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Canada’s reverse mortgage balance expands anew, exceeding $3.7B

Seniors using reverse mortgage borrowing intensifies

Ephraim Vecina
Mortgage Broker News

Canada’s reverse mortgage balance continues breaking its own records, reaching a new high in July as seniors’ borrowing kept intensifying.

The balance stood at $3.78 billion on that month, having increased by 26.24% annually and 0.98% from June, according to OSFI filings.

While growth in this debt type is decelerating slightly, “it’s still one of the fastest (if not the fastest) segments of credit growth,” according to an analysis by housing information portal Better Dwelling.

However, multiple observers have warned that this trend is unsustainable in the long term.

A significant proportion of Canadians are betting on their residential properties as evergreen investments, but several warning signs of housing’s likelihood of failure as a retirement plan have become apparent.

“More and more Canadians are retiring with a mortgage, which 30 years ago would have been unheard of. People are retiring with debt, with a mortgage, simply because they just didn’t plan well,” Carte Wealth Management’s Jacqueline Porter told the Toronto Star earlier this year.

“I have conversations with clients all the time. Freedom 55 is out the window.”

A crucial mistake that many employees and professionals commit is operating under the notion that economic and housing growth will be permanent, Porter added.

“You can’t look at the last 40 years and think that’s what’s going to happen the next 40 years, especially as people continue to use their home as a piggy bank.”

Copyright © 2019 Key Media

Hoping for a change to B-20 regulations? Not so fast

Voting with the hopes that those amendments will be drastically changed is wishful thinking

Kimberly Greene
Mortgage Broker News

Early voting has already begun across the country and no doubt voters are looking out for their best interests when making their choices.

Fresh in the minds of some would-be homeowners and mortgage professionals alike are the proposed amendments to B-20 regulations, particularly the stress testing component. One lending executive, however, says that voting with the hopes that those amendments will be drastically changed is wishful thinking.

Politicians are powerful, but there are limits to what they can and can’t do, says Nick Kyprianou, president and CEO of River Rock Mortgage Investment Corporation.

“Don’t forget, politicians don’t have the power to make changes with the financial institutions that people think,” Kyprianou said. “OSFI runs itself. They’re not a political entity. So the politicians can say ‘we want you do this, we want you to do that,’ but at the end of the day, [OSFI is] mandated to make sure financial institutions are strong.”

The Office of the Superintendent of Financial Institutions (OSFI) is part of the government, but it is an independent agency that is responsible for regulating federally registered banks and insurers, trust and loan companies, as well as private pension plans subject to federal oversight. Their stated goal is to contribute to the “safety and soundness” of the financial system in Canada.

Nowhere in their mandate mentions anything about consumers, Kyprianou points out, and there’s certainly nothing about affordability.

“The politicians can say, we’re going to get rid of B-20—they’re not going to. They might get a 30 year am[ortization] through, and all that will do is make the market busier,” he said. “Politicians focus on consumers and taxpayers. OSFI focuses on neither of those two things.”

Of course the argument is that OSFI’s concern with what’s best for the financial institutions has pushed all would-be buyers down a step on the housing market ladder, having a negative effect on affordability as well as the rental market. The question isn’t whether or not the regulations need to be changed—but whether or not we’re putting too much faith in politicians to change them.

The idea that a politician will be able to force the independent body to change their tune in order to make housing more accessible for Canadians is far-fetched at best, Kyprianou said.

“If people are thinking that B-20 and stress testing and all that’s going to be eliminated, they’re kidding themselves. And if I was a mortgage broker, I don’t know why I would be pushing for that in the first place,” he said. “The best thing that ever happened to mortgage brokers is B-20. If everybody could just go to the bank, then why wouldn’t you go direct? By introducing B-20, more people don’t qualify, or more people are anxious or stressed, they go to a mortgage professional and they make everything nice and smooth for them. I don’t know why you would be fighting something that’s giving you more business. That never made any sense to me.”

The other side of that argument is that brokers would be doing even more business if borrowers were more easily able to qualify for a home loan, and working more with straightforward, traditional products.

Everyone agrees that there will always be people who don’t qualify for a mortgage; Kyprianou puts this somewhere around 20%, based on what he’s seen in his 30 years in the business. Regardless of how the rules change, that number will still remain pretty much the same because there will still be a group of people that can’t prove their income, or have soft credit or poor credit.

Copyright © 2019 Key Media

More Canadians using FinTech but 2 things are holding them back

Trust in FinTech securing person data a concern

Steve Randall

FinTech services are gradually finding new customers in Canada but have two important barriers to overcome.

As challengers work hard to disrupt payments solutions and other traditional financial transactions including mortgages, a new survey from EY shows that there has been a 32% rise in the use of FinTech in Canada over the past two years with most Canadians using at least one for payments and money transfer.

