Notable News of the Week: November 23, 2012

 

The CMHC is cautiously optimistic about the B.C. housing market – Vancouver Courier

This week, the Canada Mortgage and Housing Corporation (CMHC) held press conferences in major cities across Canada. Surprisingly, the nation’s largest mortgage insurer held an optimistic view on the housing market in British Columbia. The confidence is rooted in three indicators of economic stability: persistent low mortgage rates, improving employment numbers, and increasing provincial migration. Employment in Vancouver is expected to grow by 2.9 per cent this year and 2.2 per cent next year. Immigration is expected to increase by 30 per cent this year, from last year, and by approximately 18 per cent in 2013. One positive stat from Citizenship and Immigration Canada shows that 17 per cent of new immigrants become homeowners within six months and more than 50 per cent are homeowners within four years. CMHC’s caution arises from the nine months of housing inventory that is currently flooding the market. The mortgage insurance giant expects housing supply normalization by mid-2013.

 

New guidelines for Canada’s mortgage insurers coming next year – Globe and Mail

Canada’s financial watchdog, the Office of the Superintendent of Financial Institutions (OSFI) will release new guidelines for the nation’s mortgage insurers early next year. Affected by the changes will be the CMHC, Genworth Canada, and Canada Guaranty. OSFI advises that the new mortgage guidelines won’t impact the housing market to the same extent as the mortgage rules for the banks have. The new guidelines will affect the mortgage policy underwriting for homes. Spearheading the policy changes will be Julie Dickson, the regulator’s superintendent. “We are in a market where there is a lot of growth in household debt, some froth, and I think whenever you see that you have to act early and try to ensure that people aren’t forgetting sound practices,” said Ms. Dickson.

CAAMP: Mortgage tightening is threatening the economy – CBC

Earlier this year, Ottawa cracked down on the mortgage rules, in an attempt to cool Canada’s heated housing market. According to Will Dunning, Chief Economist at CAAMP, the policy changes were unnecessary and likely too severe. The effects of shutting out buyers from the housing market are hurting the broader economy said Dunning, in a report released earlier this week. The rule change that limited the maximum amortization period to 25 years for all high-ratio mortgages is being pegged as the biggest culprit that is affecting buyers. Dunning estimates that 16.9 per cent of high-ratio mortgages that would have been approved in 2010 would no longer qualify under the current set of mortgage rules. Since 55 per cent of all home purchases are funded by a high-ratio mortgage, CAAMP suggests that nine per cent of the entire market is being hit.