If the changes from July didn’t cripple the market enough, wait, there’s more! This week more Federal changes took effect but some lenders are taking it even further.
I have spoken with a number of realtor friends in the industry recently and not even one has said they have seen it this bad before, ever. This Summer’s changes literally placed a huge wall in front of the road of home sales required to keep the market from crashing. Don’t get me wrong, Vancouver is way too over-priced and prices do need to come down but this seems a bit much.
The following are a number of changes implemented by some major lenders this week:
- LOC’s (line of credits) were lowered to a maximum of 65% LTV (loan to value)
- Stated income (when you can’t prove income) programs were lowered to a maximum of 65% LTV
- Net worth lending (equity lending based on the property and not the applicant) programs were lowered to a maximum of 65% LTV
- Free Down Payment programs are gone (except for credit unions) but I never liked them in the first place
- New to Canada program (for new immigrants) were lowered to a maximum of 65% LTV
- There is even a “rumour” that some lenders are increasing the minimum down payment to 10% down but that is just a rumour
My question is, what do they know that we don’t? Why are they cutting back and lowering risk to such extreme measures? This resembles a snowball rolling down a hill, gaining speed and size. Things appear to be getting worse before getting better but the industry is always evolving, we need to sit and go with the ride.
Own your life,