Canadian consumer confidence holds steady

Latest News & Economy DAZADA DIAMOND 30 Sep

Canadian consumer confidence holds steady

Canadian consumer confidence holds steadyCanadian consumers remain relatively upbeat according to the latest Blomberg Nanos Canadian Consumer Confidence Index.

The weekly poll shows that nationally, the index is at 57.38, slightly higher than 4 weeks ago. Both components of the index – the one tracking personal finances and job security, and the one tracking the outlook for the economy and real estate – increased.

Even in the Prairies, where confidence is lower than the national average, the index hit a 12-month high in the poll carried out last week.

The national index is up from 56.74 a week ago and well above the 2019 low seen in February (54.15) but below the year’s high so far of 59.06 in mid-July.

The share of those who believe real estate prices will be higher in 6 months was 42.84%, with 39.81% thinking they will stay the same, and 12.97% expecting a decrease.

Regional stats
The most optimistic region is Quebec (63.02) followed by Ontario (58.88), Atlantic Canada (55.28), BC (54.92), and the Prairies (51.04).

Most age groups showed increased confidence but there was mixed sentiment among income bands.

Both homeowners and renters showed increased optimism overall.

  • https://www.mortgagebrokernews.ca/market-update/canadian-consumer-confidence-holds-steady-304480.aspx?utm_source=GA&utm_medium=20190925&utm_campaign=MBNW-MorningBriefing&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Industry weighs in on Scheer’s proposed amortization, B-20 amendments

Latest News & Economy DAZADA DIAMOND 27 Sep

Industry weighs in on Scheer’s proposed amortization, B-20 amendments

Industry weighs in on ScheerIf elected, Andrew Scheer promises to raise amortizations to 30 years for first-time buyers.

But if interest rates go up as expected, amortization periods may need to increase for all Canadians.

“If you look at the reduction from 40 to 35 years, it coincided with a reduction of interest rates by almost a full percentage point in a short span of time with no visible indication of those rates rising again anytime soon,” said Dustan Woodhouse, president of Mortgage Architects. “Each subsequent amortization cut—from 40 years to 35, 35 to 30, 30 to 25—mathematically was roughly the equivalent of a 1% interest rate hike and it offset the lower rates. In other words, reducing amortization by 15 years was the equivalent of a 3% interest rate difference. So interest rates fell about 3% from historical averages but the shorter amortizations put the payment in line with a higher interest rate over a longer amortization.

“Naturally, as interest rates move up, you want to undo the changes, but the problem is math is hard, and at some point they forgot in government that the reason they reduced amortization all the way down to 25 was to address the amount of mortgage people were qualifying for.”

Not much changed over a decade. With a 2.5% interest rate and $100,000 income in 2017, Canadians qualified for the same amount of mortgage money that they did in 2007 when the interest rate was considerably higher at 6%.

“Even though interest rates fell by more than half, you technically didn’t qualify for more mortgage money,” said Woodhouse. “People had the perception that Canadians were able to get themselves into bigger mortgages than ever before because of lower interest rates. It didn’t matter what was real; politicians needed to address the perception.”

Mortgage Professionals Canada authored by economist Will Dunning, Woodhouse explains that if interest rates climb as high as 5.5%, the stress test would effectively decimate the market because real estate lending would become well-nigh impossible.

Scheer also announced he would ease the stress test on mortgages and eliminate it on renewals.  James Laird, president of CanWise Financial, called the amendment long overdue because B-20 in its current form is punitive.

“Those different qualifying standards at renewal allowed those existing lenders to charge high mortgage rates because they knew that their customers would have to pass the stress test to go with a different lender,” he said. “This inhibited Canadians with mortgages up for renewal from shopping around to find the best rate.”

Federal political parties’ housing platforms

Latest News & Economy DAZADA DIAMOND 26 Sep

Federal political parties’ housing platforms

Federal political partiesThe October 21 election is fast approaching, so MortgageBrokerNews.ca put together a primer of where the major federal parties stand on housing.

