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Major Mortgage Rule Changes Over The Last Decade


A new year allows us an opportunity to reflect over the previous year and all that has happened. Mortgage lending guidelines have certainly changed in the last year not to mention the last decade.  Have a review of only just some of the highlights that stand out in the last decade. 

Bonus points if you make it through them all to my summary at the end!

2008

Amortization

Maximum amortization is set at 35 years

Down Payment

Minimum down payment of 5% is established

Documents

Loan documentation standards are instituted

Credit Score

A consistent minimum credit score is established



2010

Benchmark Rate

Terms less than 5 years & variable rate mortgages must qualify at a benchmark rate

Refinance Maximum

The maximum amount that can be refinanced drops to 90% of the home value

Rental Down Payment

Investors must have at least 20% equity in rental properties

2011

Amortization

Maximum amortization on a government backed mortgage is reduced to 30 years

Refinance Maximum

The maximum amount that can be refinanced drops to 85% of the home value

Insurance on HELOC

Government no longer allows mortgage insurance on home equity lines of credit (HELOCs)

2012

Amortization

Maximum amortization on a government backed insured mortgage is reduced to 25 years

Refinance Maximum

The maximum amount that can be refinanced drops to 80% of the home value

Mortgage Insurance Maximum

Government no longer allows mortgage insurance on homes over $1M

2016

Down Payment

Down payment required increases to 10% on homes over $500K to $1M, specifically the portion from $500K to $1M

Qualifying Rate

All high-ratio insured home buyers must qualify for a mortgage at the Bank of Canada’s posted rate, as at September 26, 2016 this was 4.64%

Portfolio Insured Mortgages

Mortgage loans that lenders insure using portfolio insurance need to meet eligibility criteria that was previously only applicable to high-ratio insured mortgages

Capital Gains

Taxpayers required to provide basic information on income tax returns when they have sold their primary residence in order to claim principal residence capital exemption gains





2017

Insurance Premiums

CMHC increases insurance premiums for the third time in three years

OFSI Stress Test - Proposed

OFSI proposes further tightening of mortgage underwriting standards under Guideline B-20

BOC Rate Increase

Bank of Canada raises their overnight rate for the first time in 7 years impacting variable rate mortgages and HELOCs

OFSI Stress Test - Confirmation

OFSI announces final changes to mortgage underwriting standards establishing a new qualifying or ‘stress test’ rate for uninsured mortgages





2018


OFSI Stress Test - Implementation




What does this tell us?

First, we have seen change over and over again.  We learn the changes as they are announced, lenders update their policies and we communicate with our clients to adjust real estate goals accordingly.  There is no reason to fear change.

Second, the last statement above is only true for those working with a Mortgage Professional.  Market share of business is shifting in favour of the Mortgage Professional because more than ever clients need independent & objective advice as it relates to their financing needs.

Third, more change will come.  Make a plan.  Adapt your plan and lets see what the next decade brings us!