Ontario won’t expand the municipal land transfer tax beyond Toronto’s borders

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Ashley Csanady | December 1, 2015 | Last Updated: Dec 1 9:10 PM ET
More from Ashley Csanady | @AshleyCsanady

After weeks of dithering, the Ontario government has ruled against expanding the municipal land transfer tax beyond Toronto’s borders.

Postmedia filesThe provincial Tories lobbied against an expansion of municipal land transfer taxes.

There is already a levy on all home sales collected by the province, and Toronto has a unique power to collect an additional tax. But more than a month after it was revealed Queen’s Park was considering allowing the province’s other 443 municipalities to collect the tax, Municipal Affairs Minister Ted McMeekin announced Tuesday the plan won’t move ahead.

“Other than in Toronto, where the power already exists, our government will not be extending Municipal Land Transfer Tax‎ powers to other Ontario municipalities,” he said.

The provincial land transfer taxes ranges from 0.5 per cent to two per cent, depending on the value of the home. Toronto’s runs a similar scale.

In Toronto, homebuyers pay an average of $12,000 in provincial and municipal land transfer taxes, according to the Ontario Real Estate Association, which lobbied hard against the change. On a $1 million home in Toronto, that bill rises to $32,200. In a red-hot housing market, that might not seem like a threat to realtors’ business, but they cautioned against allowing the tax to spread to spread to other cities.

First-time home buys get a rebate of up to $2,000 for the provincial tax and nearly double that in Toronto.

ROB CARRICK   The Globe and Mail  PublishedThursday, Jun. 18, 2015 6:02PM EDT

The call display on your phone says it’s your bank calling.

If you have a mortgage coming due in the next six months, pick up. Banks can be intrusive with their client calls and telemarketing, but talking to them about an early renewal of your mortgage can save you a lot of money.

Long-time homeowners will tell you that over the life of a mortgage, you’ll almost certainly have to renew at higher rates at some point. But for the past six years, homeowners have been in the fortunate position of being able to renew at similar or lower rates. This won’t continue indefinitely, and that’s why renewals occurring through the remainder of 2015 are crucial.

Renew early with your current lender, or find a better deal elsewhere. “This is your opportunity to be a free agent, just like in sports,” said veteran mortgage broker Vince Gaetano of MonsterMortgage.ca. “This could be your big payday, so shop around.”

Early renewals can be one of the most painless of mortgage transactions. You get out of your current mortgage with no cost or penalty and move directly into a new mortgage with the same lender. “They make you feel like a million bucks when you leave,” Mr. Gaetano joked.

Canada Mortgage and Housing Corp.’s 2015 mortgage consumer survey shows that 60 per cent of people renewing a mortgage arranged the renewal in advance of the maturity date. Most did it within three months of renewal, but a fair number did the deal as much as six months ahead of the scheduled date.

Banks used to take their sweet time in sending mortgage renewal notices to clients on the principle that a short time frame reduces the time to shop around for the better deals that are often out there. But Mr. Gaetano said banks today are reaching out to clients six or more months in advance of a renewal. The point is to lock up clients for another five years and prevent them from shopping around and defecting.

“The tactic the banks are using is to say, ‘Listen, you’re paying 3.49 per cent right now on your five-year term. I can early renew you into 2.69, save you interest over the next six months and lock you in now,’” Mr. Gaetano said.

Lowering your mortgage rate immediately is one reason to jump on an early renewal opportunity. Another is to get ahead of any rate increases to come. U.S. rates are expected to rise this fall, and that could put a bit of upward pressure on mortgage rates here. It may happen, it may not. But if you’ve renewed your mortgage early, you’re covered.

Mr. Gaetano said that if you’re planning to live in your house for another five years or more and don’t see a need to refinance or break your mortgage, then an early renewal through your bank is fine. But if you foresee the possibility of breaking or refinancing your mortgage, then a renewal offers a chance to look elsewhere for better terms.

He’s referring here to the nasty penalties the banks charge customers who break a mortgage before it comes up for renewal. Read more about those penalties online. Alternative lenders have less aggressive penalties while offering rates that are at least as good as the banks.

You can’t do an early renewal if you plan to change lenders. But you can get a new lender to hold a rate for you for 120 or more days in advance of your renewal date. “This gives you an insurance policy in case rates rise,” Mr. Gaetano said.

