Private lending rates increased and lending fees increased with a loan to value (LTV) being decreased! Clients are stuck and brokers are scrambling to find options for their clients. Clients are placed in a very bad situation as they are in a position of being sued since they cannot come up with the extra capital to close on alternative mortgages.
THE GOVERNMENT has caused a tremendous issue for clients and the brokers’ community. We need Home trust back in the market. Presently no one is qualifying with the banks due to increased CMHC premium, lending restrictions and lenders requirement…it’s killing clients not helping them!
Clients have been saving for their down payment and closing cost but now they cannot close on their purchase due to down payment requirement and lending restrictions. Qualifying rate and amortization cut back on insured deals are causing greater concern. Most B lenders are affected by what’s happening with Home Capital. Both the residential and commercial market is affected.
Private first residential mortgage in the GTA is now at 8.99 to 9.99% RATE – 65% LTV to 75% LTV. You’ll obtain 80% if you’re lucky and be prepared to pay a higher rate and fees. Fees are 3 to 4% on a first now on private – This is INSANE. In fact, many private lenders are out of capital. Options are minimum! These changes only affect clients and everyone having a tough time to close. Brokers are scrambling now to find an alternative option for their clients since Home Trust is not funding and many other lenders who depended on Home trust money are stuck as well. How can a broker get by when they have to place their clients in an expensive private mortgage? There’s no room for us to charge a fee so pretty much we are all affected. Only the big banks are benefiting from the Government change and yet they themselves are losing business as no one can fit their qualifying requirements. Banks are pressuring their BDM to originate business – how can they when the Government ridiculous change affects the entire mortgage industry? Originating business is easy but closing deals have become horrid and clients pocket is feeling it.
The Government really need to make some immediate change as they have in the past year because with this trend home buyers are being placed in more debt as the cost of borrowing on private capital is expensive. These changes are hurting clients and will hurt the economy. AWFUL STATE THE INDUSTRY IS IN. If one doesn’t have about $1600 – they cannot live in a decent one bedroom apartment even by renting. Clients that purchased from builders and are set to close are having a difficult time to close in allocating extra funds.
Brokers should start to voice their opinion as this is our industry and if you don’t speak up, we are all doomed with our clients!
CONTACT AMEERA@CMFG.CA TO VOICE YOUR OPINION.