Shining a Light on Lending

Where there’s a will, there’s a way for those wanting to buy real estate even with the new challenges mandated by the Office of the Superintendent of Financial Institutions (OFSI). So far private lenders and Credit Unions will not be governed to make changes to the way they currently lend and should be considered as a viable option for a mortgage.

The recent OFSI announcement conveyed that Buyer’s with 20 per cent down or greater will have to endure a higher qualifying mortgage rate stress tests, with every change uncertainty often follows temporarily.   Non insured mortgage purchasers will now be qualified at either their preferred Lending institutions mortgage contracted rate + 2 per cent or the 5 – year Bank of Canada Rate measure (presently 4.89 per cent); whichever is higher.  Under the same stress test guidelines, refinancing up to 80 per cent of the property value of the home will still  be possible.

To ensure there’s observance to risk Lender’s must follow the protocols as they apply to the amount of the mortgage correlated to the property value procuring the loan.  More procedures and information will continue to pour in from OFSI  that are cohesive with economic changes and as housing markets change.  The heat of the Toronto and Vancouver markets in Canada have given way for a need for tighter controls.  The good news is that many institutions have been more cautious with lending amounts for over a year when tightening was first announced for Buyer’s with mortgage insurance having a less than 20 per cent downpayment.   Many felt this tightening was inevitable and the same Lender’s who’ve exercised caution lending are encouraged by the news welcoming inquiries as markets have shifted to a Buyer’s market in much of York region.

In the past, some Lenders could bring about financing by partnering with another resource from their approved product mix.   As a ‘work around’ solution for consumers with a higher Loan to value assessment that may have had a shortfall in the approved mortgage based on the mortgage law or policy and to bridge the gap a mix was the creative solution.  OFSI will no longer approve of this service conduct by all institutions excluding credit unions and private lenders.

Shop for your next mortgage at more than one lender seeking Brokers and mortgage professionals to feel confident with the dollar figures provided  as the pre-qualification before you start looking for a home.   Once the borrowing  power is known book your face to face appointment with a REALTOR® to empower your next move in real estate.

-written by Connie Power

Connie Power is a Real Estate Sales Representative SRS® ABR® SRES® CNE® and Mentors and Develops New Real Estate Sales Representatives for RE/MAX Hallmark York Group Realty Ltd.,  Brokerage serving York region and beyond.
Empowering you in Real Estate, Call Connie today to make an appointment to discuss your next move at (905) 726-0856.

**Not intended to solicit those currently under a real estate contract