The following is the press release from the Canadian Association of Accredited Mortgage Professionals annual Fall report on consumer perceptions and choices.
November 18, 2008 (Toronto, ON) - Residential mortgage consumers remain remarkably positive as they weather the financial storm, according to a report released today by the Canadian Association of Accredited Mortgage Professionals (CAAMP). Attitudes towards local conditions have shifted only slightly with 38 per cent of Canadians believing now is a good time to purchase and 32 per cent believing it is a bad time. Mortgage arrears remain low and steady at .28 per cent and an overwhelming 84 per cent of home owners are satisfied with their mortgages. The information was gathered by Maritz from an online survey of over 2,000 Canadians in mid-October and analyzed in conjunction with CAAMP Chief Economist Will Dunning.
Canadians do expect housing prices to fall: 35 per cent, more than twice as many as last fall, now believe prices will drop; half of those surveyed gave a neutral answer while the number who thought prices would go up fell from 40 per cent to 20 per cent. Westerners, who have endured particularly hot housing markets, are most negative, and in British Columbia, 48 per cent of those surveyed said they expect prices to fall, far above the national average. “As we confront these challenging times, borrowers foresee changes in their local housing markets, yet remain confident in a stable Canadian mortgage system,” said Jim Murphy, AMP, President and CEO of CAAMP. “CAAMP anticipates mortgage credit growth to slow, but remain relatively strong, surpassing the $1 trillion mark by 2010.”
Despite the traumatic American mortgage fall out, Canada has managed to steer clear of deflated markets. The Canadian system is supported by low and steady interest rates, better underwriting processes, different products and normal re-sale activity levels. “Canada is a financially conservative country where consumers are able to meet the terms of their mortgages and buying decisions are based on affordability,” said Dunning. “This contributes to a solid real estate market that will not experience the same drop off we see south of the border.”
Housing equity positions are strong in Canada with a growing trend of re-financing mortgages. About one in five borrowers took out an increasing amount of cash from their mortgages, with the average draw rising 20 per cent to $41,000 compared to last year. Fifty-six per cent of respondents said they used this money, which totals $18.5 billion nationwide, for debt consolidation and repayment; 30 per cent of these funds went towards home repair and renovation.
New home buyers took advantage of alternative mortgage products - half of new mortgages taken out in the last year were for amortizations longer than the traditional 25 years, an increase of 13 per cent. Longer term amortizations now account for 16 per cent of all outstanding mortgages and six per cent are 40-year terms. The federal government has now introduced stricter regulations on insured mortgages. CAAMP’s survey found Canadians had low awareness of the new regulations; however once explained, 60 per cent supported the changes.
The “Annual State of the Residential Mortgage Market in Canada” report contains a wealth of additional industry data, including regional breakdowns of survey responses, where Canadians obtain their mortgages, the role of job creation in fuelling Canada’s housing market, and additional insight into housing forecasts in Canada and the United States. For a full copy of the report, please visit: www.caamp.org.
Thursday, November 20, 2008
Monday, November 17, 2008
Optimum Mortgage: What's Happened to Alternative Lending?
Here is an interesting article we received on November 13, 2008 from Optimum Mortgage (a division of Canadian Western Bank). It is an interview with manager Les Shore, and explains the current market conditions for alternative lending.
What's Happening with Alternative Lending?
As world capital markets struggle to absorb the impact of the sub-prime fiasco from the United States, borrowing costs remain high, which in turn negatively impacts rates for fixed term mortgages for all borrowers. How has this affected the world of Alternative Lending? How has this affected those borrowers who still need the assistance of an Alternative Lender? (e.g., small business owners with good credit history but who do not necessarily meet "A" lender income criteria, and/or borrowers with less-than-ideal credit ratings). Lester Shore has been at the hub of Alternative Lending since Optimum Mortgage first entered the Alternative Lending marketplace in 2004.
Q: What is the current state of 'Alternative Lending'?
A: "In today's markets, the business funding model where Alternative Lenders could advance these mortgages and easily bundle-and-sell them to other investors has ultimately proven unsustainable. As such, many Alternative Lenders have quietly exited the marketplace. However, the demand for this type of lending has not disappeared. In contrast to media headlines of late, many individuals and small businesses in Canada have continued to prosper through this market turmoil."
Q: Is Alternative Lending still available?
A: "Yes, however, borrowers and brokers will see higher mortgage pricing through the foreseeable future, which reflects the significant increase in deposit costs currently faced by all financial institutions. Alternative Lenders that remain in the marketplace have also become more cautious with regard to their underwriting criteria. Real estate values have moved steadily higher across the country over the past several years, and we are now seeing the impact of moderated residential sales activity. Lenders are reducing their maximum loan-to-value on new advances to reflect more "normalized" home values, particularly in Western Canada which experienced the largest run-up in prices. Credit definitely remains available - as our economy has continued to perform relatively well and delinquency rates are not excessive - but it is being provided on a more cautious and select basis."
Q: So, who continues to lend into the Alternative Lending market?
A: "Primarily deposit-taking institutions that have not been reliant on selling mortgages into pools as their main source of funding. The more disciplined lenders who have been in this business for a while have confidence that is based on experience, and have reacted proactively to changes in the marketplace. I expect these institutions, like Optimum Mortgage, will continue to meet the needs of borrowers."
Q: Do you see any "positives" in recent events?
