Tag Archives: bank regulation

Why You Need CMHC Insurance

CMHC provides mortgage default insurance to the lender in case the borrower defaults and there isn’t enough money after a sale to pay-out the mortgage.  There are 2 other Canadian mortgage default insurers in Canada that provide identical products, Genworth Financial and Canada Guarantee. Regulated financial institutions are prohibited from lending beyond 80% of the value of your home unless they obtain this mortgage default insurance.  Although this premium is … Read More

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Self Employed Excluded From Home Ownership

Most Canadians are now familiar with the fact that mortgage rules have been tightened 4 times in 4 years by the Department of Finance.  What many don’t realize is that OSFI, the regulator of all Canadian Financial Institutions, is using its new found powers to tighten mortgage lending even further.  It recently imposed a new set of rules for mortgage lenders that’s been titled B-20. Perhaps the most restrictive component … Read More

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Flaherty Slams on the Brakes

The issue of Canadian debt levels has found a permanent place in the news.  Specifically, increasing levels of consumer debt is being cited as the reason for Jim Flaherty’s need to tighten mortgage rules yet again this summer.  With Canadian debt to income ratios approaching US pre-crash levels there’s been much panic that a US style Real Estate crash is coming to Canada. The primary reason for higher debt levels … Read More

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Appraisals Don’t Determine Purchase Price, the Market Does!

Constant government mortgage rule tightening and warnings of too much consumer debt has put property valuations and appraisals under a microscope.  Many critics are concerned that mortgage participants aren’t performing sufficient due diligence on a property’s value, and are contributing to escalating values and debt. The truth is neither a lender nor an appraiser can decide a property’s value.  That decision is left up to market forces.  The definition of … Read More

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Mortgage Rules Affect All Purchase Price Levels

The most recent round of mortgage rule tightening reduced maximum amortizations to 25 years.  This effectively increased the minimum mortgage payments required by home purchasers.  “The rule changes are affecting the entire housing market – high end, low end, mid-range,” echoed Sal Guatieri, Bank of Montreal senior economist. This is no more evident than in the Vancouver housing market.  Residential property transactions are down 33% to 1,516 units in September … Read More

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The Real Estate Divide

Canadians have always been proud of our capitalist society with a strong middle class.  As we gain wealth nationally we’ve improved the standard of living of all our income bands.  We’ve avoided the great divide between the rich and the poor that exists south of the boarder.  The new economy however threatens all of that. Our elected officials are governing us as if we all have the same net worth … Read More

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Hidden Mortgage Fees

  If you’re like most borrowers you just want the best mortgage rate.  After all, aren’t the other terms the same?  Wrong. Banks and other mortgage lenders are businesses looking to maximize their profits and although there are regulations on stating fixed mortgage rates, the other terms are fair game and buyer beware. One example of a hidden fee is the reinvestment fee. This is similar to a restocking fee … Read More

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HELOC Changes Imminent

One of the proposed mortgage rule changes coming down the pipe is lower limits on Home Equity Lines of Credit (HELOC’s).  Earlier this year the Department of Finance not only lowered maximum amortizations and restricted the limits on mortgage refinances, they also initiated several mortgage rule changes for federally regulated financial institutions.  Although many of the proposals were discarded, a couple of significant changes are nearing implementation, one of which … Read More

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Less Affordable Housing

Canadian housing became a little less affordable last quarter according to a report released today by RBC.  “This represented the second consecutive quarter during which the costs of owning a home at market prices grew as a share of household income” read the report authored by RBC economists Craig Wright and Robert Hogue. The main factors affecting affordability are rising home prices, higher mortgage rates and tighter lending rules, and … Read More

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ING Direct Up For Sale

The Dutch based mega bank ING is putting its Canadian operations up for sale with the likely buyer being one of the existing big 6 Canadian banks.  The large Canadian banks have the means and the expertise to make the most of this profitable business.  The biggest advantage of such a transaction would be lower transaction costs through greater economies of scale, but that would only apply if they could … Read More

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