Mortgages for everyone

At one time, choosing a mortgage was like buying a Model T Ford: You could only find it in one colour. Now the Canadian mortgage scene has gone beyond the basic black option and offers a rainbow of products for both investors and home buyers. There is something for everyone, even the old-fashioned homeowners who want to pay off the mortgage as soon as possible (75% of us, according to Canada Mortgage and Housing Corp.).

For investors who would rather dabble in the secondary mortgage market than rely on potential 649 winnings for their income, there are mortgage-backed securities (known as NHA MBS). These have been available for a decade in Canada, followed by the introduction of Canada Mortgage Bonds in 2001, both popular investment options. Together the two totalled $36-billion in investment last year, up 19% since 2005.

More flavours are on the mortgage shelf for home buyers as well. Not surprisingly, with more flexible mortgages available--meaning you don't have to wait years to scrape together a down payment -- the share of renters who plan to become first-time buyers has jumped to 60%, according to CMHC. A quick perusal of bank Web sites showed eight types of fixed-rate and five kinds of variable-rate mortgages. With this kind of bewildering choice, surprisingly only 30% of first-time buyers used a mortgage broker. Once we've found a lending institution, we tend to stick with it rather than shop around:Only 23% of repeat purchasers and 13% of mortgage renewers used a broker last year.

High-ratio mortgages allow buyers to put less than 20% down and that means more demand for mortgage insurance. In the past two years, the insurance landscape that once included only CMHC and Genworth, now has several other new entrants: AIG United Guaranty, PMI Canada and Triad. MGIC Investment Corp. is expected to enter the competition soon.

Compared with the United States, the mortgage climate is very different in Canada, with more stable home appreciation, says Janet Martin, president and CEO of PMI Canada. "There are more conservative lending practices here. You stick to the basics of lending known as the three Cs: collateral, capacity and character." She believes PMI can compete for several markets she thinks are underserved: new Canadians, the self-employed and those with unusual credit histories.

So, while we may be enjoying the double-scoop with sprinkles on top in current mortgages (in the form of 40-year amortizations or home equity lines of credit), the banking regulatory system still only comes in one colour: granite.

(prepared by Susan Down/National Post)


Shuswap area lenders include:

VIC HAMILTON
Bayfield Mortgage
250.833.9183
1.866.252.4526
vic@sunwave.net

SUE FOUBERT
TD Canada Trust
250.833.8790

CORINE HILD
Tekemar
250.832.8766
1.800.658.2345
child@sunwave.net