Start of 2017
2017 is off and running and it is the start of a “new lending reality”. The fourth quarter of 2016 saw further big changes to the mortgage lending landscape. The Federal Government, along with OSFI (the Wizard of Oz of the Canadian financial institutions) continue to make regulatory changes that impact Canadians.
The implementation of the stress test and other restrictions have certainly limited choices and decreased buying power. This has been coupled with a total shift on how lenders raise capital and fund mortgages, which has led to more expensive cost of capital. The default insurers (CMHC, Genworth and Canada Guaranty) have all had their capital reserve requirements increased. As we predicted in October, we are seeing rate increases from all lenders (and expect this to continue into the second quarter of 2017 before we see rates flatten out). Further, effective March 17, 2017, the insurers are raising premiums on all loan to values. For more on the changes, please click here: https://www.cmhc-schl.gc.ca/en/corp/nero/nere/2017/2017-01-17-0830.cfm
These increases in lender and insurer costs are being passed on to the mortgage borrower. One of the biggest impacts is to those with 20% down or greater equity positions. It seems counter-intuitive but you, as a consumer, have access to cheaper mortgage money with 5% down than you do with 20%. This new reality scales pricing based on down payment, amortization length, credit rating, whether the transaction is purchase or refinance, and owner occupied or rental. Our lender rate sheets now look like flow charts! What does this all mean? It means that now more than ever you need experienced and influential mortgage brokers to ensure you have access to the best options and are securing the best advice when making your mortgage decision.
Your team at Mortgage Connection has spent several months working on merging with another top level brokerage and are excited to announce our new partnership as Axiom Mortgage Solutions. We are now one of the largest brokerages in Canada. With this new partnership we will better be able to serve you and influence lenders. What does the change mean to you as our valued clients? Everything you have come to expect from our expert team will still be delivered but now with even more choice. Including our home in Inglewood, we now have two additional Alberta offices (Kensington in Calgary, and Sherwood Park), and we also have offices across the country. With power from Axiom Mortgage Solutions, we are confident we will be able to do great things for you, our valued clients.
For more information on our new venture as the Mortgage Connection Team with Axiom Mortgage Solutions please connect with us!
With the changes of the year, all the changes in the lending environment, and our change to better serve you, now is a great time for an annual mortgage review. Please connect with your mortgage broker to set up a time and review your plan. Come have a coffee and let’s make sure you’re on track and using your mortgage to help reach your financial goals. We hope 2017 is a great year for you and we are looking forward to working with you and your friends and family.
Mortgage Connection Team Axiom Mortgage Solutions