Tagmortgage rules

Posted October 28, 20148 Comments Consumer Debt

When this guy can’t qualify for a mortgage, you know the mortgage rules are too tight!

FORMER US FED CHAIRMAN CAN’T GET A MORTGAGE.

Anyone remember this guy? Ben Bernanke. He’s just the former Chairman of the US Federal Reserve Bank. He served two terms from 2006 to 2014. Earlier this month, he revealed that he was declined for a mortgage refinance. Now, just to put this in perspective, he used to make a nice 6 figure salary. And today, he is paid an estimated $250,000 per speaking engagement.

How can he not qualify? Clearly, the mortgage rules tightening process has gone waaaaaay overboard. But this isn’t just happening in the US. Canada’s mortgage lending rules have always been tighter than the US. And over the past 6 years, the Canadian govt has brought in numerous changes to tighten the rules even further. (Actually, experts agree that they went way overboard. And we are only now seeing the effects of the rule changes.. Look out. You’re in for a big surprise the next time you need mortgage money).

CANADIAN MORTGAGE RULES ARE EVEN TIGHTER!!

Canada’s Banking industry has been the envy of the world. We came out of the 2008 US sub-prime mortgage crisis with no visible scars. Continue reading “When this guy can’t qualify for a mortgage, you know the mortgage rules are too tight!”

Posted June 22, 2014 Mortgage News

The Star article on private lenders

Some comments I made about the changing lending landscape. Click on the link below.

Private lenders step into Mortgage void left by banks.

The article was good and shed some light on just how much the federal government has tightened the Mortgage rules in Canada. But the article excluded one very important fact.

Yes, I agree that the govt has gone overboard with their rule changes, and has forced qualified mortgage borrowers to pay higher rates and fees by having to go to alternative lenders. But, consumers don’t necessarily have to go from an “A” lender with the best rates (currently at around 3.00%), to a “C” lender with rates of around 12% to 15%.

There are “B” lenders that offer mortgages with only slightly higher rates. Usually 1% to 2% higher than “A” lenders. I think it’s important to point this out.

A recent example is where one client was self employed, had a slightly bruised credit score of 602 (a good score is between 680 and 720), and his net income was not high enough to qualify (remember, self employed show a lower net income because they can write off more expenses). We found this client an 80% loan to value mortgage at 4.00% with some fees. His net annual rate was 4.25%.

So the message is, ‘There are ‘B’ lenders to fill the void left by the BANKS’…. and their rates are only slightly higher.. There are also ‘C’ lenders that fill a need for even harder to place mortgages…. These products come with much higher rates and fees.. But most consumers will either fit into an ‘A’ or ‘B’ product. Only a small handful of applicants need to go to a ‘C’ Lender..

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Posted May 31, 20135 Comments Mortgage News

Top Banking regulator stepping.. OSFI’s Julie Dickson leaving in 2014

Julie Dickson, the head of OSFI (Office of the Superintendent of Financial Institutions) will not be back when her term expires in July 2014. She’s decided to not to stick around after making more lending rule changes in 2012, than I have ever seen, during my entire 23 year career working in financial services. OSFI is a regulatory body that provides regulation and supervision to 152 Banks, Trust companies and other Lenders. In short, they are auditors. Here’s a link to the major changes made just last year including putting CMHC under OSFI control.. more on that later..

Some say her claim to fame is that she was in charge during the worst banking and mortgage crises in history. And that Canada came out of this global financial collapse way better than any other country. It’s true, we did come out of this very well compared with the rest of the world… But what does Ms. Dickson and OSFI have to do with it? For me, this had more to do with luck, govt intervention and Canadians being our normal conservative selves. We were a little slower to adapt to U.S. style lending policies… Ask any financial expert and they will tell you we were just a few years behind the U.S. with regards to their wild mortgage lending guidelines… Continue reading “Top Banking regulator stepping.. OSFI’s Julie Dickson leaving in 2014”

Posted February 4, 20131 Comment Consumer Debt

Personal Debt level concerns are overblown according to Equifax stats.

So here we go again.. More stats that show our personal debt levels aren’t out of control… That’s right, I said ‘aren’t’ out of control. Equifax Canada says our defaults are at record low levels and we are paying off our debts faster. This doesn’t come as any surprise to me. Anyone that’s followed my posts knows that I have questioned all the popular articles telling us we are not managing our debts responsibly.

You’ve seen the reports… ‘Personal debts at record high levels’…..’Personal Debt crisis’. We’ve been hammered with the same headlines for the past few years. I just wasn’t seeing this with my readers or my clients… I kept seeing consumers wanting to take advantage of these record low interest rates to invest or improve their homes (why is that a bad thing?). That’s not bad debt in my opinion… that’s good debt.. And now we have some stats to back up what I have experienced. Continue reading “Personal Debt level concerns are overblown according to Equifax stats.”

Posted December 18, 20122 Comments Case study

Fed govt, BIG SIX BANK’s pushed us into Fixed rates!…part 2 of 2.

IT’S NO COINCIDENCE THAT THE BIG SIX BANKS CONTINUE TO REPORT RECORD PROFITS.

The Bankers were onto something. Now if they could only keep Variable rate pricing higher or make it tougher to get a Variable rate mortgage…. In 2010, the Fed govt would help increase those Bank profits…All new Variable rate mortgage borrowers would need to qualify at the Bank posted 5 year fixed rate. The Feds said they had to tighten Mortgage Lending Rules… They had to make it tougher to qualify for a mortgage with fluctuating interest rates to ensure we would not have a ‘housing bubble’ and a ‘mortgage default problem’… This pushed out 5% more borrowers from qualifying for, and benefiting from Variable rates. And by the way, at that time, Variable rates ranged anywhere from 1.50% to 1.95% compared with the best discounted 5 yr fixed rate of 3.89%…..! Anyone seeing a pattern here? (Some stats to remember…Mortgage defaults have been under 0.50% for over 15 years are currently at around 0.33%… this is at or near record lows!!… so where’s the problem??)

This is also when the BIG SIX BANK’S inflated, and unfair mortgage penalty calculation came to light. The lower rates became, the higher mortgage penalties climbed… $10,000, $20,000, $30,000 in mortgage prepayment penalty charges were popping up in mortgage blogs and news sites. Even the media had to jump in and cover some of this… And when Canadians needed a break in their mortgage payments, they were left out in the cold. These inflated penalties made it impossible to get out of their higher Fixed rate mortgages without paying an enormous penalty. Continue reading “Fed govt, BIG SIX BANK’s pushed us into Fixed rates!…part 2 of 2.”