“FinTech adoption has evolved significantly in Canada over the past two years alongside the evolution of customer priorities and the rise of money transfers and payments,” says Ron Stokes, EY Canada FinTech Leader. “FinTechs are no longer seen as just disrupters to the traditional financial services industry — they’re sophisticated competitors, ready to meet the changing expectations and needs of customers.”

It’s all about trust However, FinTechs operating in Canada lag their global peers in adoption rates with awareness one of the challenges for the challengers.

But a bigger issue is trust.

In EY’s 2017 survey, trust was the least cited reason for respondents not using a FinTech; in 2019 it is one of the most cited.

“Both adopters and non-adopters worry about the security of their personal data online and demonstrate greater trust in traditional institutions and providers who offer face-to-face interactions,” says Stokes.

Not that trust can’t be gained, but it is likely to mean partnering with incumbent financial institutions.

“Even though non-financial services companies have led the way in deploying new technologies to deliver innovative services while raising the bar on consumer expectations, they do not yet have the full confidence of consumers when it comes to providing financial services on their own,” says Stokes. “Our findings show that there is a trust gap that can create opportunities for both incumbent financial institutions and their FinTech competitors.”

Copyright © 2019 Key Media Pty Ltd

Toronto condo apartment sales up 11% in third quarter

Bouyant economic conditions boosting Toronto condo sales

Steve Randall

The buoyant economic conditions in Toronto mean more people moving to the city for work and wanting the most affordable housing options.

This has helped the condo apartment sales market in the third quarter, which gained 11.1% year-over-year according to new figures from the Toronto Real Estate Board.

TREB members reported 6,407 condo apartment sales through the MLS in Q3 while listings eased by 1% to 9,538.

“As economic conditions continue to be favourable for job growth in the Greater Toronto Area, people have continued to come to the city for work. Home ownership is important to many Canadians, and, as a relatively affordable housing option, condos in the GTA offer prospective buyers the chance to achieve their dreams of owning property,” said TREB president Michael Collins.

The tightening market put upward pressure on prices with the average price of a condominium apartment rising 5.8% to $584,564; although in the city of Toronto, which accounts for 70% of sales, the rise was slightly lower at 5.6% ($628,074).

Keeping up with demand TREB says there are still concerns about supply as the market gathers pace; CMHC data for August shows completions of condo apartments was down year-to-date compared to last year, which may have curbed investor purchases.

“Condominium apartments are obviously a popular choice amongst first-time homebuyers. Moreover, it is also important to remember that condominium apartments owned by investors represent a huge component of the GTA rental stock and certainly account for most additions to the rental stock, on net, over the past decade. With this in mind, a well-supplied condo segment will be important moving forward to ensure that we can keep up with population growth driven by a strong and diverse regional economy,” said Jason Mercer, TREB’s Chief Market Analyst.

Copyright © 2019 Key Media Pty Ltd

Strata fines never automatically imposed

Review bank service agreement for consent to pay fees

Tony Gioventu
The Province

Dear Tony:

Several years ago, our strata corporation adopted a bylaw requiring owners to provide payments by automatic bank withdrawal. At the time, several owners raised concerns about the strata corporation having access to their banks accounts, but were assured it was only for strata fees and nothing else.

To make this simple, I opened an account just for my strata fees and deposit the money on the 15th of each month for the following strata fee payment.

I just received a notice from my strata property manager that there are insufficient funds for the strata fees and I am now in arrears. The notice also demanded payment and notified me that a lien would be filed against my unit if I don’t pay.

I contacted the manager and she informed me I was fined $200 for parking in the wrong space and that amount was applied to my strata fee account. Of course, I am outraged. 

She sent me a copy of my bank payment service agreement to authorize payments. It says on the form the strata corporation may apply and withdraw any fines or penalties from the account.  

Is this legal? By signing this form, have we waived our rights and authorized the payment? The irony here is I don’t have a car and don’t use parking, so the violation claim is bogus. 

Colleen P., Victoria

Dear Colleen:

While automatic bank payments for strata fees are practical for monthly fees, inexpensive to manage and reduce the risk of lost cheques or unreported cash payments, they can be abused by councils and managers who do not follow the enforcement conditions of the Strata Property Act.

When an owner provides consent for direct withdrawal, it is important to read the document. You do not have to consent to any fees other than monthly strata fees, and even if you do, the application of fines, damages or insurance deductibles under your bylaws still requires the strata corporation to first apply section 135 of the act before any action is possible. Bylaws and user agreements do not override the act.

Before a strata corporation imposes a fine or penalty, it must first give the owner or tenant the notice of complaint with the particulars in writing, entitle the owner or tenant the opportunity to respond in writing or request a hearing, and then the strata council is  required to render a decision regarding the outcome of the fine or penalty. Fines are never automatically imposed.

This also applies to the late payment of strata fees. As the payment of strata fees is a bylaw, the late payment may result in a fine; however, this is still a bylaw penalty and the same enforcement conditions apply. The corporation/manager cannot apply other charges to your account without your consent.

