Real Estate

The Official Mortgage Rates Thread

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Hopefully it does :-)

My pre-approval was with TD and I dont want to go with them due to the collateral charge and also the rates are not competitive

I am going to contact them tomorrow to find out more info

I am not worried about the stress test but the amortization change to 25 years

Thanks everyone for sharing your thoughts
ace604 wrote:
PaulMeredith wrote:
crucial1 wrote: Just wondering where is it mentioned that you have up until March 31st before these rules would come into effect? Curious because my pre construction closing is in February next year so this will make a huge difference for me. Also I read about the new laws coming into effect but haven't seen anything in regard to removing the 30 year amortization option, do you have a link with more thorough information I could read?
Looks like my original post was not entirely accurate. Here's the link: http://www.fin.gc.ca/n16/data/16-117_2-eng.asp
It's actually March 1st, not the 31st as previously mentioned. The last paragraph under 'mortgage rate stress test':

The announced measure will apply to new mortgage insurance applications received on October 17, 2016 or later. This measure will not apply to mortgage loans where, before October 3, 2016: a mortgage insurance application was received; the lender made a legally binding commitment to make the loan; or the borrower entered into a legally binding agreement of purchase and sale for the property against which the loan is secured. Mortgage loans for which mortgage insurance applications are received after October 2, 2016 and before October 17, 2016 are also not affected by the rule change, provided that the mortgage is funded by March 1, 2017. Homeowners with an existing insured mortgage or those renewing existing insured mortgages are not affected by this measure.

So, as I understand the above, it appears that any application submitted prior to October 3rd... so anyone with a new build home that has an approval already in place should be fine beyond March 1st. For those submitting an application between Oct 3rd and the 17th will have up to March 1st for it to close under the current regulations.

This is all new for us as well, so we're still trying to make sense of it all ourselves and are still waiting on lenders to comment. As it's written, this affects non-bank lenders only, however big banks typically follow suit in these cases.
"This measure will not apply to mortgage loans where, before October 3, 2016: [...] the borrower entered into a legally binding agreement of purchase and sale for the property against which the loan is secured"

So ... does this sound like it protects the poster asking about his 2017 completion?
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ace604 wrote:
CdnRealEstateGuy wrote: That's not a thing.

But what is an issue (and has always been a risk), is if you were pre-approved in 2013 based off mortgage rules back then. Now your condo is complete and you have to qualify for a mortgage based off today's stricter rules. Some people qualified back when they bought the property, but cannot qualify when closing comes.
People shouldn't be buying at the margin of their affordability - that's the point!

If the rates went up 2-3% in the interim you would have the same scenario. They can't predict that. You need to borrow within your capacity not to 100% of it at "current rates" and hope/pray rates don't go back up to historic "normal" and/or that the "real estate always goes up" train doesn't derail.

Everyone who is buying at the absolute max payment they can afford (currently) at super-low rates has inflated the market. They don't look at price and think, "oh geez, this house isn't worth $800k", they just say, oh, the last house sold for $750k and we can "afford" $800k? Ok let's bid this sucker up.

And then the next person does the same. It's all driven by letting people qualify with super low rates.

If this rule had been in place for a decade+ and people had to qualify at 5% that whole time we wouldn't be as high as we are now and more first-time buyers wouldn't be in such a bad position.
I don't think you understand. This isn't the thread to get into a debate, but I'll make one last attempt to clarify and then I will leave it as is.

If you are putting more than 20% down and are a AAA client, then the new mortgage rules won't effect you. Yet you keep arguing that the new rules are going to reduce people's borrowing capacity and cool the markets...for the most part, it won't. People buying detached houses in high demand areas are putting more than 20% down, so it won't have much of an effect to "cool" these markets.

Not too long ago, there was a new rule that high ratio borrowers could not purchase a million dollar property. Did that slow down the market? No, because people buying million dollar homes are putting more than 20% down anyways.
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I understand. Did you read what I wrote and disagree with it??

If the person buying your $800k home so you can buy the $1M home doesn't qualify and can't pay $800k, it affects you.
If the person buying that $800k home from them can't sell their $600k home because THAT buyer doesn't qualify it affects everyone up the chain ... and so on.

