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2018 Mortgage Rules

By | Abana Mortgages, Industry Update, Mortgage News, Vancouver Real Estate

New mortgage rules coming into effect as of Jan 1st, 2018 are a seismic policy shift and is expected to hit the banks’ earnings in a substantial way. Meanwhile, none of the big 6 banks are raising any alarms. Why?

The federal government in the past 2 years has systematically and gradually choked off competitions for the big 6 banks by severely limiting access to capital for non-bank mono line lenders, forcing them to close down shop or merge with the big banks.

The latest set of rules will mean consumers facing renewals will not be able to shop for rates as they will be effectively stuck with their current lender or face much tougher qualification if they were looking to switch for a better rate.

So, while the big 6’s mortgage origination may take a hit with these rules, their retention rates will certainly rise significantly as consumers no longer have a choice and what they may lose on loan origination growth they will more than make up by taking market share from mono lines who no longer can compete.