I am 68 years young .I started our company almost 30 years ago out of my gargage.Last year I sold my interest in the company to four of our agents, including my daughter and formed the Matthey Mortgage Team. Freed from the responsibilities of management I am now able to concentrate on what I love to do and that is helping homeowners and home buyers strategically deal with their mortgage.
My son, Chris, my daughter, Karen and Karen Schmidt , comprise the Matthey Mortgage Team. Chris has been a mortgage agent for 8+plus. Karen's background is in International Finance and has been an agent for 5 years. Karin Schmidt has a 20+ year banking background and is our client services manager
Our speciality is First Time Buyers, but we cover a wide range of financing options for all types of situations. I am also a "Reverse Mortgage Specialist". My experience with all types of financing options and my age allows me to talk to seniors on a "Senior to Senior" basis to guide them on the best financing options for their stage in life.
If you are military, you may have seen news stories on huge mortgage penalties paid by members to their Bank, when posted. You may qualify for our "Freedom Mortgage" for military that offers no penalty when you produce a posting notice inside or outside of Canada.
If you are a First Time Buyer , we have the most comprehensive guide available for you that you can order on line. Just send an email to firstname.lastname@example.org under the heading "First Time Buyers Guide Please"
I am proud to have been a nationally and locally award-winning Mortgage Broker for over 29 years in the Kingston area.I have been one of the broker/owners of our company over the same time period. I have been ranked in the Top 3 as a Mortgage Broker in the Kingston This Week's Reader's Choice Awards for the past several years, and in the fall of 2013, I was proud to be inducted into the Canadian Mortgage Hall of Fame with Mortgage Professionals Canada.
There are many ways to contact us if you have a question. You can text us direct at 613-561-2719. You can email us at email@example.com You can also access us Face2Face(F2F) through Apple Facetime by dialing 613-561-2719. The last option works well with our clients for any questions, they have on their mortgage, before, during or after closing.
It is our belief that our job does not end with your mortgage approval.We support you through changes in your life and lifestyle and we are there to guide you into the nest mortgage product that benefit you, not the lender.
We would love to hear from you.
The majority of our business comes from referrals, which is a great reinforcement that people appreciate the job that we do. Our job is not just to get you a great rate (although we do that too!) - it is to explain the home buying and mortgage process to you, clearly explain the terms and conditions of your mortgage to you (so unlike with the bank you're not suddenly hit with a shocking penalty you had no idea could happen) and keep you informed about where rates and the economy are going.
You can find Open Houses and New Listings in the Kingston area here:https://www.facebook.com/buysellshowkingstonrealestate/
You can find Waterfront Open Houses and Listings here:https://www.facebook.com/YGKWaterfrontproperty/
Got a HELOC? Your Mortgage Options Are About to Shrink
Got aHELOC? Your Mortgage Options Are About to Shrink
ByThe SpyonNovember 6, 2018
For more thana year weve speculated that new rules will be adopted, making it tougher to qualify for aHELOC.
How could they not? TheBank of Canada,OSFI, CMHC and FCAC have all been warning about HELOC risk for months. And when multiple government agencies target a financial product, change is acomin.
And now its here.
Banks are tightening rulessignificantlyfor those with a HELOC who are applying for a new mortgage (and not closing their existing HELOC).
But this time, its not a well-publicized government rule. Its happening behind the scenes.
How people get approved today
Lets assume youre applying for a new mortgage on a second home, cottage or rental property.
Also assumeyou have a HELOC with a $200,000 limit.
Today, most lenders will make you prove you can afford the payment on themoney you owein that HELOC. If your HELOC has a zero balance, its of little consequence to your mortgage application.
If you do owe money in your HELOC, most lenders calculate your assumed payment based on:
the HELOC balance owing
the lenders posted fixed rate (commonly the 5-yearposted rate, or 5.34% today), and
Heres whats changing
Take the exact same scenario as above, but now assume the lender makes you prove you can afford a payment based on your HELOC creditlimit.
Even though you might have a zero balance, the bank assumes you might use all of your available credit. It therefore adds a hypothetical $1,334 a month payment to the debts on your mortgage application.
