Category Archives: Government Policy

Mortgage Refinance versus Mortgage Rates

With the ability to control mortgage rates stripped from the hands of federal policy makers, they’ve had to look for alternative methods of moderating housing prices and Canadian debt levels.  Four rounds of mortgage rule clamp downs in as many years is testament to our government’s yearning to intervene in this area.  Aside from the dramatic reduction in the maximum amortization, the biggest change has been the elimination of high … Read More

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Mortgage Amortizations versus Mortgage Rates

The federal government would love to tweak mortgage rates and control housing growth and debt loads, but worldwide economic events has taken that key control lever out of their hands.  Their alternate mechanism of choice has been to tweak mortgage rules.  They’ve taken such a fancy to this idea that they’ve tightened mortgage rules 4 times in as many years.  The main mortgage rule the ministry of finance has tightened … Read More

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CMHC Back to Basics

The latest round of mortgage rule tightening brings Canada Mortgage and Housing Corporation’s (CMHC’s) mortgage rules back in line with its original mandate.  Helping Canadians buy their first home.  CMHC was established in 1946 as a government-owned corporation to address Canada’s post-war housing shortage.  Over the years scope creep entered the picture and the government insurer began meeting market needs by allowing borrowers to refinance their homes to 95% of … Read More

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Mortgage Rates Not Going Anywhere

The federal government along with the Canadian Central Bank is growing increasingly concerned with our low interest rate environment.  Traditional thinking stipulates that these low rates are un-natural and in time, when the global economy rights itself, interest rates will rise to 6%-7% back to their natural norm.  This is a reasonable expectation although as time goes on the strongest argument in favor of the 6.5% natural interest rate theory … Read More

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Flaherty Tightens Mortgage Rules

The department of finance ambushed the financial services industry late Wednesday with the announcement that they are tightening mortgage rules.  Just 2 weeks ago the Office of the Superintendent of Financial Institutions (OSFI) released mortgage rule changes after weeks of deliberation and industry feedback.  Apparently the government didn’t like the process or the results and heavy handed a few changes of their own. The changes announced are a reduction in … Read More

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OSFI Interim Update

The office of the superintendent of financial institutions (OSFI) released a letter on Wednesday providing an interim update on Draft Guideline B-20.  These guidelines are the proposals put forth by OSFI to tighten the mortgage lending practices of federally regulated financial institutions (FRFI’s).  The purpose of this letter is to provide a brief description of OSFI’s key decisions on their proposals after having incorporated industry feedback. The good news is … Read More

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Time to Eliminate No-Money-Down Mortgages

Canadian household credit was rising at an alarming rate and has Ottawa looking for ways to stem the tide.  Given greater powers, OSFI is working to strengthen our banks’ balance sheet and limit mortgage lending.  Although their recent discussion paper includes many dramatic recommendations there are some proposals that could achieve its mandate without jeopardizing the housing market.  Their recommendation to eliminate no money down mortgages, for example, is likely … Read More

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OSFI Recommends Age Discrimination for Mortgages

The Office of the Superintendent of Financial Institutions (OSFI) has recently been empowered with the oversight of Canada Mortgage and Housing Corp. (CMHC), and has proposed several new rules to make mortgages safer investments for banks.  It’s controversial to say the least, that Canada’s banks need to get safer or stronger, but nonetheless this is current government paranoia.  The most controversial of which is that a borrowers age should be … Read More

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OFSI Recommends Borrowers Qualify at Renewal

Now that the Office of the Superintendent of Financial Institutions (OSFI) has oversight over Canada Mortgage and Housing Corp (CMHC) it’s looking to leave its mark as a strict regulator of risk.  And holy 4 letter acronyms batman.  The most stringent of the recommendations is the proposal that mortgagors re-qualify for their mortgage every time it renews.  In OSFI’s words “as applicable for each subsequent renewal or refinancing of the … Read More

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Government Guarantee Gone?

Canada Mortgage and Housing Corp (CMHC) is the country’s largest mortgage insurer, and Jim Flaherty is mulling over whether the government should get out of the mortgage insurance business altogether.  Privatization of CMHC would have its pros and cons to the Canadian market.  A black and white paradigm shift would provide some positive results, but beware the negative tidal wave to come. There are currently 3 mortgage insurers in Canada … Read More

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