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“Changes within our Mortgage Industry”
“Who remembers…”
• 100% Financing• 40 year Amortizations• Cash back mortgages• Qualifying for 1-4 year Fixed Rate Mortgages at contract rate• Qualifying for Variable Rate Mortgages (VRM) at contract rate• 95% Refinancing• 5% down payment for the purchase of investment/rental
properties• No limit for your Gross Debt Servicing (GDS) if your credit was
strong enough• Relaxed lending guidelines when debt servicing (GDS/TDS)• Secured and Unsecured lines of credit• Heating cost for Non subject and subject properties
“Changes within our Mortgage Industry…”
July 2008
1. The elimination of 100% financing2. 40 year amortizations dropped to 35 years3. Min required credit scores4. Total Debt Servicing (TDS) to be maxed at
45%
“Changes within our Mortgage Industry…”
April 2010
1. Variable Rate Mortgages (VRM) must be qualified at the 5 year posted rate (4.99)
2. 1-4 year Fixed Term Mortgages must be qualified at the 5 year posted rate (4.99)
3. Fixed Term Mortgages 5 years and longer continue to be qualified at contract rate
4. A min of a 20% down payment Vs 5% for purchase of investment properties• Introduced new guidelines for Rental Add backs and debt
servicing property tax and heat when calculating the TDS
“Changes within our Mortgage Industry…”
March 2011
1. 35 year amortizations dropped to 30 years for conventional mortgages
2. 90% refinance dropped to 85%3. Elimination of mortgage insurance on
secured lines of credit
“Changes within our Mortgage Industry…”
July 2012
1. 30 year amortizations dropped to 25 years for high ratio mortgages
2. 85% refinances dropped to 80%3. Ban mortgage insurance on any million dollar homes
• 20% min requirement for down payment
4. Elimination of cash back mortgages• Federal guidelines
• Min requirement of 5% down• Provincial guidelines
5. Introduction to flex down mortgage products6. Tougher guidelines within stated income mortgage products7. Disappearance of true equity lending
“Changes within our Mortgage Industry…”
February 28, 2014
1. CMHC increases default insurance as of May 15% 2.75% to 3.15%• 15% increase• Means avg of $5 per month
10% 2% to 2.4%15% 1.75% to 1.8%20% 1% to 1.25%25% .65% to .75%35% .50% to .60%Non traditional DP - 2.9% to 3.35%
• These were the same premiums in ‘06 when CMHC decreased insurance premiums
“Changes within our Mortgage Industry…”
What’s to come . . .
1. Jim Flaherty out Joe Oliver in• 73 yrs old• Former Bay Street Investment banker• Been serving as Natural Resource
minister since 2011• No forecasted changes as budget is already
complete• Expected to be in office only till next term
“Changes within our Mortgage Industry…”
What’s to come . . .
2. Tightening of calculating and debt servicing (GDS/TDS) – OSFI is now looking at MONOLINE INVESTORS• Debt servicing secured lines of credit limit or balance• 3 year post using 30/35 yrs amortization (limit)• 4.6% divided by 12 (limit)• Use interest only payments (balance)
• Debt servicing unsecured lines of credit• 3% of the balance• 1% of the limit• Use what is reporting on the credit bureau
• Debt servicing heating cost on subject and non subject properties
Expectations of STANDARDIZTION implemented by OSFI
“Changes within our Mortgage Industry…”
2014 . . .
• Difficulty of financing clients with 5 or more properties• Residential vs Commercial• Who still does them?• Which ones to use and why
• Down payment requirements• Insurance Premiums• Amortizations• Rate• Debt Servicing
• Utilizing Add backs, Offsets, DCR and Net Rent calculators
Expectations of STANDARDIZTION with how the above is debt serviced implemented by OSFI
“Changes within our Mortgage Industry…”
“Around the water cooler . . .”
• REFINANCES from 80 % to 75%• Min DOWN PAYMENT to be 10% vs 5%• 25 year amortizations regardless of DOWN
PAYMENT• Elimination of STATED INCOME for BFS• Expectations of STANDARDIZTION of debt
servicing with all investors (monoline lenders)
“Conclusion…”
• Additional changes are to come but what will they look like • Pending on Finance Minister
• Tighten• Loosen
• We have always adapted to the environment that we are faced with
• Network • Like minded people
• Problem solvers• Specialist and Experts in what they do
“ Lasting Quote…”
“It is not the strongest of the species that survives, nor the most intelligent, but rather the one most adaptable to change.”
Leon C. Megginson
The “GLM Mortgage Group” Co founder and Director of the Imani Orphan Care Foundation
• www.imaniorphancare.com
Over 15 years of real estate experience & Real Estate Investor
Member of • Better Business Bureau• Chamber of Commerce• Mortgage Brokers Association of British Columbia• Canadian Association of Accredited Mortgage Professionals
Mortgage educator/key note speaker …• Wealthy Investment Network• Business Network International
Regularly sourced for mortgage insights by the …• Vancouver Sun• Mortgage Broker News
Ranked amongst the top 3% mortgage brokers in Canada by CMP magazine
Finalist in 2013 CMP Canadian Mortgage Awards for Best Customer Service from an independent office
Contact Information
www.geoffleemortgage.com
Twitter: @geoffleeca
Linked In: http://ca.linkedin.com/in/geoffleemortgage/
Email: [email protected]
Phone: 1.778.552.3489
