Banks rolling back mortgage discounts

 

 

 

 

 

Banks rolling back mortgage discounts

grant robertson — BANKING REPORTER

Globe and Mail Update

Published Monday, Feb. 06, 2012 5:03PM EST

Last updated Monday, Feb. 06, 2012 7:43PM EST

The deep discounts seen in the Canadian mortgage market in recent weeks are beginning to evaporate, as Canadian banks pull back on the historic low rates they rolled out in January.

Royal Bank of Canada (RY-T53.980.400.75%) announced Monday that it is raising rates on a four-year fixed-rate mortgage with a 30-year amortization, to 3.39 per cent. That is an increase of 40 basis points from the 2.99 per cent RBC had been offering. (A basis point is 1/100th of a percentage point.)

RBC also increased the rate slightly on a five-year fixed rate mortgage to 4.04 per cent, an increase of 10 basis points.

The move comes after Bank of Montreal (BMO-T58.440.320.55%) recently ended a two-week push in late January that saw it offer five-year fixed-rate mortgages with a 25-year amortization at 2.99 per cent.

The move was designed to drum up mortgage sales in an otherwise slow month, and forced other banks to match those rates on a variety of similar offerings. Since banks track each others’ moves closely, it is expected others will likely follow with a similar increase in the days ahead, now that RBC and BMO are pulling back.

When RBC announced it was dropping its rates Jan. 13, the bank intended to keep them in the market until Feb. 29.

The price-cutting by the banks caught Ottawa’s attention, as the Bank of Canada and the Finance Department both remain concerned about Canadians taking on too much household debt. Sources told the Globe and Mail last week that officials in Ottawa were unhappy with the price war that developed on mortgage rates in January, at a time when the government is watching the housing market closely, concerned about consumers taking advantage of low rates to pile on debt, which could result in problems in the future if rates begin to rise.

 

 

 

Alec Bowes Director, Business Development | Canadiana Financial Corp.

 

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A Lender Talks About Mortgage Brokers

Working with a Mortgage Broker Today, about 30% of Canadian homeowners arrange their mortgages through mortgage brokers – independent specialists with extensive knowledge of mortgage lenders’ product offerings, their features and benefits, and contacts throughout the lender community to ensure competitive rates. What can a Mortgage Broker do for you? Mortgage Brokers are experts dedicated to finding the right mortgage solution and simplifying the mortgage financing process. The Broker will take the time to understand your individual situation and tailor the best solution from among the hundreds of products available to today’s homebuyers. Brokers complete all the paperwork and keep up-to-date on industry issues and changes that could affect the decision you make about which mortgage solution is right for you. A Mortgage Broker will save you time. Comparison shopping involves going from lender to lender repeating your story, asking the same questions and analyzing the answers. That’s time most people don’t have. On top of that, home financing is highly competitive and each product can be complex, which is why you should have an expert on your side. A Mortgage Broker will also work with you on strategies to manage monthly payments or improve your credit rating. Questions to ask your mortgage broker: A Mortgage Broker will also work with you on strategies to manage monthly payments or improve your credit rating. As the term "broker" suggests, he or she gets paid a commission when originating or renewing a mortgage, so you don’t pay a thing! 1. How long have you been a mortgage broker? 2. How long has your company been in business? 3. Can I get references from your clients? 4. How do mortgage brokers make money? 5. What is your experience with this type of transaction? 6. What is the process for closing my mortgage? 7. How quickly can it be done? 8. Which lenders do you work with and why? Why use a mortgage Broker? Integrity, industry knowledge and service.

First National is licensed under the Mortgage Brokers, Lenders and Administrators Act 2006 (Ontario) Licence No. 10514
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Have a great day!!

