Equifax Rolls Out Changes to its Mortgage Inquiry Process

Latest News & Economy DAZADA DIAMOND 21 Sep

Equifax Rolls Out Changes to its Mortgage Inquiry Process

Equifax Canada has implemented changes to its mortgage inquiry process to enhance the protection of consumer information.

The changes, which were first announced to the industry earlier this year, came into effect on September 14, including:

  • Requiring all lenders to have an identifying Member Number if they want to continue receiving files from brokers.
  • Only brokers who have signed amended contracts will be able to obtain credit files through industry connector platforms, such as Newton and Filogix.
  • Each and every inquiry will be posted with both the broker’s and lender’s name when using all industry connector platforms. Access to these files will be restricted to credentialed lenders.

“Essentially, we’ve made these changes for the primary benefit of the consumer,” Roger Mitchell, head of Financial Institutions Strategy & Innovation at Equifax Canada, told CMT. “By ensuring that all credit inquiries are posted to a consumer file, there will be a fuller and more accurate picture of who has access to consumers’ files. We feel doing this will strengthen consumer trust and provide the right level of transparency to consumers.”

Given that the changes were “fairly substantial,” Mitchell noted that Equifax worked hand-in-hand with all of the different stakeholders to ensure a smooth transition.

He added that industry feedback has been very positive. “Everyone understands the reasons why we’re doing this and the feedback and sign ups have been tremendous,” he said.

Benefits to Brokers and Lenders

While the new requirements were designed primarily to provide greater safeguarding and oversight to protect consumers, Mitchell notes there are additional benefits for industry partners.

Lenders benefit from a system that captures all consumer file activity and inquiries, which results in improved insights and analytics.

“We know that improved data accuracy leads to better credit decisions,” Mitchell said.

Brokers will similarly benefit from the access to additional data to help them better understand their client’s credit history. Equifax adds that an Enhanced Broker Credit Report is being launched to help brokers and lenders gain deeper insights into mortgage applicants and to help improve information accuracy.

Brokerages that have not yet signed their amended contracts can do so at the following address: https://www.equifax.ca/BOI/en/form

Lenders that have not yet been credentialed are asked to contact Equifax at na.account.services@equifax.com

  • https://www.canadianmortgagetrends.com/2020/09/equifax-rolls-out-changes-to-its-mortgage-inquiry-process/

Consumer confidence in housing sector showing signs of improvement

Latest News & Economy DAZADA DIAMOND 18 Sep

Consumer confidence in housing sector showing signs of improvement

Consumer confidence in housing sector showing signs of improvementAs Canada’s economy continues to recover from the financial impact of the COVID-19 pandemic, a new report showed that confidence in the housing sector has improved over the last two months.

Mortgage Professionals Canada (MPC) recently released findings from its second consumer survey of the year, which was conducted from August 7 to 24 and focused on two groups: non-homeowners who think that they might buy a home during the next three years, and mortgage holders.

According to Will Dunning, chief economist at MPC, data from the survey indicated that, in general, opinions have not become more negative during the pandemic period – mortgage holders are “actually showing reduced levels of regret about their mortgages” and homeowners “have not become more worried about their ability to weather a downturn in the housing  market.”

Read more: Five reasons Canadians have little reason to fear a housing crash

Moreover, Dunning said that there is still a “high degree of confidence” that real estate is a good long-term investment –and that mortgages are still considered “good debt.”

In other words, there is more confidence that now is a good time to buy a home.

“We’re encouraged by the new survey data, which indicated that confidence in the housing sector improved during July and August,” said Paul Taylor, president and chief executive officer of MPC. “As many Canadians become more comfortable with our new business operating environments, optimism about future economic activity appears to be buoying housing market activity and expectations for future purchases.”

Dunning said, however, that the economic environment remained volatile, making economic forecasting “impossible.”

“Since March, every month has produced enormous changes in economic indicators, including the housing market,” said Dunning. “Our second report shows that while the recovery continues, at this point it is only partial in nature. The future course for the housing market and the broader economy will of course be influenced by COVID-19, but also by changes in government programs that support consumers’ employment and incomes, and policies that affect the housing and mortgage sectors. A key take-away from this report is that we need as much discussion as possible about what issues are emerging and how policies can evolve to help Canadians make good choices about housing and mortgages.”

