Category Archives: mortgage

Mortgage group urges government to not discourage more debt.

Recent tweaks to housing rules are cutting into mortgage brokers business. They are asking lawmakers to relax existing rules and put the brakes on new rules:

While Ottawa considers what to include in the budget, the mortgage group is urging the government to avoid taking any drastic and unnecessary action because of isolated pockets of danger.

The new rules “disproportionately affect competitive positions of small and mid-sized lenders,” Kerzner said. “There’s a real and growing sentiment that activity in Toronto and Vancouver is negatively impacting those in the rest of the country.”

Read the full article over at the CBC.

Banks would rather not take on more risk

southseacompany pointed out this article in the financial post:

Canada’s banks are pushing back against taking on more mortgage risk

“Canada’s financial industry is urging the federal government to consider alternatives to proposals that could require them to take on a greater share of mortgage defaults through a deductible — calling it one of the biggest shakeups to hit housing finance in 50 years.”

Read the full article here.

Chicken vs Egg: Retail Sales and Housing Bubbles

Southseacompany pointed out this article in the Globe and Mail about the connection between retail sales and household debt.

Falling interest rates between the fall of 2013 and mid-2016 made it easy for Canadians to add debt. The five-year Government of Canada bond yield, on which mortgage rates are based, fell from a high of 2.2 per cent in September, 2013, to a low of 0.49 per cent in February, 2016. This trend made monthly mortgage payments lower and helped spur the housing boom.”

“The reverse process – rising interest rates – is now evident and mortgage debt is getting more difficult to service. The five-year bond yield has climbed to 1.1 per cent and major lenders are slowly raising mortgage rates.

Read the full article here.

BMO offers cash back mortgages

Are you a first time buyer looking for a mortgage? BMO wants your business and will give you back $1000 of your own money if you choose them.

Under the new promotion, first-time home buyers taking out insured mortgages with terms of at least four years are eligible for $500 cash on mortgages of less than $250,000, and $1,000 on larger loans. Once the mortgage is booked, the cash is credited to the customer’s BMO chequing account.

In a statement, BMO called its new offer a “timely” companion to a new interest-free loan program British Columbia’s provincial government launched to help new buyers cobble together down payments amid soaring housing prices. 

Read the full article here.

BC teaser loans panned in media.

The new first time buyer teaser loan program announced by the BC government has met a suprisingly negative reaction in the media, but some online polls show voters approve.

This move seems designed to undo some of the federal ramp back of housing market fuel. Bearvancouverite points out this might help developers who are seeing people backing out of presales agreements.

This might be exactly why Christy did it. Developers were panicking that presales won’t close because mortgage qualifications would be so different in the next few years, they need to dangle a carrot to make sure speculators don’t just walk away and first time buyers can be convinced to take over presales from flippers.

Scoop points out why this program should be referred to as a “teaser loan” as made popular in the US housing bubble:

Definition of “teaser loan” from investopedia: An adjustable-rate mortgage loan in which the borrower pays a very low initial interest rate, which increases after a few years. Teaser loans try to entice borrowers by offering an artificially low rate and small down payments, claiming that borrowers should be able to refinance before the increases occur.

http://www.investopedia.com/terms/t/teaser-loan.asp

Let’s all call start calling this new program what it is: Christy’s Teaser Loan Program.