Keep Competition in the Canadian Mortgage Market

Peter Menicucci
Peter Menicucci 544 Comments
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Keep Competition in the Canadian Mortgage Market

We are asking the Department of Finance to consider the important place non-bank lenders play in the health and competitiveness of the Canadian Mortgage Market.

While we endorse the DOF’s intention of providing a secure housing market and stable mortgage environment for Canadians and we support the curbing of growing debt loads in our country we are asking that consideration be given to importance of choice and value for Canadian Mortgage consumers.

The recent proposed rule changes have many welcome elements including 5 – Year Fixed Rates stress tested at the BOC Qualifying Rate, elimination of bulk mortgage insurance for rental properties and the closing of tax loop holes for capital gains on properties that may not actually be owner occupied. We endorse all these measures.

We respectfully call the DOF’s attention to two key elements of bulk insured mortgage programs that have served the Canadian public admirably for many years:

30 Amortization for Owner Occupied Purchases with Bulk Insured Conventional Mortgages – this program has been a boon to rate competition and consumer choice in this country for decades. This portfolio’s performance has been exceptional for mortgage insurers and lenders alike and has allowed a healthy alternative to the Big 6 banks that control 93% of the Canadian public’s assets. While we understand the DOF’s concerns over use of sovereign debt guarantees we are sure those concerns are outweighed by the true benefit to Canadians to allow choice and rate competition. 30-year amortization is a frank necessity when purchasing homes in major Canadian cities and it is extremely important that the mortgages required to purchase Canadian homes not become the exclusive domain of 6 Canadian banks, this change would be neither wise nor healthy in the long term. Canadians deserve more than 6 choices when they shop for 30-year mortgage financing.

Conventional Mortgage Refinances using Bulk Insurance – this is also a highly successful program that has provided tremendous benefits for Canadians and performed flawlessly for both Mortgage insurers and lenders for decades. While we recognise the DOF’s desire to curtail relentless re-mortgaging of properties we believe that reducing the consumer’s choices for mortgage refinancing to 6 banks is not in the long term interest of Canadians. Changes to the rules governing bulk insured are welcome but the complete elimination of this program is anti-competitive in the extreme.

This petition is meant help all the mortgage consumers in this country and also allow thousands of hard working individuals working at non-bank lenders to retain their jobs. The simple truth of the DOF’s present proposal means that non-bank lender volume of business would reduce by 65% causing massive harm to a vibrant, safe and valuable mortgage origination industry.

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