The Value of Working with a Mortgage Professional
Posted on May 5, 2015 in Mortgage Market Updates and News
The Value of Working with a Mortgage Professional
The real estate and mortgage industry is a competitive business. Changes in lender policies have led to an altered mortgage landscape. The recent slump in oil prices and a lowered loonie have dampened housing activity in some parts of the country.
Early forecasts pointed to a slower pace in sales but that has not happened, with the exception of regions affected by a prolonged winter. The Spring market has turned out to be surprisingly strong and house price projections have been revised upward due to high consumer confidence and low inventory.
Each year hundreds of thousands of properties trade hands and this will continue.
For consumers, competition is a good thing because it gives you choice. In the mortgage industry, with historically low interest rates, it's easy to shop the market to find a low advertised rate, whether from your local bank or from your mortgage broker. However, mortgages are not as simple as some make them out to be, especially when rate is all that is considered.
It's important that homebuyers educate themselves about mortgages including the following areas: pre-payment terms, penalties, fixed vs. variable, open vs. closed, etc. Each situation is as unique as each borrower and each needs a unique strategy.
By working with a licensed mortgage professional, you have a trusted adviser and problem solver. Brokers take the time to first understand a client's needs, both short term and long term, then recommend the right mortgage and present options. In addition to straight home purchases, brokers work with clients who refinance to consolidate debt, who are looking to purchase second homes, who are looking for the best options at renewal time, and brokers help clients make property-related investment decisions.
Although the lending environment has changed over the past few years, brokers keep up-to-date with all the changes and have access to a variety of lenders including banks, credit unions, trust companies, monoline lenders and private lenders. For example, if your personal profile does not quite fit a particular bank's profile, you may still be able to qualify for a mortgage by working with a mortgage broker. No one is more knowledgeable and more informed than we are.
Many clients are doing research online and we encourage that. We work with a wide variety of clients with different credit profiles. We counsel clients who have less-than-stellar credit or home buyers who don't qualify under the new mortgage rules. Everyone is important to us.
Simply, we are here to help.
Letter to David Chesney - City Councillor in White Rock Re: Pregnancy Comments
Posted on May 4, 2015 in Mortgage Market Updates and News
Dear Mr Chesney,
I recently took the liberty of listening to your entire interview on The Goddard Report. My first comment to you is that I absolutely love your ‘Community Conversation’ concept. As a City Councillor myself, I’m always looking for ways to better engage our community, make them comfortable giving their opinions, etc. I think you’re really onto something and I’ll likely be borrowing your idea for my own community in the near future. Great work. Unfortunately that’s the only positive I took away from the 20-minute 57-second interview.
A bit of background about myself; I’m 27, a mortgage broker in my community, and recently elected as a City Councillor. I have two children; a 3-year-old daughter and a 7-month-old son. I am also a passionate human rights advocate. As I wear many hats, I’d like to note that I’m writing to you today in the capacity of my most important job, as a mother of two amazing little people.
To say that I found your comments about pregnant women offensive would be a massive understatement. As stated above, I listened to the entire interview, not just the short clips played on the news or other people’s comments about it. I did this to give you the benefit of the doubt. After reading some very angry posts about your comments on Facebook, I wondered if the comments you made had been taken out of context or blown out of proportion at least somewhat. As is not uncommon with elected officials, I too have had bits and pieces of my actual words taken and put into unfortunate contexts in the past. After listening to the entire interview I very clearly realize this is not at all what happened here.
In explaining to you just how deeply you’ve offended me, and I can only assume millions of other women, I literally don’t even know where to start. I guess I’ll start with a bit of personal background. With each of my two pregnancies I gained 60+ pounds. With my first I was so embarrassed by the weight I tried to go out socially as little as possible. I stayed home as often as I could, I purchased very expensive maternity clothes to wear to work, and I tried to ignore and not let people in the public know just how horrible I felt about my body. What should have been an incredibly magical time in my life was largely overshadowed by my constant worry of what people might be thinking about me (and apparently people like you actually were thinking it – so thanks for that).
