New mortgage rules sending borrowers to alternative lenders
Mortgage brokers and others, who work with consumers to arrange mortgages, say that rejection rates are on the rise. Major banks and other traditional lenders have tightened their willingness to lend after Canadian banking regulators instituted a new “stress test” that applies to all home buyers. As a result, rejection rates have risen by approximately 20 percent.
The new guidelines, known as B20, have also pushed some buyers to consider private lenders, mortgage investment corporations (MICs) and credit unions, who are provincially regulated and not required to implement the stress test. The changes were implemented to curb risky lending as a consequence of rising household debt and high home prices in some markets.