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The Canadian Mortgage Market Stakeholders


The Canadian mortgage and housing market is very different as compared to the global markets. The new mortgage rules in Canada were introduced in order to regulate this market. However, there are some key factors that remain constant regardless of which market they are applied to.

The Canadian mortgage trends have shown exponential growth. Such levels of growth have rarely been seen in the past. Few mortgage markets in the world have shown such growth too. For every market there are banks and lending institutions that offer mortgages to finance purchasing activities of real property. In developed markets there are mortgage brokers and brokerage houses who sell these mortgages on behalf of the lenders.

In the Canadian mortgage and housing market, the role of these brokers and lenders is basically the same as any other market. There are some small differences in terms of the operations and functions they perform.

The Brokers

The mortgage brokers and brokerage houses have an important role to play in the Canadian mortgage and housing market. These are third parties that act as intermediaries in the mortgage transaction. Because the mortgage market in the country is one of the largest sectors of the economy, the demand for mortgages is quite high. The level of demand can also be identified by the Canadian mortgage trends.

This makes it difficult for the banks and lending institutions to cater to the large number of people looking for mortgages. This is generally the case for developed markets but one key difference in this market is that the brokers do not charge any fee from the borrowers. They are paid by the lender and charge no application fee from the end consumers.

Another basic reason for the growing popularity of these mortgage brokers is the fact that a lot of competition exists in the market. It has become increasingly difficult for the lenders to target the audience themselves. This is why the brokers act on their behalf and sell mortgages to the consumers. They have become such an integral part of this sector that the Canadian mortgage rules have been designed such that these brokers need to be monitored as well.

The Insurers

Keeping the Canadian mortgage rules in mind the government decided that they need to proactively regulate the market themselves. For this purposes some new Canadian mortgage rules were adopted and the Canada Mortgage and Housing Corporation was given the responsibility of monitoring the trends.

The Canada Mortgage and Housing Corporation is an organization that reports directly to the government. It overlooks the major housing development projects in the country and conducts market research and analysis. It has the authority to advise the government regarding the necessary action to be taken for controlling certain situations.

The CMHC provides financing for development projects in the country and supervises them too. But the most important function that it serves is that it ensures the proper implementation of the Canadian mortgage rules. It keeps a close eye on the mortgage qualification criteria and whether or not they are being followed.

The government has also introduced the rule that high ratio mortgages have to be insured. The Canada Mortgage and Housing Corporation have been given the task of insuring these high ratio mortgages so that the risk is minimized for the lenders and the borrowers. This is one of the key functions that the corporation serves in the market currently.

The Lenders

There are a number of banks and lending institutions that operate in the Canadian mortgage and housing market. They provide mo0rtgages at competitive rates. These rates have been seen to hit a record low at the start of this year. The low mortgage rates have contributed largely towards the Canadian mortgage trends. The new Canadian mortgage rules were initially designed to curb these trends but it seems that the government is having much difficulty in controlling the demand.

Most of these lending institutions have provided mortgage calculators to the consumers so that they can calculate their own mortgages and assess the affordability. This helps in a way because the borrowers are able to easily identify whether they can afford the mortgage payments or not. This tool helps to reduce risks as well as borrowers are able to make well-informed decisions.

The TD mortgage calculator, the mortgage calculator Scotiabank and the CIBC mortgage calculator are all tools offered by these large lending houses to their borrowers. These banks dominate the market and hence, have a good insight into the demand and supply in the market. They offer similar rates and similar services. It is usually at the discretion of the borrower to choose the bank or lending institution that suits them best.

The Borrowers

Even with the stricter Canadian mortgage rules, the demand for mortgages has not fallen. The mortgage rates have been quite attractive for borrowers and many investors have decided to make use of the opportunity to make money. The Canadian mortgage and housing market is still growing despite the fact that many investors have even moved to neighboring markets which offer higher return. But these markets are riskier as well.

The Canadian market is more stable and less risky as compared to the others. The government is doing a great job at regulating the sector. The most difficult task in this market is to get the approval for these mortgages from the Canada Mortgage and Housing Corporation but that too has not been able to curtail the demand.

Amongst all the stakeholders mentioned above, the borrowers can easily be called the most important stakeholder in the Canadian mortgage and housing sector. The others are only there because the demand exists. If this demand was to fall, the number of lenders and brokers would immediately start shrinking.

It is quite obvious therefore, that the whole sector is highly dependent on these borrowers in order to function. Even the government cannot ignore this fact and can only try to curb the effects and adverse impacts that are a result of the high risk created by the market activities.

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