Mortgage Changes? thin rumour gruel.

Hey look, it’s a mortgage broker referring to a huff-post article about TD bank comments on potential mortgage rule changes.

Alexander believes the most likely scenario would be the decreasing the maximum amortization period for a government-insured mortgage from 30 years to 25 years, the report said. Furthermore, Alexander said prospective homeowners who can’t afford a 25-year mortgage against a 30-year agreement probably aren’t in a financial position for home loans anyway.

Pretty thin rumor chain for more mortgage rule changes, but what do you think? Any chance we’ll return to the traditional 25 year amort for insured loans?

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rp1
Guest
rp1

Who cares? Unless they change the downpayment, currently as low as -2%, nothing will change.

http://worldhousingbubble.blogspot.com/2012/01/ca

604 Receding Gains
Member
604 Receding Gains

Here we go again. Industry insiders trying to create a wave of panic buying prior to a potential rule (tighening) change at CMHC. It worked very well last year around this time. If the gift keeps giving, why stop now – uninformed Gen Ys will take the bait.

jesse
Member

Changes are likely though may not be through CMHC. They may have already occurred behind-the-scenes. I still think BMO offering a 2.99% rate at 25 years smells a bit "off".

southseacompany
Member
southseacompany

CTV: Latest read on housing sales expected to be modest.

"white-hot Vancouver market is now cooling with sharply lower sales and with prices coming off their highs"

http://www.ctv.ca/CTVNews/Canada/20120116/canada-

Anonymous
Guest
Anonymous

"Alexander said prospective homeowners who can’t afford a 25-year mortgage against a 30-year agreement probably aren’t in a financial position for home loans anyway."

When I started reading the above sentence I thought for it was going to say those who can't afford a 25 year mortgage should jump in now before the rule changes. LOL

Meh
Guest
Meh

@604x: Until this rumoured change hits the supper news hour, there's no chance of it causing panic buying. Even if it does get widely reported, it won't have the same affect as a rumour of rising rates (rumour is falling rates at the moment), because a lot of idiot buyers don't even understand the mechanics of mortgages.

Meh
Guest
Meh

HAHA this Yatter guy is trolling for attention and site visits. Sadly, I have to admit I visited his site.

The only useful thing was some real estate market statistics that weren't updated for a few days. Hey Yatter, if you want return visits, do a better job of updating.

Devore
Member
Devore

@rp1: I wouldn't say "nothing will change". First time buyers are important. If the downpayment is raised to 10-20%, the first time buyer market will be killed. 5% you can beg, borrow and steal, even for a $500,000 "starter home" it's not that much money. Reducing the amortization is a gentler way of cooling things off, including the resale market where existing equity typically means higher downpayment. For lower ratio mortgages banks apply their own lending criteria and risk profiles. Plus, amortization reduction is much more politically viable, as it's the responsible thing to do, as opposed to removing thousands of potential buyers from the buyer pool in one swath.

Devore
Member
Devore

As Meh points out, while last time this year we has mortgage rule tightening announced, there were also higher rates from BoC coming, and general talk of rising rates. Today, latest punditry has BoC dropping rates to 0.5 or lower. Rising rates always generate more activity and pre-approvals, because omg-rates-are-going-up. Financially illiterate is as financially illiterate does.

Ted
Guest
Ted

Looks like the conservatives did a pretty good job with the economy and manipulating the housing market. Crank up the amortizations to keep housing going during the turmoil then start throttling back as they have been. From 25 years to 40 and then back to 25. Looking like it worked!

WFT?
Guest
WFT?
More RE warnings from big banks. This time they say that Canada will have a soft landing except for Vancouver. http://www.theglobeandmail.com/report-on-business… Some nice quotes form the article: "Mr. Porter expects a so-called soft landing for the real estate market overall, though perhaps Vancouver could see something worse. "That's not unusual," he said. "Vancouver has been through heavy cycles before. " And here the Globe actually publshed that Vancouver price are down 10% sice April. But it still has not sunk into the public's mind. I bet 95% still believe prices are rising. "Sales in Vancouver fell 4.1 per cent in December, and prices 2 per cent. In Toronto, where there are concerns about the condo market, sales climbed 1.8 per cent and prices dipped 2.3 per cent. "Activity in the Vancouver area has essentially mirrored the national market as prices… Read more »
southseacompany
Member
southseacompany

@ asalvari1

Re: Your comment on missing text in the CTV article I linked to. That is very interesting. Not only is the text not there, the link is to a different article now, with a totally different headline. Now instead of saying "sales expected to be modest", it now says"Housing Sales Edge up in Dec"

If you google the original headline "Latest read on housing sales expected to be modest" you can see that the article did exist. Strange that it disappeared and was replaced.

http://www.google.ca/#sclient=psy-ab&hl=en&am

Devore
Member
Devore

@Meh: Larry has only 1 listing, an $8.5M acreage. But if he sells that, that's a nice payday. I've never been to a bonafide million dollar open house before, do they spend lots of money on those (catering etc)?

southseacompany
Member
southseacompany

Re; Revised CTV link.

