Some major developments this week in the Canadian mortgage market (17July15)

Posted by Chris Richards on Jul 18, 2015 8:00:00 AM

Recap on some developments this week in the Canadian mortgage market.

On Wednesday, Bank of Canada Governor Stephen Poloz lowered the prime lending rate to 0.50%.
The move is designed to boost a sputtering economy with added spending (read more)
Major banks responded by lowering their prime lending rate from 2.85% to 2.70%
Variable rate mortgages are now available at 2.00%, or about $425/mo per $100K borrowed (25 year AM)
Fixed rate mortgages for 5 years have dropped to 2.59% with some lenders, or about ~$450/month per $100K borrowed amortized over 25 years.

The rumor mill is churning again that CMHC may tweak (tighten) mortgage lending criteria further as certain real estate markets are very overheated, specifically Toronto and Vancouver.
Discussion points rumored are increasing minimum down payment from 5% and decreasing maximum amortization to 20 years.
Personally, I see blanket Canada-wide changes to rules to address certain market conditions as the wrong tool, hence unlikely.
These changes would have impact of cutting out certain borrowers (likely first time buyers) from the market.
A more surgical approach would be to increase down payments in certain overheated market areas.

National Bank has changed their lending policy for mobile/modular homes on titled land from permanent foundation to more specifically a cement foundation (hence has removed steel pillings) - drat :/
Very few lenders will lend on mobile homes on wooden blocks
Very few lenders will lend on mobiles older than 20 years
Even fewer lenders will lend on mobiles in trailer parks (rented lots), especially old homes on blocks!
CMHC very tight on providing insurance for lenders on mobiles these days.

Any questions, deals to discuss, please contact me.