A quick look at changes to mortgage lending rules made by Ottawa in recent years

The federal government has moved several times in recent years to restrict mortgage lending. Here’s a quick look at some of the changes Ottawa has made:

Feb. 15, 2016: The minimum down payment for new government-backed insured mortgages increases from five per cent to 10 per cent for the portion of the house price over $500,000.

July 9, 2012: The maximum amortization period for new government-backed insured mortgages drops to 25 years from 30 years. Ottawa lowers the maximum amount Canadians can borrow when refinancing to 80 per cent from 85 per cent and stops offering insurance on mortgages for homes worth more than $1 million.

April 18, 2011: Ottawa withdraws government insurance backing on lines of credit secured by homes, such as home equity lines of credit.

March 18, 2011: The maximum amortization period for government-backed insured mortgages is cut to 30 years from 35 years and the maximum amount Canadians can borrow in refinancing their mortgages is reduced to 85 per cent from 90 per cent of the value of their homes.

April 19, 2010: Ottawa introduces a requirement that all borrowers meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term. The government also lowers the maximum amount Canadians can withdraw in refinancing their mortgages to 90 per cent from 95 per cent of the value of their homes and requires a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner-occupied properties bought for speculation.

Oct. 15, 2008: The maximum amortization period for new government-backed mortgages is fixed at 35 years and a requirement for a minimum down payment of five per cent is introduced. Ottawa also establishes a consistent minimum credit score requirement and introduces new loan documentation standards.


How much do you need to have beyond your down payment when buying a house?

You’ve scrimped and saved to put together a down payment to buy your first home.

But experts say it’s important to remember that your down payment is only part of the cost of buying a house.

Home inspections, title insurance and the costs of a lawyer to help with the purchase all add up. On top of that are moving expenses, service hookup fees and any renovations or repairs you want to make before moving in.

And you’re going to need to have the cash on hand to pay those bills.

Pat Giles, associate vice-president for real estate secured lending at TD Canada Trust, suggests homebuyers budget to three to five per cent of the price of their home for expenses related to the purchase if they can.

“It is critical to understand the full financial commitment up front,” Giles said. “The price of home ownership is much more than your down payment and your monthly mortgage payment, and so whether it is one-time closing costs or it is the ongoing costs of home ownership, there’s a lot to take into account.”

Having an extra five per cent to cover the extra costs on top of your down payment means if you’re buying a house for $400,000, you need to budget upwards of $20,000.

CHMC helps first-time homebuyers with a work sheet to help estimate the cost of buying a new home beyond the purchase price. The list includes more than 20 upfront and other costs you may need to pay in addition to the purchase price of your new home.

If you’re moving from an apartment into a house, you might need to buy a lawn mower or a snow blower. Depending on the change, you may also want to buy a new patio set or barbecue. Or maybe you need to set up a guest room which you didn’t have in your old place.

Patti Brown, a RE/MAX Hallmark sales representative with the Susan Chell Team in Ottawa, estimates just the closing costs can be upwards of two per cent of the cost of the house.

But, she said, there are also plenty of other costs.

“A lot of people like to refinish hardwood floors if they’re in rough shape,” she said. “Painting you can obviously do yourself, but if you’re going to hire that out it’s not cheap, that’s for sure.”

Giles said it’s key that homebuyers understand all of the costs related to both buying a house and maintaining one.

“Saving three to five per cent will allow you to have funds available if the costs end up being higher than anticipated,” he said.

“And if they come under, you can either make a lump sum payment to your mortgage, you can keep it as an emergency fund, or you can help cover repairs or renovations down the road.”


National Bank of Canada raises dividend despite 48% profit drop on soured energy loans

National Bank of Canada raises dividend despite 48% profit drop on soured energy loans

National Bank of Canada said fiscal second-quarter profit fell 48 per cent after setting aside more money to cover soured energy loans. The lender raised its quarterly dividend 1.9 per cent to 55 cents a share.

Net income for the period ended April 30 dropped to $210 million, or 52 cents a share, from $404 million, or $1.13, a year earlier, the Montreal-based lender said Wednesday in a statement. Earnings excluding some items were 60 cents a share, matching the average estimate of eight analysts surveyed by Bloomberg.

National Bank, the country’s sixth-biggest lender, recorded $183 million in pretax provisions for oil-and-gas industry loans in the quarter, which it pre-announced on May 5. Personal and commercial banking unit had a loss, while wealth management profit declined. Capital markets earnings rose.

“The credit quality of the overall loan portfolio, excluding the oil and gas producer and service company loan portfolio, remains within expectations,” Chief Executive Officer Louis Vachon said in the statement.


Bermuda experts head to Canada to promote jurisdiction

HAMILTON, Bermuda, April 28, 2016 (GLOBE NEWSWIRE) — Bermuda Business Development Agency (BDA) will lead a team of industry and regulatory experts to Toronto next month to detail the benefits to Canadian corporations of setting up captive insurance companies in Bermuda.

