Average condo price toronto . The loan rejection rate of home buyers has risen by nearly 20%. Mortgage brokers say the rejection rate of lenders by large banks and traditional lenders has risen by 20 per cent since the implementation of the new stress test policy.
The Canadian Office of Financial institutions Supervision ((The Office of the Superintendent of Financial Institutions, OSFI)) announced new stress test rules during the approval process of home loans on October 17 last year. From January 1 this year, home buyers will have to pass the stress test even if they pay 20% of the down payment, as long as they do not buy mortgage insurance, so as to ensure that borrowers can bear the risk of raising interest rates.
As a result, real estate agents are increasingly instructing buyers to choose loans that do not require new stress tests, and the business of some other lenders is growing. Some rejected buyers are starting to choose private loans, mortgage investment companies or credit union (credit unions), which do not need to carry out new stress tests.
In addition to the new stress tests, the Bank of Canada also raised interest rates, dealing a double blow to home buyers.
Campaniaro (Carmen Campagnaro), president of Pro Funds Mortgages, a mortgage financial institution in Burlington, Ontario, reckons that the rejection rate of big banks has risen by 20 per cent since January 1st. Nob (Hali Noble), senior vice president of Fisgard Asset Management Corporation, a private lending company in Victoria, said there had been a big increase in the number of home loan customers. He believes that many of these people should be accepted by the banks and have in fact been turned away.
Teixeira (Dave Teixeira), vice president of Dominion Lending Centres, another mortgage agency, also said that the rate of rejection of mortgage applications sent by the company to big banks was higher. Borrowers have to submit applications to multiple lenders at the same time, hoping that eventually one of them will agree to borrow. In this case, the total number of applications submitted by mortgage brokers increased by an average of 80 per cent over last year, and the proportion of applications submitted to credit unions was increased to 20 per cent instead of the practice in the past that applications were mainly submitted to large banks.
