Pointed out by SouthSeaCompany: Mortgage rule changes are cooling housing market: Morneau
“Finance Minister Bill Morneau says last October’s sweeping mortgage rule changes aimed at cooling Canada’s housing market have successfully dampened high-risk borrowing.”
“But despite a report urging Ottawa to look at ways of boosting support for Canadians entering the housing market, the Minister ruled out any new measures along those lines, expressing concern that such an approach would encourage higher house prices.”
Read the full article over at the Globe and Mail.
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.
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.
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.
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.