Speakers at next month’s forum in Toronto on Bermuda captive insurance, from left: Joe DaSilveira of Liberty Mutual Management; Oceana Yates of R&Q Quest Management; Mark Allitt of KPMG Bermuda; Leslie Robinson of the Bermuda Monetary Authority (BMA); Christiane Kenny-Post of ASW Law; Jereme Ramsay, of BDA (missing from photo David Downie of KPMG Canada)

The panel will host an informative Executive Forum in downtown Toronto Tuesday, May 10, in which representatives will outline the advantages of Bermuda-based captive insurance companies to self-insure a variety of risks, from healthcare and employee benefits to cyber disruptions. To register, go to http://conta.cc/1VdNmfk

“Bermuda offers Canada corporations a pragmatic, cost-effective solution in a blue-chip jurisdiction to manage the many complex risks facing today’s global businesses,” said Jereme Ramsay, BDA Business Development Manager. “We hope this presentation will highlight Bermuda’s strengths as a partner jurisdiction, and we welcome questions or requests for one-on-one meetings while we’re in Toronto.”

Bermuda has been of growing interest to Canadian corporations following the June 2010 signing of the Canada-Bermuda Tax Information Exchange Agreement (TIEA), which allows Bermuda subsidiaries of certain Canadian corporations with international operations to be eligible for Canadian tax benefits, including the tax-free repatriation of certain dividends to Canada.

The forum, scheduled for 8:30 am–11:30 am at the Shangri-La Hotel, features two sessions, moderated by Joe DaSilveira, Senior Vice President of Liberty Mutual Management. The first, “Captive Solutions & Strategies,” will explain what a captive insurer is, a captive’s structure, key reasons to set up a captive, along with common risks insured, citing several case studies. A second session will focus on tax and regulatory considerations.

Industry speakers include: Oceana Yates, Vice President, Captives of R&Q Quest Management; Mark Allitt, Advisory Services Manager, KPMG (Bermuda); Leslie Robinson Assistant Director, Corporate Authorisations, Bermuda Monetary Authority (BMA); Christiane Kenny-Post, Corporate Manager, Consultant, Compass Administration Services/ASW Law; and David Downie, Partner, Tax, Financial Services KPMG (Canada).

“Canada and Bermuda have a long-standing relationship, which has resulted in many successful Canadian entities establishing a Bermuda presence,” noted panellist Oceana Yates. “As such, we are delighted with the opportunity to share our experience and present about captives, addressing critical issues and highlighting some of the benefits that Canadian corporations typically look to achieve with a captive.

“The well-established historical ties between Canada and Bermuda were reinforced by the signing of the Canada-Bermuda TIEA,” she added, “and this has further enhanced business opportunities between the countries.”

BDA will return with a team of Bermuda insurance industry representatives to Canada this fall to attend the Risk & Insurance Management Society (RIMS) Canada conference in Calgary September 11–14.

The BDA encourages direct investment and helps companies start up, re-locate or expand their operations in our premier jurisdiction. An independent, public-private partnership, we connect you to industry professionals, regulatory officials, and key contacts in the Bermuda government to assist domicile decisions. Our goal? To make doing business here smooth and beneficial

Rosemary Jones
Communications Manager
441 278-6558
441 337-4696

JPMorgan Broker-Dealer and Custodian Hit with $1 Million Fine

Source: Financial Advisor 

JPMorgan’s broker-dealer and custodian have been fined more than $1 million for supervisory and operational failures related to record keeping, Finra reports.

The regulator has fined J.P. Morgan Securities $775,000, and J.P. Morgan Clearing Corp. $250,000, for failing to provide certain information to customers in two segments of the bank’s global wealth management unit during various times between 2006 and 2014, Finra says in its disciplinary action document.

J.P. Morgan Securities, a brokerage, allegedly failed to send investment objective letters to more than 3,000 JPMorgan Global Wealth Management clients from 2006 to 2012, according to the regulator.

From 2009 through 2013 the firm also allegedly failed to send copies of account records within 30 days of account opening to more than 1,300 Private Bank customers, and from 2007 through 2014, the company failed to deliver transaction confirmations to more than 7,000 Private Bank customers.

The firm also allegedly failed to properly monitor outside brokerage accounts of close to 2,000 of its employees and preserve certain customer correspondence, according to the regulator.

The custodian J.P. Morgan Clearing Corp., meanwhile, allegedly failed to send annual privacy notices from 2011 to 2013, affecting more than 965,000 account holders in 2013, according to Finra.

RBC Donates $50,000 to the Canadian Red Cross for Ecuador Earthquake Relief Efforts

Press Release:

RBC announced today a $50,000 donation to the Canadian Red Cross to support relief and humanitarian efforts for those affected by the earthquake in Ecuador. RBC has requested that its donation be directed where it is needed most for emergency relief which can include food, clean water, shelter and medical aid.

“The impact of this disaster is enormous and our hearts go out to the families and friends of the many people whose lives were lost as a result of this devastating earthquake in Ecuador,” said Valerie Chort, vice-president, corporate citizenship, RBC. “We have a long-standing tradition of helping communities that are in need, and on behalf of our clients and employees, we are proud to support the relief efforts of the Canadian Red Cross with a donation.”

Anyone who wants to contribute to the Canadian Red Cross can do so by visiting any RBC branch in Canada.

Royal Bank of Canada is Canada’s largest bank, and one of the largest banks in the world, based on market capitalization. We are one of North America’s leading diversified financial services companies, and provide personal and commercial banking, wealth management, insurance, investor services and capital markets products and services on a global basis. We have over 80,000 full- and part-time employees who serve more than 16 million personal, business, public sector and institutional clients through offices inCanada, the U.S. and 37 other countries. For more information, please visit rbc.com.‎

RBC helps communities prosper, supporting a broad range of community initiatives through donations, community investments, sponsorships and employee volunteer activities. In 2015, we contributed more than $121 million to causes around the world.


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