Category Archives: Mortgage News

Budget Overview: What It Means for CMHC

From pennies to old age pensions, yesterday’s budget was full of unexpected quirks. What wasn’t surprising to best rate mortgage brokers was the government’s discomfort with the Canada Mortgage and Housing Corporation. Ottawa has voiced concern over the activities of the Crown corporation for months now, threatening to toughen its oversight of this important economic organization. Yesterday, the budget took aim at the CMHC, which controls about 75% of the mortgage default insurance market. Currently, CMHC is backstopped by the federal government; however, the organization is coming close to a mandated limit of $600-billion thanks to a sizzling housing marketing and the proliferation of bank-offered portfolio insurance packages (for more background information on this issue, review our article “CMHC Backing Fewer Loans: A Look at the Repercussions“).

According to the budget, “the government will introduce enhancements to the governance and oversight framework of the Canada Mortgage and Housing Corporation.” Continue reading →

What Will the Budget Bring?

According to a report in the Globe and Mail, next week’s highly anticipated federal budget should only contain “modest” spending reductions and little to no intervention in the housing market. Finance Minister Jim Flaherty delivered these and other comments outside of a volunteer firefighter station in Ottawa last Thursday. During the announcement, Mr. Flaherty stated that he would like to see if the market could “correct itself,” rather than force new regulations into place.

Flaherty’s response comes after Canadian banks requested Ottawa to institue mortgage insurance regulations in order to avoid what many are foreseeing as a major housing crash. The nation’s largest banks have been calling for the government to either lower the maximum amortization period for insured mortgages or raise the required minimum down payment amount for best rate mortgages.

Continue reading →

Draft Guidelines: Residential Mortgage Underwriting Practices and Procedures

More stringent mortgage qualifications are on the way. On Tuesday, the Office of the Superintendent of Financial Institutions in Canada released draft recommendations that would impact Canada’s banks and other federally regulated lenders.

The 18 page document contained a slew of information, the majority of which make complete sense. However, there’s still great cause for concern in the financial sphere. According to this document, the OSFI is proposing a swift implementation that could shake the system off its foundations. One reputable mortgage source described the OSFI’s recommendations as a “policy-initiated free-fall”.

While we encourage home hunters to review the entire document (available via this link), here’s what best rate mortgage hunters need to know. Continue reading →

Low Mortgage Rates = False Sense of Security?

Historically low interest rates are making it easier for Canadians to enter the real estate market. Why continue to rent when a mortgage payment could be less than your current monthly lease? If you’re considering the here and now, buying makes perfect sense. With the help of a seasoned mortgage broker, you can easily secure a best rate mortgage that’s cost-effective – but what happens when the market shifts and interest rates begin to rise? Continue reading →

Changes Coming for Mortgage Penalties

One of the easiest ways to ensure you’re getting the best mortgage rate around is to renegotiate your financing terms when interest rates are low. Which is great… except for one small problem: penalties. Banks are notorious for slapping borrowers with hefty penalties, especially those who are looking to wiggle their way out of a long-term fixed rate deal.

It used to be that borrowers could anticipate a penalty charge that amounted to approximately three months’ worth of interest at their current rate. Today, most lenders charge a penalty that is based on three factors:

  1. The current and past interest rates
  2. The outstanding balance
  3. The number of months left in the mortgage term

This is knowns as the Mortgage Rate Differential (IRD). Unfortunately for homeowners in search of a best rate mortgage, the IRD is now significantly higher than in the past thanks to rock-bottom interest rates. Continue reading →