The Financial Institutions Commission is increasing its oversight of mortgage brokers in Canada to help curb problems with predatory lending as Canadian debt loads rise and home prices fall. Despite rising interest rates, other data suggest that in Vancouver, delinquencies are not increasing as the number of borrowers who are three months or more behind in mortgage payments has dropped. The Greater Victoria housing market continues to struggle with sales in all residential categories at a 10 year low due to the more stringent federal government mortgage stress test rules.

IN THE NEWS

Chris Carter, acting registrar of mortgage brokers for the Financial Institutions Commission (FICOM) says brokers will face greater scrutiny with rising debt and declining home prices as FICOM has added more investigators and examiners to ensure that Canadians are not subject to predatory lending practices that could lead to overleveraging. According to CMHC, BC has the largest average credit debt at $124,000 for those with home equity lines of credit. However, the CEO of the Canadian Mortgage Brokers Association-BC does not necessarily agree with the increased FICOM oversight warning that while it is important not to over leverage a client, access to credit is also important.

CMHC has released February data showing that Metro Vancouver’s mortgage delinquency rates are falling despite the high cost of housing, rising interest rates and resulting carrying costs. Only 0.10 per cent of mortgages in Metro Vancouver were delinquent in 2018’s third quarter, down slightly from 0.11 per cent in the same quarter of 2017. This figure is also below the provincial average of 0.16 per cent mortgages in delinquency.

The Greater Victoria residential real estate market continues to be impacted by the federal government changes to the mortgage stress test. According to the Greater Victoria Real Estate Board, the changes impact not just new buyers getting into the market but also those looking to upgrade as many people who were previously qualified to purchase a home, or a more expensive home, are now unable to qualify.

After more than a year in place, some real estate industry professionals are of the view that the federal mortgage stress tests are doing more harm than good and need to be rolled back to allow first-time homebuyers back into the market.

STATS AT-A-GLANCE

BC UNEMPLOYMENT RATES

Regions Rate from February 2019 to March 2019 Rate from January 2019 to February 2019
Northern B.C. 9.4% 9.2%
Southern Coastal 4.9% 5.4%
Southern Interior 5.6% 5.9%
Vancouver 5.0% 4.5%
Victoria 4.1% 4.5%

Table source: http://srv129.services.gc.ca/ei_regions/eng/rates_cur.aspx

REAL ESTATE ACTIVITY (RESIDENTIAL) BY REGION

Greater Vancouver

  • Units sold: 32.8% decrease from Feb. 2018
  • Active listings: 48.2% increase from Feb. 2018
  • New listings: 7.8% decrease from Feb. 2018
  • Benchmark price: $1,016,600 (6.1% decrease from Feb. 2018)*

Victoria 

  • Units sold: 22.8% decrease from Feb. 2018
  • Active listings: 37.9% increase from Feb. 2018
  • Benchmark price: $845,900 (0.3% decrease from Feb. 2018 for detached homes)*

Fraser Valley

  • Units sold: 29.1% decrease from Feb. 2018
  • Active listings: 47.6% increase from Feb. 2018
  • New listings: 3.4% decrease from Feb. 2018
  • Benchmark price:$958,900 (3.7% decrease from Feb. 2018 for detached homes)*

Okanagan/Shuswap/Revelstoke

  • Units sold: 19% decrease from Feb. 2018
  • Active listings: 39.5% increase from Feb. 2018
  • New listings: 19% increase from Feb. 2018
  • Average residential price: $490,760 (4% decrease from Feb. 2018)

Northern BC

  • Units sold: 1.3% increase from Feb. 2018
  • Active listings: 7.4% decrease from Feb. 2018
  • New listings: 8% decrease from Feb. 2018
  • Average residential price: $288,322 (0.4% increase from Feb. 2018)

*Benchmark based on the MLS HPI® benchmark for single family detached homes.

Sources:

  1. https://biv.com/article/2019/02/regulator-fires-warning-shots-bc-mortgage-brokers-amid-turbulent-market
  2. https://www.vancourier.com/real-estate/ever-fewer-metro-vancouver-homeowners-behind-on-mortgage-payments-cmhc-1.23647842
  3. https://www.timescolonist.com/real-estate/greater-victoria-real-estate-sales-slide-prices-slip-as-stress-test-cools-market-1.23650994
  4. https://business.financialpost.com/opinion/the-mortgage-stress-test-has-started-harming-canadians-more-than-it-helps
  5. https://www.rebgv.org/market-watch/monthly-market-report/february-2019.html
  6. https://www.vreb.org/current-statistics
  7. http://fvreb.bc.ca/statistics/Package201902.pdf
  8. https://www.omreb.com/files/Media%20Release%20-%20February%2019%20Market%20Stats.pdf
  9. http://creastats.crea.ca/cari/index.html

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