Notable News of the Week: June 22, 2012

Alyssa Furtado
by Alyssa Furtado June 22, 2012 / No Comments

Each week, Ratehub compiles and summarizes the latest news from the mortgage and housing industry to keep you up-to-date with the most interesting and relevant headlines. This week, Flaherty announced major changes to the mortgage rules in an effort to cool the housing market. Toronto is also taking steps to fix the glass that has been falling from condos, and Moody’s downgrades a major Canadian bank.

Mortgage clampdown will save Canadians thousands: Flaherty – Globe and Mail

A major announcement from Ottawa as four changes have been made to the Canadian mortgages rules, only some of which apply to insured mortgages. Jim Flaherty says the changes will save Canadians thousands of dollars. The changes are outlined below:

  • Maximum amortization period is now 25 years for high-ratio mortgages (i.e. downpayments of less than 20%).
  • No CMHC insurance on homes priced over $1M. Homes over this amount will require a 20% down payment.
  • Maximum amount of home equity that can be borrowed is now down to 80% from 85%.
  • Maximum gross debt score and total debt score are now fixed at 39% and 44% respectively.

The new mortgage rules will take effect on July 9, 2012.

Moody’s downgrades ING Bank of Canada  – Financial Post

After ING’s Dutch corporate parent ING Bank N.V. was downgraded two notches to a C- in financial strength, ING Bank of Canada was also downgraded from an A2 to a Baa1 by Moody’ Investors Service. The agency raised concerns about ING’s narrow business model in Canada and says it believes “ING Bank of Canada manages these exposures carefully, but in a stress environment they could still result in material losses.”

Australia looks to adopt Canada’s securitization model to benefit smaller lenders – Broker News

Australia is considering adopting Canada’s securitization model to benefit smaller lenders. MFAA chief executive Phil Naylor wants to see aspects of the system introduced in Australia to increase competition among lenders. The CMHC has three roles: a mortgage insurer, a securitiser and a general advice body, of which, Australia is most intestered in the securitiser role. Naylor says that the 20% funding accessed by small lenders would still be a substantial improvement for Australia saying, “At the moment our securitised lenders in Australia have been reduced to 1-2% of the market, and anything is better than that.”

Toronto looks to prevent condo balconies from shattering – Toronto Life

You may not have to duck for cover anymore when walking around downtown Toronto. The city plans to do something about the falling glass from condo balconies, which has resulted in eleven mishaps this past year. The city plans to create a database of the condos with glass balconies for developers to voluntarily make inspections. The province is also reviewing a city report that recommends stricter rules about glass types used in condo development. The only problem is, even if the recommendations are adopted, under Ontario’s building code, developers still don’t have to upgrade existing buildings to meet new regulations. However, the potential revamp could mean safer, sturdier glass in future condos, but the existing buildings already shedding glass may not be assessed.