A: "Real estate values have remained on a relatively steady long-term growth trend in most parts of Eastern Canada, and we anticipated the price corrections observed on property values in areas of Western Canada - simply because the rate at which values were increasing was unsustainable; affordability was becoming an issue. Overall, moderated sales activity will not only be healthy for both the real estate and the mortgage/lending markets, but ultimately, for the consumer."
Q: What does the future hold for Alternative Lending in Canada?
A: "Some borrowers may have a tougher time finding credit - reflecting more stringent underwriting standards and the fact that there now are fewer lenders in the marketplace - but credit remains available for the majority of this segment. We remain very optimistic about future opportunities in this business, and overall values remain solid providing adequate protection for our loans. We also have confidence that our clients will continue to repay their loans in a satisfactory manner."
What's Happening with Alternative Lending?
As world capital markets struggle to absorb the impact of the sub-prime fiasco from the United States, borrowing costs remain high, which in turn negatively impacts rates for fixed term mortgages for all borrowers. How has this affected the world of Alternative Lending? How has this affected those borrowers who still need the assistance of an Alternative Lender? (e.g., small business owners with good credit history but who do not necessarily meet "A" lender income criteria, and/or borrowers with less-than-ideal credit ratings). Lester Shore has been at the hub of Alternative Lending since Optimum Mortgage first entered the Alternative Lending marketplace in 2004.
Q: What is the current state of 'Alternative Lending'?
A: "In today's markets, the business funding model where Alternative Lenders could advance these mortgages and easily bundle-and-sell them to other investors has ultimately proven unsustainable. As such, many Alternative Lenders have quietly exited the marketplace. However, the demand for this type of lending has not disappeared. In contrast to media headlines of late, many individuals and small businesses in Canada have continued to prosper through this market turmoil."
Q: Is Alternative Lending still available?
A: "Yes, however, borrowers and brokers will see higher mortgage pricing through the foreseeable future, which reflects the significant increase in deposit costs currently faced by all financial institutions. Alternative Lenders that remain in the marketplace have also become more cautious with regard to their underwriting criteria. Real estate values have moved steadily higher across the country over the past several years, and we are now seeing the impact of moderated residential sales activity. Lenders are reducing their maximum loan-to-value on new advances to reflect more "normalized" home values, particularly in Western Canada which experienced the largest run-up in prices. Credit definitely remains available - as our economy has continued to perform relatively well and delinquency rates are not excessive - but it is being provided on a more cautious and select basis."
Q: So, who continues to lend into the Alternative Lending market?
A: "Primarily deposit-taking institutions that have not been reliant on selling mortgages into pools as their main source of funding. The more disciplined lenders who have been in this business for a while have confidence that is based on experience, and have reacted proactively to changes in the marketplace. I expect these institutions, like Optimum Mortgage, will continue to meet the needs of borrowers."
Q: Do you see any "positives" in recent events?
A: "Real estate values have remained on a relatively steady long-term growth trend in most parts of Eastern Canada, and we anticipated the price corrections observed on property values in areas of Western Canada - simply because the rate at which values were increasing was unsustainable; affordability was becoming an issue. Overall, moderated sales activity will not only be healthy for both the real estate and the mortgage/lending markets, but ultimately, for the consumer."
Q: What does the future hold for Alternative Lending in Canada?
A: "Some borrowers may have a tougher time finding credit - reflecting more stringent underwriting standards and the fact that there now are fewer lenders in the marketplace - but credit remains available for the majority of this segment. We remain very optimistic about future opportunities in this business, and overall values remain solid providing adequate protection for our loans. We also have confidence that our clients will continue to repay their loans in a satisfactory manner."
Friday, November 14, 2008
What's Up With Lenders!
Here is some enlightened information we received this week from only a few of our lenders . . .
Lender 1
- 100% Financing still available!
- No Notice of Assessments (NOA's) for self-employed
Lender 2
- 1 year term rate special at 4.49%
- 4 year term rate special at 5.34%
Lender 3
- Will lend on foreclosures, bruised credit, no income
- Lending up to 75% loan to value (LTV)
Lender 4
- Stated Income Program at the best fixed rates. Up to 95% LTV for self-employed and 100% commissioned, and up to 65% LTV for salaried employees.
- Rental Program at the best fixed rates. Up to 90% LTV insured, up to 80% LTV conventional, and an 80% rental offset is available on the subject property.
Because we deal with so many lenders, we can offer you the best available mortgage for your own particular situation.
Stressed about mounting debts and high monthly payments?
OR
Curious whether or not you are receiving the very best deal from your bank?
Whatever your concerns or circumstances are, feel free to call us anytime (evenings and weekends included)!
Lender 1
- 100% Financing still available!
- No Notice of Assessments (NOA's) for self-employed
Lender 2
- 1 year term rate special at 4.49%
- 4 year term rate special at 5.34%
Lender 3
- Will lend on foreclosures, bruised credit, no income
- Lending up to 75% loan to value (LTV)
Lender 4
- Stated Income Program at the best fixed rates. Up to 95% LTV for self-employed and 100% commissioned, and up to 65% LTV for salaried employees.
- Rental Program at the best fixed rates. Up to 90% LTV insured, up to 80% LTV conventional, and an 80% rental offset is available on the subject property.
Because we deal with so many lenders, we can offer you the best available mortgage for your own particular situation.
Stressed about mounting debts and high monthly payments?
OR
Curious whether or not you are receiving the very best deal from your bank?
Whatever your concerns or circumstances are, feel free to call us anytime (evenings and weekends included)!
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