My second pregnancy was very different in a lot of ways. On the one hand, having my first child drastically changed my perspectives on life. I no longer felt the need to seek approval from people in the public I didn’t even know, I felt much more comfortable with and confident in myself, and I’d gained the realization that what mattered was that I had a healthy pregnancy and a healthy baby not what I looked like. All that said, I also decided during my pregnancy I’d be running for City Council, which brought a whole new set of challenges, throwing me into the spotlight at a time when I’d naturally be less confident in myself.
During my campaign I endured a lot of incredibly inappropriate comments regarding my pregnancy, my choice to run for council instead of being ‘home with my children’, and shockingly, a few about my body shape. As challenging as those things were I want you to know that I also endured 4 months of chronic nausea so bad I couldn’t even lift myself off the couch until 4pm most days. I want you to know that I also endured 3 months of heartburn so bad I couldn’t lie down at night and had to try to sleep sitting up. I want you to know I endured the sometimes-severe aches and pains of actually feeling my uterus stretching inside of me as my baby grew. I endured constant fear and stress that I would eat something I shouldn’t or do something I shouldn’t and end up losing my baby. I endured SPD (symphysis pubis disfunction), a pregnancy condition causing pelvic pain so bad I could hardly put one leg in front of the other to walk. I want you to know I endured limping into my candidate TV clip, trying to look and present myself professionally to the voters of my community 30 minutes after throwing up in the bathroom because a smell made me nauseous. I endured 3 months of sleepless nights in late pregnancy because I needed to get up every hour to pee but I was in too much pain to get out of my bed and get to the bathroom. I endured 6 months of stressing that my labour would be as long and painful as it was when I gave birth to my daughter. I then endured 2 months of panic, worry, and tears when I learned my baby was breach and I’d need to have a cesarean to deliver him. I endured early labour pains before going to the hospital for my surgery. I endured an hour of shaking so hard from the cesarean drugs that they had to strap my arms down (not exactly the most magical way to have your baby brought into the world). While I didn’t feel the pain of the surgery, I did endure the feeling of what felt like doctors pushing and yanking on my insides while delivering my baby. After my baby was born I endured weeks of recovery from my cesarean where I was in so much pain I needed my husband to sit me up to feed our son and help me roll from my side to my back in bed without hurting myself. I endured trying to fit into literally anything I owned that was appropriate to wear to an all candidates meeting and while there I endured walking around chatting with voters so long I felt like I was going to fall over and then having to give my speech in front of a huge group of voters stressed that my breastmilk would leak all over my dress since I hadn’t fed my son in more than 2 hours. I’m still enduring the everyday fears mother’s of new babies go through like sickness, developmental issues, or worse SIDS. It goes without saying that I’ve endured what feels like a lifetime of sleepless nights while up with my crying baby, but I’ve also endured my 3-year-old’s tears because she no longer has me all to herself and I can’t always snuggle her to sleep at night anymore. I want you to know that dispite all this, my pregnancy was considered 'normal', and many women go through far worse than this.
I’m writing this in hopes that you may gain a deeper understanding of why your comments were so wrong. I know you’ve put out the standard apology, my comments were taken out of context, I didn’t mean to offend anybody, blah blah blah, but I don’t feel at this point you really are sorry or understand why your beliefs are so misguided.
In conclusion I’d like you to consider what women go through during pregnancy, labour/delivery, and the sleepless and stressful months to follow. While there is no greater joy in this world than our children, getting them here is no simple feat. What we wear during pregnancy should be the last fu***ing thing on our minds! I hope this brings you a bit of clarity as to why your comments were not just rude and offensive, but incredibly insensitive.
previously pregnant woman - guilty of having my 'belly button actually pushing through the material [of my shirt]' which is apparently absolutely disgusting to you..
*PS the way you threw your entire council and mayor under the bus during the first 30-seconds of your interview seemed a little classless to me.
To listen to the full interview and gain your own opinions please use the link below. His comments start at about 10 minutes.
5 questions to help you decide whether to rent or buy a home
Posted on Jun 30, 2014 in Mortgage Market Updates and NewsLibby Kane, Business Insider
A home is one of the biggest financial commitments most of us will ever make — so it’s understandable that we might get a little stressed over what seems like a straightforward question:
Should I rent or buy?
To try and ease that anxiety, we spoke with a mortgage expert and a certified financial planner to get their take on when buying a home is in your best interest.
