MLN NewsStream

CMHC says Canada built 30,000 fewer homes last year thanks to lofty borrowing costs. Turns out, steep rates caused small-fry investors, who account for about half of condo construction funding, to run for the hills faster than Sean "Diddy" Combs from a truth-telling contest.

This spells trouble for one simple reason: "Canada has built a structural deficit in housing supply that can only be remedied through extensive investment by the private sector," CMHC reported this week. In fact, despite all the government home-building hoopla, the private sector shells out no less than 95% of home-building capital.

When it comes to condo apartments, it is individual investors who provide "the majority of the funding to build," CMHC Deputy Chief Economist Aled ab Iorwerth tells MLN. So, given that most developers need at least 70% of units pre-sold to secure financing and start construction, the exodus of small investors has thrown a wrench in the housing machine.

Canadian fixed mortgage rates are so tied to U.S. monetary policy, they should probably ask for a green card.

Most borrowers don’t realize how important this cross-border relationship is, so a touch of Fed history offers enlightenment.

Looking at the six easing cycles prior to the pandemic, what we learn is that once the Fed makes its initial rate cut:

Effective November 21, people with uninsured mortgages will be able to switch lenders without passing the federal mortgage stress test.

That follows a similar move last October when the government clarified that people with transactionally insured mortgages can also switch lenders without a stress test.

As for folks getting low-risk bulk-insured mortgages, so sorry. Your government says you don't get the same treatment. As it stands, the Department of Finance has refused to let insurable borrowers switch lenders without a stress test.

That makes about as much sense as an inflatable dartboard. But let's not give up hope just yet.

There's now one less direct-to-consumer (DTC) mortgage provider in Canada. Questrade's online mortgage division has officially gone offline.

It lasted a whole 30 months—shorter than most car leases.
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In a significant win for consumers, the Office of the Superintendent of Financial Institutions (OSFI) has kicked the stress test to the curb for straight switches of uninsured mortgages.