Recent mortgage-rule changes have eroded volumes by as much as 15 per cent, possibly reflecting the loss of clients to the alternative lending market.
What we’re seeing is a loss of what were A clients that no longer qualify as borrowers with us because of the rule changes.
Leading that migration are clients looking to refinance above the new cap of 85-per cent of value. Others include new borrowers who need amortization terms longer than the new maximum of 30 years.
Starting March 18, Ottawa withdrew government backing for 35-year mortgages, lowering the cap to 30. Among other key changes, meant to rein in on record-high levels of consumer debt, the federal government also lowered the maximum amount Canadians can borrow in refinancing their mortgages to 85 per cent from 90 per cent of the value of their homes.
Starting today, it has also withdrawn government backing on any new lines of credit secured by homes, such as home equity lines of credit – HELOCs. It means many A-type clients may now be unable to obtain a line of credit at 80% LTV or higher. More importantly from Canadiana’s perspective, they can’t qualify for refinances above 85 per cent despite relatively low risks of default.
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Constantine Isslamow
Broker of Record / Mortgage Broker
CENTURY 21 United Realty Inc. Brokerage.
Independently Owned & Operated
CENTUM Core Financial Inc. Brokerage License #: 10642 Constantine Isslamow License#: M08005391
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