You are saying 20% down AAA client is fine, because he can find a lender that doesn't bulk-insure ... but the lenders that DO bulk-insure need to either raise rates and lend to that person without insurance OR decline that business. So let's say you have 10 lenders, and 2 bulk-insure, now some population can't qualify so they have to go to only 8 lenders.
Same number of borrowers, but spread across 8 lenders instead of 10 ... supply/demand ... the rates are going to go up on balance. They can't lend infinite money to everyone so the $X they had available to lend goes to 80% of the original population leaving 20% (of that specific demographic I'm talking about) not able to get the loan they want at the rate that would have previously been available.
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Some stats are referenced in this article: http://www.bloomberg.com/news/articles/ ... -new-rules

"Under Canadian law, home buyers who put down less than 20 percent of the cost of the home must insure the mortgage. Portfolio insurance, which allows lenders to insure mortgages that aren’t already backstopped by the housing agency, makes up about 35 percent of the mortgage insurance market in Canada. In its last quarterly financial report, CMHC said that portfolio insurance made up C$189 billion of its C$523 billion insurance-in-force."

So over one third of insured mortgage $'s are from conventional mortgages, is the way I read that.
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Some predictions this article makes http://canadianmortgagetrends.com/canad ... offin.html

"
Non-deposit-taking lenders could be forced to sell a wide array of loans to balance sheet lenders at a premium. They’ll be forced to pass those funding cost hikes directly through to consumers. These include refinances, amortizations over 25 years, non-owner-occupied properties and mortgages over $1 million—all the stuff that can no longer be insured and securitized.

Mortgage availability will drop in high-valued regions like Vancouver and Toronto and rates will rise nationally.
This liquidity drop is partly because of the insurance prohibitions, and partly because of higher capital requirements for insurers. This latter measure was announced previously and is expected to take effect in Q1. Word on the street is that bulk insurance premiums (which average roughly 40+ bps now) could at least double.
As competitors raise rates, banks will likely take that opportunity to hike their own rates. And they’ll probably do it nationally because regional pricing presents internal challenges.

Market share for near-prime lenders will rise yet again, especially for refinances.
Consumers, of course, will pay significantly higher interest for these lenders’ flexibilities.

Non-balance sheet lenders could apply rate premiums to amortizations over 25 years since they can no longer be insured. That’s no small point. Mortgages with amortizations longer than 25 years accounted for over half of all portfolio insurance underwritten by CMHC through June.
"
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ace604 wrote: I understand. Did you read what I wrote and disagree with it??

If the person buying your $800k home so you can buy the $1M home doesn't qualify and can't pay $800k, it affects you.
If the person buying that $800k home from them can't sell their $600k home because THAT buyer doesn't qualify it affects everyone up the chain ... and so on.

You are saying 20% down AAA client is fine, because he can find a lender that doesn't bulk-insure ... but the lenders that DO bulk-insure need to either raise rates and lend to that person without insurance OR decline that business. So let's say you have 10 lenders, and 2 bulk-insure, now some population can't qualify so they have to go to only 8 lenders.
Same number of borrowers, but spread across 8 lenders instead of 10 ... supply/demand ... the rates are going to go up on balance. They can't lend infinite money to everyone so the $X they had available to lend goes to 80% of the original population leaving 20% (of that specific demographic I'm talking about) not able to get the loan they want at the rate that would have previously been available.
Just out of curiosity, which rule do you think will hurt bulk insurers the most?
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CdnRealEstateGuy wrote:
ace604 wrote: I understand. Did you read what I wrote and disagree with it??

If the person buying your $800k home so you can buy the $1M home doesn't qualify and can't pay $800k, it affects you.
If the person buying that $800k home from them can't sell their $600k home because THAT buyer doesn't qualify it affects everyone up the chain ... and so on.

You are saying 20% down AAA client is fine, because he can find a lender that doesn't bulk-insure ... but the lenders that DO bulk-insure need to either raise rates and lend to that person without insurance OR decline that business. So let's say you have 10 lenders, and 2 bulk-insure, now some population can't qualify so they have to go to only 8 lenders.
Same number of borrowers, but spread across 8 lenders instead of 10 ... supply/demand ... the rates are going to go up on balance. They can't lend infinite money to everyone so the $X they had available to lend goes to 80% of the original population leaving 20% (of that specific demographic I'm talking about) not able to get the loan they want at the rate that would have previously been available.
Just out of curiosity, which rule do you think will hurt bulk insurers the most?
Are you referring to lenders that choose to bulk insure when you say "bulk insurers" ?
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ace604 wrote:
CdnRealEstateGuy wrote:
ace604 wrote: I understand. Did you read what I wrote and disagree with it??

