Less than 1 week ago, I shared an article where the Conservative Party Deputy Shadow Minister MP for Finance, Tom Kmiec, was looking into overturning B-20 and the stress test. Apparently the Federal Government is declining the Conservative’s proposed subcommittee review of B-20 and this is the second time the proposal has been dismissed in a matter of weeks. What is their motivation in refusing to even hear evidence on what impact their changes are having on Canadians? Is it all about their fragile egos or possibly because they made a mistake?
“The new stress test is going to block up to 60,000 Canadians from being able to buy a home and about 100,000 Canadians will probably fail the stress test and won’t be approved to borrow from a federally-regulated lender and that will push them to the unregulated lenders. We know from a CIBC Capital Market report that 47% of all mortgages need to be refinanced in 2018. In the year they knew there would be so many people refinancing, they still imposed the stress test. That was irresponsible and unfair. B-20 is harming Canadian families.”
Upon renewal of your mortgage if you continue with the same lender, you don’t need to re-qualify, you just sign the renewal agreement. However, lenders are not going to be offering you the best rates on renewal because they know you are stuck between a rock and a hard place. If you switch to a new lender, you have to re-qualify at the new stress test and they know the odds of you qualifying and potentially losing your business are less than 50%. Banks used to send renewal notices at posted rates because they had a captive market until Mortgage Brokers came on the scene and offered better interest rates.
Given the escalating number of desperate families taking out private loans this year, we wish Kmiec’s proposal was given consideration rather than dismissed outright. The result is we’re seeing is a lot of people getting refinances that would have previously qualified but now need to go to private lenders to retain their homes or face putting them up for sale, this has a dramatic impact on people’s lives. It shouldn’t be government policy to force people out of their houses or be forced to pay 12% – 15% for a private mortgage to take care of their finances. I really don’t know who is winning in this situation except maybe the Banks getting a higher return on their Mortgage portfolio!
Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.
To contact Colleen, please fill out the form on www.mortgagesbycolleen.ca or call 416-459-2406
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