  • https://www.mortgagebrokernews.ca/news/consumer-confidence-in-housing-sector-showing-signs-of-improvement-333324.aspx?utm_source=GA&utm_medium=20200916&utm_campaign=MBNW-Newsletter-20200916&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Bank of Canada’s 4.79% benchmark rate expected to increase home buyers’ purchasing power

Banks & Bank of Canada DAZADA DIAMOND 16 Sep

Bank of Canada’s 4.79% benchmark rate expected to increase home buyers’ purchasing power

Bank of CanadaWith the five-year conventional mortgage rate at a historic low of 4.79%, experts are saying that now might be the right time to secure a mortgage.

In August, the Bank of Canada (BoC) dropped its five-year conventional mortgage rate to 4.79%, following cuts from the country’s six biggest banks. It was the second time in three months that the central bank cut the benchmark rate.

And with the benchmark qualifying rate at a record low, experts are saying that it may be a good time for potential home buyers to enter the market.

Read more: BoC overnight rate remains at effective lower bound of 0.25%

“Over the last few years, rule changes have made it harder for Canadians to qualify, so the recent reductions in the benchmark qualifying rate is welcome news for first-time home buyers hoping to enter the housing market,” said James Laird, co-founder of Ratehub.ca and president of CanWise Financial. “The change to the benchmark qualifying rate will increase home buyers’ affordability by 1.5%.”

Meanwhile, Paul Taylor, president and chief executive officer of Mortgage Professionals Canada, told the Globe and Mail that the new rate will l make qualifying easier, or permit some people to borrow fractionally more.”

“In addition to the lower rates, the lower stress test added about one percent to a buyer’s maximum mortgage amount, depending on the down payment,” said Mark Herman of Mortgage Alliance. “The new rules that have come in and the tighter underwriting guidelines the banks are using have taken away much more than that for the average buyer.”

  • https://www.mortgagebrokernews.ca/news/bank-of-canadas-4-79-benchmark-rate-expected-to-increase-home-buyers-purchasing-power-333291.aspx

How much does a “middle class” lifestyle cost in Toronto?

Latest News & Economy DAZADA DIAMOND 4 Sep

How much does a “middle class” lifestyle cost in Toronto?

How much does a “middle class” lifestyle cost in Toronto?Condos in Toronto’s downtown core have become increasingly out of reach of most household budgets, skewing what it means to be “middle-class” in one of Canada’s hottest cities.

Speaking to the Daily Hive, Fong and Partners Inc. said that a “middle-class” one-child household living in a modest condo in the area will cost a family around $123,388 annually after taxes – an income level currently accessible to only the top 10% earners.

Even singles – who would need to make around $74,000 annually after taxes – will find it exceptionally difficult to sustain themselves in the downtown area: A one-bedroom condo with one parking spot in Toronto’s core will cost approximately $2,540 a month in mortgages alone.

Those who are counting on the long-term impact of coronavirus pandemic to moderate home price growth should abandon such notions, according to Victor Fong, president of Fong and Partners.

“This is because of the money-printing that is happening in the US, Europe, and Canada to battle the economic effects of COVID-19. Money printing causes inflation in asset markets such as real estate, which naturally increases prices,” Fong said.

Recent Royal LePage data supported Fong’s stance, with the national aggregate home price growing by 6.8% year over year during Q2 to reach $673,072.

“Home prices shot up in the second quarter as a crush of buyers entered the market, attracted by extremely low interest rates and the perception of bargains to be had,” said Phil Soper, president and CEO of Royal LePage. “Once provinces allowed regular real estate activity to resume, demand surged in many markets. Inventory levels, already constrained pre-pandemic, have failed to keep pace.”

  • https://www.mortgagebrokernews.ca/news/how-much-does-a-middle-class-lifestyle-cost-in-toronto-331857.aspx?utm_source=GA&utm_medium=20200727&utm_campaign=Newsletter-20200727&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Government of Canada to Launch First Round of $300 million Housing Supply Challenge

Banks & Bank of Canada DAZADA DIAMOND 3 Sep

Government of Canada to Launch First Round of $300 million Housing Supply Challenge

OTTAWA, ON, Aug. 21, 2020 /CNW/ – Every Canadian deserves a safe and affordable place to call home. To help foster housing supply solutions, the Honourable Ahmed Hussen, Minister of Families, Children and Social Development, today announced the Government will launch the first round of the Housing Supply Challenge in October.