While there’s no universal “right” answer, start your decision process by asking yourself these five questions:
1. Can you afford it?
Having the money for a down payment is only the first step. Next, you need to make sure you can afford to pay your mortgage … and costs like utilities, maintenance, furniture, taxes, and inevitable surprise costs like emergency replacement of the broken boiler.
“Understand what you’re getting into,” says certified financial planner Mary Beth Storjohann of Workable Wealth. “You have to be able to afford to purchase and maintain the property, and expect that your bills will change on a monthly basis.”
Plus, she points out, you’ll need to be able to pay all of the fees during the buying process. “The best thing you can do is educate yourself,” she advises. “If you don’t do your research, making the wrong decision to buy could really set you back financially.”
Rent if: You don’t have the money saved to buy and carry a home.
Buy if: You’ll have the cash to cover the initial transaction, plus the ongoing costs of homeownership.
2. Are you financially secure?
To be in a financial position that’s secure enough to responsibly to buy a home, explains Mortgage Hippo CEO Valentin Saportas, you need:
- Decent credit (“You don’t need perfect credit or even good credit,” he says, “but generally above 620 you can qualify for a conventional loan.”)
- A stable income
- Moderate liabilities
- Enough cash on hand to cover down payment and closing costs
- Liquid assets as financial reserves
When Saportas says “financial reserves,” he’s talking about an emergency fund. It’s not a good idea to scrounge every penny from each of your accounts for a down payment, leaving yourself without a safety net for an emergency or hobbling your retirement savings.
“I wouldn’t recommend that someone without an emergency fund buy a house,” cautions Storjohann. “It really sets you up for trouble when you wipe out your savings to reach this goal and don’t have any money set aside.”
Rent if: You can’t check off one or more of the above bullet points, or if buying would completely wipe out your savings.
Buy if: You’re financially secure outside of your home savings.
3. What are your other financial goals?
While buying a home is a major financial accomplishment, it’s unlikely that it’s the only one you ever intend to make. Storjohann remembers a client and her husband who were “really gung-ho on buying their first home.” But after getting a financial plan and seeing exactly how much money they would need to lay out, they decided to postpone their purchase for another few years in order to finance their other financial goals, like starting a business.
“It’s all about breaking it down into steps, and getting clear on the numbers,” says Storjohann. “If you have any major life transitions coming up, you may want to hold off and see what happens.” How will your home purchase affect your pursuit of your other financial goals?
Rent if: You’re currently prioritizing other financial goals above homeownership.
Buy if: Homeownership is your primary financial goal, and you’re both aware of and comfortable with how the cost will affect your progress towards your other goals.
4. Are you willing to be the super?
This isn’t a financial question, but a lifestyle one: If the sink springs a leak, the yard needs to be mowed, the door handle breaks, who deals with it? It won’t be your landlord or super, Storjohann points out, so either you’ll need to DIY or find the cash to hire someone.
Rent if: You want someone else to step in when things get complicated around the house.
Buy if: You don’t mind dealing with the increased chores that come with being your own landlord.
5. Where do you see yourself in the near future?
Different experts have different estimates, but generally, it’s recommended that a homebuyer spend at least four to five years in a home to offset the costs of buying.
But aside from the numbers, “buying a home is as much an emotional decision as it is a financial one,” says Saportas. “Of course, you must crunch the numbers to determine whether buying makes financial sense, but it’s just as important to feel that you’re in a place in your life where buying just makes sense. It’s no coincidence that most people seriously start considering buying a home when they get married and are comfortable with the idea of settling down and raising a family.”
Rent if: You’re unsure where you’ll be in the near future.
Buy if: You expect to be in the same place for a few years and want to own your home.
Calgary’s housing market making a dramatic comeback
Posted on Jun 27, 2014 in Mortgage Market Updates and NewsGarry Marr
The Calgary housing market is so hot that an economist reported Tuesday that only 15 condominiums in the city remained built and unsold last month.
It’s been a dramatic comeback for the oilpatch’s housing market which saw prices peak in 2007 with that high only recently reached again.
“Those people who bought at the peak just barely got out of the ditch,” said Doug Whitney, president of the Calgary chapter of the Canadian Home Builders’ Association.
He said now that people are out from under water, they are ready to sell and move up which should help create inventory and relieve some pressure on the new home housing market.
