Tag Archives: OSFI

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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Canadians Comfortable with Their Mortgages

A survey of more than 2,000 Canadians conducted and compiled by Maritz Research Canada concludes that Canadians are comfortable with the amount of their mortgage debt.  The key findings are: ·         80% of mortgages have an original amortization of no more than 25 years ·         18% of mortgage holders increased their monthly payments in the past year. ·         16% of mortgage holders made lump sum payments on their mortgages during … Read More

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Flaherty Doesn’t Make Cents

Jim Flaherty is defending his decision to interfere in the mortgage market on the basis that he is preventing Canadians from borrowing more than they can afford.  This is nonsense.  After tightening mortgage rules 4 times in the past 4 years and enhancing the powers of the Office of the Superintendent of Financial Institutions (OSFI) to oversee prudent lending practices, we now have extremely conservative lending practices.  Anybody that still … Read More

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Non-Mortgage Debt on the Rise

Canadian non-mortgage related debt increased 4.6% in the fourth quarter over the same period last year bringing the average to $26,768, its highest point in 2 years.  This increase has many pundits scratching their heads trying to understand why Canadians aren’t getting the message.  Both the Bank of Canada and the Department of Finance have been so concerned about the amount of overall consumer debt that have been working to … Read More

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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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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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No More Cash Back Mortgages

The second significant mortgage rule change imposed by the Office of the Superintendent of Financial Institutions (OSFI) is the elimination of “Cash-Back” mortgages.  These mortgages offer the borrower a cash incentive or bonus once the mortgage closes.  The amounts are significant and usually represent 5% of the mortgage balance.  On a $300,000 mortgage this amounts to $15,000!  A much better gift than a new toaster. If it sounds too good … 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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Banks Respond to Appraisal Concerns

In the wake of the Office of the Superintendent of Financial Institution’s (OSFI’s) letter to federally regulated financial institutions, (FRFI’s) the big banks are already responding to the concern on property valuations.  “We have tightened our process, and make sure that we are getting an accurate read,” reported RBC through David McKay, its head of Canadian banking.  TD bank however feels further tightening isn’t necessary.  “We’re really not seeing a … Read More

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