TRANSCRIPT OF BLOG:
Hi, everybody. This is Rowan Smith from City Wide Mortgage Services. There was an announcement today that OSFI ‑‑ which is the Office for the Superintendent of Financial Institutions ‑‑ has released a report of some studies they’ve been doing that makes it look like they might be tightening mortgage rules further. For those of us in the industry it’s been four years and a litany of changes as they’ve been tightened over and over and over. I personally don’t want to see any more changes, as they’re coming too fast, and they’re not giving the market really time to react to those changes.
Most notably, they’ve started to point their finger at uninsured mortgages. These are conventional mortgages. The difference being when you have 20 percent down or less, you’re considered a high‑ratio mortgage that is insured through CMHC or one of the private insurers. Anything less than that is non‑insured, meaning the risk is being borne fully by the bank.
Previously OSFI was not getting involved in adjusting how banks loaned when they were solely at risk, meaning 20 percent or more down. But now there’s starting to be grumblings that that might be the case. We already saw the disappearance of the 40‑, the 35‑ and the 30‑year motgage for insured products. There’s talk now that perhaps the 30‑year mortgage for uninsured products will have to disappear.
For those of you watching this that are in British Columbia, we’ve been blessed for a long time with some credit unions that have some pretty liberal lending policies. For example, Coast Capital Savings, Envision Savings, both of those credit unions will still do a 35‑year mortgage.
Now you have to have the 20 percent down, and there are some tricks and qualifications for it, it’s not straightforward. Basically, they want to know that you can afford it on a 30‑year product, and then they’ll grant you the 35 for cash flow purposes. But they’re not going to do it if you need the 35‑year to qualify. That product does still exist, but it exists in an isolated market, and, to my knowledge, only in British Columbia.
Does OSFI’s changing and consistent tightening, is it warranted in our market? I’m not entirely sure it is. But this is just my opinion. These are just keeping you up to date on some of the changes in the industry.
For City Wide Mortgage Services, I’m Rowan Smith.