Genworth Forecast: Mortgage Pulse? ... Flat Line!!!

The Market Pulse from Genworth

Last year’s mortgage regulations shrank the overall high-ratio mortgage insurance market by about 15%, according to recent estimates from GenworthCanada.

Those rule changes also eliminated high-ratio refinances and contributed to a 15% drop in housing sales last quarter versus Q1 2012.

Genworth CEO Brian Hurley spoke today on BNN about the pulse of the market. Here are some of his insights of note (our comments in italics): 

• As an insurer, "We make money by getting the risk right." That means "We've got to get the properties right," he told BNN.
  (If one is to read into this, and if history is a guide, we can expect more scrutiny on appraisals and property types as the market slows. This is especially true in richly valued markets like the Greater Toronto Area and Vancouver.)
• "Our two factors that drive our business performance are delinquencies, driven by unemployment (a very high correlation), and the size of our claims…(as) driven by home price declines."
  (As a result, Hurley hinted that Genworth is now focusing more on employment quality in its underwriting.)
• Genworth has been extra careful about insuring condos with a large investment component—typically those with small unit sizes.
• For the next few years "the mortgage market is going to be flat," he predicted. It will be "a couple of years until we see [the mortgage market] back to the 5-6% growth rate.”
• Genworth is seeing 24-25% average gross debt ratios (GDS) for first-time buyers
  (That may seem surprisingly low and well below the normal maximum of 32-39%. ButCAAMP found that the average GDS of an insured fixed-rate borrower was 22.5% in 2010—the latest marketwide GDS data we know of.)

More Here (Canadian Mortgage Trends)

Itemizing Up-Front Closing Costs

Itemizing Up-Front Closing Costs
Canadian Mortgage Trends
When you buy a new home, lenders like to see proof that you can cover the closing costs.

To satisfy this condition you typically have to demonstrate your ability to pay an additional 1.5% of the purchase price at closing, on top of your down payment.

But not everyone knows what closing costs entail. TD recently released an interesting survey that touches on this. It found that 13% of first-time buyers “overlooked some of the one-time fees associated with buying a home, such as inspection fees and land transfer costs, and 6% didn't budget for anything beyond the down payment and monthly mortgage payment.”
Read more here.