I found a link which includes the original CTV article text with the quote on Vancouver's 'white hot' market cooling.

http://money.ca.msn.com/savings-debt/yourmoney/ho

Have a look before it disappears.

jesse
Member

@Devore: "what are the rules for this in Canada?"

I don't know all the details but it's difficult to securitize something near prime if it has no collateral. Many loans will have insurance in which case it's no problem to renew. The looming problem I see is, CMHC liability aside, a disconnect between qualification criteria for uninsured and insured loans. If the previously-uninsured loans require insurance on renewal due to equity erosion that will strain qualification criteria (now need to qualify at posted, not discounted, rate).

YLTNboomerang
Member

@southseacompany: Too late, it is now "No housing slowdown in 2011, data shows"

I'm not one for conspiracy crap but seriously, what's with the changing of headlines to sound positive???

registered
Member
registered

13 Ted Says: "Looking like it worked!"

Only because we haven't paid the bill yet. They pulled the market forward at the expense of the part of a trillion in loan guarantees on the taxpayer's ledger. "I'll take 'what hasn't worked anywhere else on the planet' for a thousand Alex."

Boombust
Guest
Boombust

"…you can see that the article did exist. Strange that it disappeared and was replaced."

Sounds like Winston at the Speakwrite in "1984".

Li Kai Shing
Guest
Li Kai Shing

I am back!!! Let's throw a party wooohoo!!!

Sheesh
Guest
Sheesh

Question: if they go back to 25-year amortizations, what happens when people with 40-year loans have to renew? Will they have to go down to 25 years, or will there be some sort of grandfathering to let them renew for 35?

I guess the question stands even if they stay at 30 years.

Burbs Boy
Guest
Burbs Boy

A litte reading reminds me, surprisingly, how fast the rules changed going up.

Jan 2006 – Minority Conservative Government elected

Feb 2006 – 25 year increase to 30 year on test basis

Jul 2006 – 30 year test affirmed and also increased to 35 year

Jul 2007 – 35 year increase to 40 year

Oct 2008 – 40 year decrease to 35 year

Mar 2010 – 35 year decrease to current 30 year

Feb 2012 – ????

1.5 years to go from 25 to 40… but 4 years and counting to go back down. A 25 year amortization or less is certainly the only prudent thing to do, anything longer is financial suicide.

Anonymous
Guest
Anonymous

@fixie guy:

13 Ted Says: “Looking like it worked!”

"Only because we haven’t paid the bill yet. They pulled the market forward at the expense of the part of a trillion in loan guarantees on the taxpayer’s ledger. “I’ll take ‘what hasn’t worked anywhere else on the planet’ for a thousand Alex.”

"

And if I'm not mistaken, they started juicing mortgages at least a couple years before any signs of turmoil…they basically threw gas on the fire when they first started loosening.

Anonymous
Guest
Anonymous

@DEFAULT NAME:

Here's a brief history of CMHC changes from http://canadabubble.com/bubble-watch/1758-the-gre

"In 1999, the National Housing Act and the Canada Mortgage and Housing Corporation Act were modified allowing for the introduction of a 5% down payment….a far cry from the minimum 25% of a few years earlier.In 2003 CMHC decided to remove the price ceilings limitations. That is, it would insure any mortgage regardless of the cost of the home. In 2005 and 2006, CMHC began insuring 30, then 35 year amortization mortgages.In 2007, CMHC allowed people to purchase a home with no down payment and ammortize it over 40 years. This was changed back to a 5% down payment requirement and a maximum amortization length of 35 years in 2008 once the idiocy of this policy was blatantly obvious."

Some Guy
Guest
Some Guy

@Ted:

For a more accurate history, read this unusually good article in the Globe and Mail on the Conservative government's actions with respect to the housing market:

How High Risk Mortgages Crept North

"Finance Minister Jim Flaherty repeated the mantra that the government acted early to get rid of risky mortgages. What he and Prime Minister Stephen Harper do not explain, however, is that the expansion of zero-down, 40-year mortgages began with measures contained in the first Conservative budget in May of 2006.

At the time, Mr. Flaherty announced that the government was opening up the market to more private insurers.

“These changes will result in greater choice and innovation in the market for mortgage insurance, benefiting consumers and promoting home ownership,” Mr. Flaherty said."

There's lots more in the article.

Maverick
Guest
Maverick

@DEFAULT NAME:

What was the old price ceiling in 2003?

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