The first round, Data Driven, seeks solutions to address gaps in housing data which is often outdated, inconsistent and not openly available, making it more difficult to manage housing supply issues. Participants will create technology or methodology-based solutions to improve data collection, sharing, analysis and integration, thus improving decision-making on housing supply. This first round will disburse up to $25 million to fund a variety of new solutions. The Data round aims to create long-term partnerships between data experts, housing experts, researchers, and communities, which will enable the creation of housing supply solutions.

Canada Mortgage and Housing Corporation (CMHC), in collaboration with the Impact and Innovation Unit in the Privy Council Office and Infrastructure Canada, will be running several rounds over the course of the five-year program, each targeting a different barrier to housing supply. Upcoming rounds will focus on various issues, including housing development, northern housing, and the future of housing.

“Our goal is to encourage innovative and disruptive thinking within the housing ecosystem. Challenge-based initiatives have proven effective in uncovering new ideas and different points of view in other contexts, and I am confident it will help address housing supply needs.”

– The Honourable Ahmed Hussen, Minister of Families, Children and Social Development

“The issues relating to housing supply are complex and cannot be solved by one organization alone. We need the right type of housing, with proximity to public transit, schools and other services. Through the Housing Supply Challenge, we are looking for the best ideas and the right solutions while encouraging collaboration among innovators, researchers, industry and all levels of Government.”

– The Honourable Catherine McKenna, Minister of Infrastructure and Communities

Quick facts

According to the 2016 Census, approximately 1.7 million Canadian households were in core housing need in 2016. Canada requires more housing supply, but there is no single solution to address this need.

To help municipalities grow their housing supply, Budget 2019 provided $300 million in funding over five years to launch a Housing Supply Challenge to address housing supply and unlock new solutions for Canadians searching for an affordable place to call home.

The Challenge aims to provide new resources and find solutions to enhance housing supply and provide a platform to share these models with communities across Canada.

The Challenge will also help address barriers to housing supply and affordability, showcase new ideas and solutions and cultivate collaboration and partnerships.

The Challenge is a component of Impact Canada, a Government of Canada-wide initiative to help departments accelerate the adoption of innovative funding approaches to deliver meaningful results to Canadians.

The Challenge also aligns with the National Housing Strategy and CMHC’s goal, that by 2030 everyone in Canada has a home they can afford and that meets their needs.

Canada Mortgage and Housing Corporation will launch the Data round in the fall. For more information visit https://www.cmhc-schl.gc.ca/en/nhs/housing-supply-challenge.

The Government of Canada is currently rolling out its National Housing Strategy (NHS), an ambitious 10-year, $55 billion plan that will create 125,000 new housing units and lift 530,000 families out of housing need, as well as repair and renew more than 300,000 housing units and reduce chronic homelessness by 50 percent.
Associated Links

As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers unbiased housing research and advice to all levels of Canadian government, consumers and the housing industry. For more information, visit our website or follow us on Twitter, YouTube, LinkedIn, Instagram and Facebook.

To find out more about the National Housing Strategy, visit www.placetocallhome.ca.
SOURCE Canada Mortgage and Housing Corporation

For further information: Information on this release: Jessica Eritou, Office of the Honourable Ahmed Hussen, P.C., M.P., Minister of Families, Children and Social Development, jessica.eritou@hrsdc-rhdcc.gc.ca; Audrey-Anne Coulombe, Media Relations, Canada Mortgage and Housing Corporation (CMHC), 613-748-2573, acoulomb@cmhc-schl.gc.ca

Related Links

  • https://www.newswire.ca/news-releases/government-of-canada-to-launch-first-round-of-300-million-housing-supply-challenge-806993433.html

Conference Board: COVID-19 impact on Canadian economy worse than initially projected

Latest News & Economy DAZADA DIAMOND 2 Sep

Conference Board: COVID-19 impact on Canadian economy worse than initially projected

Conference Board: COVID-19 impact on Canadian economy worse than initially projectedOn August 24, the Conference Board of Canada released its latest look at COVID-19’s impact on the nation’s economy. Titled “Uneven Recovery” and featuring an all-too-fitting cover image of a man either rubbing his eyes with exhaustion or attempting to gouge them out of his skull, the Board’s new report downgraded the country’s economic prospects.