In CMHC’s mortgage survey, 55 per cent of people said they renewed early to avoid rate increases. Another 19 per cent said the reason was that their mortgage professional convinced them it was the right decision. It’s worth a reminder here that your bank benefits as much as you do with an early renewal. You get peace of mind; they get you cinched down for another five-year term.

The most striking finding in the CMHC survey was that not even half of renewers negotiated different terms than those presented in the renewal documents their bank sent. What a waste. Mortgage renewal statements mean it’s time to call or visit your bank to discuss rates and terms. If your conversation doesn’t go well, you have options.

Focus on Mortgage Renewals

Canada Mortgage and Housing Corp.’s 2015 mortgage consumer survey offers these insights on mortgage renewals:

– 60 per cent renewed before their mortgage maturity date;

– 61 per cent said they were “totally satisfied” with the decision to renew early;

– almost 50 per cent negotiated different terms than those presented in the renewal notice from their lender;

– 49 per cent of those renewing set their payment higher than the required minimum; and

– 32 per cent made a lump-sum payment, increased their regular payment or did both since their previous renewal.

How is your bank doing? From today’s Canadian mortgage Trends Magizine.

Q1 2015 Bank Earnings – Mortgage Morsels

March 9, 2015  Robert McLister  1k 

Canada’s big banks defied expectations for first-quarter earnings, despite the collapse in oil prices and its spinoff effects on consumer credit.

In their conference calls, the banks addressed concerns about their exposure to Alberta’s housing market. They reassured analysts that they are actively stress-testing their portfolios given the possibility for sustained low oil prices and increasing unemployment in the province. “We have determined that the potential losses would still be manageable and within our risk appetite,” said one executive at RBC, which has 19% of its portfolio in Alberta.

RBC was also in the hot seat for leading the banks in only partially dropping prime rate. In January, RBC was the first to lower its prime rate by only 15 basis points following the Bank of Canada’s 25-basis-point rate cut. President and CEO David McKay answers to that below.

As we do every quarter, CMT has dug through the Big 6 Banks’ quarterly earnings reports, presentations and conference calls, and pulled together these mortgage tidbits. The most notable observations are in blue.

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Bank of Montreal

Q1 net income: $1 billion
(-6% Y/Y)
Earnings per share: $1.46

• BMO’s total Canadian residential mortgage portfolio stands at $93.1 billion, up slightly from $93.0 billion in the previous quarter. (Source)
• 62% of BMO’s portfolio is insured, down from 63% in the previous quarter. (Source)
• The loan-to-value on the uninsured portfolio is 58%, unchanged from Q4. (Source)
• The condo mortgage portfolio stands at $13.3 billion (unchanged from Q4) with 53% insured (down from 54% in Q4). (Source)
• 6% of the bank’s mortgage portfolio is in Alberta. (Source)
• Asked about the 3 bps rise in delinquencies in Q1, Surjit Rajpal, Chief Risk Officer, said: “You have to look at it in the context of where they’ve been in the past. If you look at it on a year-over-year basis I think they’ve come down 3 points. Look at the trend. It’s very much in the range that one would expect right now. So I wouldn’t consider that seasonality. Nor would I consider this anything indicative of where the losses are. You’re not seeing any losses increase either at this point.” (Source)
• “On the NIM side, we are down three points on the quarter, that’s a little bit of pressure on the personal lending spreads specifically in direct auto and mortgage needs,” said Cam Fowler, Group Head, Canadian Personal and Commercial Banking. “I expect that we’ll get much of that, if not most of that back in the second quarter, and I think through the balance of the year, the reason I think it will [be] stable to up modestly is that [we] will have the combined benefit of improved spreads on…variable loans.” (Source)
• Questioned about a reference in BMO’s report regarding a potential application of Basel III for risk weighted assets (RWA), Tom Flynn, Chief Financial Officer, said it was an acknowledgment of discussions that are going on among regulators globally “related to the extent to which risk-weighted assets are model based versus standardized factor based and the extent which you use floors when using models,” he said. “On the mortgages specifically, I guess the only thing I could add is, as you know, the majority of the Canadian portfolio is government insured and I would say that we have no reason to think that the risk-weighting related to government-insured product will change and so we are totally comfortable with that.” (Source)

