More Money For The Big 6

The Feds just handed over the master license to print money to the big banks with their less publicized mortgage changes that will take effect November 30th. Mortgage brokers aren’t too happy about this change as a big chunk of their business comes from many non-bank lenders.

Don’t forget to read more about the other two major changes that took effect oct 17th.

You’ll have to go to one of the big banks if you:

  1. Want to buy or own a home valued at over a million dollars. Including refinancing.
  2. Want to buy or refinance a Rental Property
  3. Have an amortization of longer than 25yrs.

What does this mean to you? Short answer – higher rates are on the horizon. We just saw TD push a slight bump in their variable lending rate to 2.85% from 2.70% just to dip their toe in the money pool but you can expect the other banks to follow suit after November 30th and then you can expect to see further increases in interest rates across the board as Banks will no longer have any competition from any non-bank lender which usually offered better rates.

Based on this information I’m questioning who the Feds were really trying to protect here. This is the most aggressive series of changes we’ve ever seen here in Canada and we’re already seeing the effects of the “stress test” for high ratio buyers. Putting these lending restrictions in place for homes valued at over a million dollars (regardless of your loan amount) clearly targets Vancouver and Toronto markets and will put further many more qualified buyers to the curb.

This move is going to put even more pressure on larger condos and townhouses valued at less than a million dollars and absolutely blow up the rental market making the City even more unaffordable for young people and first time buyers.

What are your thoughts? Feel free to comment below or message us via live chat or email to chat.