Writing the monthly mortgage update requires a lot of reading, sifting, data aggregation and overall work. “Good” content often does. There is a lot of content out there, but less good content than one would hope for. I am referring to company and personal blogs, such as this one. In the mortgage industry, you can count the good content providers on two hands, one of which is often referenced heavily in these monthly updates. Continue reading
Last week, we updated an old blog post of ours on New to Canada mortgages. One piece of the puzzle we only briefly touched on was mortgage default insurance, and the fact that CMHC will insure most newcomers’ home purchases with a down payment of as little as 5% if you have permanent resident status or 10% if you are a non-permanent resident. However, CMHC isn’t the only mortgage default insurance provider in the country.
If you’re a newcomer to Canada and you need to purchase mortgage default insurance, because you have to put down less than 20% of the purchase price of a home, there are three insurance providers you can choose from. Grab a coffee from Timmy’s and keep reading!
CMHC limits guarantees for mortgage lenders – Global News
This week, the Canada Mortgage and Housing Corporation (CMHC) notified banks, credit unions and other lenders that they will begin restricting each lender to $350M worth of mortgage-backed securities (MBS) per month. CMHC was given the authority to guarantee up to $85 billion in 2013, as part of the National Housing Act Mortgage-Backed Securities (NHA MBS) program. By the end of July, however, CMHC had already guaranteed $66 billion. To better manage the volumes going forward, CMHC introduced this $350 million cap.
Analysts think that the new cap will make it more difficult and expensive for banks to lend to their customers. Converting loans into mortgage-backed securities was a way for lenders to utilize funds from a broad range of investors and offer mortgages at a lower rate. Without this option, added costs will likely be passed onto customers in the form of higher mortgage rates. TD Economist Diana Petramala predicts that mortgage rates will rise anywhere from 0.20-0.65 per cent, as a result. Continue reading
I’m going to preface this article with a warning that it involves banking jargon, but will try to distill it to the key takeaways for average Canadians.
Today it was announced in a Globe & Mail article that, effective immediately, the CMHC is limiting banks, credit unions and other mortgage lenders to $350M worth of mortgage-backed securities (MBS) per month under the National Housing Act (NHA). This follows Ottawa’s announcement earlier this year that it would limit mortgage-backed securities that it would guarantee to $85B this year, up from $76B last year.
By the end of July – just 7 months into the year – banks had already tapped $66B of the $85B annual limit, resulting in an immediate need for further intervention from Ottawa. Continue reading
CMHC Amidst Major Changes
In March of this year, Finance Minister Jim Flaherty presented the idea of placing the Canada Mortgage and Housing Corporation (CMHC) under the auspices of the Office of the Superintendent of Financial Institutions (OSFI). This decision came as a result of the Crown Corporation selling too much bulk or portfolio insurance to banks, forcing Flaherty to decide it was time to reduce the federal government’s exposure to the Canadian housing market. And apparently this decision, on top of a number of mortgage rule changes made over the last two years, has given him the results he was hoping for.
In the first three months of this year, the total amount of CMHC insurance out in force dropped by $3.5 billion, to $562.6 billion. This number fluctuates when homeowners pay down their insured mortgages or when CMHC sells more insurance. Most of the decline this year is said to come from the bank’s inability to sell insurance in bulk now, but can also be attributed to changes in the mortgage lending rules. CMHC said that insurance needed on new mortgages dropped by 23 per cent, shortly after Flaherty decreased the maximum amortization period on high-ratio mortgages from 30 years to 25 years. Continue reading