If the person buying your $800k home so you can buy the $1M home doesn't qualify and can't pay $800k, it affects you.
If the person buying that $800k home from them can't sell their $600k home because THAT buyer doesn't qualify it affects everyone up the chain ... and so on.

You are saying 20% down AAA client is fine, because he can find a lender that doesn't bulk-insure ... but the lenders that DO bulk-insure need to either raise rates and lend to that person without insurance OR decline that business. So let's say you have 10 lenders, and 2 bulk-insure, now some population can't qualify so they have to go to only 8 lenders.
Same number of borrowers, but spread across 8 lenders instead of 10 ... supply/demand ... the rates are going to go up on balance. They can't lend infinite money to everyone so the $X they had available to lend goes to 80% of the original population leaving 20% (of that specific demographic I'm talking about) not able to get the loan they want at the rate that would have previously been available.
Just out of curiosity, which rule do you think will hurt bulk insurers the most?
Are you referring to lenders that choose to bulk insure when you say "bulk insurers" ?
Yes.
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CdnRealEstateGuy wrote:
ace604 wrote: I understand. Did you read what I wrote and disagree with it??

If the person buying your $800k home so you can buy the $1M home doesn't qualify and can't pay $800k, it affects you.
If the person buying that $800k home from them can't sell their $600k home because THAT buyer doesn't qualify it affects everyone up the chain ... and so on.

You are saying 20% down AAA client is fine, because he can find a lender that doesn't bulk-insure ... but the lenders that DO bulk-insure need to either raise rates and lend to that person without insurance OR decline that business. So let's say you have 10 lenders, and 2 bulk-insure, now some population can't qualify so they have to go to only 8 lenders.
Same number of borrowers, but spread across 8 lenders instead of 10 ... supply/demand ... the rates are going to go up on balance. They can't lend infinite money to everyone so the $X they had available to lend goes to 80% of the original population leaving 20% (of that specific demographic I'm talking about) not able to get the loan they want at the rate that would have previously been available.
Just out of curiosity, which rule do you think will hurt bulk insurers the most?
ace604 wrote:
CdnRealEstateGuy wrote:
ace604 wrote: I understand. Did you read what I wrote and disagree with it??

If the person buying your $800k home so you can buy the $1M home doesn't qualify and can't pay $800k, it affects you.
If the person buying that $800k home from them can't sell their $600k home because THAT buyer doesn't qualify it affects everyone up the chain ... and so on.

You are saying 20% down AAA client is fine, because he can find a lender that doesn't bulk-insure ... but the lenders that DO bulk-insure need to either raise rates and lend to that person without insurance OR decline that business. So let's say you have 10 lenders, and 2 bulk-insure, now some population can't qualify so they have to go to only 8 lenders.
Same number of borrowers, but spread across 8 lenders instead of 10 ... supply/demand ... the rates are going to go up on balance. They can't lend infinite money to everyone so the $X they had available to lend goes to 80% of the original population leaving 20% (of that specific demographic I'm talking about) not able to get the loan they want at the rate that would have previously been available.
Just out of curiosity, which rule do you think will hurt bulk insurers the most?
Are you referring to lenders that choose to bulk insure when you say "bulk insurers" ?
CdnRealEstateGuy wrote:
ace604 wrote:
CdnRealEstateGuy wrote:

Just out of curiosity, which rule do you think will hurt bulk insurers the most?
Are you referring to lenders that choose to bulk insure when you say "bulk insurers" ?
Yes.
http://www.fin.gc.ca/n16/data/16-117_2-eng.asp

"Effective October 17, 2016, all insured homebuyers must qualify for mortgage insurance at an interest rate the greater of their contract mortgage rate or the Bank of Canada’s conventional five-year fixed posted rate. This requirement is already in place for high-ratio insured mortgages with variable interest rates or fixed interest rates with terms less than five years."

That's insured by choice or not. See the section above "mortgage insurance".