Conservative Party of Canada
The Tories would loosen stress test stringency—as well as eliminate it altogether for renewals to prevent banks from gouging borrowers with uncompetitive rates—and allowing first-time buyers 30-year amortizations to lower their monthly payments. In addition to starting an inquiry into money laundering, the Conservatives’ Andrew Scheer has said he would set aside surplus federal lands for housing developments to help with supply constraints.

Liberal Party of Canada
Under the Grits’ tutelage, the First-Time Home Buyer Incentive was introduced and became operational early this month. If re-elected, the Liberals would expand it to allow buyers in Toronto, Vancouver and Victoria to qualify for up to $769,000 instead of $505,000 like the rest of the country. The program allows the government to share in equity gains—and losses. Additionally, the Liberals have also promised a 1% speculation tax on non-residents and non-Canadians.

NDP
The perennial underdog has an extensive list of promises—over 30 of them—to make housing more affordable. One of them is developing 500,000 affordable units over 10 years, $5 billion of which will be spent within the first 1.5 years of the party’s rule. In an effort to build co-ops, social and non-profit housing, the NDP has promised “fast-start funds” to ensure construction commences as soon as possible rather than years down the line. The federal GST/HST will be waived on affordable housing construction in the hope that it succours more development, and to lower monthly mortgage payments, the NDP has said it will re-introduce 30-year amortizations.

Arguably the most interesting aspect of the NDP’s housing platform is the 15% foreign buyer tax it would impose on non-residents and non-Canadians who own housing anywhere in the country. In fact, it might be the boldest offering from any of the parties.

The NDP has also said it will double the Home Buyers Tax Credit to $1,500, and facilitate co-housing through funding from the Canada Mortgage and Housing Corporation.

Green Party
Another recurrent underdog releases an elaborate platform. The Greens have proposed legislating housing as a fundamental human right, and while the statement is vague, would it help the growing hordes of homeless people living in Canada’s largest cities?

In addition to appointing a minister for housing as a means of supporting the National Housing Strategy and strengthening collaboration between provinces, the Greens have proposed building 25,000 new housing units and renovating 15,000 more every year for a decade. Housing co-investment will see an increase of $750m for new builds, and the same amount of money will be added into the Canada Housing Benefit to help 125,000 households with rent.

The Green Party also sees co-living as a cornerstone solution to Canada’s growing housing crisis. It will also create a Canada Co-Op Housing Strategy to encourage co-op living and eliminate grants for first-time purchasers. The Greens will also fund non-profit housing organizations for seniors, low-income families and special-needs individuals. Restoring tax incentives for rental housing construction and conceiving of a new tax credit for gifted lands, the Green Party believes, will spur plentiful affordable housing.

The Green Party also seeks to change CMHC’s mandate and have it focus on developing affordable non-market housing and co-ops.

People’s Party of Canada
Maxime Bernier’s nascent party has the least comprehensive housing strategy of any major party, but what has heretofore stood out from the party is that by lowering immigration, there will be less demand for housing, which would theoretically close the chasm between supply and demand.

Bernier intends to address housing indirectly: a 15% income tax for Canadians earning between $15,001 and $100,000, and 25% on anything larger, will free monies that could go towards housing. The PPC has also proposed abolishing the capital gains tax.

  • https://www.mortgagebrokernews.ca/news/federal-political-parties-housing-platforms-304505.aspx?utm_source=GA&utm_medium=20190926&utm_campaign=MBNW-Newsletter&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

When You Might Need an Alternative Lender Mortgage

Banks & Bank of Canada DAZADA DIAMOND 25 Sep

The majority of homeowners are blissfully unaware of alternative mortgages. They presume everyone is entitled to sub-3% mortgage interest rates, with no fees of any kind.

But there is a growing, significant percentage of borrowers who need a different type of mortgage financing solution. Sometimes there is no choice. That is why the alternative lending market (B-lenders) is so important to the overall health of the mortgage industry and, indeed, our economy.

Could this happen to you? Who would you turn to if your bank turned you down for a mortgage? How would you know if you are being given the straight goods, or being sold a bunch of baloney?

