Tag Archives: governement policy

Time For A CMHC Price Cut

It’s time for CMHC to reduce it’s insurance premiums.  These premiums, charged to purchasers with less than 20% downpayment, insure lenders against default.  The 3 mortgage insurers in Canada have been reaping substantial profits on the backs of Canadian homeowners for a decade.  Canada Mortgage and Housing Corporation (CMHC) has held the lions-share of the market (typically 70%) and has reported an average annual net income in excess of $1.1 … Read More

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High Housing Costs Hurting Canadians

A letter from the Federation of Canadian Municipalities cites the high cost of housing as the most urgent financial issue facing Canadians today.  “Housing costs and, as the Bank of Canada notes, household debt, are undermining Canadians personal financial security, while putting our national economy at risk,” quotes the document addressed to Stephen Harper. The letter was put forth by the Federation of Canadian Municipalities, who represent over 90% of … Read More

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Fixed Mortgage Rate Forecast – September 2013

The mortgage rate roller coaster continues as bond yields dip 20 basis point last week.  This dip comes as a result of the US Fed’s announcement that it will continue to support its bond buying program known as quantative easing.  The announcement surprised and rallied markets reversing upward march of bond yields. Lower bond yields remove upward pressure on mortgage rates and will eventually allow competitive lenders to lower their … Read More

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Mortgage Rates Stabilize

Ben Bernanke and the US Federal Reserve (Fed) shocked markets this week with the announcement that it will continue with it’s bond buy-back program.  This program, known as quantative easing or QE, is designed to keep bonds liquid and to force down yields or borrowing rates for bond issuers.  The net effect of lower bond yields is lower long term mortgage rates in Canada. Earlier this summer Mr. Bernanke hinted … Read More

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How Much Mortgage Debt is Too Much Debt?

The Canadian government is concerned about our level of consumer debt, including mortgage debt, and so are most Canadians.  When surveyed however, the vast majority of Canadians feel comfortable with their own level of debt.  The question remains, how much debt is too much debt. The yardstick our Department of Finance has been using is the ratio of debt to disposable annual income.  Let’s look at that at the household … Read More

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Consumer Debt Levels Hit Record in Second Quarter

According to Statistics Canada, the ratio of household debt to disposable income increased to a record high of 163.4% in the second quarter.  The latest figure represents a 1.3% increase from a first quarter level of 162.1%.  Red flags over consumer indebtedness have been the main driver behind our governments mortgage rule tightening efforts over the past 4 years.  Four years ago this debt benchmark was hovering around the 155% … Read More

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Fixed Mortgage Rate Forecast – August 2013

Fixed mortgage rates are primed for a .25% to .50% increase over the next couple of months.  The Department of Finance’s policy change restricting the amount of MBS mortgages that Canada Mortgage and Housing Corp (CMHC) will insure is to blame. Without the ability to insure and then securitize as many mortgage assets, Canada’s mortgage lenders will have to resort to more expensive sources of capital to fund Canadian mortgages.  … Read More

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Flaherty Fights Growing Housing Market

July’s strong market results just may have been the latest tipping point for Ottawa and the Department of Finance (DOF).  A new government initiative to slow housing growth is restrictions on cost effective funding sources.  Canada Mortgage and Housing Corporation (CMHC) has already notified banks and other mortgage lenders that it’s putting a $350 million monthly cap on the amount of Mortgage-Backed Securities (MBS) that each lender can issue.  Although … Read More

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Jubilant July for Toronto Real Estate

The Toronto Real Estate Board (TREB) announced that 2013 brought the 3rd best July on record.  Not only did sales rocket by 16% but average sale prices also shot up by 8% to $513,246.  This is particularly good news for an industry that typically sees a summer slowdown July and August. The implication of these strong numbers is that tighter mortgage rules imposed by the Department of Finance (DOF) have … Read More

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Variable Mortgage Rate Forecast – July 2013

It’s steady as she goes for variable mortgage rates for the foreseeable future.  Variable mortgage rates are linked to the overnight rate which is controlled by the Bank of Canada (BOC), and the BOC’s new chief, Stephen Poloz is maintaining the same cautious hand as outgoing chief Mark Carney. When asked when we can expect to see rates rise Mr. Poloz replied, “The honest answer is, we really don’t know”.  … Read More

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