New mortgage guidelines aimed at Canada’s sizzling real estate market might not be as ironclad as Finance Minister Mark Carney may have hoped. That’s because credit unions, which are provincially regulated, are not under the jurisdiction of the Office of the Superintendent of Financial Institutions (OSFI). This loophole may provide community credit unions with an important competitive advantage and borrowers with an attractive alternative to traditional lending sources. Continue reading
Tag Archives: Stated Income Mortgage
Mortgage Rule Changes Not So Severe
The first round of changes to Canada’s mortgage rules were more bark than bite, according to a letter sent to the nation’s banks on Wednesday from the Office of the Superintendent of Financial Institutions. Earlier this year, mortgage experts speculated that new mortgage rules could have a dampening effect on hot real estate markets, as more and more mortgage applications would inevitably be rejected.
Draft guidelines released in March suggested that the OSFI would eliminate 100% financing using a 5 percent cashback mortgage as well as enforce stiffer regulations concerning loan-to-value ration calculations and stated income mortgages. The document also inferred that borrowers would be required to re-qualify each time their mortgage came up for renewal.
However, Wednesday’s announcement tells an entirely different story.
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.
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
More Rules Rumoured for Hot Canadian Real Estate Market
The Government of Canada is considering imposing stricter rules on mortgages due to the nation’s seemingly overvalued housing market. Bank of Canada’s Governor, Mark Carney, and Finance Minister, Jim Flaherty, have been focused on the nation’s rising debt load for more than a year, stating that things must change in order to avoid serious economic repercussions. Ironically, instead of encountering a doomsday outcome, the Canadian real estate market has continued to boom as rates remain low and buyers maintain an optimistic outlook. Continue reading