“Initially, we thought this would last from March to perhaps June and July and in the second half of the year, the economy would be fully back to operating normally – this is not the case at all,” the Conference Board’s chief economist, Pedro Antunes, told the Financial Post on Monday.

“What we’ve come to realize is the economy will be operating well below (pre-pandemic) levels.”

At the national level, the Board is expecting GDP growth to fall by 8.2 percent in 2020, almost double what it had forecasted while the pandemic was ramping up in April. Third quarter growth will improve matters, as will an anticipated 6.7 percent increase in GDP in 2021, but economic growth isn’t expected to reach pre-pandemic levels until the end of 2021.

One of the challenges facing the Canadian economy is an old one: a dependence on the U.S. Just as America’s trade war with China and the overall destabilizing presence of Donald Trump threatened Canada’s economic growth last year, the country’s mangled approach to managing the coronavirus, and the suffocating effect it is having on local economies, is expected to limit Canada’s trade prospects this year and next.

“Canadian exporters will be hurt if U.S. economic growth drops below our current assumptions due to the inability of the Trump administration and the governors of Florida and other hard-hit states to halt the spread of COVID-19,” reads the report.

While the Conference Board expects the modest economic momentum generated over the past three months to continue into the fall, its forecast is based on some rather bold assumptions, including the availability of a COVID-19 vaccine to Canadians by June 2021 and to the wider world by next fall. While it’s true that Russia claims to have already developed a vaccine (any readers want to try it?) the fastest a vaccine has ever been developed was for mumps. That process took four years.

Provincial putlooks

Canada’s recovery will indeed be uneven. Several provinces will be struggling to return to pre-pandemic levels of economic and employment growth long after 2021 comes and goes.

Atlantic Canada

The report’s sub-headline for Newfoundland and Labrador says it all: “COVID-19 and low oil prices combine to devastate Newfoundland economy.” With the province’s critically important oil sector still suffering from a years-long depression, COVID-19 came along and knocked the life out of most the economy’s previously healthy sectors: accommodations, food services and arts and entertainment. The provincial government, facing a shortage of revenue due to a lack of oil production and tourism, has already asked the federal government to provide financial assistance.

The province is expected to experience a decline in GDP of 7.1 percent in 2020, lower than the national figure thanks to a quick reaction to the coronavirus. GDP is anticipated to grow a further 5.2 percent in 2021, but unemployment is projected to be 12.8 percent in 2021.

Prince Edward Island, the little engine that could of the Atlantic provinces, is currently suffering through its worst recession on record. But the Conference Board expects the province to return to “trend levels of growth” by the end of 2021, when GDP is expected to rise by 4.9 percent.

“The market here on the Island should be able to maintain its current level of stability for the foreseeable future,” RE/MAX Charlottetown’s Nick MacDonald told MBN in an email.

While the housing market is strong, tourism, the heart of the province’s economy, has been decimated. Barring a vaccine, the report says there are “no guarantees that the travel industry will return to some state of normalcy next summer.”

Like Newfoundland, Nova Scotia’s economy was in a bad way even before COVID-19 unleashed itself upon it. Tumult in the pulp industry led to cascading job losses from January to April, and a sloppy response to the pandemic has increased its staying power. Jobs in the manufacturing sector have been slow to return and the province’s exporters have, according to the Board, “suffered badly.”

Population growth, one of the province’s key economic drivers, has been greatly reduced since March, and the timing and intensity of its rebound is hard to predict. The Conference Board expects the province’s combined issues to create a GDP decline of 7.6 this year. A modest rebound of 4.6 percent is projected for 2021.

New Brunswick is expected to see its GDP shrink by 8.1 percent this year, but its anticipated rebound in 2021, 7.1 percent, will almost cancel out the decline. The province’s proactive approach to containing the coronavirus has been helpful in preventing a catastrophic number of job losses, but its manufacturers and exporters have a lot of ground to recover.

Quebec and Ontario

COVID-19 tore into Quebec like no other province, and the sudden health impacts forced the government to implement an aggressive shutdown that brought construction and manufacturing in the province to a halt as early as April. The province is expected to see a GDP decline of 7.2 percent this year, which will be largely wiped out by growth of 5.2 percent in 2021.

