New rules hurt bottom line

New Consumer Advocacy Campaign Announced (continued)

On April 25, Mortgage Professionals Canada launched a new consumer advocacy campaign including a website www.tellyourmp.ca

The purpose is to educate members of Parliament about the negative impact that changes to mortgage insurance and eligibility have had on homeowners or potential homeowners.

The association has been lobbying the government and now is asking middle-class Canadians to voice their opinions by letting them know how they have been affected by the changes.

Here is a summary of the rule changes:

  • 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 that $1 million can no longer be portfolio-insured.
  • A proposed risk-sharing model for lenders to share in losses of insured mortgage claims.
  • New capital requirements as of Jan. 1, 2017 that require mortgage insurers to increase the amount of capital they need to hold in reserve.
  • An increase announced by CMHC for insurance premiums that consumers pay on unconventional mortgages. In some loan to value categories, premiums will increase by more than a whole percentage point of the value of the mortgage, effective March 17, 2017.  This is the third increase in three years.


The Mortgage Professionals of Canada are concerned with the negative impact these changes are having on the housing activity in Canada.

They are also concerned by the additional costs by way of higher interest rates and reduced purchasing power that will impact middle class Canadians. 

These changes have caused some banks to increase their prime rates, which will cost many Canadians thousands more over the course of a mortgage term.

The reduction of portfolio mortgage insurance eligibility, in addition to the increase in premiums due to the Office of the Superintendent of Financial Institutions (OSFI) recent increased requirements for adequate capital is having more of an affect on the competiveness of small and medium sized lenders. 

These changes are reducing mortgage competition and therefore affordability for Canadian homeowners and potential homebuyers.

The members of the Canadian Mortgage Professionals have been voicing their displeasure regarding the impacts these changes are having, especially outside of the Vancouver and Toronto markets. 

There is a growing resentment that the activity in these hot markets is negatively and unfairly impacting the rest of the  country, such as the Okanagan.

If they move ahead with a risk-sharing provision this would provide an additional burden on the market and divide between rural and urban centres.

The Canadian economy only saw modest growth in 2016, especially for the middle class, and the housing sector was one of the drivers of that growth.

Mortgage pros are concerned that these changes will hurt the economy as the Bank of Canada noted that the new rules will ultimately reduce economic growth which in turn will hurt the middle class the most.

If you have been impacted by the changes please visit: www.tellyourmp.ca.


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About the Author

Tracy Head and Laurie Baird help busy families find mortgage solutions. Together they have more than 45 years of experience in the mortgage industry.

With today’s increasingly complicated mortgage rules, Tracy and Laurie spend time getting to know the people they work with and help them to better understand the mortgage process. They support their clients before, during, and after their mortgage is in place.

Tracy and Laurie work closely with their clients, offering advice and options. With access to more than 40 different lenders, Tracy and Laurie are able to assist with residential, commercial, and reverse mortgages in order to match the needs of their clients with the right mortgage package.

They work closely with their clients to find the right fit, and are around to provide support for years down the road!

Contact them at 250-862-1806 or visit http://www.okanaganmortgages.com

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