Broker criticism of OSFI’s proposed guidelines may carry little weight with the regulator, its policy head answering and, perhaps, dismissing concerns those changes go too far.
“Are the banks equipped to handle a 40% drop (in property values)?” writes Vlasios Melessanakis, OSFI’s Manager of Policy Development, in an internal document responding to broker Rob McLister and an article posted to his website in March. “Canada is not immune. Just because nothing happened in Canada in 2008 (a US-centred crisis), does not mean that Canada is not vulnerable to a housing correction now.”
The posture reveals the extent to which the regulator is committed to bringing forward a slew of tighter mortgage lending rules for federally regulated institutions. The broker channel has raised a red flag on several points – from re-qualification tests on renewals to consideration of a borrower’s age at the time of application.
CAAMP, among other industry players, has also questioned the need to ratchet down on HELOCs to the extent OSFI is proposing. The regulator passed those guideline changes by members of the broker channel earlier this spring in order, ostensibly, to win their input.
Click here for full details from MortgageBrokerNews.ca.
The Bank of Canada may be thinking about raising interest rates but there’s apparently no need because Canadians are hunkering down to cool debt obligations on their own.
“The pace of growth in household credit is no longer a reason for the Bank of Canada to move from the sidelines any time soon,” says Benjamin Tal, Deputy Chief Economist at CIBC World Markets.
He wrote a report released last week that suggests central bank intervention is not needed, especially with consumers already seeing interest payments on debt eating into 7.3% of their disposable income as of the fourth quarter of 2011, even at today’s low rates.
“Why are you raising rates? To slow down credit growth – but it’s already slowing,” Tal says. “I say let the market slow naturally. We are so concerned about this but it’s moving in the right direction.”
Among Canadians who plan to buy a home within the next two years, women (49%) are more likely than men (35%) to be first-time homebuyers, according to the 19th Annual RBC Homeownership Poll.
Overall, 51% of women and 65% of men who are likely to buy in the next two years already own a home.
“We are seeing more single women entering into the housing market, as income levels, changing demographics and lifestyle patterns shift purchasing habits,” said Marcia Moffat, Head, Home Equity Financing, RBC. “But women are being more cautious than men, weighing cost, affordability and job security before buying a home.”
Of the Canadians who have recently become first-time homebuyers, men and women were tied (47%) in saying affordability was the biggest concern that prevented them from purchasing a home earlier. Women outpaced men in three other reasons that caused them to delay their first home purchase.
BMO Financial Group released a study today indicating that many Canadian homeowners are feeling the pinch of balancing mortgage responsibilities with saving for retirement.
The survey, conducted by Leger Marketing, found the following:
- Over half of Canadians expect to carry a mortgage into their retirement years (51%)
- 52% of homeowners feel their debt load or mortgage is hindering their ability to plan or save for retirement
“Paying off your mortgage prior to entering retirement is very important, because it will eliminate a significant amount of debt and keep you from having to manage higher debt loads after you stop working,” said Tina Di Vito, Head, BMO Retirement Institute. “When you are no longer receiving employment income, it makes it much harder to let go of large amounts of money.”
While saving for retirement and paying off a mortgage can often become competing priorities, many experts recommend finding a balance between both but placing extra focus on paying off a mortgage first.
Click here for more details in the BMO press release.
A survey commissioned by Royal LePage Real Estate Services showed that intended recreational property buyers have different ideas on generating income from their properties compared to the actual decisions of those who are already in the market. Often, potential buyers will consider renting as a means to finance their purchase.
The survey, which was conducted by Leger Marketing, polled both current owners and those intending to buy within the next five years. In addition, although many desired features of recreational properties remained the same, the survey showed a difference in priorities among the two groups surveyed.
Among intended buyers, 51% said they would rent their property either to a tenant that was referred by someone they knew, or otherwise, to offset the cost of ownership. The cost of owning a recreational property generally includes a mortgage, property taxes and utilities, but can also include condo fees and snow removal depending on the property.
Among current owners, more than eight in 10 (83%) said they do not rent out their recreational property to offset carrying costs, though one in 10 indicated that they would “like to.”
Click here to read the Royal LePage press release.
Understanding the nuts and bolts of your mortgage may seem intimidating at first, but it’s not as difficult as it sounds. Learning more about how mortgages work could save you thousands of dollars in interest or penalties.
There are three basic parts to a mortgage: the amortization, the term, and the interest rate, which could be fixed or variable.
Click here for a simple guide to mortgage terminology from The Star.
At a recent US home-buying session at Allan Gardens in Toronto, hundreds of prospective buyers attended – so many they had to add chairs to accommodate the overflow. And though you might expect the crowd to be filled with soon-to-be retirees, there were a significant number of young people hoping to profit from bargain-basement properties south of the border.
Paula Thomas, 29, of Toronto was attracted by price, she said with a laugh. “The potential we are looking at is in Orlando so you can rent it out… and it’s pretty much paying for itself. And hopefully when we retire, we could use it or pass it to our kids.”
“I’ve scoped out a few places online, and I can get a four-bedroom, four-bathroom house for cheaper than I can get my 680-square-foot condo in Toronto,” said her partner, Brian Rupnarian, 30.
The couple has enough money for a down payment, but said they would likely get a line of credit to finance the rest of it. “We did the math, and if we can rent it out for $1,000 a month, it will be paid off in roughly three years,” he said.
The overflow event was run by Florida Home Finders of Canada, a Vaughan, Ontario-based real estate company that connects Canadians with US property, holding regular information sessions around the country. Co-owner Wayne Levy says interest in their Florida properties, which range in price from $60,000 to $150,000, has been growing steadily. “We’ve sold more units… in these first three-and-a-half months than we did all last year.”
Click here for the full story in the Globe and Mail.