2695 replies to this topic

[Mike K.]

Last year as of January 9th there were 65 sales. If we were to average out this year's sales of 41 by the 8th we'd be looking at 46 by the 9th.

[tjv]

Still it will be interesting to see how the market plays out over January or February.

 

Mike, you could very well be right that more and more people will be renting.  Also, I am curious do you have to pass the stress test to get a secured line of credit against your house?

[Mike K.]

I don’t think lines of credit have such challenges.

Banks actually “want” people on LOC’s. They love offering them to homeowners.

[tjv]

I found this:

 

It also becomes tougher to qualify for a home equity line of credit (HELOC) with banks, assuming the 200 bps stress test is greater than the current “benchmark rate” stress test at the time you apply

• Today most people qualify for bank HELOCs at 4.89%. On January 1, assuming rates don’t change, they’d qualify at 5.70%.

https://www.ratespy....s-test-10174935

[Mike K.]

How is it becoming tougher to qualify?

[tjv]

good question, I am assuming they put you thru the same stress test?  No difference between refinancing for an additional 200k and getting a secured lined of credit for 200k?

 

If that is true then that it why the high interest rate secondary mortgage industry is booming since they can't get money elsewhere.

[m3m]

I'd hope that they don't put you through the same stress test.  It seems to me that there would be very little risk to banks since most HELOCs only allow you to borrow up to 80% of your home's value.  You are simply accessing equity/money that you've already earned either from paying down your existing mortgage or through market appreciation.  If I were to sell my property, that equity would be cash in my pocket. I always viewed HELOCs as simply a tool to liquify money that you already own, but can't access because it's tied up in your house. 

 

I was planning on getting a HELOC later this year to use essentially as bridge financing to pay off my student loans. So I guess we'll see. 

[tjv]

^Not disagreeing with what you are saying, but we have confirmed that refinancing your home requires a stress test.  I don't see much difference between refinancing and HELOC

 

Just did another search, here is another article confirming HELOC treated the same as mortgages under OSFI stress test:

 

http://business.fina...sured-mortgages

 

So basically if you want any money from or purchase real estate and you aren't paying cash, expect to go thru a stress test

[LeoVictoria]

^Not disagreeing with what you are saying, but we have confirmed that refinancing your home requires a stress test.  I don't see much difference between refinancing and HELOC

 

Just did another search, here is another article confirming HELOC treated the same as mortgages under OSFI stress test:

 

http://business.fina...sured-mortgages

 

So basically if you want any money from or purchase real estate and you aren't paying cash, expect to go thru a stress test

 

Which is as it should be.  The point of the stress test is to reduce risk from overleveraging.  It would make zero sense to impose a stress test on acquiring the mortgage and then let someone turn around and take the money out again via a HELOC with no stress test.

[Mike K.]

Or pay a higher rate with a private lender, or, for the time being, go to a credit union as they’re not bound by OSFI regulations.

[lanforod]

Federally regulated ones are... I think that is just Coast Capital?

[Mike K.]

Yes, as long as they're not federally regulated by the OSFI. There are several credit unions operating locally, the biggest after CC being Island Savings, I think.

[jonny]

Coast Capital members voted over a year ago to go federal. 

[tjv]

Is it worth coming up with a list of credit unions that are not affected?  Vancity is regulated by OSFI

[Mike K.]

Yes, I think that would be very helpful.

[tjv]

We only have 2 other credit unions to check?  Island Savings and Coastal Community?

[Sparky]

Van City

[tjv]

^

Vancity is regulated by OSFI

Jonny also said Coast Capital is federally regulated for the last year

[tjv]

From what I have heard thru general conversation, credit unions are basically maxed out on mortgages.  I don't know the details, but I would assume they have had a rush of people who failed the stress test at the banks?  Can anyone else confirm that?

 

I haven't had the time to stop by Island Savings or Coastal Community to check it out myself

[LeoVictoria]

From what I have heard thru general conversation, credit unions are basically maxed out on mortgages.  I don't know the details, but I would assume they have had a rush of people who failed the stress test at the banks?  Can anyone else confirm that?

 

I haven't had the time to stop by Island Savings or Coastal Community to check it out myself

 

The smaller lenders rely on bulk portfolio insurance to get the loans off their books.  Problem is CMHC also drastically cut back on that.   So there is definitely a limit to what they can take on.