The Mortgage Landscape: Forever Changing

So, as many of you know, coming January 1st new mortgage rules will implement a stress test for anyone placing 20% or more down.

What do I think of this?

Well, it does level the playing field with insured mortgages, which could be a good thing for first-time homebuyers who have less money to place down. But, it will also increase the income needed to purchase a home at a higher price. Making people drop down to the already “red hot” condo/townhouse market.

The new rules are not the only thing taking place. CMHC want to regulate “Shadow” Lenders.

This I already hate.

First, they call them “shadow” lenders to give them a bad connotation to the general public. The way they use rhetoric to portray a well above board and regulated business as “Shady”. Companies like Home Trust, First National, RMG, Street Capital, are not shady businesses that are making under the table deals.

Second, they are giving the big banks an even greater competitive advantage to further provide worse and worse services and products. At every angle, they are trying to stop monoline lenders from playing on the same field. Giving the big banks an upper hand spells monopoly.

Third, we need more choice as consumers and brokers. If we have only a few options that are actually viable to the majority, what stops those few from raising the price? Nothing. I know there is a fine line between options and regulations. The great the options the harder it is to regulate. I understand, but it seems to me more and more things in this great country are turning to fewer options.

BC, for example, hydro, insurance, transit, communications, all have one or few options. This cause prices to never drop or be competitive. What is the motivation for any of these industries to innovate? Absolutely nothing. There is no motivation at all. They know they will have clients forever. Now on top of these, we will get fewer options for financing as well.

I simply don’t agree with that.

What effects will all this have? Truly?

I guess we will have to wait and see.

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