New condos mississauga . The new pressure caused banks to reject mortgage loans by 20%. The business of private lending institutions has greatly increased! Recently, the central bank and major banks have raised mortgage interest rates one after another, making the situation of borrowers even worse.
Mortgage agencies generally estimate that applications for home loans rejected by big banks and traditional financial institutions have increased by 20% since the new year, and these rejected people have turned to credit unions, private lending and other alternative financial service institutions that are not regulated by federal regulations, making their business booming, the Gatong news agency reported. Alternative lenders may also take the opportunity to raise interest rates or be more picky about borrowers.
The Canadian Office of Financial institutions Supervision ((Office of the Superintendent of Financial Institutions,OSFI) announced last year that with effect from January 1 this year, banks and financial institutions subject to federal regulation must also impose more stringent stress tests on borrowers who can provide more than 20% down payment and do not have to buy mortgage insurance when approving mortgage loans. Add 2% to the real lending rate, or the higher of the benchmark five-year mortgage rate (five-year benchmark rate)) announced by the Bank of Canada, to calculate the borrower’s ability to repay and the amount of loans approved.
The measure is aimed at reducing risky lending by banks, curbing the rise in household mortgage debt and cracking down on possible price bubbles in the property market in some parts of Canada.
After the new rules came into effect this year, the central bank announced interest rate increases one after another, as did the central bank’s five-year benchmark interest rate, which industry people believe will be a double blow to mortgage applicants. Home buyers who have been refused loans by large banks and traditional financial institutions have to turn to alternative financial institutions, such as credit union (credit unions), private lenders and mortgage investment company (mortgage investment corporations, MICs), for loans. These alternative financial institutions, which are regulated by provincial governments and do not have to enforce stress tests for the time being, have seen a marked increase in business after the New year.