Plan BIf your primary financial institution (bank, credit union, trust company) refuses you a mortgage, you need to source a mortgage broker that can explore alternative financing options for youhopefully with a B-lender solution. And if that doesn’t work out, then there are numerous private mortgage lenders, too.

Most mortgage brokers are very comfortable working with A-lenders like banks, credit unions and monoline lenders, such as MCAP. And, in recent years, a growing number have expanded their businesses to provide alternative and private lending solutions. Be sure to select a professional who is experienced with these types of specialized products when you are in the market for a non-traditional mortgage.

Mortgage brokers have access to numerous alternative mortgage lenders (B-lenders) that offer excellent solutions above and beyond the traditional branch-based lenders, including:

  • Expanded debt-service ratiossome alternative lenders will allow GDS and TDS ratios as high as 50%, and are not constrained by 35/42 or 39/44 ratios, as traditional lenders usually are. In fact, if the loan-to-value ratio is low, they can get really creative. (For example, Haventree Bank will allow 60/60 when the LTV is under 65%)
  • Tolerant of damaged credit historiesthey will reserve their lowest rates for those with high credit scores (720 and above) but, at the same time, may entertain your mortgage application with a score as low as 500 or even lower.
  • Receptive to forms of income that traditional lenders cannot consider, such as Air BnB income, commission income, tips and contributory income from spouses not even on title. And most are more relaxed in their approach to self-employed borrowers.

Suppose for you the door is closed to banks and all A-lenders. How did you get here? Reasons typically include one or more of the following:

  • Cannot pass the mortgage stress test: inability to meet maximum debt-service ratios.
  • Low credit scores: could be too many late payments, balances too high on credit facilities, collections and liens, or even a consumer proposal or bankruptcy.
  • Non-traditional income: could be commissioned or rely on tips and work in a cash-based business. May even be irregular part-time income. Or perhaps you rent out rooms in your home, or have Air BnB income, foster care income, disability income, child tax benefits, etc. Do you buy, renovate and sell houses, and the capital gains are your only income? You could even own “too many properties.” (Yes, that can be a thing!)
  • Self-employed: you could be a business owner with lots of expense deductions and low reported taxable income. Or maybe you have been self-employed only a short timefewer than the two years A lenders prefer to see.

How long will it take to graduate back to A-lending?

The length of time you remain in an alternative lending product will vary based on your unique situation, but the ideal timeframe is one to two years. As such, most alternative mortgages are offered as one or two-year terms. There are some lenders who offer three and even five-year terms, but this is much rarer.

There are some borrowers who remain in this space for the long haul. It is unlikely they will ever qualify for a mortgage with an A-lender because of credit and/or income issues and that’s ok. They are grateful there is a reasonable cost alternative.

What added costs come with alternative mortgages?

Interest rate

Your interest rate will be a bit higher than those offered by an A-lender. These days, they mostly range from 3.99% to 5.99%. I don’t have the stats, but it feels like a large percentage of these are in the narrower range of 4.24% to 5.24%.

And the lowest rates are typically for a one-year term, with the two-year term coming in a touch higher.

Here are some sample payments to illustrate the impact of different mortgage rates. The difference is not as much as people expect.

  • $300,000 at 2.99% with a 30-year amortization = monthly payments of $1,260
  • $300,000 at 3.99% with a 30-year amortization = monthly payments of $1,425
  • $300,000 at 4.99% with a 30-year amortization = monthly payments of $1,600

Lender fees

Most of the time, your lender will charge a one-time fee of 1% of the loan amount.

Brokerage fees

alternative lender feesWith mortgages arranged with A-lenders, your mortgage broker is paid by the lender at no extra cost to you. This is less the case with alternative mortgages, mainly because the shorter the mortgage term, the less the compensation, yet the workload is at least the same and often more intense.

