In the last few years, all levels of government have maintained a concentrated focus on looking at and implementing measures to protect Canadians from a housing crash the likes of which we saw in the U.S. in 2008. Some measures have included reducing the length of amortizations of mortgages, increasing down payment requirements on some purchases, and limiting what refinance mortgages can be insured.
Mortgage agents have been vocal in the media with regard to obtaining support and looking to provincial and federal governments to be accountable.
Here are a couple of articles you may be interested in:
We asked Paul Mangion, Principal Broker and Owner of MOS Mortgage One Solutions, a GTA Mortgage Centre franchise, what mortgage regulation change last year had the most impact on his operation and why.
PM: The biggest change was lenders whose primary products are insured can no longer offer many insured refinance products. This has meant that agents have had to source their funds for refinance business from other B lenders like MICs, trust companies, finance companies and other private lenders. Fortunately, for our brokerage, our agents have access to a wide range of alternative lenders.
PFMB: What does that mean to home buyers?
PM: It means that homeowners will have to have more equity in their home when looking at refinancing. Whereas before you could even get high ratio refinancing, now many lenders are hesitant to refinance more than 80% of the value of your home.
PFMB: Has this impacted your mortgage agents at all?
PM: Things are always changing in the mortgage industry. Mortgage agents are most successful when supported by a broker who helps them adapt to changes quickly, whether that means educating them about changes or sourcing new lenders and products to offer. Our mortgage agents have fared well through the changes.
PFMB: In Ontario, the government recently announced changes to cool the hot markets in areas like Toronto. Most of the changes announced aim to make housing more affordable in Canada. Do you think that housing is generally affordable in the GTA?
PM: Certainly larger down payment requirements have made it challenging for first time home buyers to enter the market. There isn’t much you can buy in the GTA anymore for under $500,000 which is the marker at which a 20% down payment is now required to purchase a home. Some families manage with interest rates being so low. That said, it is very expensive to live in the GTA which has led some families to purchase further outside the immediate suburbs in places like Hamilton and Barrie.
All in all, it seems that agents and brokers are feeling the impact of regulatory changes but are adapting well by innovating the mortgage products offered and diversifying the lenders they work with.
Thanks so much Paul for taking the time to chat with us – we appreciate it!
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