CIBC

Q1 net income: $923 million
-22% Y/Y
Earnings per share: $2.28

• CIBC’s residential mortgage portfolio rose to $153 billion in Q1, up from $152 billion in the previous quarter. (Source)
• Regarding its indirect exposure to oil and gas in Alberta, CIBC said it had $16.9 billion of insured mortgages in Alberta (LTV of 65%), $6.6 billion in uninsured mortgages (LTV of 62%) and $2.8 billion in HELOCS (LTV of 57%). (Source)
• “The bulk of this exposure (in Alberta) is to borrowers with strong credit profiles, and to date we have not seen any stress in this portfolio and there have not been any notable increases in delinquencies or write-off,” said Laura Dottori-Attanasio, Chief Risk Officer. (Source)
• Overall, the bank’s residential mortgage portfolio was 67% insured (unchanged from Q4), and 33% uninsured with an LTV of 60%. (Source)
• Condo mortgages account for roughly 11% of CIBC’s residential portfolio and the loan-to-value of the uninsured portion of this portfolio is 62%. (Source)
• CIBC brand mortgages grew 14%. (Source)
• 87% of the bank’s insurance in the quarter was provided by CMHC, down from 90% in the previous quarter and 94% a year earlier. (Source)
• “We’re investing in the mobile sales force, we continue to do that and it’s resulting in mortgage growth that’s double the industry average, and the CIBC name even, excluding the impact of conversions from FirstLine,” said David Williamson, Senior EVP and Group Head, Retail and Business Banking. (Source)

National Bank of Canada

Q1 net income: $415 million
(+2% Y/Y)
Earnings per share: $1.16 a share

• Residential mortgages rose to $40 billion in Q1, up from $37.1 billion a year earlier. HELOCS totalled $17.3 billion. (Source)
• National Bank’s mortgage portfolio is 43% insured, 23% uninsured and 34% HELOCs. (Source)
• The average loan-to-value on the HELOC and uninsured mortgage portfolio was about 59%. (Source)
• The net interest margin was 2.20% in the first quarter of 2015 versus 2.21% the preceding quarter and 2.25% in the first quarter of 2014. (Source)
• Quebec and Ontario represented 65% and 22% of the mortgage book, respectively, in Q1, with 5% in Alberta. (Source)
• Asked about increased competition in Quebec and the downside risk to loan growth, Diane Giard, EVP, P&C Banking, said: “…What we don’t want to do is to be competitive with Desjardins on pricing…Where really the main pricing pressure is coming from is on the mortgage side with Desjardins…This is where you would see in fact [Desjardins’] growth being somewhat more significant than ours…I really want to make sure that my troops are well disciplined in maintaining the proper balance between growth and NIM.” (Source)
• Giard: “…Our three main channels for mortgage origination…works well for us…” (Source)
• Following its earnings, National Bank announced a new $6 fee on its All-in-One line of credit, which takes effect on all new and existing customers on May 4, 2015. There was previously no fee on a client’s first All-in-One account. (In CMT’s expectation, there will be enough broker and client backlash that this move will adversely impact the bank’s broker-originated All-in-One volumes.)

Royal Bank of Canada

Q1 net income: $2.5 billion
(+17% Y/Y)
Earnings per share: $1.65

• RBC’s residential mortgage portfolio rose to $194 billion in Q1, up from $192 billion in Q4. (Source)
• 60% of its mortgages are uninsured while 40% are insured, unchanged from the previous quarter. (Source)
• 19% of the bank’s portfolio is in Alberta. (Source)
• “Beyond active monitoring, we have stress tested both our wholesale and retail portfolios given the $45 oil price for a sustained period of time, a significant increase in Canadian unemployment and interest rates, and a national downturn in the real estate market as well as a recession in Alberta,” said Mark Hughes, Chief Risk Officer. “Under this very extreme scenario, we have determined that the potential losses would still be manageable and within our risk appetite.” (Source)
• RBC’s condo exposure is 9.6% of its mortgage portfolio (up from 9.5%), representing approximately $3.8 billion. (Source)
• Asked about the bank’s decision to lead on dropping prime rate only partially following the BOC’s rate reduction, David McKay, President and CEO, said this: “We took a number of factors into consideration obviously when we moved prime down…by 15 basis points a few months ago…We looked at our funding costs, we looked at the environment, we looked at the structure of our business and that was the appropriate decision at that time, and we take the same variables into consideration for any future prime decrease.” (Source)
• McKay on the partial cut offsetting some pressure that otherwise may have come up if they had moved in line with the BOC: “Looking at our historic margins in our variable rate mortgage book and if you’re looking at our funding costs, and all those go into it and we’re able to manage it somewhat, not offset completely the impact, but certainly manage it, if it does stimulate demand, you have increased volumes in demand to offset that from a revenue perspective. We are very happy with our volume growth and our revenue growth and our margins in a difficult operating environment around competition and lower rates. So I think it’s good performance by the business.” (Source)
• McKay on early signs of deterioration in the market: “Certainly if you looked at the last recession, the first portfolio that showed signs of stress was actually the auto secured portfolio, then the credit card portfolio, the auto secured could show stress in a three- to six-month timeframe, the card book could start to show stress in a six to 12, and actually [stress in] the mortgage book was more in the 12- to 24-month lag [timeframe] to economic deterioration…(It’s) not necessarily the unsecured that always goes first, some of the secured higher-risk portfolios go first. So I think there is a mix there that we watch very carefully. And as we talked about a number of times, we’ve got proprietary lending systems that allowed us to perform the way we did through the last cycle. And we continue to use very advanced monitoring capability around with our customers to watch for signs of stress and deterioration and act proactively to manage that account.” (Source)