Sal Guatieri, an economist with Bank of Montreal, issued a warning to anyone thinking of moving to Calgary for work.
“Thinking of moving to Calgary’s red hot, job-spinning economy and settling right into a brand spanking new home? Good luck. The available supply of completed new units dropped below 500 for only the third time on record (back to 1992) in April, and only 15 new condos were on the market,” Mr. Guatieri said in an economic note.
He pointed out the resale market has been just as tough for prospective buyers with the benchmark price of a home up 10.6% in May from a year earlier.
The Calgary Real Estate Board did say this month that while market conditions continue to favour the seller, there is some sense supply is improving. May new listings were up 16.5% from a year earlier.
“Strong sales activity is a reflection of improving fundamental conditions such as a growing population, favourable lending rates and rising wages,” said chief economist Ann-Marie Lurie with CREB, in a statement on the market.
Mr. Whitney said there has been a shortage of serviced land for builders to put new developments on and that has contributed to supply problems.
“Most of it has been just being able to put shovels into the ground to meet the increase in the velocity in demand,” he said. “The reality is there are 12,000 approved lots in the city, it’s a matter of getting things going.”
Mr. Guatieri said there are just so many people moving to Calgary for work that the housing market cannot keep up.
“There were over net 100,000 people moving to Alberta from other provinces last year from across Canada and other countries,” said the economist. “I’m assuming a good portion of those people ended up in Calgary.”
The attraction is 4% annual job growth and a 5% unemployment rate. “Those type of numbers just suck people in like a vacuum, you can’t build homes fast enough when your population grows like that,” said Mr. Guatieri, adding if prices get too out of line it could turn people off from moving to the city.
There’s not much room in the rental market either based on the latest set of numbers from Canada Mortgage and Housing Corp. which found the vacancy rate in October in Calgary was around 1% for condominium rentals.
One byproduct of the rising prices could be rising debt. A report from credit agency Equifax Inc. found demand for credit in the fourth consecutive quarter was higher in Western Canada than any other region in the country.
“The economic indicators do look a little better in the West,” said Regina Malina, senior director, decision insights, Equifax Canada. “When people feel confident about their financial situation, unemployment is low and income is high and the forecast for the region in terms of the economy is positive, it wouldn’t be surprising that people would be more comfortable taking [debt] on.”
Here comes the echo boomer to save the housing market
Posted on Jun 26, 2014 in Mortgage Market Updates and NewsGarry Marr
There’s a new kid in town ready to save Canada’s housing market and maybe even the economy — at least for a few more years.
A new report says that Canadian residential real estate has been getting a huge boost from so-called echo boomers, those in the 20-38 age bracket.
“The Canadian housing market keeps soldiering on and, while much focus is cast on brash calls of overvaluation, mortgage rate wars and mortgage rules, demographics are playing a less-publicized yet important role,” said Bank of Montreal economist Robert Kavcic, in a report released Thursday.
“The Baby Boom generation grabs most of the attention on this front, but their children, the echo boomers, pack a heavy economic punch as well.”
Even though there are just under 10 million Canadian Baby Boomers aged 49-67, they are actually outnumbered by those aged 20-38.
In an interview, Mr. Kavcic said the emergence of the echo boomers bodes well for the overall economy but, like housing, the tide will eventually turn because the next cohort coming through simply isn’t as large.
“For the next couple of years, there is enough population to support the retiring population but when you look out past 2018, the bulk of the Baby Boomers are approaching 65 and behind the echo boom there is a significant dip in the population,” he said.
Fertility rates among Boomers has been lower than for their parents, resulting in fewer children. But the gap has been filled by immigration which the economist said has been concentrated in the echo boomer age group.
While there were other factors that coincided with a housing downturn in 1989, Mr. Kavcic noted there was a huge plunge in population growth in the 25-34 age group in the 1990s.
“Interestingly, it was only when this age group began to expand again on a sustained basis (around 2002) that the next bull market really began, in part because of a pickup in immigration, but also helped by the aging of the echo boomers,” he wrote in the report.
The problem is what comes next. He says we’ve got a few more expansion years in the housing market based on this age cohort but there will be some stagnation that starts in 2018.
“From a strictly demographic perspective, that would place us around the 7th inning of the secular bull market in Canadian housing, before conditions become unfavourable around the turn of the decade,” wrote Mr. Kavcic. “The tide is going to turn.”