Today, if a lender currently uses portfolio insurance, they can qualify a borrower at 5-yr on the contract rate (or if 20% down on any term?).
Oct 17th, that same lender has to qualify the borrower at the benchmark posted rate instead if they still want to be able to insure it, regardless of term or downpayment amount.

This rule also probably sucks for them too, re low-ratio insurance:
"A maximum property purchase price below $1,000,000 at the time the loan is approved;"

Was there a higher or no limit before?
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ace604 wrote:
CdnRealEstateGuy wrote:
ace604 wrote: I understand. Did you read what I wrote and disagree with it??

If the person buying your $800k home so you can buy the $1M home doesn't qualify and can't pay $800k, it affects you.
If the person buying that $800k home from them can't sell their $600k home because THAT buyer doesn't qualify it affects everyone up the chain ... and so on.

You are saying 20% down AAA client is fine, because he can find a lender that doesn't bulk-insure ... but the lenders that DO bulk-insure need to either raise rates and lend to that person without insurance OR decline that business. So let's say you have 10 lenders, and 2 bulk-insure, now some population can't qualify so they have to go to only 8 lenders.
Same number of borrowers, but spread across 8 lenders instead of 10 ... supply/demand ... the rates are going to go up on balance. They can't lend infinite money to everyone so the $X they had available to lend goes to 80% of the original population leaving 20% (of that specific demographic I'm talking about) not able to get the loan they want at the rate that would have previously been available.
Just out of curiosity, which rule do you think will hurt bulk insurers the most?
ace604 wrote:
CdnRealEstateGuy wrote:

Just out of curiosity, which rule do you think will hurt bulk insurers the most?
Are you referring to lenders that choose to bulk insure when you say "bulk insurers" ?
CdnRealEstateGuy wrote:
ace604 wrote:

Are you referring to lenders that choose to bulk insure when you say "bulk insurers" ?
Yes.
http://www.fin.gc.ca/n16/data/16-117_2-eng.asp

"Effective October 17, 2016, all insured homebuyers must qualify for mortgage insurance at an interest rate the greater of their contract mortgage rate or the Bank of Canada’s conventional five-year fixed posted rate. This requirement is already in place for high-ratio insured mortgages with variable interest rates or fixed interest rates with terms less than five years."

That's insured by choice or not. See the section above "mortgage insurance".

Today, if a lender currently uses portfolio insurance, they can qualify a borrower at 5-yr on the contract rate (or if 20% down on any term?).
Oct 17th, that same lender has to qualify the borrower at the benchmark posted rate instead if they still want to be able to insure it, regardless of term or downpayment amount.

This rule also probably sucks for them too, re low-ratio insurance:
"A maximum property purchase price below $1,000,000 at the time the loan is approved;"

Was there a higher or no limit before?
Ummmm, ok. Why did you post this for?

I simply asked which new rule would hurt bulk insurers the most.
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CdnRealEstateGuy wrote:
ace604 wrote:
CdnRealEstateGuy wrote:
Just out of curiosity, which rule do you think will hurt bulk insurers the most?
ace604 wrote:
Are you referring to lenders that choose to bulk insure when you say "bulk insurers" ?
CdnRealEstateGuy wrote:

Yes.
http://www.fin.gc.ca/n16/data/16-117_2-eng.asp

"Effective October 17, 2016, all insured homebuyers must qualify for mortgage insurance at an interest rate the greater of their contract mortgage rate or the Bank of Canada’s conventional five-year fixed posted rate. This requirement is already in place for high-ratio insured mortgages with variable interest rates or fixed interest rates with terms less than five years."

That's insured by choice or not. See the section above "mortgage insurance".

Today, if a lender currently uses portfolio insurance, they can qualify a borrower at 5-yr on the contract rate (or if 20% down on any term?).
Oct 17th, that same lender has to qualify the borrower at the benchmark posted rate instead if they still want to be able to insure it, regardless of term or downpayment amount.

This rule also probably sucks for them too, re low-ratio insurance:
"A maximum property purchase price below $1,000,000 at the time the loan is approved;"

Was there a higher or no limit before?
Ummmm, ok. Why did you post this for?