Scotiabank

Q1 net income: $1.73 billion
(+1% Y/Y)
Earnings per share: $1.35

• The total portfolio of residential retail mortgages was unchanged at $189 billion in the quarter. The portfolio was comprised of $169 billion in freehold properties and $20 billion in condos. (Source)
• 52% of the residential mortgage portfolio was insured in the first quarter, unchanged from Q4. The uninsured portfolio has an average loan-to-value ratio of approximately 55%, up from 54% in the previous quarter. (Source)
• The bulk of the bank’s mortgage activity is in Ontario, with $93 billion in mortgages vs. $96 billion in the rest of Canada combined. (Source)
• Net interest margin rose 4 basis points year-over-year. (Source)
• “Loan volumes increased 4% year-over-year, with double-digit growth in personal loans and credit cards, as well as commercial lending balances. This growth was probably offset by the Tangerine mortgage run off. Adjusting for the mortgage run off, loan growth was good at 6%.” (Source)

TD Bank

Q1 net income: $2.06 billion
(+5% Y/Y)
Earnings per share: $1.09

• TD’s residential mortgage portfolio rose to $175 billion, up from $173 billion in the previous quarter and $165 billion in Q1 2014. (Source)
• The bank reported real estate secured lending growth of 4% YoY, matching the previous quarter. (Source)
• Net interest margins fell to 2.88%, down 4 bps from the previous quarter and 6 bps from Q1 2014. (Source)
• 61% of the portfolio is insured, down from 62% in the previous quarter. The loan-to-value of the uninsured portfolio is 60%, down from 61% in Q3. (Source)
• 71% of the bank’s condo mortgages are insured, down from 72% in the previous quarter. (Source)

Note: Transcripts are provided by a third-party (Seeking Alpha). Their accuracy cannot be 100% assured.

Steve Huebl & Rob McLister, CMT

Why you should care about the banks’ posted rates on mortgages

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Garry Marr | February 9, 2015 8:55 AM ET

Chris Schwarz/Postmedia NewsAbout a week ago, Bank of Nova Scotia lowered its posted rate on a five-year fixed rate mortgage to 4.49% from 4.79%.

There are not too many Canadians who get tricked into accepting the posted rate on a mortgage anymore but that doesn’t mean no one should care when the banks drop their published rates.

About a week ago, Bank of Nova Scotia lowered its posted rate on a five-year fixed rate mortgage to 4.49% from 4.79%, which doesn’t sound like much of a deal when compared to the discounted rate of 2.84% for the same product, according to http://www.ratespy.com  The other banks have not matched the posted rate from Scotiabank — which is important because if they do it’s going to get easier for consumers to borrow even more money.

What’s key about the posted rate is that it is used by the Bank of Canada to create what is called the qualifying rate. The prime rate is 2.85% today, and you borrow at even less, but if your mortgage is for a term under five years, you qualify based on the posted rate — meaning you must borrow based on a higher monthly payment which ultimately means you can take on less debt.

Household debt continues to be cited as worrisome by many who watch the economy. The McKinsey Global Institute last week pointed to Canadian consumer debt as unsustainable. Statistics Canada said debt reached a record 162.6% of disposable household income in the third quarter.

Rob McLister, founder of ratespy.com, says that every Wednesday the Bank of Canada surveys the big six banks, and posts the qualifying rate based on the five-year mortgage posted rate. One bank isn’t enough to move the rate.

