• Robert Floris’s office at Mortgage Architects’s office has been concerned regarding the lower oil prices . It has started already, listings are up, sales are down and the banking industry has tightened

    up. It has not hit us yet in Hamilton but Calgary sure is feeling it. As our economy struggles  we will continue  to monitor the Hamilton real estate  market and the Hamilton mortgage market.


    Brokers are already feeling the effects of tighter lending in one major market.

    “I have just recently had a deal in Calgary that would have been a slam dunk six months ago get declined by both CMHC, and Genworth due to market risk and only 10 per cent down,” one broker wrote on MortgageBrokerNews.ca.

    The first to act was an insurer and now at least one major lender has followed suit by announcing it will tighten its lending standards in Alberta due to the effects the faltering oil industry are expected to have on the housing market.

    “The warning signs are out,” Gerald Soloway, chief executive officer of Home Capital said, according to the Financial Post. “It’s only prudent for everybody who participates in that market to heighten their alertness.”

    Home Capital released its yearly financial report last week, and in it stated its exposure in energy-producing regions, including Alberta, is “very limited”.

    “The Company’s exposure to energy producing regions remains very limited with 3.8 per cent or $440.7 million of outstanding uninsured single-family mortgage loans in those regions (regions included are Alberta, Saskatchewan, and Newfoundland and Labrador),” the report states. “The average LTV for uninsured single family mortgage loans in these regions is 64.8 per cent.”

    Still, Alberta has seen slugglish sales this year, with January’s numbers slipping 28.2 per cent year-over-year.

    Genworth’s stance comes on the heels of a similar standpoint being taken by Canada’s second largest provider of mortgage default insurance.

    According to the Globe and Mail, Genworth will take a closer look at mortgages originated in Alberta in anticipation of losses incurred as a result of the faltering oil industry. The insurer is also raising the target for its loss ratio, upping it to 20-30 per cent from the previous target of 15-25 per cent, in anticipation of possible losses.

    “Clearly, the current environment, specifically the low oil prices, will put some pressure on losses and potentially the size of the housing market in Alberta,” Stuart Levings, president and CEO of Genworth Canada told analysts during a conference call last week about its fourth-quarter earnings, according to the Globe.

    Robert Floris is a mortgage broker with Mortgage Architects in Hamilton Ontario

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