How are Low Mortgage Rates Affecting Buyers?

26 August 2015

As you know mortgage rates have fallen as low as 0.5 per cent. As lending rates have decreased, lending criteria and documentation has become tougher from our lenders. Our take is that government regulations are setting tougher standards for the lenders because they are worried about high real estate prices. Lenders want to even lower their losses.

That’s funny, because mortgage arrears, as a percentage of all mortgages in Ontario, now sit at just .16%. That means out of 2000 mortgages only 3 are behind in payments. Incidentally, that number is the lowest since 1990. Remember the US problems in 2008? Their peak mortgage arrears number was 44 times bigger than the number we are at in Ontario today. However, today lenders no longer do stated income for self-employed mortgages and they want to see NOA’s (Notice of Assessment) only. Not only that they require a certificate of incorporation, three years of financial reports and exceptional credit scores. Only a few lenders do mortgages based just on equity. Instead of 25 and 25% down, now they want 50% with no income proof. The end result is that the potential pool of buyers has not increased, even with these lower rates but has just stayed the same.