Today was our BRMC mortgage team weekly lunch. Galaxy Pho in Chilliwack was our destination today – Sooooo Gooood!
As we enjoyed our soups we discussed the challenges each of us are facing. We are seeing challenges on all different types of mortgage products and mortgage clients. The more we compared, the more we realized the Mortgage Market in Abbotsford, Chilliwack and Mission have changed over the last few months.
Technically the changes started 6 years ago when the mortgage insurance companies like CMHC began their slow and steady “de-risking” policy by amending their lending policies. In doing this they have hoped to create a more stable housing market in this low interest rate era. That being said, they have effectively left consumers with less choices and higher funding costs for lenders and borrowers. This article somewhat summarizes these insurance companies bottom line and why they made these changes, though it seems they are being ultra conservative based on their reserves according to this article..
Changes over last 6 years have included:
- cutting back amortization maximums
- reducing maximum LTVs (Loan To Value of the house)
- Eliminated products
- Applying conservative approach to Low Down Payment purchasers
- Increased documentation for Self Employed mortgages
- Fees for insurance increased
We as a group have seen a significant up-tick in turn downs for mortgages from the insurers in Canada. It is our belief that recent reports regarding the inability of low down payment purchasers to save money after receiving their mortgages have led the insurers to make tougher lending guidelines specifically aimed at them.
Business For Self clients are also receiving the same treatment regardless of down payment size. At one time borrowers such as these BFS clients could put 35% down payment and demonstrate an ability to save money to offset any concerns from the lenders & insurers but that is not the case anymore.
We were recently advised by an underwriter from a major lender that self employed “stated-income mortgages” will be a thing of the past and all clients will be expected to report higher incomes on their tax returns to qualify for mortgages. Demonstrating a strong cash position will simply not be enough.
In conclusion we can still lend you money, but be prepared for the lender to ask for a lot of documentation no matter who you are, strong credit, weak credit or indifferent.
By Referral Mortgage Consultants*
“Click, Call, Chat – Award Winning Brokers”
1 – 32540 Logan Ave
Mission BCV2V 6G3
360-3033 Immel St
8387 Young Rd
Dave 604 897 2741 Jordi 604 615 1312
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*By Referral Mortgage Consultants – doing business as BRMC is: Verico Preferred Financing Inc / Verico Canadian 1st Mortgage Corp which have a co-brokering agreement and there is a common Mortgage relationship and are licensed with the Verico Dreyer Group. Mortgage ownership, that employees of both Mortgage companies may review, advise and help process the Mortgage files. That Verico Preferred Financing Inc & Verico Canadian 1st Mortgage Corp share the some expense and income from mortgages. Kim Langille Featured on thess site is an unlicensed mortgage assistant only, not a Mortgage Consultant. Jordi Browne featured on this site is the Mortgage Broker of record. “The Broker” is Jordi Browne. Jordi Browne also holds a Life Insurance License and represents Verico Canadian 1st Mortgage Corp. Dave Browne featured on this site has a Life Insurance License too but is an independent agent– Jordi and Dave Browne co-broker life insurance files and share expenses, all income retained by Verico Canadian 1st Mortgage Corp.