The Baby Boom generation grabs most of the attention on this front, but their children, the echo boomers, pack a heavy economic punch as well
He said policy makers should be concerned about full-time employment compared to the over-65 population. “It’s holding up okay for now. But it’s going to roll over.”
Doug Norris, chief demographer with Environics Analytics, agrees the echo boomers have helped prop up the housing market but he believes immigration is probably as much a part of the story.
“If the numbers continue, we will have the upward pull because people are coming into the country at ages in which they form households and families,” said Mr. Norris. “I think you’ve got another five years of the echo boom.”
He says immigration should probably be considered for its impact on housing and the economy separately from the echo boom. He said the impact of immigration is “going to continue long after the echo boom is gone.”
Phil Soper, chief executive of Royal LePage Real Estate Services, said his company did a survey on real estate attitudes last year and found some echo boomers have bought into the dream of owning a detached home in a suburban neighbourhood.
“It was a surprise to us because we expected more of propensity to choose urban living,” said Mr. Soper, adding those attitudes should continue to drive prices of single family homes.
James Mckellar, director of the program in real estate and infrastructure at York University, says for the past decade people have been predicting a bursting real estate bubble but it hasn’t materialized because there isn’t enough supply to meet demand and there won’t be any time soon.
“They are not building any more existing neighbourhoods,” he said. “Condo owners are going to look to existing neighbourhoods, that’s pent up demand that is going to come from condos.”
What does the future hold for CMHC?
Posted on Jun 25, 2014 in Mortgage Market Updates and Newsby Justin da Rosa
Mortgage Broker News
The Canada Mortgage and Housing Corporation (CMHC) announced further changes to its insurance offerings Friday, providing even more fodder for brokers to speculate about the future of the crown corporation.
“I think the goal is to eventually have the private insurers take over a larger market share,” Andrew Libby of The Mortgage Makers told MortgageBrokerNews.ca.
CMHC announced it will nix its loan insurance for the financing of multi-unit condo construction and that it will align its low-ratio product with its high-ratio insurance by implementing maximum house prices, amortization periods and debt servicing ratios, effective July 31.
“The changes are a business decision designed to increase market discipline in residential lending while reducing taxpayers’ exposure to the housing sector through CMHC,” an official release from the crown corporation reads. “They also support the government’s continued efforts to adjust the housing finance framework to restrain growth of taxpayer-backed mortgage insurance, as noted in Economic Action Plan 2014.”
It’s a move that will surely allow the two private mortgage default insurers to grab a larger chunk of the market share.
“CMHC helps Canadians meet their housing needs and contributes to the stability of the housing market and finance system,” said Steven Mennill, Senior Vice-President, Insurance. “The changes announced as part of the review ensure that CMHC’s products and services are aligned with these objectives.”
It remains to be seen whether Canada Guaranty and Genworth follow suit but, in a perfect world, Libby thinks the government should back off and allow the two private insurers to decide their own parameters for lending requirements, instead of instituting sweeping government regulation changes.
“The changes from 2010-2012 were made to stop the private insurers from making their own rules,” Libby said. “They made regulation changes that should have only applied to the CMHC.”
OECD calls for Canada to shift mortgage risk from taxpayers to private-sector
Posted on Jun 24, 2014 in Mortgage Market Updates and NewsGordon Isfeld
OTTAWA • Despite aggressive moves by the federal government to limit consumers’ exposure to an overheated housing sector, a major global think-tank is warning Ottawa that even tougher measures are needed to protect taxpayers.
In particular, the government should gradually reduce its share of the mortgage-insurance market and transfer more of the risk to the private sector, the Organization for Economic Cooperation and Development said Wednesday.
Insurance provided by Canada Mortgage and Housing Corp. is currently fully backed by Ottawa for those loans that come without at least a 20% down payment by the buyer.
Also, the Ottawa-based agency can now insure mortgages up to a limit of $600-billion. The OECD suggests that ceiling could gradually be lowered and the private-sector contribution raised to $300-billion.
“Over the longer run, the insurance activities of the CMHC could be privatized, shifting the government’s role to one of guaranteeing only against catastrophic losses,” the Paris-based OECD said in a report presented to the International Economic Forum of the Americas in Montreal.