As this chart depicts, the impact is momentous:
This policy change would (will) push tens of thousands of borrowers over the maximum allowable debt-ratio limit, preventing them from getting the mortgage they seek (unless they make adjustments; see below).
The above example is based on the $200,000 HELOC limit, a 25-year amortization and a stricter 6.45%qualifying ratefor illustration purposes, given higher rates could eventually apply. Today, the most common rate lenders use to qualifyexistingHELOCs is 5.34%, much higher than thebest HELOC rates. Using 5.34%, lenders would apply a $1,202 theoretical payment to the borrowers mortgage application. That results in a still-offside 51%TDSratio. Heres how the chart looks with that assumption (still a huge impact on borrowers):
Why it matters
Roughly 3.1 million Canadians have HELOCs, according to CMHC. The number of people impacted will be a meaningful minority of that number.
Given the median homeowner household makes about$7,400a month, adding a $1,334-a-month paymentalmost 20% of gross incometo their debts (for mortgage qualification purposes) is big potatoes!
Take a typical borrower with an average total debt service (TDS) ratio of 35%, for example. If that person wishes to retain his or her $200,000 HELOC (whether they use it or not), suddenly their TDS ratio soars to over 50%.
The result: they no longer qualify for additional financing. (Note: 44% is the maximum TDS limit for prime HELOCs, but 40% or 42% is more common.)
This rule update is market-moving. And intuitively, its purpose sort of makes sense. But dont be fooled, saysbroker Shawn Stillman ofSigma Mortgage. Its just chipping away further at borrowers options.
Whos doing it
So far, three of the six largest banks have moved to this debt-ratio calculation method.
Canadas undisputed leader in HELOCs (TD Canada Trust) just made the change November 5.
TD explained its logic in this email to RateSpy:
TheDebt Service Ratiochange was made to ensure prudentunderwritingguidelines, and reflects concerns around consumers abilities to manage debt particularly in a fluctuating rate environment.
Before this change, a borrowers capacity to service their entire authorized limit was not assessed, even though the borrower had access to those funds. This change helps ensure our customers make informed financial decisions by assessing their affordability on the available lines of credit they currently hold in addition to any credit they apply for.
The change aligns with our existing prudent underwriting guidelines, with the impact being limited to a small number of customers that have an existinghome equityline of credit and are applying for additional financing.
RBC, Canadas second-biggest HELOC lender, is using a similar method. Earlier today, it told us:
RBC reviews every mortgage based on a number of factors, including a clients credit worthiness and history, and their ability to repay. When evaluating an applicants capacity to repay we need to understand their total financial picture. We are unable to see if a HELOC from another financial institution is secured or unsecured, so we assess the client on the assumption that they could draw on the available credit at any time rather than assuming the balance at the time of application will remain unchanged
Whos behind all this
This came from somebody in the government, Stillman says. Banks never would have had a eureka moment and said, We need to do this from a risk point of view. Its not justified withdelinquencies of 25basis points.
And heres some more relevant stats: Homeowners with a HELOC (and no mortgage) have81%equityon average, according to data from Mortgage Professionals Canada. The number of standalone HELOC holders who borrow more than 50% of their equity is just 7%.
Broker Ron Butler ofButler Mortgageagrees. Lets face it, TD is the biggest HELOC provider in Canada. Chances are, OSFI is trying to put a lid on [HELOC growth] because, factually, rates are guaranteed to rise 50 bps at least, 100 bps at worst, in 12 months. For a government who has a hard time not interfering in anything, its tough to leave that one alone.
Indeed, this issue has been on policy-makers radars for a while.
A senior banker we spoke with yesterday, who didnt want to be named for obvious reasons, told us that OSFI inspired this policy.
We asked OSFI to confirm that and the banking regulator told us:
When underwriting a new HELOC application, as per B-20 principles, OSFI expects federally regulated financial institutions (FRFIs) to ensure the borrower has the ability to expect full repayment over time, which means theGross Debt ServiceRatio (GDSR) for a HELOC application should be calculated based on the HELOC limit requested.
