Street Capital announces update in wake of tightened mortgage rules
Days after new mortgage insurance rules were announced by the federal government’s Department of Finance, Street Capital Group Inc. provided a business update disclosing their response.
The new mortgage insurance rules, which were announced on Oct. 3, are foreseen to affect rentals, refinancing, and mortgages for properties valued in excess of $1 million. A requirement to apply a qualifying mortgage rate stress test has also been expanded to include all new insured mortgages. The changes are expected to impact financially overextended home buyers, homeowners who sell their primary residence, and mortgage lenders.
“The Company's current view is that these changes will be most impactful for those lending institutions that solely rely on the availability of mortgage insurance… This is not the case for Street Capital, which has other sources of funding available,” the firm’s statement read.
Remarking on its previously disclosed application to obtain a Schedule I bank license from the Minister of Finance, the company said that it did not expect any of the changes to affect its progress. Once the application is approved, the company expects to be strategically positioned with additional support for its prime mortgage business, as well as take advantage of the expanding near-prime segment.
Street Capital said that it expects a near-term negative impact, but believes that it is well placed for future growth and profitability.
“The Company will carefully monitor the market during the roll-out of the changes and provide updates as to the impact on its future business when appropriate,” it said in the update.
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The new mortgage insurance rules, which were announced on Oct. 3, are foreseen to affect rentals, refinancing, and mortgages for properties valued in excess of $1 million. A requirement to apply a qualifying mortgage rate stress test has also been expanded to include all new insured mortgages. The changes are expected to impact financially overextended home buyers, homeowners who sell their primary residence, and mortgage lenders.
“The Company's current view is that these changes will be most impactful for those lending institutions that solely rely on the availability of mortgage insurance… This is not the case for Street Capital, which has other sources of funding available,” the firm’s statement read.
Remarking on its previously disclosed application to obtain a Schedule I bank license from the Minister of Finance, the company said that it did not expect any of the changes to affect its progress. Once the application is approved, the company expects to be strategically positioned with additional support for its prime mortgage business, as well as take advantage of the expanding near-prime segment.
Street Capital said that it expects a near-term negative impact, but believes that it is well placed for future growth and profitability.
“The Company will carefully monitor the market during the roll-out of the changes and provide updates as to the impact on its future business when appropriate,” it said in the update.
Related stories:
Should Canadian banks be worried about credit levels?
Some high-net-worth Canadians choose to take on mortgages
