Were TD’s bombshell new HELOC rules inspired by the government’s master plan? You be the judge. Our take: HELOC rule changesare about more than just stopping speculators from funding secondary properties. And TD’s move is just a precursor. Regulators won’t come right out and say it, but people we talk to are certain that OSFI and the Department of Finance...
For more than a year we’ve speculated that new rules will be adopted, making it tougher to qualify for a HELOC. How could they not? The Bank of Canada, OSFI, CMHC and FCAC have all been warning about HELOC risk for months. And when multiple government agencies target a financial product, change is a’comin. And now it’s here. Banks are...
In the next few years you’re going to see press release after press release announcing new mortgage technology from big banks. And that’s a good thing. Big banks are finally innovating mortgage processes that have been materially unchanged for years. And it’s being inspired by countries that are well ahead of Canada in online mortgage innovation. Take the UK, for...
“[Canada’s] policy rate will need to rise to neutral to achieve our inflation target.” That was the headline-making quote yesterday from Bank of Canada boss Stephen Poloz. Speakingin front of the parliamentary finance committee, he repeated what the BoC’s been saying for over a year: “Our estimate of neutral is in a range—currently 2 ½ to 3 ½ per cent....
When you go online, you leave a trail of digital bread crumbs. And if new research catches on, mortgage lenders could someday use those crumbs against you (or for you). The U.S. National Bureau of Economic Research (NBER) has published a study showing that creditworthiness is linked to a borrower’s “digital footprint.” NBER studied nine digital footprint variables: the borrower’s...
A lot of people in the mortgage biz like to tell customers: “Pay your variable like a fixed.” In other words, increase the payment on your adjustable-rate mortgage (ARM) to match the payment you would have made, had you chosen a 5-year fixed. The purpose of this strategy is to pay more up front so that if rates (and your...
If you’re carrying floating-rate debt, the rate lords at the Bank of Canada have just added to your interest burden. Here’s what the BoC just did and what it means to your wallet: Rate Decision:Canada’s key interest rate rose 25 bps today Prime Rate:Should climb to 3.95% within the week Market Rate Outlook:3 more hikes by year-end 2019 (as of...
There’s still way too much inefficiency in the mortgage research process. That is, if we’re to believe the latest CMHC data. Three out of four homebuyers used websites to gather mortgage-related information, says Canada’s housing agency. But, among those, only 20% of first-time buyers, 24% of repeat buyers and 23% of renewers used “interest rate comparison” websites. It’s bad enough...
We’ve said it many times over. OSFI’s imposition of a stress test on borrowers switching lenders is potentially the most short-sighted government mortgage policy in Canadian history. See: “Mortgage Renewals Now More Costly — For Those Least Able to Pay“ The policy keeps borrowers—who have proven their ability to handle their mortgage—from switching lenders to reduce their interest bill. These...
Significant rate catalysts often come out of left field. Case in point: collapsing Canadian oil prices. Check out this chart below. It shows Canadian oil (a.k.a., Western Canada select, or “WCS“) rapidly cheapening versus higher-demand “WTI” oil from the U.S. This is arecord discount. Its thickness, inferior quality and delivery challenges mean Canadian oil always trades at a discount to...
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