Ottawa has already intervened four times in the past five years to cool the housing market — fired by record-low lending rates — by tightening lending rules and limiting the length of mortgages.
Recent government moves have reduced the maximum period on government-insured mortgages to 25 years, and lowered the amount homeowners could borrow against their mortgage when dealing with commercial banks.
Ottawa has also hounded commercial banks — to limited success — not to cut mortgage costs even further. The concern is that already heavily indebted consumers may not be able to meet their loan payments, especially when interest rates begin to rise above the rock-bottom levels experienced in the recession.
Speaking in Montreal, OECD secretary general Angel Gurria said “we do not expect to see a generalized crash in house prices” in Canada.
“The quality of mortgage loans remains high, and macro-prudential regulation has significantly slowed credit growth,” he said in the text of his address. “Risks remain, however.”
The condominium sector, especially Toronto, “looks overbuilt.”
“And high debt levels may put some households under financial strain as interest rates rise. Given the government’s backing of a large share of mortgage loans, taxpayers are highly exposed in the event of a major shock to housing markets.”
Through the CMHC, the government also recently stopped offering mortgage insurance for condominium developments — especially in Toronto and Vancouver — that have led the way in price increases and fanned worries that over-building would lead to a much-expected housing bubble.
That’s something Ottawa and the Bank of Canada have warned presents the biggest risk to the economy.
Finance Minister Joe Oliver said the Conservative government “has taken prudent action in the past to ensure our economy remained stable while limiting consumer indebtedness and taxpayers’ exposure to the housing market.”
“We will continue to monitor the market closely,” Mr. Oliver said Wednesday in an emailed statement from New York, where he was attending the North American Energy Summit.
“The CMHC and the Bank of Canada have both predicted a soft landing for the housing market.”
In its report, the OECD said that, “as in many countries, real house prices have increased substantially over the past decade.”
“Following an almost uninterrupted boom, they have reached record levels relative to incomes,” it said. “This has fueled debates over whether a bubble exists…. While house prices look remarkably high in certain markets, the probability of a major broad-based correction appears low.”
But David Madini, chief economist at Capital Economics in Toronto, said “clearly, it’s a major risk.”
“The government is really just coming full circle. The rules they are tightening up now are the very same rules they relaxed in the early 1990s and the past decade,” Mr. Madini said.
“I think this is a classic case of closing the barn door after the horse has bolted. I think these measures will actually reinforce the downturn in the housing market. The reason why we think prices will ultimately fall is because of oversupply, tighter credit terms and, eventually, higher mortgage rates.”
Credit unions take on banks in mortgage wars with rates as low as 2.69%
Posted on Jun 23, 2014 in Mortgage Market Updates and NewsGarry Marr
The latest salvo in mortgage rates wars among financial institutions appears to be coming from credit unions, free from federal regulation and ready to take on the banks.
DUCA Credit Union six weeks ago quietly opened up “DUCA Brokers Services” which has been funding brokers with rates as low as 2.79% on a five-year fixed rate loan. Some brokers are even eating into their own commission to buy down that rate to 2.69%.
At 2.69% for five years, it undercuts the efforts of the banks to compete. Bank of Montreal kicked off a new round of competition earlier this year with a 2.99% five-year rate and Bank of Nova Scotia went slightly lower to 2.97% for the same term.
“This new channel seeks to partner with the broker community as a virtual extension of our branches,” said Richard Senechal, DUCA’s chief executive, in an email.
DUCA is also guaranteeing its rate discounting within broker contracts to counter mild rate fluctuations. Based on the five-year government of Canada bond which mortgage rates are priced off, Duca’s spread is an almost unheard of 115 basis points.
The credit union is also not using underwriters in its broker service network but instead provides that network with certain guidelines to meet, DUCA itself employs people for fraud and number checks.
“This system allows for the efficiencies necessary for DUCA’s unequalled pricing,” said Mr. Senechal.
Rob McLister, editor of Canadian Mortgage Trends, said the DUCA model “is to cut out all the fat” and push more of the work onto brokers.
