Finance Minister Jim Flaherty would consider taking CMHC out of the mortgage default insurance business he told the National Post’s editorial board.
“Over time, I don’t think it’s essential that a government financial institution provide mortgage insurance in Canada. I think what’s key is that mortgage insurance is available at a reasonable cost in Canada. I think there is a role to regulate but whether we, the Canadian people, have to be the owners and shareholders of a financial institution to do this is a question. I don’t think it’s essential in the long run.”
He offered no timetable on when the government could get out of mortgage default insurance business, just offering it up as a possibility. “We have a list of Crowns, Crown agencies that are being reviewed,” said Flaherty.
In a wide-ranging discussion on the housing market, he said he has no plans to increase CMHC’s current $600 billion loan limit, ruled out any possibility of regulating foreign real estate investment and made it clear his focus is on the governance of Crown corp that controls about 75% of the mortgage default insurance business in the country.
Click here for the full Financial Post article.
The federal regulator threatening to overhaul the guidelines lenders and brokers work under is now in receipt of the channel’s most exhaustive response to those proposals – in short, a list of what ain’t broke and don’t need to be fixed, say brokers.
“It is important to note the many positive features of the Canadian residential mortgage market,” writes CAAMP in its official response to OSFI’s draft on Residential Mortgage Underwriting Practices and Procedures. “This is something that is noticeably absent from the OSFI Draft Guideline B 20 Discussion Paper on mortgage underwriting.”
While CAAMP supports a thorough underwriting structure for residential mortgages, it cautions the regulator from going too far in five areas: loan documentation; debt service charges; loan-to-value ratios; HELOCs; and down payments.
For example, while OSFI is effectively stumping for greater loan documentation and underwriting at renewal, CAAMP, like consumer advocacy groups, is concerned those plans would actually compromise Canadian homeownership, not bolster it.
Click here for details in MortgageBrokerNews.ca.
Canada’s biggest banks accepted tens of billions in government funds during the recession, according to a report released Monday by the Canadian Centre for Policy Alternatives (CCPA).
Canada’s banking system is often lauded for being one of the world’s safest. But an analysis by CCPA Senior Economist David Macdonald concluded that Canada’s major lenders were in a far worse position during the downturn than previously believed.
Macdonald examined data provided by CMHC, OSFI and the big banks themselves for his report published Monday.
It says support for Canadian banks from various agencies reached $114 billion at its peak. That works out to $3,400 for every man, woman and child in Canada, and also to 7% of Canada’s gross domestic product in 2009.
Click here for more from CBC News.
It doesn’t make much sense, but a skimpy down payment on a home may actually get you a better mortgage rate in today’s market.
Blame the government subsidy known as mortgage default insurance, which ultimately makes it less risky to lend money to someone who has only 5% down compared to someone with 20%.
Consumers with less than 20% down must get mortgage default insurance in Canada if they’re borrowing from a federally regulated bank. The cost is up to 2.75% of the mortgage amount upfront on a 25-year amortization but that fee comes with 100% backing from the federal government if the insurance is provided by Crown corporation CMHC.
“It’s already happening,” says Rob McLister, Editor of Canadian Mortgage Trends, who says secondary lenders are now offering rates that are 10 to 15 basis points higher for a closed five-year mortgage for uninsured consumers.
Click here to see the Financial Post article.
I recently sold my house and have decided to get a new mortgage through a mortgage broker rather than my bank.
So, I met with my bank last week to discuss the transaction and learned that the cost to break my existing mortgage is nearly $5,000!
Hogwash! For $5,000 I could take a three-week European vacation or contribute the annual maximum amount to my tax-free savings account.
Mortgage prepayment charges are the costs to “break” your existing fixed-rate mortgage contract. They exist because the lender has to borrow the funds needed for the mortgage from the market. When a borrower “breaks” a mortgage, the lender is charged a “breakage cost,” which is passed along to the borrower to offset the cost that the lender is charged.
Click here to read the full Metro article.
When Chris Vale and his wife Keli Hines bought a home in Oshawa, they arranged a mortgage through an in-house firm their real estate agent’s company had.
“We were told, ‘Here’s the rate and here’s what you pay,’” Vale recalls of the transaction, which took place several years ago.
Then Vale met mortgage broker Marshall Spencer and got to learn what a broker could offer. When their mortgage came up for renewal three years ago, he and Hines used Marshall, who found a mortgage for them at 2% lower than the posted bank rate.
“Marshall explained a lot of things to us, such as out clauses and penalties. It really set the path for finding the mortgage that was going to work for us,” says Vale. “When we had questions, we could pick up the phone and get answers from the same person every time. Having that personal one-on-one relationship was important.”
Click here for the article in The Star.
Are you trying to navigate Canada’s red-hot real estate market, sick of renting and on the prowl for a home to call your own?
On May 1st, Globe Investor launched a new month-long Home Buying site, packed with stories, videos and expert opinions to help readers make what for many will be the biggest financial decision of their lives.
Canadian Mortgage Trends Editor Robert McLister kicks off his first in a weekly series of columns on Thursday with a look at the best – and worst – mortgage terms out there.
Click here to read more from the Globe and Mail.