Quebec’s economy reopened far faster than many expected, a strategy the Conference Board credits for helping the province recover 576,000 lost jobs between May and July. Job levels in most sectors have already recovered to 90 percent of their pre-pandemic levels.

GDP growth in Ontario is expected to drop by 7.6 percent in 2020 before increasing by seven percent in 2020. Rather than reopen quickly like its neighbour to the east, Ontario took its time. Bars and restaurants, for example, weren’t allowed to open – at greatly reduced capacity – until July. The cautious approach appears to be working, but the GTA’s dense crowds remain a powder keg with the potential to blow the province’s recovery to bits.

While Ontario is suffering greatly from reduced immigration, tourism and auto exports to the U.S., its financial and tech sectors, because of their employees’ ability to work remotely, have weathered the storm admirably. The province’s labour force isn’t out of the woods yet, though. Employment isn’t expected to recover until after 2021.

The Prairies

Until quite recently, Manitoba’s low number of COVID-19 cases was cause for celebration. (Things have taken a distressing turn over the past few weeks.) The province’s GDP is expected to fall by “only” 5.8 percent this year, followed by a five percent improvement in 2021.

The low number of infections helped get Manitobans back to work. By July, employment in the province had recovered most of the losses experienced since the beginning of the pandemic, and was sitting only 5.3 percent lower than the level seen in February.

Saskatchewan’s economy, already dragged down by sluggish mining and oil activity, is anticipated to shrink by 8.7 percent in 2020. The province’s response to the coronavirus was largely successful, allowing retailers and restaurants to get back to work sooner than in some other provinces. The government’s pledge to boost capital spending by $2 billion should provide a welcomed shot of extra stimulus.

What can be said about Alberta that you haven’t already seen written in blood on Twitter or in the Calgary Sun? The province’s existing oil woes were exacerbated by costly COVID-19 shutdowns, limiting oil production and employment. GDP in Alberta is expected to plummet by 11.3 percent in 2020 and expand 7.9 percent in 2021.

“The outlook for oil prices over the next two years is quite pessimistic because of the impact on transportation which is a big user of oil,” Antunes said. “That affects profits and royalties the government will have to forgo, but the biggest impact … is the capital investment. Firms have cut down to the bare bones.”

Where oil goes in Alberta, consumer spending and government finances are sure to follow; right now, all three are squarely in the toilet. The Conference Board predicts that real household spending will decline by 13.6 percent in 2020; 2019 levels won’t be reached until 2022. The Alberta government, so long a model of fiscal restraint and balanced budgets, has implemented a $10 billion stimulus package that could, without a colossal rebound in tax revenue, hamper much needed future spending.

British Columbia

Why not end with some relatively good news?

B.C. has been one of Canada’s leading provincial economies for the last few years, which sets it up for a relatively smooth recovery. GDP is expected to fall by 5.5 percent this year, followed by a 6.7 gain in 2021 that will once again put it at the head of the pack.

Although it’s now experiencing a rise in infections, B.C. flattened its COVID-19 curve quickly, allowing employees in some of the economy’s biggest sectors – film production, accommodations – to get back to work. Over the last few months, most of the job gains have been seen in the sectors that were hammered hardest in March and April, such as food services and retail.

“The province should continue to add new jobs in the second half of this year and into 2021,” the Conference Board writes, “but the surge in COVID-19 cases in July (which is being blamed in part on large social gatherings on beaches) is a cause for concern.”

  • https://www.mortgagebrokernews.ca/news/conference-board-covid19-impact-on-canadian-economy-worse-than-initially-projected-332727.aspx?utm_source=GA&utm_medium=20200827&utm_campaign=MBNW-Newsletter-20200827&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Canada’s Banking Regulator Begins Phasing Out Special Mortgage Payment Deferrals

Latest News & Economy DAZADA DIAMOND 1 Sep

Canada’s Banking Regulator Begins Phasing Out Special Mortgage Payment Deferrals

Canadian banks are going to make it a little more difficult to get a break from your mortgage. Office of the Superintendent of Financial Institutions (OSFI) announced they will begin phasing out special treatment of payment deferrals. Previously, due to the pandemic, the regulator had allowed banks to avoid classifying payment deferrals as non-performing loans. Starting in October, no new deferrals will receive special treatment.