 

Lisette Amalfi, AMP

 

 

Mortgage Broker/Owner

Mortgage Alliance Oac Mortgages

Important Industry Update

During the past week, there has been extensive media coverage and announcements affecting the mortgage industry.  OSFI's lender audits on NIQ (Non Income Qualified) products and news that the government guaranteed mortgage insurance ceiling is approaching its limit directly affect the type of mortgage products that can be offered and the way in which mortgages are funded. CAAMP is actively engaged in these issues.  We are:  · Speaking with lenders, insurers and brokers to evaluate the facts and their implications; · Communicating regularly with the Minister of Finance's Office in Ottawa; · Retaining a Government Relations firm in Ottawa to work in collaboration with us; · Conducting focused Roundtable discussions with brokerage owners; ·  Attending meetings with government officials in Ottawa to increase their awareness and understanding of our industry. CAAMP is advocating the following fundamental messages: · Government has already tightened lending criteria significantly and mortgage volumes have decreased; · The issue of lenders and the mortgage insurance ceiling has nothing to do with lending practices, but rather liquidity and capital requirements; · Arrears and defaults in Canada remain low and are declining; · Homeowners have significant equity and are paying down their mortgages; · As an industry, we are vigilant and caution against further measures that could precipitate a weakening of the housing market. A detailed set of messages to share with your local media or Member of Parliament will be forwarded in due course.  We will keep you informed of activities as and when they occur.

 

First Line Closes door on Stated Income

 

 

Time may be ticking for some of the current lending policies with CMHC and the “Banks”.. 

Yesterday Firstline officially dropped the hammer on their “Stated Income” and “New Immigrant” programs.  In English, you now have to borrow based on your actual declared income, (Average of the last two years, line 150 on your notice of assessments), and must have a 2 year  Canadian Credit score if you want a mortgage from CIBC’s Firstline Mortgages.

http://www.thestar.com/business/article/1124551--mortgage-cmhc-firstline-ottawa-self-employed-new-immigrants-housing-market?bn=1

It looks like some of the Banks are not going to wait until April 1 2012 until Flaherty announces the upcoming changes for CMHC . 

BMO was first out of the gate by restricting their new 5 year mortgage special to 25 year maximum amortization.

There is a distinct possibility that April 1^st will bring some of the most significant changes to the current lending policies, which will affect a large percentage of mortgage holders, both current and future.

Here are a few that policies that could be affected:

1.       Amortizations reduced back to 25 years, (The 30 year amortization may disappear)

2.       The elimination of self-employed applicants over stating their income, beyond the 2 year average of line 150 on their Notice of Assessments

3.       Elimination of New Immigrant Program

4.       Establishing ceiling amounts for mortgages, ie  $1,000,000, but this could filter down into the first time homebuyer market with lower ceilings in different markets

5.       5% Down could only be for 1^st time home buyers once again, that existing homeowners may have to come up with 10% down on their next purchase.

6.       80% Conventional Mortgages could move back to 75%

Now please keep in mind that until CMHC announces any actual changes, these are all completely speculative at best, and it is not likely all of these may happen.

But one thing is certain at this point, and that is that we will likely see some form of changes get announced in April that will have some effect on some applicants qualifying for a mortgage.

References to CMHC needing to increase their $600 Billion Cap, are somewhat of a concern, however I would be very surprise if they do not approve an increase in that cap at the same time they announce the upcoming changes to the lending policies.

With this in mind, my very strong suggestion is,  if a home purchase is in your near future,  or you have a mortgage maturing soon, or you have debts, renovations or any other reason to consider refinancing your current mortgage, and any of those possible changes are a concern to you, then get your application in soon.

The self-employed applicants will likely be the most affected by these upcoming changes.

It is still status quo with most of our current lenders. 

This is a perfect example as to why using an independent mortgage agent, with access to multiple lenders is your best option today, if one lender changes their policies, we likely have other lenders who may not have changed yet.

 
David Kendall
 
Mortgage Agent
License # M08004045
 
211 York Road, Unit 3, Dundas, Ont. L9H 1M9
OAC Mortgages Brokerage License # 10928
An independently owned and operated franchise of the Mortgage Alliance Network