Mortgage, Money and Dream – Our thoughts on Canadian Mortgage Market
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Today in an article – published in Macleans – Ben Rabidoux has outlined how the Made in Canada housing balloon will start to pop. Obviously the story starts with the suspected chief craftsman of the present situation – CMHC.

The story assumed that CMHC would not be granted any more extra public backing to get more mortgages insured. It also assumes that since Canadian public also backstop Genworth – it will remain in the current status-quo. This assumption may have some fundamental flaw. The primary mandate of CMHC is to help Canadian to find affordable shelter.

If CMHC is indirectly de-railed from its prime directive then that action may have sociopolitical implications.

Apart from that the article is probably right to predict that HELOC and conventional mortgages may experience some ratcheting. OSFI is likely to bring in stricter requirements in future starting with its recent underwriting guidelines.

If the government would put CMHC under OSFI or not that is uncertain at present. But that change may not as effective as economists may think today.

Alt-B in the media:

Home Capital President Martin Reid was quoted in a recent Bloomberg report;

The big banks are sort of juggling around their mortgage strategy and as part of that, they’re tightening up in certain areas. We’re seeing some of the fallout.

The report suggested that some of the heavy-weights are leaving the Alt-B market – fearing a housing downturn – such as TD and CIBC.

In another communication today TD informed that – the extra add-on of 20bps on Equity Lending – Stated Income applications will be rescinded. Which is a good news for some borrowers