Soapboxes, Popcorn and Credit Cards. Oh My!
By my count, on a random Thursday night, as I have a glass of wine and some microwave popcorn for supper, there have been about 9 sweeping regulatory changes in the Canadian mortgage market since 2007.
Lets go back to 2007.
At that time, I was in love forever, I wore a size 26 pair of jeans and my Canadian Blue Chips were pulling in a lazy 15% return, all while I was trying to figure out what was going on in Lost. (What exactly was the black smoke monster? Did they ever really ever circle back to that?) Speaking of smoke, all of this went up in it.
That same year, I left my cush bank gig for the rock n roll lifestyle of a mortgage broker because I was promised endless sandwiches and the ability to cuss whenever I wanted. And here I am. Exactly 10 years later. Truly, the sandwiches and profanity are the only constants in this market. Everything else is flipped and reversed.
There are probably a couple of changes in how your mortgage is qualified that we should address. So, let me just lay this out for you:
Firstly....you kind of need a paper trail and reasonable track record of the income that you earn over a legit period of time that would lead someone to the logical conclusion that you can afford a payment on a big thing like a whole entire house.
I knowbanks are assholes. But lets just devils advocate this one.
If you have a salary or guaranteed base hours and that can be confirmed by your employer, we can use that to determine how much of a mortgage payment you can afford by the banks guidelines. If you have any fluctuating income, are self-employed or working on a contract basis, youre going to need to show a two-year track record of how thats been playing out. Or, youre going to need to pony up a more sizable down payment to mitigate the possibility of a dip in your earnings.
Does that really seem so unreasonable? Youre buying a WHOLE ENTIRE HOUSE!
Second...ifyou have credit card debt, or lines of credit which are readvancible*, we are going to assign, on your mortgage application, a completely fictitious, super-high payment that you dont contractually, morally or reasonably ever have to pay and will effect the price of the home the banks determine that you can afford by their guidelines. (And when I say super-high, I mean James Franco super-high.) Oh and by the way, youre completely screwing your credit!
*Readvancible means that its not a loan that you would make set payments on over a predetermined amount of time until its paid. Rather, its a credit limit, like a credit card or line of credit.
And I have a serious beef on this point.
When it comes to your credit card debt and how its required to be appropriated on your mortgage application, the banks blame the feds who regulate the banks. The feds wag their fingers at the consumers who misuse the credit limits. The credit limits are glad-handed by the banks to anyone with a pulse. The banks blame the feds and the feds blame us and the banks blame
You get where this is going, right? To Bullshitsville! Thats where.
Take control. If you are holding credit card debt or balances on lines of credit, you are putting undue pressure on your capacity to carry a mortgage. You may have some interest-only, easy-street, payment arrangement written in blood on your 20% annual interest contract. However, the banks are assigning a very large, made up payment for the purpose of qualifying a mortgage. (The same bank that said Hey! Here! Have this interest-only, easy-street credit card! Youve made it, Cuz! Drinks for everyone!) And then you cant qualify for your mortgage.
This is a thing. Its happening.
And not to kick you while youre down but if you are holding more than 50% balance on your credit card, in relation to the overall credit limit, your credit score is abysmal. This is true. Call your handy dandy mortgage broker. We see credit reports by the dozen, on the daily. And we can help. We have access to the whole puppetshow. We know where all the strings are. And when I say we, I actually mean more specifically me. I can help. Its pretty much my lifes work.
On a side note, its been 10 years for me as a mortgage broker this month. This is a tough industry. So, I think that makes me officially biker-gang badass. And Im celebrating with wine and microwave popcorn.
Like a black smoke baller.
Bank of Canada increases overnight rate target to 3/4 per cent
The Bank of Canada is raising its target for the overnight rate to 3/4 per cent. The Bank Rate is correspondingly 1 per cent and the deposit rate is 1/2 per cent. Recent data have bolstered the Banks confidence in its outlook for above-potential growth and the absorption of excess capacity in the economy. The Bank acknowledges recent softness in inflation but judges this to be temporary. Recognizing the lag between monetary policy actions and future inflation, Governing Council considers it appropriate to raise its overnight rate target at this time.
The global economy continues to strengthen and growth is broadening across countries and regions. The US economy was tepid in the first quarter of 2017 but is now growing at a solid pace, underpinned by a robust labour market and stronger investment. Above-potential growth is becoming more widespread in the euro area. However, elevated geopolitical uncertainty still clouds the global outlook, particularly for trade and investment. Meanwhile, world oil prices have softened as markets work toward a new supply/demand balance.
Canadas economy has been robust, fuelled by household spending. As a result, a significant amount of economic slack has been absorbed. The very strong growth of the first quarter is expected to moderate over the balance of the year, but remain above potential. Growth is broadening across industries and regions and therefore becoming more sustainable. As the adjustment to lower oil prices is largely complete, both the goods and services sectors are expanding. Household spending will likely remain solid in the months ahead, supported by rising employment and wages, but its pace is expected to slow over the projection horizon. At the same time, exports should make an increasing contribution to GDP growth. Business investment should also add to growth, a view supported by the most recent Business Outlook Survey.
The Bank estimates real GDP growth will moderate further over the projection horizon, from 2.8 per cent in 2017 to 2.0 per cent in 2018 and 1.6 per cent in 2019. The output gap is now projected to close around the end of 2017, earlier than the Bank anticipated in its April Monetary Policy Report (MPR).
CPI inflation has eased in recent months and the Banks three measures of core inflation all remain below 2 per cent. The factors behind soft inflation appear to be mostly temporary, including heightened food price competition, electricity rebates in Ontario, and changes in automobile pricing. As the effects of these relative price movements fade and excess capacity is absorbed, the Bank expects inflation to return to close to 2 per cent by the middle of 2018. The Bank will continue to analyze short-term inflation fluctuations to determine the extent to which it remains appropriate to look through them.
Governing Council judges that the current outlook warrants todays withdrawal of some of the monetary policy stimulus in the economy. Future adjustments to the target for the overnight rate will be guided by incoming data as they inform the Banks inflation outlook, keeping in mind continued uncertainty and financial system vulnerabilities.
The next scheduled date for announcing the overnight rate target is September 6, 2017. The next full update of the Banks outlook for the economy and inflation, including risks to the projection, will be published in the MPR on October 25, 2017.
This is an opportunity to gather in our communities, from coast to coast to coast, and to proudly celebrate all we have in common. It is an opportunity to celebrate our achievements, which were born in the audacious vision and shared values of our ancestors, and which are voiced in nearly all of the languages of the world through the contribution of New Canadians.
Canada Dayis a time to celebrate the heritage passed down to us through the works of our authors, poets, artists and performers. It is a time to rejoice in the discoveries of our scientific researchers, in the success of our entrepreneurs, and to commemorate our history a history in which each new chapter reveals itself to be more touching, more fascinating than the last.
In this momentous year marking the 150th anniversary of Confederation, our Canada Day celebrations will be bigger than ever! There will be major celebrations in 19 Canadian cities in addition to the many festivities set to take place in various communities from coast to coast. A full weekend of activities is also on the agenda in Canadas Capital Region to celebrate Canada Day and our countrys anniversary in a spectacular way.
As we look ahead, we have every reason to show our pride in being Canadian and to face the future with confidence and enthusiasm.
Activities across Canada
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