The conversion of mortgages into securities with CMHC backing is a way for lenders to fund from a broader range of investors and enables banks to issue more mortgages at lower rates.
Most analysts are convinced that this will lead to an increase of interest rates over the near term. Big banks that lend larger volumes will be the hardest hit while smaller less known lenders who deal primarily with mortgage brokers will be less affected.
What should we do now? If someone is buying his or her first home and don’t yet have a pre-approved mortgage, now is the time to get it and lock in the best possible rate and terms. Now could also be the best time to finally get rid of expensive monthly debts such as credit cards through a low interest rate debt consolidation mortgage.
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