Three predictions for 2014 Canadian Mortgage Market
1.) People will hedge their bets.
-Did you know it's possible to have a mortgage that is part variable and part fixed? With so much uncertainty in future rates, people will turn to hybrid mortgages. For example. A $200,000 mortgage at Prime minus 0.40% (2.6% currently), and another $150,000 mortgage at 3.49% for 5 years fixed for a total loan of $350,000 with a blended rate payment.
2.) Non-OFSI regulated lenders will increase market share.
OFSI regulates financial institutions in Canada. OFSI has been the regulator and driver of the mortgage rule tightening bus in Canada. There are certain credit unions that are not regulated by OFSI and thus may allow certain borrowers to complete transactions that would be otherwise not possible.
3.) More rules, More rules, More rules
We know it's not what people want to hear, but we expect OFSI to continue to tighten mortgage lending in Calgary, and the rest of Canada. The rules are designed to lower risk for lenders and default insurers as well as slow down the market.