Mortgage underwriters are so busy that it is unlikely rates will drop again before their anticipated increase in 2022, says a Toronto-based broker.

“Consumers need to remember that what lenders discount off of the prime rate is up to the lender. Lenders tend to use lower rates to drive borrowing and the last few months have seen a record number of mortgages being processed,” said Leah Zlatkin, principal broker at Brite Mortgage and an expert with LowestRates.ca . “Lenders are short staffed and often can’t submit applications fast enough to keep up with demand. Given this environment, why would lenders incentivize homebuyers to increase lending?”

CanWise Financial recently rolled out a 98 basis variable rate mortgage that’s being made available to homebuyers who have less than 20% for their down payments. It also includes a 120-day rate hold, a 20% prepayment option, three months of interest as the penalty for breaking the mortgage, and it’s both portable and assumable.

Citing the deal, Zlatkin suspects there will be few, if any, similar rollouts.

In fact, some lenders have even raised rates to alleviate pressure on their mortgage underwriters, says Daniel Johanis, principal broker at Pekoe Mortgage.

“We’ve noticed that underwriters are human and only have so many hours in a day,” he said. “Some close friends of mine are underwriters for banks and I sympathize, for sure. One thing we’ve been doing is communicating with our clients on new expectations, as far as turnaround times, whether for purchases or refinances. Purchases take more precedence because there’s usually a hard deadline, while refinances are more flexible. We see underwriters straining to keep up with the volume.

“Equitable Bank, for example, raised its rates in June because of its backlog of files.”

However, good mortgage brokers usually have strong relationships with underwriters, and that could help get a file funded faster, but—of course—there’s no guarantee that will happen anymore. Johanis says that typically there would be a 24-hour turnaround just for a file review, however, in most cases it now takes weeks to hear back from underwriters.

“It’s definitely out of the ordinary and not what we’re used to, and I’m hearing the same thing at the branch level with pretty high turnaround times just to get an answer, not funding,” he said. “If you look at Meridian Credit Union, they were halting applications for refinances recently because their turnaround time was something crazy like 16 weeks.”