Mortgage Professionals Canada has launched a new web-based consumer advocacy campaign and website to highlight “the negative impacts of the federal government’s changes to mortgage insurance and eligibility,” the association says. The association says the federal government should make “reasonable, common-sense changes to the new rules”.
“Our members are working with and seeing directly that many Canadians are frustrated by the impacts of these changes and are looking at ways to reach out to the government directly,” says Paul Taylor, president and CEO, Mortgage Professionals Canada. “Our goal with this grassroots campaign is to make it incredibly easy for Canadians who have been disadvantaged by the changes to send a message to their local MP to build support for affordable homeownership.”
The association is encouraging anyone who has been negatively impacted by these changes to visit the website to send a letter to their MP. It has been lobbying local MPs about the negative impacts the changes are having on housing activity in Canada “and the additional costs that are being placed on the Canadian middle class through higher rates and reduced purchasing power,” it says.
It says the mortgage broker channel originates 33 per cent of all mortgages in Canada and nearly 50 per cent of mortgages for first-time homebuyers, representing approximately $80 billion in annual economic activity.
Currently, all insured mortgages need to qualify at either the Bank of Canada benchmark rate (currently 4.64 per cent) or the contract rate offered on the homebuyer’s commitment, whichever is greater. Portfolio (bulk) insurance must now meet the same criteria as mortgages that are high-ratio insured. This means that amortizations greater than 25 years, rental and investment properties, refinances and homes with values greater than $1 million can no longer be portfolio-insured.
The association wants the rules changed to allow for refinances to be included in portfolio insurance. “If 80 per cent LTV is unpalatable, consider reducing the threshold to 75 per cent or 70 per cent rather than removing these products eligibility altogether,” it says.
It also wants the government to “decouple the stress test rate from the posted Bank of Canada rate. Instead, set the stress test based on a market rate, either by looking at the Canadian 10-year bond yields or having the Bank of Canada set a rate that is independent of the average of the banks posted rates.”
It also says all mortgages should be required to qualify at the stress test rate, not just insured mortgages.
Dominion Lending Centres has also launched a website to advocate for a change in the rules, at NewRulesHurt.ca.
The website is a partnership between broker networks DLC, The Mortgage Centre, Mortgage Architects and Mortgage Professionals Canada, the company says.
“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,” says Gary Mauris, president and CEO of Dominion Lending Centres.
DLC says the government’s mortgage rule changes have reduced the average Canadian’s purchasing power by upwards of 20 per cent and have the unintended consequence of making housing less affordable for Canadians. Mauris says government must take a regional market approach when setting mortgage policy to avoid sweeping policy that hurts all Canadian consumers.
