Over the past couple of months we have seen a gradual shift in mortgage rules most notably;
- The end of 100% financing and the cash back mortgage
- The reduction in line of credit limits to 65% of the home’s value compared to the previous 80%
What makes this round of changes interesting is the creative means some lenders are using in order to maintain the status quo. I believe it will be November before we see the full impact of these changes and how lenders plan to respond. We still have lenders operating under the old rules so it is business as usual for us at this time.
So what is the next change coming? If I was a betting man I would think the elimination of “stated income” mortgages for self-employed individuals. “Stated income” mortgages are often used for the self-employed where income cannot be verified, but credit is strong suggesting an ability to manage one’s financial affairs. I would hate to see that happen, as the self-employed numbers continue to grow and common sense suggests if an individual has proven their ability to manage their existing affairs, then they are not going to obtain a mortgage that would jeopardize that record.
We welcome your comments.