“If the posted rate went down materially, 30 basis points, like Scotia just did, it will have a meaningful effect for some people on the bubble,” he says, noting it’s been almost nine months since the qualifying rate moved. “In my opinion, Scotia dropped because they want to seem more competitive, even though most people know it means nothing.”

But it does affect people qualifying for loans based on prime, which according to the Canadian Associated of Accredited Mortgage Professionals, is usually about 25% of the population — but it’s shot up as high as 30% when there is a large gap between prime and long-term rates.

Don’t let anyone drive you nuts!

Call your Broker, he is in the know. 705 646 2777 or 705 333 2222

This week I did an application for a branch manager of a local bank and wondered what led him to my office to renew the mortgage with me.

Here is an Article I often refer back to when customers ask; why they shouldn’t get a mortgage from the bank that they are currently banking with.

In addition to “penalties” and things like “collateral mortgages” there are other restrictions in typical bank contracts. (Just ask your lawyer… oops.. the bank did not want you to see a lawyer…  ever wonder why?) It’s okay give me a shout and I will get you up to speed…..

A competent experienced mortgage broker is required by law to make sure that your mortgage is suitable for your family’s current and future needs. Your Broker will get you the best and cheapest product from any Bank (with the exeption of RBC, CIBC and BMO, they have closed the broker channels in favour of emoloyees that they can control  and tell what products to push). Banks are federally regulated and have no requirement for employees to be licensed to conduct mortgage business.

Read on…. this article will explain how and when shit hits the fan!

The hidden trap of mortgage penalties at the big banks!

Rob Carrick

The Globe and Mail

Published Wednesday, Dec. 04 2013, 7:52 PM EST

Last updated Thursday, Dec. 05 2013, 10:47 AM EST

It’s easy to get caught in the posted mortgage rate trap at the big banks.

No, you won’t have to pay the posted rate on your next mortgage. Pretty much nobody does that any more, according to mortgage broker Robert McLister. The real danger is that posted rates will be used to calculate the penalty if you ever have to break your mortgage, probably costing you thousands of extra dollars.

A mortgage penalty compensates a lender for the interest payments it loses out on when you break a mortgage contract. “That’s the intention,” said Mr. McLister, who is also editor of CanadianMortgageTrends.com. “But in many cases, it overcompensates. It’s punitive in many cases.”

As we head into another round of quarterly bank earnings reports, it’s worth thinking for a moment about how those wonderful profits and dividends for investors are generated. One way is by using posted instead of lower discounted rates when calculating how much to penalize a client breaking a mortgage.

With houses as expensive as they are today, it’s crucial to get the lowest mortgage rate you can. Keep the same level of focus when inquiring about mortgage penalties. Although it’s hard to imagine the need to break a mortgage on a house you’re just buying or living in happily, it can happen. Mr. McLister said roughly 70 per cent of people adjust their five-year fixed rate mortgage before maturity, although many do it to refinance or move to a bigger house rather than to break the mortgage outright.

Mortgage penalties are straightforward if you have a variable-rate mortgage – expect to pay the equivalent of three months’ interest in most cases. With a fixed-rate mortgage, the penalty is set at the higher of three months’ interest or a calculation called the interest rate differential, or IRD. The must-ask question when negotiating a fixed-rate mortgage: Do you use discounted or posted rates to calculate these penalties?

This is important because using posted rates can result in a much higher penalty. For some real world numbers, let’s use the mortgage prepayment calculators all lenders now provide on their websites. They show penalties for paying all or a portion of your remaining mortgage balance (to find them, Google your lender’s name and “mortgage prepayment calculator”).

Let’s use an example of someone who, three years ago, set up a $250,000 five-year mortgage and has a balance owning of $200,000. Assuming an original mortgage rate of 3.64 per cent with a discount of 1.5 percentage points, the mortgage prepayment calculators at several big banks showed penalties ranging from $5,000 to $7,600 or so.

A check with some alternative lenders found penalties ranging from $1,800 to $2,800. These are very rough comparisons because lenders differ a fair bit in what information they ask you to supply. But you get the picture – the big banks apply penalties with a sledgehammer.

As well as producing revenue for lenders, inflated mortgage penalties also help trap clients who might otherwise move their business to another lender. Imagine you want to refinance your mortgage or buy a bigger home and your bank won’t come across with a competitive rate. You say you’ll change banks, only to find out how prohibitively expensive it is to break your mortgage.

