Tag Archives: osfi

Housing Collapse: banks ok, consumers vulnerable

The head of the OSFI is warning about the dangers of a Canadian housing market correction.

Speaking on Monday Julie Dickson said that the OSFI would be preparing new guidelines for the mortgage industry.

“Consumers must be considered here because, while banks may be able to withstand shocks, consumers may not,” said Julie Dickson, the head of the Office of the Superintendent of Financial Institutions. “Banks have to set aside reserves for unexpected losses and are typically far better situated to deal with shocks than consumers — who may be highly indebted and therefore particularly vulnerable to significant increases in interest rates or unemployment.”

For more details read the full article over at the Financial Post.

FFFA! Debt, Stats, Assets, Low Rates

Hooray! It’s time for another Friday Free-for-all!

This is our regular end of the week news round up and open topic discussion thread for the weekend.

Here are a few recent links to kick off the chat:

Poor people make poor customers
Is a condo a debt or an asset?
Feel good now, pay later
Blame busy August for slow September
Phantom listing distort stats?
Gregory Klump: no no no
Vancouver Island Foreclosures
Low rates create false sense of security
Smiling with record debt levels

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have and excellent weekend!

The new lending guidelines

Those new OSFI guidelines for CMHC mortgages are still ‘coming soon’, but the Vancouver Sun has an article up outlining the current state of the guidelines and predicting they will be announced in the next few weeks.

They’ve softened some since the first concepts floated out there by OSFI, but as a batch of changes that occur all at once they still stand to have a marked impact on the market.

Here’s the list of predicted new guidelines:

. Home Equity Line of Credit mortgages reduced from 80-per-cent financing to 65-per-cent financing.

. Lines of credit to be either amortized, or amortized after a specified period of time (no more never-never plans).

. More stringent income requirements for self-employed borrowers.

. All mortgages to be reviewed upon renewal (currently as long as payments are made, it is unlikely for a bank not to offer a renewal to a client).

. Funds from cashback mort-gages are not allowed as a source of down payment (currently only a handful of lenders allow this, but it does mean that “zero down” mortgages are technically avail-able, but with some restrictions.)

. Use of the five-year posted “benchmark” to qualify uninsured terms of one to four years and all variable terms (currently most lenders use a three-year posted or a lower rate to qualify uninsured mortgage.)

. More limits on underwriting exceptions (many recent applications don’t fit the ever shrinking “boxes” with the banks, which means fewer common-sense deals will get approved.)

. Home insurance to be included in debt-servicing ratios (it is currently not included.)

. More public disclosure of statistics pertaining to institutions’ mortgage practices.

. More accountability from management to ensure lenders are adhering to their underwriting guidelines.

If these changes are implemented I guess we’re going to find out how much of our real estate market is supported by those who are stretching beyond their means.

Friday Free-for-all!

It’s that time of the week again! Friday is here and the weekend draws nigh!

So lets do our regular end of the week news round up and open topic discussion thread for the weekend.

Here are a few recent links to kick off the chat:

19,000 Listings Party!
Vancouver home sales hit 10 year low
Updated inventory graph, next leg up!
OSFI Relent on tougher rules
Your own private BC island?
Investors shy away from Genworth
US prices down 42% from peak?
Sales great in interior says BCREA
The moving-to-America experiment
Boomers double-down on real estate
Canadas mobility problem
VCI comment signal to noise graph

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend.

Also! For a short time we tried opening up registration on the VancouverPeak forums, but were immediately inundated with spam registrations. So we’re back to invite only for now. There are ten invite codes at the end of this post if you’re interested in registering for an account there. The main advantages of a VancouverPeak account are that you can upload images, xls files, etc to share data or analysis.

Here are those codes, you can use them at this registration link, first come first served.

Used codes removed and replaced with fresh codes Saturday Morning 9:19 am:


Heloc LTV going to 65%?

Canadian Mortgage Trends is saying that changes to HELOC loan to value (LTV) limits are a done deal.

If so this means the maximum HELOC you’ll be able will move from 80% to 65% of the total value of the property.

Read the original link for full details. Many commenters there seem to think this is too big a move.

Appraiser said…
65% is too much of a leap all at once.

I can’t understand why OSFI doesn’t ratchet the LTV ratio down a little more slowly (i.e., 5% at at a time and sit back to observe the consequences).

As has been noted lately, the previous three sets of mortgage tightening guidelines have been gradually working their way through the credit markets effectively.

You can kill an ant with a hand grenade, but it usually makes a hell of a mess.