When underwriting any loan application where the borrower has an existing HELOC in place, FRFIs may use either the limit, or outstanding balance of the HELOC, to estimate an assumedpayment in calculating the Total Debt Service Ratio (TDSR) for this loan application.It is at their discretion, however OSFI expects that, given the revolving nature of a HELOC facility, FRFIs will take a longerterm(and conservative) view of the borrowers debt servicing requirements.
you want a mortgage
you have a HELOC that you want to keep
your prospective lender stress tests you based on your HELOC limit
you have higher-than-average debt ratios
then here are some of your options:
Find another lender
As mentioned, only a handful of lenders use this policy now, but as Stillman notes, This industry is all monkey see, monkey do. Given OSFIs priorities, we expect most big banks, if not all, to apply it by year-end, or next year at the latest.
Many non-federally regulated lenders who get their funding from banks should also follow suit.
Expect lenders who dont apply this debt-ratio policy to charge higher rates for this service (just as credit unions do for borrowers who dont pass the federal stress test).
Lower your HELOC limit
Banks that stress test you on your HELOC limit will try hard to retain your new mortgage business. Two ways theyll do that is by recommending you:
convert your HELOC debt to an amortizing fixed or variable-rate mortgage.
lower your HELOC limit(s) so you qualify for new financing.
Close your HELOC
A minority of affected borrowers may choose to close their HELOCs altogether.
Others may trade them in for an unsecured credit line (which are typically qualified based on 3% of the balance, at least for now).
Get a co-borrower.
The economy, say policy-makers
They argue that its economically beneficial because less risky HELOC borrowing (and accounting for what borrowers might borrow) makes the economy more stable.
Thats apparently notwithstanding the fact that HELOCarrearsarelessthan mortgage arrears and near an all-time low. Nor does it account for the economic and jobs benefit of greater HELOC liquidity (which has never been OSFIs guiding consideration).
Lenders that can convince existing borrowers to lock in HELOC debt to fixed rates (assuming those fixed rates are more profitable for the lender) and stay with them.
Mortgage brokersbecause they have lender solutions banks dontand they know which lendersarentapplying the new policy.
HELOCs have countless prudent uses.Restricting them further reduces economic opportunities for investors and cuts fallback liquidity for Canadians who rely on HELOCs to weather economic shocks.
Mortgage brokers (yes, they win and lose)
If you say to a borrower, You dont qualify for a mortgage because of your HELOC, the first thing theyll do is go to their bank and ask how to fix it, says Stillman.
The bank will tell the borrower theyll work with them to get them approvedifthey get their mortgage through the bank. And a good chunk of these borrowers will then stay with their bank.
Looking to the Future
The higher rates go, the harder itll become to qualify for a HELOC and/or a mortgage if you already have a HELOC.
In a rising rate environment, at what point doesitnotmake sense to add two points on the stress test anymore? Stillman asks.If we get three more hikes, as the markets predict, the qualifying (stress test) rate on HELOCs could exceed 7%. Coupled with stricter debt-service policies, HELOC growth would collapse in this scenario. (Regulators end-game?)
Its going to hurt the upper end of the market, people with higher priced properties that have big HELOCs, Stillman predicts. This will further slow real estate given many of those people rely on HELOCs to buy rental properties, cottages or second homes.
With every new lending rule comes higher costs for prudent consumersand increased risk for borrowers who gravitate to more costly (higher risk) lenders. This one will be no different.
Rightly or wrongly, theres an obsession in Ottawa with borrower risk. It makes you wonder how far theyll go to stamp it all out. Next thing you know, lenders will be asked to assign a hypothetical payment to peoples credit cardlimits. (We say that only half jokingly.)
Canadian home sales activity eases in October
Ottawa, ON, November 15, 2018 Statistics released today by the Canadian Real Estate Association (CREA) show national home sales declined between September and October 2018. Highlights:
National home sales fell 1.6% from September to October.
Actual (not seasonally adjusted) activity was down by 3.7% from one year ago.
The number of newly listed homes eased 1.1% from September to October.
The MLS Home Price Index (HPI) was up 2.3% year-over-year (y-o-y) in October.
The national average sale price slipped by 1.5% y-o-y in October.
Home sales via Canadian MLS Systems edged back by 1.6% in October 2018. While activity is still stronger compared to the first half of 2018, it remains below monthly levels recorded from early 2014 through 2017. (Chart A) Transactions declined in more than half of all local markets, led by Hamilton-Burlington, Montreal and Edmonton. Although activity did improve modestly in many markets, it was offset by a decline in sales elsewhere by a factor of two.
