Can you update the twitter link from Ron Butler? I can't see his post about the OSFI considering ending residential mortgage by banks. I pray that it is the case cause that will be huge. It is legit what is needed to end this craze of financialization of housing. I don't know who thought it was a brilliant idea to give the cheapest and most tax advantaged lending to buying a house.
Regulators, however, are getting uneasy with the financing behind these personal portfolio properties. Long-time mortgage broker Ron Butler, based in Toronto, says the party will be ending for those old-fashioned investors who followed the long-time BRRRR practice of buy-renovate-rent-refinance-repeat. Unless they have cash to keep buying, the federal regulator has been shifting away from allowing someone to own multiple mortgaged investment properties.
“It’s something that’s been going on for the better part of a year, this narrowing down of how many rental properties that anyone can own,” he says. “The issue now is, what is the maximum? And today the philosophy from the regulator is: you can own your own home, a vacation property and five rentals through federally regulated institutions, and then that’s it. You can’t own any more,” Mr. Butler says.
“There was a policy by which you could have, theoretically, as many rentals and mortgages as your income and capacity could handle. Then the regulator said, ‘we don’t want to do this anymore,’” Mr. Butler says. “‘We don’t want a couple or one person or a family owning 25 rental properties. We aren’t comfortable with it,’ and for obvious reasons.”
Of course, an investor can still go to a private lender for financing, or get commercial financing, or they can pay with cash, he adds. Cash is still king.
“But BRRRR is going to die,” says Mr. Butler. “In Canada, it’s just going to become unmanageable because you’re not going to be able to get bank mortgages for any more than a smaller number,” he says.
BRRRR, he adds, had already been on life support due to higher interest rate, so the new policy isn’t solely to blame.
Can you update the twitter link from Ron Butler? I can't see his post about the OSFI considering ending residential mortgage by banks. I pray that it is the case cause that will be huge. It is legit what is needed to end this craze of financialization of housing. I don't know who thought it was a brilliant idea to give the cheapest and most tax advantaged lending to buying a house.
The link still works for me - it could be a problem on the Twitter side. I included the whole thread in the quote.
There's also a Kerry Gold story. Excerpt below. https://www.theglobeandmail.com/real-estate/vancouver/article-multiple-unit-investors-are-juicing-the-condo-market/
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Regulators, however, are getting uneasy with the financing behind these personal portfolio properties. Long-time mortgage broker Ron Butler, based in Toronto, says the party will be ending for those old-fashioned investors who followed the long-time BRRRR practice of buy-renovate-rent-refinance-repeat. Unless they have cash to keep buying, the federal regulator has been shifting away from allowing someone to own multiple mortgaged investment properties.
“It’s something that’s been going on for the better part of a year, this narrowing down of how many rental properties that anyone can own,” he says. “The issue now is, what is the maximum? And today the philosophy from the regulator is: you can own your own home, a vacation property and five rentals through federally regulated institutions, and then that’s it. You can’t own any more,” Mr. Butler says.
“There was a policy by which you could have, theoretically, as many rentals and mortgages as your income and capacity could handle. Then the regulator said, ‘we don’t want to do this anymore,’” Mr. Butler says. “‘We don’t want a couple or one person or a family owning 25 rental properties. We aren’t comfortable with it,’ and for obvious reasons.”
Of course, an investor can still go to a private lender for financing, or get commercial financing, or they can pay with cash, he adds. Cash is still king.
“But BRRRR is going to die,” says Mr. Butler. “In Canada, it’s just going to become unmanageable because you’re not going to be able to get bank mortgages for any more than a smaller number,” he says.
BRRRR, he adds, had already been on life support due to higher interest rate, so the new policy isn’t solely to blame.