Canadian Mortgage Rule changes announced today

This morning, Federal Finance Minister Jim Flaherty announced changes to mortgage rules intended to ensure the stability of Canada’s housing market.

These measures include:

• Amortization period capped at 30 years (down from 35 years)
• Reduction of home equity lines of credit.
• Maximum refinancing reduced to 85% from 90% of home value.

There are no changes to down payment requirements to buy a new home – Still only 5% down payment.  See full details in this Globe and Mail article.

What does this mean to us at Alta Pacific?  Well, to the one side our business (the mortgage broker side) it means adjusting how we work with customers seeking conventional financing.  To the other side of our business (the Mortgage Investment Corporation [MIC] side) it means more opportunities as the country’s major banks are forced to work within new guidelines.  We think this will mean more opportunities to Specialty Mortgage companies like ourselves.  Time will tell.

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If you’re interested in learning how you can plan for retirement with an investment that either grows (due to re-investment) or one that pays monthly cash flows, we invite you to learn about Alta Pacific Mortgage Investment Corp.  We focus on consistent returns for registered investors (those with RRSP, LIRA, RESP, TFSA etc.) or open investments (for folks with cash on hand).  Alta Pacific works with Western Canada’s best Exempt Market Dealers.  We can introduce you to folks that will work to understand your current situation and future needs; and who can assist you in choosing the right Alta Pacific options for your investment.

www.altapacificmortgages.com

Security. Growth. Transparency.

 

Underwriting mortgages WITHOUT government help

A very interesting article today in the Financial Post; Canada’s Mortgage Hazard. Seeing that we (Alta Pacific) are in the mortgage business, we read it with interest (no pun intended).

The article speaks about Canadian banks and the privilege (err, protection) they have on high-ratio mortgages with CMHC insurance.  As writer Neil Mohindra points out, this protection takes a fair bit away from the banks’ duties to vigorously underwrite mortgages (the Canadian taxpayer dollars is essentially their safety net).

This is not the case for specialty mortgage companies like ourselves.  At Alta Pacific we must consider risk and the consequences of a borrower that doesn’t fulfill their obligations of their loan/mortgage.  Because of this, we have very specific credit standards and underwriting processes that must stand on their own.  If the borrower defaults, we must consider our position and recovery of capital (our investors’ capital)… all without government assistant/bailout.  We look at every deal thinking that the worst case scenario could happen and we make decisions accordingly.

Interesting to note in the article the connection between the fed’s involvement in the mortgage space and their view of Canadian consumer debt .  This was echoed in Monday’s Bank of Canada (BoC) speech by Agathe Côté.  It focuses alot on this consumer debt issue in Canada and also points out something that we all probably knew but a reminder is healthy… the BoC’s cornerstone of monetary policy is “its inflation-control agreement, the goal of which is to keep inflation near 2 per cent.“  Read the full speech here – http://bankofcanada.ca/en/speeches/2011/sp100111.pdf

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If you’re interested in learning how you can plan for retirement with an investment that either grows (due to re-investment) or one that pays monthly cash flows, we invite you to learn about Alta Pacific Mortgage Investment Corp.  We focus on consistent returns for registered investors (those with RRSP, LIRA, RESP, TFSA etc.) or open investments (for folks with cash on hand).  Alta Pacific works with Western Canada’s best Exempt Market Dealers.  We can introduce you to folks that will work to understand your current situation and future needs; and who can assist you in choosing the right Alta Pacific options for your investment.

www.altapacificmortgages.com

Security. Growth. Transparency.