Industry puts up a fight

by REP08 Feb 2017
Several influential industry players have provided the government with recommendations for future mortgage policy.

Mortgage network argues rules have made housing less affordable
“While we understand and agree with the government’s desire to protect consumers, DLC fundamentally disagrees with the proposed approaches to do so, as it will make housing less affordable for the middle class,” Gary Mauris, President and CEO of Dominion Lending Centres, said. “Our submission outlines several ways to encourage affordability and if the government chooses to work with industry, their proposals can be positively amended to ensure that Canadians have the best chance of achieving their home-ownership dreams.”

Dominion Lending Centres presented the Federal Standing Commission on Finance with a report on how the changes have negatively impacted monoline lenders and Canadians’ access to additional mortgage options.

DLC also published a 15 minute summary of the Standing Committee’s hearing.


MPC calls for moratorium on rule changes
The industry’s largest mortgage broker association has implored the Finance Department to cease any further mortgage rule changes until the full effects of the current policies are determined.

““The recent changes are having a cumulative negative impact on the mortgage market and ultimately on the Canadian consumer,” MPC president and CEO Paul Taylor said, per Canadian Mortgage Trends. “We are asking for slight amendments to the portfolio insurance eligibility guidelines, and to wait for the remaining existing changes to make their way through the market before implementing any further changes.”

MPC also provided a number of recommendations aimed at leveling the playing field for all Canadian mortgage lenders.

CMBA provides its own recommendations
The Canadian Mortgage Brokers Association sent a letter to the Standing Committee, advocating for changes that would lessen the burden on Canadians wanting to purchase homes.

“It goes without saying that people have to live somewhere: if they are not able to purchase housing, they must rent.  In doing so, they are no longer paying down a mortgage on their appreciating asset, but instead that of their landlord,” CMBA said in the letter, which was obtained by “However, most Federal Government policies, such as latest crop of federal mortgage rules, which are intended to promote economic stability by curbing consumer debt, only have only a singular, narrow focus on the economy.

“These policies fail to consider that housing affordability problems impact both lower and middle income households, renters, first time buyers, and even established home owners.”


  • by Shawn Laghai 2/23/2017 1:28:00 PM

    There’s no plan of action, suggestion, or constructive criticism in this article. Sales people, buyers, and the general public would like to see better policies.
    Here’s one suggestion.

    From my understanding, these rules are made to protect both the buyers and lenders. At the same time, the rules protect the economy of our country.
    Nevertheless, some of the rules must be adjusted to achieve these goals and for my recommendation to be effective.

    In the current market, the property is assessed for $500,000.00 for the next few years and the tax is about $450.00 per month. However, the property is sold for $1,200,000.00 or more and the new owner will keep paying the same tax on the old assessed amount until the next assessment day.
    This is my recommendation:
    As soon as the purchased property has closed and the change of ownership happened, the local property tax starts immediately with the new paid price. This will be fair for the buyer, since he/she paid for it, as well as for the government (Revenue Canada) and the rest of Canadian property owners. This will also prove to be safer for the buyers and lenders because they will be better equipped to know what to expect.
    Why? Because the lenders can calculate the mortgage amounts accurately. The rule of calculating the mortgage for buyers is that, the property tax and heating are part of their liabilities. So, as an example, if a buyer’s total income is $10,000.00 per month and they have $130,000.00 cash down payment (which is 20%). The buyer can have a total of $3,000.00 per month payment (GDS of 30%). So we say buyer has a pre-approval of $500,000.00 (mortgage amount) and he can buy up to $620,000.00. But if he goes to buy the above property for $1,220,000.00 and he puts $720,000.00 cash down, with the current policy buyer will have the $500K mortgage. However, if the property tax goes up immediately, the lender can radius the mortgage amount to comply with 30% GDS.
    This action has the following benefits:
    1- The government will make more property tax immediately and no one (including the new owner) can complain that the property is not worth so much, since the buyer himself paid for it.
    2- The lender will reduce the mortgage amount if the buyer purchases more than he anticipated since the property tax is higher and is changing his loan to income ratio.
    In this case, the lender and the buyer are both protected and there will be no surprise in the future.
    3- It is cheaper (more savings) for the government since assessment companies would have less paperwork.

    4- (The best benefit of all: )
    A- This system will be for everyone and not exclusively for people who would be putting less than 20% down.
    B- This will put a positive pressure on the buyers to not pledge absurdly high amounts in their offers.
    C- Eventually, the markets will experience a rest from this price increase problem without crashing the market.

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