I simply asked which new rule would hurt bulk insurers the most.
Ya, that was my answer. Are you saying those rules don't hurt lenders that use portfolio insurance?
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I found this mortgage affordability calculator helpful to figure out how the new stress test works:

http://www.ratehub.ca/mortgage-affordability-calculator

So basically by October 17th, to fall under the old stress test requirements, you have to have an approved mortgage? Or are they saying have an active mortgage application in the works? My closing is Jan. 26. Since the 90 day window to lock in a rate would be October 26, could I start the application before the 17th and wait for the approval to come through to "lock" in the rate for 90 days?

I found this article to be informative: http://www.moneysense.ca/spend/real-est ... borrowers/
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I have a family member closing on Nov 22nd. Purchase price is 400K, making 20% DP, so seeking mortgage of 320K. Mortgage can be conventional or collateral, please let me know the options. Need to apply in next 2 days to ensure everything is finished before October 15th.
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CdnRealEstateGuy wrote:
mrthwap wrote:
valuemortgage wrote: It appears (at least my understanding at this moment) that it applies to high ratio mortgages only. Conventional mortgages should not be affected at this time (even if the lender insures the loan - as most lenders do these days anyways).

Edit - I re-read the article on the Globeandmail and it seems even bulk insured mortgages will be affected too, as they will now have to qualify under the same criteria as high ratio mortgages!

So... is the idea here that this will shift risk from insurers (CMHC) to lenders? That is, insurance will only be available for borrowers who meet this more stringent financial requirement (ability to borrow at the posted rate). So if lenders want to lend out to people who don't meet that test (but can carry a loan at the "going rate" just fine), they
can't insure the loan? Could this "spread out" rates a bit - ie borrowers may pay a rate premium for an uninsured mortgage?
Pretty much. This is a very unfair decision. If they truly cared about housing prices, they would not limit these rules to bulk insured mortgages or high ratio mortgages.

This has nothing to do with cooling the market, but instead, cherry picking the mortgages they insure.
Agreed.
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ace604 wrote:
CdnRealEstateGuy wrote:
ace604 wrote:





http://www.fin.gc.ca/n16/data/16-117_2-eng.asp

"Effective October 17, 2016, all insured homebuyers must qualify for mortgage insurance at an interest rate the greater of their contract mortgage rate or the Bank of Canada’s conventional five-year fixed posted rate. This requirement is already in place for high-ratio insured mortgages with variable interest rates or fixed interest rates with terms less than five years."

That's insured by choice or not. See the section above "mortgage insurance".

Today, if a lender currently uses portfolio insurance, they can qualify a borrower at 5-yr on the contract rate (or if 20% down on any term?).
Oct 17th, that same lender has to qualify the borrower at the benchmark posted rate instead if they still want to be able to insure it, regardless of term or downpayment amount.

This rule also probably sucks for them too, re low-ratio insurance:
"A maximum property purchase price below $1,000,000 at the time the loan is approved;"

Was there a higher or no limit before?
Ummmm, ok. Why did you post this for?

I simply asked which new rule would hurt bulk insurers the most.
Ya, that was my answer. Are you saying those rules don't hurt lenders that use portfolio insurance?
Of course not. The problem I have, is that you're just looking stuff up online as you argue. You don't even understand the changes in the rules. You're not even sure if bulk insurance on million dollar homes is currently available...yet you're certain that these changes (that you're not 100% aware of) are going to cool the market?

If you don't truly understand the scope of the changes, how can you argue the impact it will have? This isn't the first time amortization periods have been shortened. Hell, there are still lenders that offer 35-year amortizations, but I honestly don't send much business to that program, because borrowers do not need it to qualify. Not too long ago, they announced 20% minimums for million dollar homes....guess what, it didn't have much effect because most were putting 20% down in that sub-market.

My initial issue, was that the changes are really aimed at protecting the CMHC (and btw, as it stands at the moment, only CMHC has announced these changes...feel free to Google it) and not at "cooling the market". And until OFSI steps in and regulates all of their lenders, I don't believe it will have big impact on houses in high demand areas. Unless the non-bulk insured mortgages follow suit, you cannot say for certain what will happen.

Now I'm pretty sure GE and CG will follow CMHC. I'm sure lenders who don't bulk insure won't follow all the changes to bulk insurers. I'm not sure if these rules will effect high demand house...but you somehow are, even though you don't quite get the changes.
Kevin Somnauth, CFA
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Real Estate Salesperson - Century 21 Innovative

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