Regulators Gave Banks Freedom To Defer Payments

In March, OSFI began giving banks special capital treatment for deferred loans. This allowed deferral of payments without classifying the account as non-performing. Non-performing loans typically require banks to set aside extra capital, in case the loan goes bad. By avoiding the non-performing classification, banks were able to avoid setting aside extra cash. The program encouraged banks to easily grant deferrals for up to six months.

Payment Deferral Programs Start Phase Out In September

Starting tomorrow, OSFI is phasing out this program. Accounts granted a payment deferral from September 1 to September 30 will only receive special treatment for a max of 3 months. This is down from the previous six months from March to August. As of October 1, no new payment deferrals granted will be subject to special treatment. Basically, the program now has a final date.

What Does This Mean?

This likely means payment deferrals won’t be as easily granted from lenders. OSFI’s special treatment made it a no brainer to grant a deferral to borrowers. Since the lender didn’t have to classify it as non-performing, or put aside extra cash, they granted them with ease. Now banks will have to revert to their pre-pandemic support programs for borrowers experiencing hardship.

An end to payment deferrals means the deferral cliff is getting closer. While some people are expected to smoothly transition back to regular payments, the plan was always just to buy people a little extra time. Higher credit defaults are forecasted to rise well into next year.

  • https://betterdwelling.com/canadas-banking-regulator-begins-phasing-out-special-mortgage-payment-deferrals/

New data finds Canadians more optimistic about debt, personal finances

Latest News & Economy DAZADA DIAMOND 31 Aug

New data finds Canadians more optimistic about debt, personal finances

New data finds Canadians more optimistic about debt, personal financesIn defiance of pandemic-driven fears, Canadians are becoming more hopeful about their long-term financial prospects, according to the latest edition of the quarterly MNP Consumer Debt Index.

After reaching a historic low when the coronavirus outbreak first took hold of the Canadian economy, households’ confidence in their purchasing power has strengthened amid sustained federal assistance.

“The fact that many Canadians are more optimistic or even hopeful about their personal debt situation is likely a result of the pandemic relief measures,” said Grant Bazian, president of MNP LTD. “But it could also be the result of Canadians comparing their own circumstances to what is playing out in other parts of the world.”

During the second quarter, the number of Canadians who said that they can cover their living expenses for the next 12 months without incurring further debt has gone up to 61%. Another 43% of respondents said that their current debt loads are better compared to pre-pandemic levels, while 27% said that their debt situation is better than it was last year.

The proportion of Canadians who said they were $200 or less away from insolvency fell by six percentage points from Q1, settling at 43%.

“Many found it easier to spend less over the last few months since they were required to stay home,” Bazian said. “COVID-19 dramatically altered consumer spending since restaurants, theatres, malls and other bastions of discretionary spending were closed. Even with marginal increases in groceries, utilities and online shopping, many households have reported significant savings which, in some cases, have made them feel more capable of keeping up with previously unsustainable debt payments.”

  • https://www.mortgagebrokernews.ca/news/new-data-finds-canadians-more-optimistic-about-debt-personal-finances-331786.aspx

Have CMHC’s underwriting changes affected business for brokers and lenders?

Latest News & Economy DAZADA DIAMOND 28 Aug

Have CMHC’s underwriting changes affected business for brokers and lenders?

Have CMHCPrior to the implementation of the Canada Mortgage and Housing Corporation’s new underwriting rules on July 1, the industry was abuzz with the news that Canada’s private mortgage insurance providers, Genworth and Canada Guaranty, would not be following suit. Almost a month after the new CMHC guidelines were put in place, they don’t appear to be having much impact on brokers or lenders.

Multi-Prets Mortgages’ broker Linda Tosini says she has experienced no change to her day-to-day operations, as the decision on which insurer a deal is sent to is ultimately made by her lenders.

“If I do know there’s something, I can put it in my notes to the lender and say, ‘He’s not going to fit the 35/39 [CMHC’s new minimum debt servicing ratios],’” Tosini says. But she’s not sending those notes very frequently.

Tosini feels the CMHC changes will force brokers to have a better understanding of their lending partners. Desjardins, for example, primarily uses CMHC. If Tosini needs a lender to help out a client with a 39/44 situation, she knows where not to send it.

“It’s all about knowing your lenders,” she says.

Albert Collu, the recently named CEO of lender Marathon Mortgage Corp, says the CMHC/Genworth/Canada Guaranty split hasn’t made much of a difference to his company either, largely because of CMHC’s new minimum Beacon score requirement of 680.

