This is a continuation of the article I had written here.
Borrowers will not need to requalify for a mortgage upon renewal
I could be wrong about this, but I honestly do not believe that they were actually serious about acting on this proposal. This would have been high among the all time idiotic policies ever instituted, and it would have decimated mortgage lending in this country as we know it, would have led to wide scale foreclosures and caused a depression in property values and a continuous downward spiral for the housing market in Canada.
In my opinion, this was just a clever slight of hand by the OFSI that the media and even our national mortgage industry associations bought hook line and sinker. It was a diversion tactic that they put on the table to take attention away from the other major measures they were instituting that I mentioned previously. It made it easy for them to relent on an item while pressing through the real changes they wanted to make without anyone even questioning them.
It is disappointing that psychological games such as these are being used on the general public, and its even more so that they are successful with this.
It is easy for me to shoot holes in things that are being done by the OFSI and government, and over the past 4 years, I can’t say that I disagreed with all the changes they have made or that in retrospect some were the right decision to make.
However, I do believe that some of the changes being done, we can live with and life goes on, but some very real damage is being done to our lives in this country. Central to my belief is to see the erosion of the middle class into a society of haves, and have-nots. They make it harder for someone to buy a house, or to refinance a house, but does the OFSI care at all about banks giving away credit cards like candy? I have not heard any news about them making it more difficult to lend unsecured credit that is what is harming this country much more than secured lending on a stable asset like real estate.
The government made it a requirement for the general public to put 20% down to purchase a rental property, but for commercial rental properties like apartment buildings which cost millions of dollars, CMHC will still only require 15% down. Interest rates on these kinds of insured properties are also actually LOWER than a regular residential mortgage. What sense does this make? It is matters like this that cause me to believe that the government would like to see a class of landlords and wealthy, and a class of those who pay the rent. Their motto appears to be “Make it more difficult for the average person to buy, make it easier for someone with means to own.”
In the next article, I am going to write some thoughts on what I believe would be positive steps to take to not just protect the real estate market in Canada, but to ensure that the general population can continue to own property.