Housing bubble fears a boon for alternative lenders
Pressure on Canada’s big banks from Ottawa and the Bank of Canada to tighten mortgage lending practices is benefiting the country’s alternative lenders.
In the wake of recently tightening regulations and increased supervision from the Office of the Superintendent of Financial Institutions (OSFI,) alternative lenders such as Mortgage Brokers are filling the void. In this article, we learn that larger lenders have held back lending to self-employed borrowers or outsourcing to their own broker channels. As a result, these clients are seeking alternative means to finance their home purchases.
Canadian's current debt-to-income ratios, coupled with the feared impact of the eurozone debt crisis, is causing regulators to increase scrutiny surrounding mortgage lending. After OSFI was set to directly supervise the Canada Mortgage and Housing Corporation in April, the organization set forward several proposed regulatory changes. Some of these, including lowering the maximum loan-to-value ratio of Home Equity Lines of Credit, have been pulled back after consultation with industry professionals.
With access to multiple lenders and the best mortgage rates, Mortgage Brokers are an option more and more Canadians are taking advantage of.
To read the full article from the Financial Post, click here.