“I can’t speak to all the books, but a lot of books, if you look at the average Beacon in our space, they’re usually well over 700,” he says.

Taylor Little, CEO of lender Neighbourhood Holdings, says that even though the increased competition in the mortgage insurance space may not impact borrowers significantly – limits on mortgage insurance for properties over $1 million means most owners of detached homes in Toronto and Vancouver can’t get insurance anyway – the two differing, very public views on the market implied by the divergent underwriting approaches can be used as a valuable resource.

“If Canada Guaranty and Genworth thought there was a huge amount of risk in the market, they’d probably be changing their rules as well,” Little says. “They’re signalling something to the market that’s a little different from what CMHC is.”

With price and sales forecasts all over the map and many awaiting July data to determine if June’s sales activity was a blip triggered by CMHC’s looming changes, Little suggests that Genworth and Canada Guaranty’s next moves could be a valuable indicator of market sentiment at a time of unparalleled uncertainty.

“At a very high level, seeing what the private insurers do is going to give a lot of clarity on how they view they market,” he says. “If they continue to hold firm and don’t change their policies to align with CMHC, that would be an interesting sign.”

It’s a strategy Little and his associates at Neighbourhood Holdings have used before.

“We certainly watch what the banks are doing, what the insurers are doing, in terms of adding to our matrix of how we determine our lending guidelines. If you’re seeing everyone clamp down on risk, it’s a really good sign that we, as a lender, should as well,” he says.

While the changes to CMHC’s guidelines haven’t affected her business thus far, Tosini says that’s largely because Canada Guaranty and Genworth are still providing alternative paths for lenders shut out by CMHC. It will be a different story for borrowers with more challenging credit profiles if CMHC’s competitors wind up following in its footsteps.

“Who knows?” Little says. “They could change next week or next month.”

  • https://www.mortgagebrokernews.ca/news/have-cmhcs-underwriting-changes-affected-business-for-brokers-and-lenders-331787.aspx?utm_source=GA&utm_medium=20200723&utm_campaign=Newsletter-20200723&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Alberta has the highest mortgage deferral rates in Canada

Credit & Debt DAZADA DIAMOND 27 Aug

Alberta has the highest mortgage deferral rates in Canada

Next highest rates were in Saskatchewan and Newfoundland, tied at 14.8 per cent

Alberta leads the country in mortgage deferrals, according to the CMHC. (Robson Fletcher/CBC)

Around one-in-five mortgages in Alberta remains in deferral, the highest rate of any province in the country, according to the Canada Mortgage and Housing Corporation.

CMHC president and CEO Evan Siddall said in a tweet on Tuesday that as of July, 21 per cent of mortgages in Alberta were deferred.

The next highest deferral rates were in Saskatchewan and Newfoundland, tied at 14.8 per cent.

“Deferrals in oil-producing regions are evidently elevated,” he wrote.

Quebec had the lowest rate at 5.6 per cent.

Siddall said around 11 per cent of all homeowner transactional insured mortgages are in deferral across the country, and that factors like unemployment rates and government supports will play a role in deferrals and house prices going forward.

Low oil prices had already hit Alberta’s economy hard before the coronavirus pandemic.

The Conference Board of Canada forecasts Alberta will see its economy shrink by a historic seven per cent this year.

Justin Havre with RE/MAX says the Alberta deferral numbers don’t come as much of a surprise.

“I think Albertans have gone through some tough times,” said Havre.

“We typically don’t have the opportunity to defer mortgage payments when there is a collapse in energy payments and when the opportunity was available to get mortgages deferred here in Alberta, I think a lot of people took the opportunity to preserve their cash because nobody really knew with this pandemic how long it would go on and what was going to come of it.”

Havre said he would encourage anyone having trouble making payments to be proactive, and speak with their bank and insurer.

“Don’t wait — take action now to find a solution, and if the solution has to be that you put your house up on the market, then you may want to start acting on that now while we have the activity in the marketplace, because our market typically does slow down when snow hits the ground.”

In May, Siddall had warned a House of Commons committee that the country could see a “deferral cliff” when some unemployed people are required to begin paying their mortgages again this fall.

  • https://www.cbc.ca/news/canada/calgary/cmhc-mortgage-deferral-1.5700021