Therefore, when sourcing an alternative mortgage for you, your mortgage broker will often charge an upfront brokerage fee. They should be upfront about this exact charge early on in the process. The amount varies from broker to broker and from loan to loan. Factors brokers consider are:

  • The complexity and level of effort they anticipate is involved to fund your mortgage.
  • The size of your mortgage. The smaller your mortgage, the larger the fee may seem as a percentage of the loan amount, and the larger the mortgage, potentially the smaller the fee may seem as a percentage of the loan amount.

If you are buying a property, lender and brokerage fees come from your pocket. If you are refinancing, they are deducted from the mortgage advance, if there is enough equity to do so.

All fees and costs must be disclosed properly to you according to your provincial regulator’s rules.

Other fees

As with most mortgages, you can expect to pay for an appraisal, solicitor and title insurance.

Some lenders charge annual administration or “maintenance” fees of a few hundred dollars, and they typically charge a renewal fee if you accept one of their renewal offers. There is not a one-size-fits-all formula applied when calculating renewal fees.

Monthly property tax administration fees can also be charged (less than $5 per month).

Alternative lenders are a safe route

In the Q1 broker lender market share figures, alternative lenders Home Trust Company and Equitable Bank together held more than 13% of broker market share.

Alternative lenders are not to be feared or disparaged. They serve a very useful role in the mortgage industry and are a terrific midpoint between a bank-issued mortgage and a private lender solution.

  • https://www.canadianmortgagetrends.com/2019/09/when-you-need-an-alternative-lender-mortgage/

 

Real estate, mortgage bodies welcome federal housing pledges

Latest News & Economy DAZADA DIAMOND 24 Sep

Real estate, mortgage bodies welcome federal housing pledges

Real estate, mortgage bodies welcome federal housing pledgesWith the electioneering gathering pace, two real estate and mortgage industry bodies have welcomed some recent pledges by the federal parties.

Toronto Real Estate Board says that it is pleased that parties are making housing affordability a key part of their election campaigns, especially the Liberals’ commitment to expanding the First Time Home Buyers Plan and the Conservatives pledge to reform the mortgage stress test and increase housing supply.

“Housing affordability is one of the most important issues facing Canadians. We are glad that the federal political parties are acknowledging this with their respective plans. Two key issues that TREB believes have negatively impacted affordability are the federal mortgage stress test and mortgage amortization periods. TREB has been strongly calling for changes to the federally imposed mortgage stress test, since it was imposed, and for a 30-year amortization period for insured mortgages to be re-introduced, to give home buyers more flexibility and assist with affordability,” said Michael Collins, TREB President.

TREB says that proposals to address money laundering in real estate and the increased use of federal real estate to boost housing supply are also positive moves.

The Canadian Real Estate Association said that it’s pleased with the Conservative proposals which include suggestions that it has been making to policymakers.

Mortgage Professionals Canada has also welcomed the latest announcement from the Conservatives which would reduce the mortgage stress test thresholds and bring back a 30-year amortization period.

“We are delighted to see our recommendations included in the Conservative Party of Canada platform,” said Paul Taylor, President and CEO of Mortgage Professionals Canada. “I am very encouraged to see the real concerns of our members, and the would-be homeowners they serve, have been addressed in such a positive manner. Accessible home ownership is an important issue for all Canadians. Thank you to Andrew Scheer and his team for having heard our concerns and responding so directly.”

  • https://www.mortgagebrokernews.ca/market-update/real-estate-mortgage-bodies-welcome-federal-housing-pledges-304426.aspx?utm_source=GA&utm_medium=20190924&utm_campaign=MBNW-MorningBriefing&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Canadians’ wealth reduced as real estate gains are erased

Latest News & Economy DAZADA DIAMOND 23 Sep

Canadians’ wealth reduced as real estate gains are erased

The average Canadian household was worth less in 2018 than in the previous year.

The average net worth of $678,792 was down $7,594 (1.1%) in 2018 according to a study by Environics Analytics.

While real estate values gained $6,336 (1.6%) other factors erased this gain as equities contributed to a $10,045 (3.4%) drop in liquid asset values.

