Name: Robert McLister

Email: robert@canadianmortgagetrends.com

Biographical Info: Robert McLister is one of Canada’s best-known mortgage experts, a mortgage columnist for The Globe and Mail, editor of CanadianMortgageTrends.com (CMT) and founder of intelliMortgage Inc. and RateSpy.com. Robert created CMT in 2006. The publication now attracts 550,000+ annual readers, is a four-time Canadian Mortgage Awards recipient and has been named one of Canada’s best personal finance sites by the Globe & Mail. Prior to entering the mortgage world, Robert was an equities trader for eleven years and a finance graduate from the University of Michigan Business School. Robert appears regularly in the media for mortgage-related commentary (recent coverage: http://bit.ly/tUjp3Q). He can be followed on Twitter at @CdnMortgageNews


U.S. Home Prices Down – First Time in 10 Years

In August, U.S. existing home prices dropped for the first time in 10 years to a median value of $225,000.  It looks like this may be the first of many corrections to come because the backlog of unsold homes is the highest since April 1993.  (Source:  New York Times)

This is not "news" since the stats were released in September, but we’ll document it here so we can compare what happens in the next 3-6 months.

Long Term Mortgages Catching On

20% of home buyers are taking out 35-year mortgages according to Genworth Financial.  (Source:  Toronto Star, Story Link)

Expect the trend towards mortgages with less down and longer terms to strengthen notably in Canada, as it has in the U.S. 

Note however:  If you get one of these products, MAKE SURE you are disciplined enough to pay down principle as soon as you can.

American Mortgage Insurers Coming to Canada

The impending arrival of American mortgage insurer AIG United Guaranty has forced Canada’s mortgage insurers to be more competitive.  Here’s a good article by Canadian Business Online about what this means to you:  Story Link

Points of interest:

  • Almost 1/2 of Canadians are required by law to purchase mortgage insurance.
  • Canada has just two insurers:  CMHC (70% market share) and U.S.-based Genworth (30% market share)
  • Three new U.S. insurers have applied to do business in Canada
  • AIG United Guaranty is one of them.  It may be the first to offer insured 50-year and 0% down mortgages
  • Next summer Canadians will only need 20% down to avoid mortgage insurance (instead of 25% now) according to a federal department of finance announcement.

All of this may add up to higher home prices eventually–and some fear more foreclosures.  The easier it is to get a mortgage, the more people can pay for a house.

Seperately, Canada’s Finance Minister has denied a Globe and Mail report that CMHC may be sold.  (Source:  Reuters story)

Canadian Lenders Risk More to Satisfy Borrowers

Nearly 1 out of 2 of home buyers in California chose interest only loans last year according to LoanPerformance.com.

That’s a staggering number of people who would rather own a pricey house than pay off a cheaper one.

Could this happen in Canada?  Vancouver?  Calgary?

Well maybe not to that extent but Canadian Lenders are clearly gearing up to satisfy our desires for lower payments and pricier homes.  CIBC, for one, expects "high risk" mortgages to grow 50% a year in Canada.

Do we think this increased buying power will lead to higher Canadian home prices after our little correction?  Well, assuming the economy doesn’t tank, we’d be lying if we said "no."

Foreclosures in Brief

Here’s an outstanding overview of the foreclosure process in Canada by Andre Mayer of Bankrate.com, via www.canadianmortgagenews.com.

Point’s of note:

  • When a lender liquidates a foreclosed property, "it is the lender’s responsibility to the court to make sure the best possible price for the property is obtained."
  • "The mortgage broker [may be] in a position where he can help the homeowners by refinancing, or bringing in equity with secondary financing or consolidating their debts."

Story Link