“Brokers are now widely posting below-market rates on mortgage comparison sites,” said Mr. McLister, who also runs the site http://www.ratespy.com. “Consumers increasingly see those hyper-competitive rates and ask their bank to match them. If their bank doesn’t match, more and more are taking their business to online brokers. Right now, online mortgage brokers are a speck of dust in terms of market share. But their impact on the market is disproportionately profound because lenders and consumers use their rates as benchmark.”
He says credit unions only have to answer to customers and shareholders and that could allow them to ultimately control a larger segment of the market over time. Credit Union Central of Canada, the national trade association of the industry, notes credit unions only have about 7% of the residential loan market.
But they do have the advantage of not being regulated by the Office of the Superintendent of Financial Institutions which last year implemented strict guidelines for loans with less than 20% down that included rules on better loan documentation, income documentation and tighter debt services ratios.
Peter Routledge, an analyst with National Bank who follows the industry, noted credit unions with loans that require mortgage default insurance are still subject to federal guidelines because companies in that sector like Canada Mortgage and Housing Corp. are regulated by OSFI.
“For the last two years and maybe like the next year it may seem like credit unions are getting an easier ride,” said Mr. Routledge, adding credit unions must also meet federal guidelines for any loans they want to securitize which narrows any advantage.
Ryan McKinley, senior mortgage development manager with VanCity a British Columbia credit union, said the the gap between federal and provincial rules does allow credit unions to compete on some products the banks can’t provide.
“Credit unions can offer some products that federal institutions can’t offer,” said Mr. McKinley, pointing to deals that allow cash back for down payment and longer amortizations.
Another aspect of credit unions not available from banks is an ability to share in dividends which ultimately lower your effective mortgage rate because you are getting cash back. VanCity’s 3.04% current five-year mortgage could be lower depending on its financial success.
“It does factor into the pricing,” said Mr. McKinley.
Meanwhile, the other factor that just might take rates even lower could be yields falling in the bond market.
Benjamin Tal, deputy chief economist with CIBC, wouldn’t rules out the possibility that rates could go even lower.
“In the long term, they’ll go up but I think they could shrink even more for now,” said Mr. Tal.
Vancouver realtors say there hasn’t been this much home buyer demand in three years
Posted on Jun 20, 2014 in Mortgage Market Updates and NewsGarry Marr
Vancouver sales jumped 14% last month compared to a year ago but still remain 6.5% below the 10-year sales average for the month of May.
The Real Estate Board of Greater Vancouver said there were 3,286 sales last month in Greater Vancouver across the Multiple Listing Service, up from 2,882 sales recorded in May 2013. Sales jumped 7.7% from the 3,050 in April, 2014.
The board’s MLS home price index composite benchmark price for all residential properties in the metro region was up 4.3% in May from a year ago to $624,000.
“Home prices have experienced consistent yet modest increases in our region since the beginning of 2013,” said Ray Harris, president of REBGV, in a release Tuesday. “Our MLS statistics tell us that there’s more home buyer demand today than at any point over the last three years.”
The sales-to-active listing ratio is now 20.4% in Greater Vancouver, the first time is has been above 20% since June, 2011.
New listings for detached, attached and apartment properties reach 5,936 in Greater Vancouver in May, a 5% increase from a year ago. It was a 0.2% decline from a month earlier.
The total number of properties listed for sale on the MLS system in Greater Vancouver was 16,072, a 6.7% decline from a year ago and a 3.6% increase from a month ago.
CMHC WON’T INSURE HOMES WORTH MORE THAN $1M
Posted on Jun 19, 2014 in Mortgage Market Updates and NewsCanadian Press / June 6, 2014
Canada Mortgage and Housing Corp. says it will no longer offer mortgage insurance for homes that cost $1 million or more, starting July 31, even if the buyer has made a deposit of 20% or more.
It’s a step further than rules introduced two years ago when then finance minister Jim Flaherty announced that CMHC would stop insuring mortgages on homes worth $1 million or more if the buyer borrowed more than 80% of the value.
The Crown corporation says the changes announced Friday would have affected only about 3% of the mortgage insurance it provided last year for individual homes.
CMHC also announced it will no longer insure loans that are used to finance construction of multi-unit condominium projects, effective immediately.
It says that type of insurance product was introduced in 2010, but CMHC hasn’t provided any to builders since 2011.
CMHC also says its mortgage loan insurance for condo buyers isn’t affected by the change.