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.