The impact was worsened as household debt continued its upward trajectory, adding $3,309 (2.3%) to the average debt burden; and interest rate increases slashed $576 of employer pension plan values.

“Despite being relatively prudent in terms of their debt acquisition and repayment in 2018, Canadian households felt the effects of a significant decline in equity market valuations over the fourth quarter of the year,” says Peter Miron, Environics Analytics’ Senior Vice President, Research and Development and the architect of WealthScapes. “On a more positive note, Canadians are actively taking steps to reign in their debts and build up their savings. In fact, four provinces saw the average debt per household decline in 2018.”

Apart from the investment losses, rising interest rates during 2018 have been another significant drag on household net worth. In response, Canadians have been trying to blunt the effect of rising rates by converting their variable-rate, non-mortgage debt into locked-in loans.

  • https://www.canadianrealestatemagazine.ca/market-update/canadians-wealth-reduced-as-real-estate-gains-are-erased-304253.aspx?utm_source=Pinpointe&utm_medium=20190919&utm_campaign=&utm_content=&tu=

DLC readies to bulldoze competition

General DAZADA DIAMOND 20 Sep

DLC readies to bulldoze competition

DLC readies to bulldoze competitionThirteen years ago, Gary Mauris co-founded what would become the most transformative company the Canadian mortgage space has ever seen. Never one to mince words, he has spent the better part of 2019 quietly working behind the scenes to prepare the company for the decade ahead by increasing its bench strength.

Having recruited luminaries from all corners of the industry to Dominion Lending Centres —including Dustan Woodhouse, author of the Be the Better Broker series and president of Mortgage Architects; Doreen Walsh, formerly of First National, who will heading network-wide training for DLC; Rich Spence, who’s bringing over two decades in the financial services industry to Mortgage Centre Canada; Eddy Cocciollo as DLC’s new president; and Dong Lee as COO of DLC Group of Companies—Mauris has a new vision for DLC, one he promises will empower his agents and owners to blow their rivals out of the water. As Mauris tells it, the next five years will be the most pivotal in DLC’s history.

MBN: You’re usually brash and outspoken, but we haven’t heard from you in a while. Where have you been?

GM: DLC Group of companies have been perennial top performers for many years and we have a very deep experienced group of owners and agents who are very successful in their own right. When we decided to deepen our bench strength by moving Eddy Cocciollo into role of DLC’s president and adding Rich Spence (MCC) and Dustan Woodhouse (MA), we recognized how important it would be to give them a very wide berth to earn the trust and respect of our agents and owners. Having me meddle and get in the way of their fresh ideas and perspectives before they found their way would be counterproductive and disruptive to these very capable individuals. Now that everyone is settled into their new roles, you will see much more of me.

MBN: The last time we spoke, you chuckled over M3 promoting themselves as “The undisputed number one” mortgage originator in Canada. Has anything changed there?

GM: The only thing that M3 is “The undisputed number one at” is lying. The DLC Group has been number one since 2009 in mortgage originations and has never relinquished that position. If you want the truth about mortgage originations, ask the lenders. They are transparent. I am happy to approve the top 10 lenders in Canada posting our funded annual volumes for our group, and would ask M3 to approve the same to bury this rhetoric once and for all.

MBN: A new year is nearly upon us. What is DLC planning on doing to blow its competition out of the water?

GM: Despite the more difficult housing market in some regions like BC, The DLC Group of Companies has had an excellent 2019 and expects 2020 to be even better. We will be double- down on our agent training and have gotten back to our roots with Multiday Owner Universities, and will continue our ‘direct to consumer’ brand awareness campaigns. I can guarantee you one thing, and let me be clear: we are not tired of being number one! I won’t publicly lay out our strategies, as the competitors love to follow us, but hang onto your hat because there is a storm coming.

MBN: Consumers appear to have acclimated to the near-two-year-old qualification rules and the market has picked across the country. How is DLC planning on helping its brokers take advantage of that?

