Mortgage Digest: 50% odds of a 50-bps October rate cut, experts say + MORE Oct 4th

Canada’s mortgage lending rules and policies are broken.  They just don’t work.  And the more our Federal government tries to help, the worse it gets.  This is a 4 part series of what our government can do to make home ownership affordable.

KNOWING THE PAST WILL HELP OUR FUTURE.

I’m going to list some of the changes that have handicapped Canadians from buying and renting.  There are over 30 changes over the last 18 years but I’m just going to list the ones that have had the greatest impact.  Notice the pattern of ever tightening government lending rules that increase a homeowner’s

minimum monthly mortgage payment. But first, look at how inviting our mortgage rules were back in 2006.   Some would argue they were too loose and perhaps this is true but I would argue the pendulum has swung way too far the other way. We’ve become way too tight.

2006  

February.  Canada Mortgage and Housing Corporation (CMHC) increases amortization from 25 years to 30 years…

Speaking at Global Risk Institute summit on Wednesday, Routledge said he was worried that the requirement by lenders to run the “OSFI stress test” is making Canadians feel the regulator is too directly involved in their affairs.

“If I were that person, I would feel regulated by OSFI. And that’s what we hear from Canadians. And I don’t think that was ever part of its intent.”

The concern helped lead to OSFI’s announcement last week that starting Nov. 21, it would no longer require a stress test for uninsured mortgages when borrowers are making a straight switch between lenders, meaning they aren’t changing things like their amortization or borrowing amount.

Only between 2% and 6% of borrowers make such a switch, so while it was something Routledge previously maintained was part of sound underwriting practices, the agency no longer saw it as worth the cost…