Category Archives: mortgage

New mortgage rules hit Genworth hard

New mortgage insurance rules are having an impact over at Genworth:

Genworth MI Canada Inc., which provides mortgage insurance for home buyers and financial institutions, said the total value of new insurance it wrote in the second quarter of 2017 was down 81 per cent to $6.1-billion from $31.7-billion in the same period last year.

Most of the decline was the result of a 96-per-cent drop in the value of portfolio insurance written in the quarter, which is bulk insurance bought by financial institutions for their portfolios of uninsured mortgages. New portfolio insurance fell to $1.1-billion from $25.9-billion in the second quarter last year.

Read the full article here.

Rate hikes threaten the middle-class dream

In Canada ‘middle class’ currently seems to mean ‘deep in debt’ and rate hikes are a looming threat on the middle class :

For one view of Canada’s rate hike, consider the case of David and Neera. He can’t get a raise, is worried about retirement and they borrowed money a couple years ago to fix the roof. Interest costs will jump now, with vacations and kids’ clothes already out of reach.

Justin Trudeau’s entire economic agenda is aimed at David and Neera — we know, because he invented them. Their story anchored the Liberal government’s debut budget, tying together the impact of all the prime minister’s measures. Now they’re a cautionary tale.

“Canadian families are also taking on more debt to make ends meet,” the 2016 budget said. “For David and Neera, this debt is a constant source of worry.”

Read the full article over that the Financial Post.

OMG OSFI!

YVR pointed out this article by Rob Mclister about the OSFI B-20 bombshell:

The new OSFI’s stress test rules will make 20% of the mortgage market not qualify or they will have to reduce their mortgage by 18% to qualify. That is before recent and future mortgage rate increases are factored in.

Roughly 80% of new big bank lending in the richly valued Toronto and Vancouver markets is low-ratio mortgage lending

OSFI’s stress test, as proposed, would slash buying power for prime buyers by roughly 18%

For non-prime borrowers, qualifying rates would immediately rocket into the 6% to 7% range

Read the full article here.

Good time to be sitting on a $800k down payment

With interest rates going up there’s good news and bad news for housing. It can make it tough for people who are stretched thin financially, but might be good news for people waiting to buy:

The people who will benefit are those who have a nest egg and have been waiting for the right time to buy a home, he said.

“The real winner here is somebody sitting on a $800,000 down payment who says I’m going to wait for prices to fall.”

Overall, interest rates will continue to rise, added Brander. He predicts mortgage-lending rates could increase by several percentage points in the coming years. But as long as those increases are incremental, like Wednesday’s announcement, the economy will be able to absorb it, he said.

Seems like it’s always a good time to be sitting on an $800k down payment, but maybe we’re just optimists. Read the full article here.

Business is ready for a rate hike

Lots of key indicators are telling the Bank of Canada that it’s time for an interest rate hike.

After the survey’s release, the chance of a July rate hike rose to 84 per cent from about 70 per cent, according to Bloomberg. Nine of 16 economists polled by Bloomberg now expect the central bank to raise rates to 0.75 per cent in July from the current 0.5 per cent.

The survey is one of the key pieces of information that Mr. Poloz and his central bank colleagues use to set monetary policy.

It was conducted between early May and early June, just before Mr. Poloz and his deputies started publicly saying the economy has turned the corner from the devastating oil price collapse that began in 2014.

Read the full article here.