No mortgage rule changes

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No mortgage rule changes

The Government of Canada threatened to tighten mortgage rules this spring as they have during the past two years. However, at the end of the day, they decided to make no mortgage rule changes. Even though they decided not to make any changes at this time there are still two large issues looming in the lending arena.

The first are stated income mortgages for self-employed people. These are mortgages where lenders will look at waiving the income requirements for self-employed people that have good credit history and a solid track in business. The government is making it more and more difficult for self-employed people by demanding that the banks tighten up the rules in these programs. Some lenders have even gone as far as to completely remove these programs from their portfolios. This will make it very difficult for self-employed people to borrow money down the road. In a sense they will be forced to declare more net income to try and qualify for the loans/mortgages that they need.

The other major item on the books is the involvement of CMHC in insuring mortgages that have less than 20% down. CMHC is approaching the ceiling of what it is allowed to insure and the government has decided not to increase this ceiling. If they hit their insurance ceiling then Genworth and Canada Guaranty, Canada’s two private mortgage insurers, will be forced to pick up the slack and insure more mortgages. If they are unwilling to do this then we could see contraction in lending of high ratio mortgages in Canada.

Important Reminder Regarding Your Mortgage Renewal

If your mortgage is up for renewal and you are being contacted by your lender to early renew before the maturity date please call or email us before signing the renewal. We are able to give you a quick recap of rates in the market to make sure you aren’t signing for a rate/term that isn’t beneficial for you. Often times your lender will tell you that you only have a very limited time to sign the renewal to pressure you into taking the rate they want. Get in touch with us for a quick 2nd opinion!

If you require any further information regarding this article or any other mortgage matters please contact our office at 604‐556‐3893. Also, as a reminder to anyone looking for a mortgage, we offer 4 month pre-approvals at no cost to you. This means that you can get a rate hold for up to 4 months to protect yourself in case rates rise.

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About the Author:

Alex Kotai

Alex Kotai has worked in the mortgage lending business for over 10 years. His career started at HSBC Bank Canada where he spent most of his time in senior management roles which involved training and managing the sales staff at his branch. After leaving HSBC, Alex decided to open his own mortgage brokerage firm, Your Mortgage Source. Through his company, Alex has access to many lenders across the country with a very expansive list of products.