Mortgage Industry in the Media – Part 2
In recent weeks, there have been numerous articles in the national media on the state of the Canadian mortgage industry. Some of the issues regard the impact of longer amortizations and a perceived failure to anticipate the effects of various mortgage products. Others are misconceptions due to all the information coming from the US. The situation in Canada is quite different.
Here is part two of some information compiled from CAAMP’s Annual State of the Residential Mortgage Market in Canada, by CAAMP Chief Economist Will Dunning. To view the full report click here (PDF file).
- Differences between the Canadian and U.S. markets remain.
The option ARMs that have and continue to be reset to higher rates are not common in Canada. Those who hold variable and even fixed rate products in Canada are now doing so in a declining interest rate environment. A greater percentage of mortgages in Canada are funded by balance sheet lenders than in the U.S. Subprime or alternative lending products were never as common in Canada; - Canada has a rich history of mortgage insurance.
Nearly half of all mortgages obtained in any given year are insured with a second approval process for mortgage applications. Underwriting principles and guidelines in Canada, while not perfect, are more thorough than in the U.S.; - Regulation for Canadian mortgage brokers and agents is more stringent than in the U.S. Several provinces have recently updated or are in the process of updating their origination legislation including Ontario, Quebec, Saskatchewan, Manitoba and Nova Scotia. There are now license requirements and in most provinces education and disclosure requirements. This will ultimately lead to enhanced professionalism in our industry and added security for Canadian borrowers.