GM: Listen, the only thing constant in life is change. Life is not fair and life is not easy. Our agents and owners are resilient, seasoned and in most cases long-term professionals. We find a way to navigate and adapt to every rule change, every new mortgage guideline, and headwinds in each market. We will continue to curate and organize the ever changing landscape and educate and help our team members find alternatives to these changes and thrive.

MBN: How closely will DLC be monitoring the federal election, and what concerns might you have before Oct. 21?

GM: Obviously we are very interested in the upcoming federal election. The federal Liberals under Justin Trudeau have been very disruptive to our industry and to the economic prosperity of most Canadians. No Government is perfect but this one in particular has mismanaged Canada more than most. We would love to see a government change this fall, but truthfully, as I said above, we will adapt and adjust regardless of the outcome. People still want to own homes and need help with financial transactions under any government.

MBN: Tech is the name of the game these days, but the Canadian mortgage space has been a slow adopter. What are you guys doing to rectify that?

GM: We have led in tech for many years. The investment that we made three years ago in Marlborough Stirling (Velocity) is finally paying off. Velocity has many of the largest teams in the country now using it exclusively and the feedback has been extraordinary. We continue to invest millions of dollars into this system because the norm for so long when it came to deal submission was so underwhelming and archaic. Velocity, at no cost to the agents will become the gold standard with dynamic applications, mobile app with push notification, instant decisioning, and complete end-to-end communication between the lender, broker and consumer.

  • https://www.mortgagebrokernews.ca/news/broker-networks/dlc-readies-to-bulldoze-competition-304242.aspx?utm_source=GA&utm_medium=20190919&utm_campaign=MBNW-Newsletter&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Fixed Rates Outweighing Variable

Down Payment & Buying DAZADA DIAMOND 19 Sep

Fixed Rates Outweighing Variable

We are currently in a very unique situation when it comes to 5-year fixed and 5-year variable interest rates. For the first time in almost a decade, the lowest 5-year fixed interest rate is more than 0.30% lower than the lowest available variable interest rate for new mortgages. For some, their current variable rate is 0.80% higher than what a new 5-year fixed interest rate could be.

Why is this important?

Variable mortgage penalties are only equivalent to 3 month’s interest. On a $400,000 mortgage with a net variable rate of 3.10%, the penalty would only be $3,100 ($775 per $100,000 of mortgage debt).

What are the savings to switching to a lower rate?

The following is an excerpt from an email we have sent several clients recently. The numbers have been adjusted from their originals to protect clients.

$2,152.76 current monthly payment
$437,857.16 current outstanding balance
4 years and 0 months remaining on term and 24 years and 0 months remaining on amortization

$3,800 approximate penalty to break mortgage including discharge fee (legal fees and appraisal covered)

$2,061.88 new monthly payment on 5-year fixed rate
$437,857.16 new outstanding balance
4 years and 0 months remaining on term and 24 years and 0 months remaining on amortization

$90.88 savings per payment

Interest paid with current lender for remainder of term: $50,847.29
Principal paid with current lender for remainder of term: $52,485.19
Remaining balance at end of term: $385,371.97

Interest paid with new rate for remainder of term: $44,025.53
Principal paid with new rate for remainder of term: $54,944.71
Remaining balance at end of term with new rate: $382,912.45

For $3,800, this client has the potential to save almost $6,800 in interest, save $90.88 a month, while at the same time owing less on their total balance at the end of their term.

Now, this might not be for everyone. Variable, as you know, can go up and down. Locking into a 5-year fixed rate also takes away your ability to get out of your mortgage for only 3 months interest penalty compared to staying in a variable rate. For some people, maintaining the variable for an opportunity of having that rate drop below current 5-year fixed rates is worth waiting too.

There is no right or wrong decision. It is how you want your monthly payments structured and how much risk you want to allow for, both in rate variances and potential penalties.

To find out what kind of savings you could see with moving your variable rate into a fixed rate, please, contact a Dominion Lending Centres mortgage professional today.

