“The really good lenders will use the reduced workload as an opportunity to improve their service and speed up the processing of loans,” said Marcus Tzaferis, a mortgage broker with MorCan Financial Inc. in Toronto.
He's not alone, with housing industry analysts predicting reduced wait times for mortgage applications as lenders look to retain their funded volumes in a slowing market.
Their other option is to drop interest rates in order to attract more of the borrowers still qualifying under the new rules.
No major lender has yet moved in that direction, with most expected to focus on improving underwriting efficiencies first as a way to win themselves a competitive edge.
Economists are predicting a significant reduction in the number of mortgage applications stemming from the higher qualifying standards, any reduction in workload could spur mortgage lenders to up their underwriting processes and advance themselves.
“The logic is that a lower LTV and a shorter amortization period will result in less people qualifying for a loan,” another mortgage professional, Derek Rowley said Monday. “This will help banks weed out the number of applications they process and ideally would mean the applications they process could be approved faster.”
However, industry veterans remain skeptical that investors will see their wait times reduced just because of a reduction in the number of actual applications.
“I think the approval wait times will generally remain the same,” said Dianne Chafe, a mortgage broker with Oriana Financial. “The approval process will remain the same, and I expect that banks will return decision in about the same time they did before the new regulations came in.”