Homeowners looking to take out a home equity line of credit will find their borrowing power slashed as the National Bank enforced a 65 per cent LTV cap which takes effect today.
This week we saw the Bank of Canada stick to their guns, announcing they would hold their rate of 1 per cent in their July announcement. In new mortgage rule news, lenders are responding to the guidelines in different ways, with some banks applying limitations to their conventional mortgage products as well – and credit unions may provide options for those looking to skirt the new HELOC and cash-back mortgage rules.
OSFI has released their final draft guidelines on mortgage underwriting principles. Expected to be in full compliance by the end of the 2012/13 fiscal year, the guidelines are targeting the borrowing capacity of mortgage seekers, establishing sound appraisal processes as well as effective credit and risk management measures.
Great news for homeowners! OSFI has revised proposed changes made in March to mortgage renewal and HELOC guidelines. The changes, which would have subjected home owners to a new credit risk check upon renewal, as well as imposed an amortization rate on home equity line of credit, were revised in light of criticism that they would cause more harm than good to the Canadian housing market.
After the CMHC announcement hit headlines last week, a few lenders changed their guidelines for promotional rates offered. The lenders revealed that the promo rates are no longer offered for conventional mortgages anymore and they are only looking at high-ratio deals. CMHC claimed that their cap wouldn’t affect qualified home buyers nor would it affect the cost of buying a house. Ahemm… the last time I checked, putting LESS money down on a home to qualify for a lower promotional rate, increases the interest payments made over the life of your mortgage, thereby directly affecting the cost of buying a house!
Less Canadians are treating their homes like an ATM. The report by the Canadian Housing and Mortgage Corporation (CMHC) says, since new stricter rules were brought in last year by Finance Minister Jim Flaherty, refinancing activity of insured mortgages has dropped by 40%.