  • https://dominionlending.ca/news/fixed-rates-outweighing-variable/

How divorces affect mortgages

Credit & Debt DAZADA DIAMOND 18 Sep

How divorces affect mortgages

How divorces affect mortgagesThey say about half of all marriages end in divorce—whatever the figure, complications arise when it comes to dividing assets like homes, and determining who keeps making mortgage payments.

“It’s a commercial transaction irrelevant to marital status,” said Nathalie Boutet of Boutet Family Law & Mediation. “If one person moves out and the other stays in the house, they still have an obligation to pay the mortgage to the bank, so the sooner the separating spouses make an arrangement the better because it could impact credit rating.”

According to Statistics Canada, there were roughly 2.64 million divorced people living in Canada last year—a figure brokers may not find surprising. While divorcing couples often fight over their marital home as an asset, the gamut of considerations is in fact more onerous.

“With the stress test, it’s a lot harder,” said Nick Kyprianou, president and CEO of RiverRock Mortgage Investment Corporation. “The challenge is qualifying again with a single salary. The stress test adds a whole other level of complexity to the servicing.”

Additional complexities include a new appraisal, application, and discharge fees.

“If you have a five-year mortgage and you’re only two years into it, there will be some penalties,” said Kyprianou. “Then there’s a situation of whether or not the person will qualify as a single person for a new mortgage.”

As an equity lender, RiverRock has welcomed into the fold its fair share of borrowers whose previous institutional lender wouldn’t allow one of the spouses to come off title because they were qualified together.

If one spouse is the mortgage holder and the other is not, Boutet explains how the law would mediate.

“Let’s say she owns the house and he moves in and pays her something she would put towards the mortgage but it’s still below market rent, she’s effectively giving him a break,” she said. “Would part of his rent go towards a little equity in the house because he helps pay the mortgage? Or is he ahead of the game because he pays less than he would to rent an apartment? What they have decided in this case is that a percentage of his payment will be given back to him as compensation for helping her out with her mortgage and he will never go on title.”

Boutet recommends that cohabitating couples, one of whom being a mortgage holder, should have frank discussions at the outset about where the rent payments go.

“Sometimes the person who pays rent has a false understanding of paying the mortgage. They have a misunderstanding of what that money is going towards.”

  • https://www.mortgagebrokernews.ca/news/how-divorces-affect-mortgages-304194.aspx?utm_source=%25%25Platform%25%25&utm_medium=%25%25todaysdate:Ymd%25%25&utm_campaign=%25%campaign_name%25%25&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Canadians’ worries about household debt continue to persist

Credit & Debt DAZADA DIAMOND 17 Sep

Canadians’ worries about household debt continue to persist

Canadians’ worries about household debt continue to persistCanadians continue to be anxious about inflation and rising costs of living, despite household debt easing slightly by the second quarter of the year.

According to fresh data from the Credit Counselling Society, the Canadian household debt ratio shrunk to 177.1% of disposable income during Q2 2019, slightly lower than the previous quarter’s reading of 177.6%.

The CCS also reported that on average, Canadians are carrying a debt load of $30,000 each – far above the $12,000 level just 20 years ago.

“Canadians continue to rely on their credit cards or lines of credit to supplement costs of living,” CCS president Scott Hannah said.

“If the economy continues to slow amidst trade tensions and other factors, Canadians need to prepare now for a potential recession in the future.”

Hannah also cited the latest survey of employed Canadians by the Canadian Payroll Association, which found that 1 in 3 consumers currently hold credit card debt, and 38% will need more than a year to pay off said debt.

Additionally, 1 out of 3 Canadians indicated that their debt loads have increased since last year, and that they are spending more than their net income. As much as 43% are forced to live paycheque to paycheque, while fully 83% confessed anxiety over growing daily living costs.

“We are not surprised by these latest statistics, as we continue to hear from Canadians, who are having difficulty managing their rising debt levels and how to effectively manage the increasing costs of living without relying on credit,” Hannah stated.

  • https://www.mortgagebrokernews.ca/news/canadians-worries-about-household-debt-continue-to-persist-304092.aspx?utm_source=GA&utm_medium=20190916&utm_campaign=MBNW-Newsletter&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619
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