New mortgage rules? Another kick in the face!!

As if it wasn’t already hard enough to qualify for a mortgage with the introduction of new mortgage rules like the infamous stress test, the Canadian government seems to be at it again. These new rules pushed a lot of good people out of the housing market like first time homebuyers who had a small down payment and a short work history. Good mortgage brokers are able to help by mitigate some of those restrictions in different, sometimes creative, ways.

Now the Canadian government agency that makes these decisions (OSFI) is talking about introducing even more mortgage rules which will make it even more difficult for homebuyers AND people refinancing their homes alike.

Equity Lenders

They are talking about cracking down on “equity lenders”. These are lenders that focus more on the equity of the home rather than on the borrowers ability to pay off the mortgage. In some cases, equity is (one of) the only thing people have going for them. Equity lenders are a very important option and segment of the mortgage industry. For example, we just helped a couple who fell on hard times, to keep their home and get back on their feet through equity lending. If it had not been for this equity lender, the couple would have had no choice but to sell and start renting. Guess what? Their rent would have been more expensive than their mortgage payments.

These additional mortgage rules will be another example of government meddling in a complex real estate market. It will only server to push people out of the market, and in some cases, out of their homes. Another consequence? Probably reduced home values and prices but be careful what you wish for. Collapsing home prices will hurt current homeowners. You may think that it will help prospective homebuyers but with all the government mortgage rules, will they be able to qualify??

Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

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