New Mortgage Rules Q&A With Ben Sammut

New listings are barely starting to trickle in, and I’ve get to witness anything “newsworthy” out there in the market thus far, so I’m satisfied with my week-long committment to the topics of debt, and the new mortgage rules.

I’ve given you about 6,000 words on how I feel about the new morgage rules, and debt in general in Canada.

So let me give you a mortgage broker’s take on the new rules, for what it’s worth, two cents or otherwise…

I’m going to beat you to the punch here, folks.

And no, it has nothing to do with mortgages…

The audio.  I know!

My video on “Condo Builder Forms” last fall was perhaps the best video I’ve ever done, at least in terms of content, and oh-so-many people stopped watching after the poor audio.

Well, crap.

I really thought we’d nailed it this time!

Something about screwing in light-bulbs and real estate agents come to mind…

But I hope you enjoyed yet another “unbiased” take on the new mortgage rules.

Like I said, a mortgage broker and a real estate agent sit down to discuss mortgage rules – you’re free to take the content with a grain of salt, if you’d like.

Next week, we’ll pretend like this mortgage banter is old news, and dive back into the spring market…


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  1. Ralph Cramdown says:

    I’ll tell ya what’s going to get the spring market moving. Magnets. That’s right, magnets. What’s an essential part of the new definition of luxury in Toronto? “Doors that seal discreetly and completely in precision magnet-lined frames.” I kid you not. It’s the new Decora. Mark my words.

    1. Appraiser says:

      Beer, the cause of and the solution to, all of life’s problems.

      ~ Homer Simpson.

    2. Sardonic Lizard says:

      Magnets, eh? How do they work again?

  2. Appraiser says:

    The Teranet HPI stopped retreating in December: Say What – The tide turning so soon?

    “Young man, in mathematics you don’t understand things. You just get used to them.” ~John von Neumann

  3. Appraiser says:

    Here’s a novel idea:

    “After controlling for fundamentals such as employment, population growth, housing tenure, immigration, education and the solidity of the welfare system, our analysis suggests that the ratio of household debt to disposable income in Canada is relatively conservative,” Marion and Arseneau wrote. “This probably reflects the cumulative effect of all actions taken to date to mitigate the vulnerability of the financial system to household indebtedness.”

    1. Ralph Cramdown says:

      “With four parameters I can fit an elephant, and with five I can make him wiggle his trunk.” — John von Neumann

  4. paul says:

    great and informative video!, showed this to a bunch of my friends who think the opposite. got their wheels in their brain turning haha

    1. Condodweller says:

      I would bet on your friends who think for themselves vs what a mortgage broker says (no disrespect to said mortgage broker). Another of my favourite Buffett quote is that that public opinion polls are not a good replacement for thought. This goes hand in hand with another one of his sayings which is that once you have done your homework and have arrived at a conclusion ignore what everybody else says.

  5. Ralph Cramdown says:

    Who ARE these mythical people who were scrimping and saving to get to 20% down and had the rug pulled out from under them?

    – Up until spring, prices were increasing faster than any of these people could save, so buying with less down and rolling the insurance into the mortgage was the winning move; saving to get to 20% was a loser move.
    – The preliminary B20 changes were announced in July, finalized in late October, and didn’t go into effect until last week. Anybody who was caught off guard wasn’t paying attention.
    – SFH prices are down significantly from spring, and condos are down slightly

    So these scrimpers and savers either couldn’t afford what they wanted then, and still can’t (too bad), or couldn’t qualify for a high ratio mortgage and now can’t qualify for a conventional one either (so sad), or just weren’t paying attention (bye bye).

    The cohort that nobody seems to want to talk about is kids (er, young buyers) who couldn’t qualify for an insured mortgage on income, but whose parents HELOC’d ’em up to 20% so they didn’t have to. Scrimpersavers will be back, eventually, but those kids won’t.

    And that baseball analogy?

  6. Chris says:

    Interesting video, thanks to both you and Ben for taking the time to share your opinions.

