“With people now more concentrated on hitting the malls before Christmas, business has become quieter,” said Nawar Naji, with Verico - The Mortgage Wellness Group in Toronto. “The big question now is will we see more clients next spring despite the new mortgage rules.”
Naji, who does some substantial condo business, is hopeful that historically low interest rates remain as attractive a carrot for consumers next year as they were before the government moved to implement new, tighter mortgage rules in July.
Those measures have already had a profound effect on mortgage transactions across Canada.
Last week, the CMHC released a report pointing to the near-obliteration of the high-ratio refinance market. More specifically, the Crown corporation reported new home purchases fell by 6 percent and it refinance volumes dropped 22 per cent.
Earlier this year, the government reduced the maximum amortization for government-insured mortgages from 30 years to 25. The feds also reduced the amount of equity that can be borrowed against a home from 85 per cent to 80 per cent.
“Lenders have become more conservative with many agreeing to refinance only up to 75 per cent LTV and asking for insurance at 80 per cent,” Naji said. “But rates as low as 2.99 per cent still make refis attractive to some homeowners – I hope the rates hold for the foreseeable future.”
The latter half of 2012, however, has been a devastating time for the refi business of many brokers, according to another mortgage professional.
“There’s been a significant drop in refinancing,” said Mauro Di Cosola, a mortgage broker with Dominion Lending Centres in Oakville, Ont. “It was almost like falling off a cliff after having the best July - August I’ve had in years.”
Di Cosola attributes lower volumes in the last quarter of the year to the mortgage rule changes that shut out a lot of buyers.
“The rule changes definitely made it difficult for first-time buyers to get a mortgage,” he said. “When it came to refinancing, the 80 per cent LTV threshold was a big hurdle for many homeowners.”