Once again, it is important to review your bank service agreement to determine if you have consented to any fees such as bylaw penalties, damages or insurance deductibles being first applied to your account before strata fees are paid. 

To resolve this formally, request a hearing with council, provide it with the documentation to refute the claim and if this is a credible bylaw complaint, demand the particulars in writing, and request a formal decision in writing. 

There are many misunderstandings with strata corporations and managers often relating to poor communication between the parties. A formal written decision of the council will be the evidence you may need to rely on if you need to apply to the Civil Resolution Tribunal to order a remedy. 

It is important for owners to monitor their accounts monthly as late payments may result in a rate of interest being imposed under the bylaws and added to the fees. Interest bylaws on strata fees and special levies, if they do not exceed 10 per cent compounded annually and calculated monthly, form part of the fee. It’s the same advice banking and credit institutions give all clients.

Check your statements and accounts at least monthly. If a penalty has been imposed without complying with the act, immediately notify your manager and council of the error and request a correction.  If you are in doubt about what you signed for, request a copy of the agreement provided to the strata council or manager.

© 2019 Postmedia Network Inc.

The Heights on Austin 344 homes in two towers – East Tower 1045 Austin – West Tower 505 Nelson by Beedie Living

The Heights on Austin to comprise two 25-storey towers

Simon Briault
The Province

The Heights on Austin, a project from Beedie Living, will include 344 homes.

Spectacular outlooks will be on offer at The Heights on Austin

Bathrooms will be fitted with custom mirrors, porcelain floor tiles and undermount sinks

Kitchens will have LED under-cabinet lighting and quartz counters and backsplashes

The Heights on Austin

What: East tower: 177 homes (now selling); West tower: 167 homes; 344 one- to three-bedroom homes in total

Where: 1045 Austin Avenue (east tower) and 505 Nelson Street (west tower), Coquitlam

Residence size and prices: East tower: 481 to 1,734 square feet and priced from $441,900

Developer: Beedie Living

Sales centre: 1032 Austin Ave, Coquitlam

Hours: noon — 5 p.m., Sat — Thurs

Telephone: 604-492-2882

Big changes are coming to the Austin Heights neighbourhood of Coquitlam. In recent weeks, one of Western Canada’s oldest Safeway stores was reopened on Austin Avenue after a rebuild by Beedie Living. On either side of the new 65,000-square-foot grocery store, the same developer has just broken ground on the first of two 25-storey residential towers that will be part of a major revitalization of the area.

The new development is appropriately named The Heights on Austin. But buyers of the homes won’t necessarily have to choose a plan at the top of one of these buildings to enjoy spectacular views, according to Beedie’s director of marketing and strategy, Sunny Hahm.

“Even when you’re only on the third level, you’ll already have incredible southward views of Surrey, the Port Mann Bridge and the Fraser River,” Hahm said. “Typically, you’d have to purchase something on the tenth floor or above to get any type of view.”

The east tower will be completed first and have 177 homes (out of a total of 344 for the whole project), including five three-bedroom townhomes. The west tower will include additional retail space and commercial office space.

“The accessibility that the Austin Heights area provides to the rest of Metro Vancouver is a one of the key reasons why real estate in this neighbourhood holds its value so well,” Hahm added. “You’re still very much part of a residential community, but you’re also only a five-minute drive away from any one of three SkyTrain stations… In terms of driving, you can get to anywhere in Metro Vancouver within about half an hour.”

That’s assuming you need to leave the neighbourhood, of course. The brochure for Austin Heights lists no fewer than 60 educational institutions, restaurants, shopping outlets and activities in the neighbourhood. In addition, there are 750 acres of green space within four kilometres of the site.

“Just behind our site, Ridgeway Avenue has been designated by the City of Coquitlam to be a new pedestrian area with an incredible new streetscape,” Hahm said. “It will be a beautiful promenade with cafes, restaurants and public art installations – a fully walkable neighbourhood right on your doorstep.”

Inside the homes, kitchens will feature premium Fisher & Paykel integrated appliance packages, including fridges with bottom freezers, stainless steel gas cooktops electric convection ovens. There are white upper Shaker cabinets with wood-grain lower cabinets, soft-close cabinet hardware with polished chrome pulls, LED under-cabinet lighting and quartz countertops and backsplashes.

Bathrooms will have custom mirrors and medicine cabinets, matte porcelain floor tiles, quartz countertops and undermount sinks. There are porcelain bevelled subway tiles with niches, polished chrome Grohe shower systems and adjustable shower wands in ensuites. Main bathrooms feature luxurious soaker tubs.

There are multiple plans to choose from at The Heights on Austin. East tower homes have one to three bedrooms, range from 481 to 1,734 square feet and are priced from $441,900.

© 2019 Postmedia Network Inc.