Mortgage changes to impact investors

There are now fewer options for rental properties.

In the wake of new mortgage rules, some mortgage lenders are pulling mortgage programs for rentals.

One of the first was Merix/Lendwise, which announced a change to its offering Tuesday – a day after recent housing rules were put into place.

In a note to brokers, the lender said it would no longer be accepting rental applications.

First National, another major lender, has made similar changes to its offering.

“(First National) have temporarily suspended their conventional rental program and their Alt-A program, which is part of the business for self-program,” Ernie Stapleton, a representative for First National, told CREW. “As the dust settles, I think First National will re-evaluate their programs in the context of the new rules to see what can be offered.”

And it isn’t just rental properties that are being impacted.

Another lender, MCAP, will soon charge a 15 basis point surcharge for all new refinances beginning November 30, 2016.

These sorts of lender updates are the result of the government’s recent changes to low-ratio mortgage insurance requirements.

Effective November 30, all mortgages originated by lenders who use portfolio insurance – which includes all monoline lenders – must meet the following criteria;
  • Maximum amortization of 25 years
  • Maximum property price below $1 million
  • A property must be owner occupied
The full scope of the changes can be viewed here.

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  • by Scott 2016-10-09 10:14:04 PM

    What's up with the rule that houses must be "owner occupied"? If the borrower meets the criteria to borrow the money and has the means to pay the mortgage whether from their professional income, rental income or savings.

    I assume the banks think the owner will take better care of the house if s/he lives there? What's the rationale for this?

  • by 2016-10-17 10:04:34 AM

    Maybe it will eliminate the problem that Vancouver had in where entire condo buildings were left empty because no one actually lived there. Businesses opened up around expecting some form of commerce and then no one showed up due to the fact that every condo was foreign owned. I am glad that the unethical and politically greedy people that we call a government are finally doing something to curb the destruction of the middle class.

  • by Scott 2016-10-17 11:23:08 AM

    I agree the houses can't just sit vacant and not have a population using them and shopping at local businesses. This rule specifically says "owner occupied". I suspect most people in here buy houses/condos to rent out. This is going to make it really difficult for us. Our tenants are usually the ones that occupy the houses/condos.

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