The changes to the Canadian mortgage finance market in the last 60 days have caught many by surprise and the future is blurry at the moment. Even the mortgage lenders/banks are confused with round two of the new CMHC rules, effective Nov 30, 2016. Some lenders have already left or restructured their role in the mortgage market, impaled by the combination of events and their inability to respond. My biggest concern as a mortgage broker is loss of borrower options.  Our industry has sent delegations to Ottawa, and we have written our MPs and their eyes glaze over.  

I know a number of readers of this Realtor blog are from rural communities, and I wanted to touch on one of the changes that is going to rock owners in rural communities and no-one sees it yet.

New Mortgage Market Landscape – effective immediately

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

Mortgage Interest Rate Decreasing

• 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.

CMHC Rumored to be Discussing Tightening Mortgage Lending Rules (again)

• 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.

Another Mortgage Lender for Mobile Homes Tightens Criteria

• 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.

Reminder to Realtors

Insurers' premiums increasing June 1, 2015 - deadline fast approaching.  Get your clients' offers accepted by May 27th.

Last updated: May 2019

What are permitted Down Payment Sources for a Mortgage in Canada?

A question that often comes up with Realtors and clients is about permitted sources of down payment and how long the money has to be sitting in the client's account. Here's the list I send to my mortgage customers:

How to finance home improvements

Yeah, but the house needs some work...

A common objection when a buyer prospect is looking at purchasing a home is that the property needs some sort of improvement, such as new carpets, new windows, new fence, new roof, garage, etc.

Solution

A number of mortgage lenders participate in a program called Purchase + Improvements, which means qualified home buyers can get reimbursement for pre-approved renovations made to their new home, which need to be completed immediately after taking possession of the purchased property.   All this can be done with one mortgage and with as little as 5% down.