    However, when Ben says “Bill Morneau is at the head of OSFI” and “there’s very much a Liberal influence”, I again don’t feel that this is entirely accurate.

    Jeremy Rudin, the Superintendent of Financial Institutions, is at the head of OSFI. They report to Finance Minister Morneau, yet are an independent sub-agency, in a similar category as the Bank of Canada, the CPP Investment Board, the Royal Canadian Mint, etc.

    Further, if we believe that the Federal Liberals are at the helm of these organizations, how do more stress tests (from OSFI), higher interest rates (from the BoC), etc. jive with that assertion?

    67.8% of Canadians own their homes (many of whom are older and more likely to turn up on voting day). Canadians also have record levels of household debt. Stress tests (with the potential to negatively impact home price appreciation) and increased interest rates (negatively impacting debt service ratios) act against the financial security of these large segments of the population.

    Thus, I can’t imagine that the Federal Liberals would have advocated for either of these changes. If voters start feeling a financial pinch, rightly or wrongly, it is typically the ruling party that bears the blame, and subsequently suffers at the ballot box.

    Or maybe DTZ was right; I’m naive, they’re all tightly knit and in cahoots, working towards some end-goal that I can’t foresee?

    1. Kramer says:

      I don’t understand why this is being argued. I ask sincerely: does it matter, or is this just a pissing contest over who is right about it, which is fine – I’d just like to know. What’s the impact either way?

      1. Chris says:

        In 2017, I was talking to a friend who confidently stated that the Bank of Canada would not raise interest rates, because debt levels were too high. As he said “the Government won’t let rates go up, because that would hurt households, and they’d lose votes”.

        But rates did go up, because the Bank of Canada is independent, and their mandate is simply to maintain the value of money by keeping inflation low.

        This is my point with OSFI. Their mandate is not to act in the interest of citizens, or to win votes, etc. It is to ensure financial systems stability.

        Rather than viewing this through the lens of “is this fair or unfair to borrowers” we should try to view it through the lens of “does this improve or deteriorate financial systems stability”. If it improves stability, well, OSFI is adhering to their mandate.

    2. Daniel says:

      Chris, what’s going on with you buddy. You’ve historically been pretty careful with your arguments and lately you’re defending Better Dwellings and arguing about whether Morneau heads OSFI.

      Check out OSFI’s corporate page where Morneau’s name is listed above Rudin’s

      Probably a little naive to think the minister doesn’t direct the agency to some degree?

      Probably a lot more politically at stake if there’s a banking crisis and the libs had done nothing to get ahead of it, wouldn’t you say…

      1. Chris says:

        I would agree that there is probably some degree of pressure from Finance Minister Morneau on OSFI. I guess none of us truly know just how indepdent these “independent sub-agencies” are. Maybe I am naive in believing that they have a good deal of autonomy? But that’s the trusting optimist in me I suppose.

        Definitely, if there was a banking crisis, the Liberals would suffer at the polls. But that’s a hypothetical, something that may have been avoided until another party was in power. These changes (stress tests, interest rate increases) are negatively impacting voters now though.

      2. Ralph Cramdown says:

        The OSFI Super was appointed to a seven year term by PM Harper. Stable countries don’t fire their chief bank inspector halfway through his term, except maybe for a sex scandal. If the guy’s beholden to anyone, it’s the CEOs of the big banks, one of whom will provide him a fat sinecure after OSFI. If he’s good, it’ll be RBC. If not, CIBC.

    3. jeff316 says:

      The Bank of Canada is independent in that the Minister doesn’t not intervene in decisions and the Governor doesn’t take orders from the Minister. Decisions about policy, however, are not made independent of the political context within which they are made. If the federal Liberals were unsupportive of those changes, they wouldn’t have happened or would have been met with some other policy changes from the government to offset their impact.

    4. Sardonic Lizard says:

      > Stress tests … and increased interest rates … act against the financial security of these large segments of the population.

      How on earth are stress tests designed to keep financial illiterates from over-indebting themselves acting against the financial security of the population?

      Please tell me what you have been smoking? Because I want some!