Actual (not seasonally adjusted) activity was down 3.7% compared to October 2017 and in line with the 10-year average for the month. While sales were down y-o-y in slightly more than half of all local markets in October, lower sales in Greater Vancouver and the Fraser Valley more than offset the rise in sales in the Greater Toronto Area (GTA) and Montreal by a wide margin.
This years new mortgage stress-test has lowered how much mortgage home buyers can qualify for across Canada, but its effect on sales has varied somewhat depending on location, housing type and price range, said CREA President Barb Sukkau. All real estate is local. A professional REALTOR is your best source for information and guidance in negotiating a purchase or sale of a home during these changing times, added Sukkau.
National sales activity lost momentum in October, said Gregory Klump, CREAs Chief Economist. In part, this reflects waning activity among some urban centers in Ontarios Greater Golden Horseshoe region and the absence of an offsetting rise in sales in the Lower Mainland of British Columbia. Even so, the balance between sales and listings in these regions points to stable prices or modest gains. By contrast, the balance between sales and listings for housing markets in Alberta, Saskatchewan and Newfoundland indicates a weak pricing environment for homeowners who are looking to sell.
The number of newly listed homes edged down 1.1% between September and October, led by the GTA, Calgary and Victoria. The decline in new supply among these markets more than offset an increase in new supply in Edmonton and Greater Vancouver.
As for the balance between sales and listings, the national sales-to-new listings ratio in October came in at 54.2% close to Septembers reading of 54.4% and its long-term average of 53.4%.
Considering the degree and duration to which market balance readings are above or below their long-term average is the best way of gauging whether local housing market conditions favour buyers or sellers. As a rule of thumb, measures of market balance that are within one standard deviation of their long-term average are generally consistent with balanced market conditions.
Based on a comparison of the sales-to-new listings ratio with the long-term average, about two-thirds of all local markets were in balanced market territory in October 2018.
Most First-Time Homebuyers Spending All They Can Afford
Millennials have made up a significant portion of homebuyers in recent years and based on the 2018 Mortgage Consumer Survey, they continue to do so, representing just under half (49%) of first-time buyer respondents. Although this is a decrease from 60% in 2017 and 58% in 2016, Millennials continue to influence and shape the homebuying and mortgage process.
Heres more of what we learned about Millennials and first-time buyers as a whole, powered by the 2018 Mortgage Consumer Survey.
What does the typical first-time buyer profile look like? Forty percent are married, 80% are employed full-time and about one-quarter (26%) have a household income between $60,000 and $90,000. A strong percentage of them were born outside of Canada, with 22% identifying as newcomers to Canada. Mortgage professionals can help meet the unique needs of newcomers with the support of CMHCs homebuying information which is available in 8 different languages.
The top 2 reasons first-time buyers bought a home: they wanted to get a first home and they felt financially ready. Although certain urban markets continue to exhibit high house prices and other barriers to entry, the survey found that 61% of first-time buyers bought a single-detached home. In fact, single-detached home was the top housing type purchased in all regions across Canada, except in British Columbia where condominium apartment was the most popular housing type.
The vast majority (85%) of first-time buyers spent the most they could afford on their home, compared to 68% of repeat buyers. This indicates that first-time buyers, including Millennials, may be stretching themselves financially to purchase their home. When it comes to the down payment, savings from outside an RRSP was the main source for first-time buyers. This suggest there is an opportunity to further educate first-time buyers about other options to help fund their down payment, such as the Government of Canadas Home Buyers Plan (HBP).
To get assistance with the mortgage process, first-time buyers contacted, on average, 2 brokers and 3 lenders. First-time buyer satisfaction levels with mortgage brokers and lenders remains high. However, mortgage professionals could further increase satisfaction levels by conducting more post-transaction follow-up and by providing clients with more information on closing costs, house purchase fees, interest rates, and steps involved in buying a home. CMHCs Step by Step guide is a valuable tool for mortgage professionals to share with homebuyers to ensure they feel confident throughout the entire homebuying process.