original amortization, is not a permitted loan purpose,” reads the statement. “At the borrower’s request, a mortgage may be switched from one lender to another, and be eligible for mortgage loan insurance, provided that the new lender does not refinance the mortgage at time of the switch/transfer and meets other insurability criteria per the Insurable Housing Loan Regulations… In the case of a dissolution of relationship/buyout of a co-borrowers interest in the property, funds required to acquire the departing co-borrower’s interest in the property would be eligible for mortgage loan insurance.”

Canada’s mortgage growth has fallen to the lowest in nearly two decades as interest rates rise and after new mortgage rules took effect at the start of the year.

Total residential mortgage credit grew just 0.3 percent on average over the last three months, the slowest since 2001, Bank of Canada data show. That’s down from 0.47 percent at the end of 2017, and about half the average 0.57 percent pace over the past twenty years. Outstanding residential mortgage loans in Canada now total C$1.53 trillion ($1.19 trillion), the data show.

Borrowing costs are rising for the first time in almost a decade, and recent rule changes are making it tougher to get a mortgage. Just how sensitive consumers — and the economy — will be to higher rates has become a key question for policy makers, with Canadians now holding a record C$1.70 in debt for every dollar of disposable income.

Dominique Lapointe, an economist at the University of Ottawa’s Institute of Fiscal Studies and Democracy sees slowing credit growth as a potential headwind for Canada’s economy, at least in the short run. “In the near term, it’s bad for growth. In the longer-run, when it leads to deleveraging, it’s good for financial stability. What matters is the speed of deceleration, or contraction, in credit,” Lapointe said in an email.

Bank of Canada governor Stephen Poloz will be speaking later this afternoon on the subject of household indebtedness.

Toronto-Dominion Bank has lifted its posted rate for five-year fixed mortgages by 45 basis points to 5.59% as government bond yields touched their highest levels since 2011 last week.

Canada’s second-largest lender also increased its two-year, three-year, six-year, and seven-year mortgage rates, bank spokeswoman Julie Bellissimo said in an e-mailed statement.

“Adjusting our rates is not a decision we take lightly,” Bellissimo stated. “We look at a number of factors when determining rates including the competitive landscape, the cost of lending and managing risk.”

Despite the hike, rates “remain competitive and at historically low levels,” Bellissimo assured.

“It’s a big move, the biggest move in years,” RateSpy.com founder Rob McLister told Bloomberg. “There’s a lot of reasons why that could be — maybe they’re taking a position on rates going forward, which is not that typical; maybe they’re trying to get people to lock in and generate better spreads.”

The change came as the yield on five-year federal government bonds rose to 2.18%, the highest in almost seven years.

Toronto-Dominion’s posted rate now stands higher than those of Royal Bank of Canada, Bank of Nova Scotia, and Bank of Montreal, which each advertise posted rates of 5.14%. Canadian Imperial Bank of Commerce has the lowest posted rate at 4.99%.

There are two investments a bank is making when they decide to provide you with a mortgage: You and the Property. So, if you’re being turned down for a mortgage it could be the property that is the issue, not you. Here are some properties to avoid:

1. An apartment smaller than 40 square meters – Because they are so tiny, they could be harder to market should the bank have to take possession. Banks may not believe there is enough demand for a small apartment, so they will have a hard time getting their investment back.
2. A property in a ‘bad’ or ‘risky’ neighbourhood – Tried and true rule is to buy the worst house in the best neighbourhood you can afford. Setting up in a bad neighbourhood with a lot of crime or unemployment could be a red flag to financial institutions. Deterioration of the value of the property due to crime or negligence could be an issue here, so avoid it if you can.
3. Cookie cutter apartments in the suburbs with continuous buildup – The concern here is that people may find themselves vulnerable if the property market collapses. To a bank it’s a diversification issue: having money in too many properties of the same type could be very risky if the market goes sideways and they can’t sell them.
4. Properties that aren’t structurally sound – Never purchase a property without looking at it yourself and getting it surveyed. If a property doesn’t comply with a building code or it contains something hazardous such as lead paint or asbestos, this could affect the future saleability and  cost the owner more money down the road.
5. Properties with geological issues – This has become an increasing concern with the risks of flooding skyrocketing and global warming in the forefront of everyone’s mind. Areas on the water or built on marshland hold a much higher risk than they once did and one flood could leave a property uninhabitable.

These issues may seem extreme, but they could save you money down the road. Talk to a mortgage specialist today to get further assistance with finding the right property for you and your bank.

If you’re getting turned down for a mortgage, a good way to increase your chances is having a larger down payment for your house. This shows that you’re serious about your investment and the banks can be serious about it as well. Easier said than done right? Here are a few tips to help you out.

1. Prioritize – You have to make saving for your house a priority. Do you need a new car this year or will the one you have last for a bit longer? Do you need to go out for dinner or can you eat at home? Finding ways to cut back so you can put more money in your savings account is huge. Creating a budget is the first step, then you need to stick to it.
2. Pay off your credit cards – The interest you are paying on your credit card will be far more than the return on any TFSA or RRSP you can hope to have. Get rid of that debt and stop wasting money paying interest to other people.
3. Save more from work – The next time you get a raise, bonus, extra commission, tax refund etc. put it in a separate savings account and don’t touch it. You were living fine without the money in the first place, you don’t need to change now.
4. Utilize a TFSA – This is an ideal place to save for your first home. The money is able to grow tax free without being hit with income tax. Talk to a financial planner to help with this.
5. Borrow from your RRSP – If you already have money in your RRSP, you can borrow up to $25,000 to buy your first home. If you don’t have an RRSP, it may be time to set one up. It’s a good way to save money while at the same time getting a tax credit. You do have to pay the money back within 15 years, however, so make sure you factor that in to your considerations.

There are many other ideas to save for a down payment. Speak to a mortgage specialist today to get started.