Q&A with Paul Taylor, President and CEO, Mortgage Professionals Canada
It has been over a year since the Federal Department of Finance announced changes to mortgage insurance and eligibility rules. The Ontario and B.C. governments have also introduced measures to cool demand, and the Office of the Superintendent of Financial Institutions (OSFI) is proposing further changes. How are these changes impacting the marketplace and consumers?
The cumulative effects of the policies introduced to date can be seen in the declining activity in the housing market, and the reduction in transactions and average house prices in many regions of the country. The goal of the provincial governmental measures was to cool certain markets, and the data is indicating that this is occurring. However, the reduction in demand is not just impacting the hot markets, but is also reducing housing activity in the form of sales and housing starts in areas of the country that were already moderate, flat or even declining.
There is some concern that the combination of these changes and the speed with which they have been implemented has created some adverse effects. If the proposed additional measures currently being considered by OSFI are also introduced, it may cause a further and potentially significant decline in housing activity nationally.
How has the mortgage broker channel adapted to these changes?
Our industry is very resilient and is adapting well. As a service industry, we know our role is to support Canadian consumers through these uncertainties, and we are finding more and more consumers turning to a mortgage broker for the independent and unbiased advice they can provide. Given the structural changes to mortgage insurance, which predominantly affects first-time buyers’ purchasing power, and the additional complexities of mortgage qualification for seasoned homeowners, speaking with a mortgage broker can make buying a home much easier.
Brokers work with many different types of lenders, all of whom offer unique mortgage products, each with their own qualification requirements, interest rates, pay down and/or extension options, and portability. Consumers should always speak to a broker before making a mortgage decision to ensure they are getting the absolute best product for their specific employment and lifestyle needs.
The Bank of Canada has raised interest rates twice in the past few months, with additional increases possible. What do these rising rates mean for consumers when they are considering what type of mortgage is right for them?
Many of our mortgage broker members tell us that consumers are calling frequently with this question. Those with a variable mortgage are asking if now is the right time to lock in, and new purchasers and those whose mortgages are renewing face the same decision. Every personal circumstance is unique, and it is tough to provide broad advice that applies to everyone here, but a mortgage broker can help you make the right decision based on your individual circumstances. There are some mortgage product variations to consider that may also enable flexibility in the choice.
You mentioned a growing complexity and uncertainty in Canada’s housing market. What advice would you give to consumers looking to purchase a home in the next year?
As soon as you begin looking for a home, do your homework. Don’t rush into anything, and reach out to a mortgage broker to have a conversation about what mortgage is right for you. It is important to know what size mortgage you will qualify for before you begin your housing search, and a broker is best positioned to give you that advice. Mortgage brokers have access to many different lenders, types of rates, different terms, unique products, and are able to provide you with options to best suit your personal needs. They will help you navigate these complex and volatile markets.
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