Mr. McLister said some banks have a stated policy of offering clients only a small discount off the posted rate if they want to add on to their mortgage to buy a more expensive house. You may be able to negotiate something better than a trivial discount, but your bank knows your leverage is limited because of the penalty you face if you go.

Alternative lenders often have better rates than the big banks, and they typically have cheaper penalty fees. Why do so many people use their banks for mortgages, then?

Mr. McLister speculated that some borrowers like the convenience of having their mortgage where they bank, and of being able to go into a branch to talk about their mortgage. If you prefer transacting online, some alternative lenders don’t have great websites.

One thing you do not need to worry about if you borrow from an alternative financial institution is that your lender will go bankrupt. “It’s funny that people look at mortgages and think, I need a safe lender.” Mr. McLister said. “If a lender goes out of business, pretty much nothing is going to change except for the name of your new lender.”

Remember Your Mortgage Broker is in the KNOW! Call me any time to explore your options (SAVINGS) 705 333 2222 or email me.

I suggest talking to a mortgage broker who will have relationships with various institutions along with a thorough understanding of the particular product offerings that are available for your individual circumstance. Your broker will be able to steer you toward the best mortgage for your particular situation.

Mortgages are becoming so complex, and there are so many options for people, they should actually be using a mortgage broker.ven if you think they’re best client in the world and your institution has your best interest at hart.

You don’t know what you don’t know! There are so many strings and fine print associated with your mortgage that it really does pay to use a broker.

April 26, 2014

CMHC Sends Another Message

Andy Charles, CEO of Canada Guaranty, told CMT:

“We are currently reviewing the announcement and potential implications…(The) overall materiality of the change is modest but indicative of an evolving market dynamic…(We have) no current plans to alter our product offering but, as indicated, are reviewing…”

What’s behind CMHC’s announcement?

• Terminating these programs appears to be a business decision by CMHC.
• Sources tell us that the insurance regulator, OSFI, was not behind this decision. (OSFI doesn’t generally impose product restrictions on individual institutions.) Moreover, there is no indication that this news is directly related to the recently released B-21 guidelines.
• We’re also awaiting comment from the Department of Finance. In recent years its leadership has clearly indicated a desire to see less government involvement in the mortgage market. (CMHC is 100% backed by the federal government.)

Market impact

• CMHC says these two programs only accounted for a combined 3% of its unit volume.
• It claims this should not have “a material impact” on the housing market. (Mind you, this is yet another instance where CMHC is withdrawing and/or limiting its programs. All of these “immaterial” changes may ultimately combine to slow the market further.)
• There is no word yet on whether the second-largest insurer, Genworth Canada, will follow suit. It’s in its quiet period before earnings so it couldn’t comment.
• Even before this news, it was clear in talking with CMHC sources that it plans to meaningfully reduce its insurance business. This will create further opportunities for private insurers and self-insured lenders (e.g., Equitable Bank, Home Trust, Optimum Mortgage, certain credit unions, private lenders, mortgage investment corporations, etc.)

Borrower impact

• The last day to submit CMHC-insured “stated income” and second home mortgage applications is May 29 (but many lenders may set a cut-off date earlier than this.)
• The majority of Canada’s 2.7 million self-employed borrowers prove income in traditional ways (for example, using a 2-year average of income from their NOAs, grossed up by 15% to account for write-offs)
• Self-employeds who can’t prove income traditionally, and Canadians who buy a second home with less than 20% down, will be left with these options:
• Prime lenders who insure through private insurers (assuming the privates keep their “low-doc” and second home programs intact)
• Non-prime institutional lenders, who finance up to 85% loan-to-value (less in non-urban areas) at higher interest rates
• MICs and private lenders who finance up to 80% with even higher rates and fees
• Private lenders who offer second mortgages in urban areas above 80% loan-to-value
• Anyone with a CMHC-insured residence will no longer be able to obtain, or co-sign for, an additional CMHC-insured mortgage. There are two exceptions:
• Bulk-insured mortgages are not affected by this particular rule (“The rules apply to all transactionally insured homeowner mortgages, both high and low ratio,” says CMHC spokesperson Charles Sauriol. “The rule does not apply to loans that are bulk insured — (i.e., CMHC’s Portfolio insurance product.”) Lenders purchase bulk insurance on mortgages with 20% equity or more, typically so they can resell these mortgages to investors.
• CMHC-insured rental mortgages are also unaffected (“There is no limit on the number of CMHC-insured rental mortgages a borrower may have,” Sauriol adds.)