How COVID-19 Has Impacted Mortgages

How COVID-19 Has Impacted Mortgages

 
 
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Our guests today are Edward Kim and Imran Thaver from Genworth Canada. Genworth provides mortgage default insurance to Canadian residential mortgage lenders. They join us to discuss the impacts of COVID-19 and policy changes on their business.

[0:30] What do you do at Genworth?

  • We help Canadians purchase their primary residence with less than 20% down payment.

[2:03] Did the CMHC policy changes at the beginning of July affect Genworth at all?

  • We review policies twice a year. Our underwriting is currently sufficient for the risk we see in the market.
  • We assess risk constantly.

[3:20] There were plans to revisit the stress test, have you heard anything regarding that process?

  • No.
  • We understand that it can be a challenge for people entering the market and staying in homes for long periods of time, and we hope that once things normalize that it will be re-visited.

[4:47] The CHMC ratio tightening has effectively increased the stress test without actually increasing the stress rates. Do you have any thoughts on that?

  • We believe those individuals that are looking purchase, have the income, have credit and meet our criteria should be treated the same as before.

[5:53] What kind of market activity are you seeing?

  • A lot of people trying to get in.
  • With interest rates it is also a great opportunity. Lockdown has allowed some people to save money and get a down payment together.

[7:53] What are you seeing from a price point perspective?

  • A lot of activity in the first-time buyer range of under 400k.
  • We are seeing condos pressured due to supply.

[10:25] What do you see as the potential long-term impacts of oil prices on the market?

  • It’s definitely something we monitor along with unemployment rates. We are hoping to just see some consistency.

[11:27] Do you have concerns about the delinquency rates rising?

  • It’s too early to tell. The industry has all worked together to make deferrals work.

[13:32] What happens if there is a second wave when the deferrals end in fall?

  • Hopefully the staggered approach to re-opening keeps everyone healthy. We are working to ensure our customers are looked after.

[14:23] What kind of risk plans do you have in place?

  • We have strong underwriting policies and we are looking at properties with a fine-tooth comb.
  • We want to ensure individuals can be in the right home long term.

[17:44] Where do you think we will be a year from now in regards to renewals and transfers?

  • As long as our customers are current on their payments, we have no issue with people moving or switching.

[18:34] What are your predictions for the market in the next few years?

  • The current driver is that niche market, but it will be interesting to see what happens with the downward pressure on condos and also with the higher end homes as inventory increases.

[20:50] As insurers, what keeps you up at night?

  • Ensuring our customers are happy and that our lenders and brokers know we are here to support them.

[21:29] Have you seen a shift in where deals are being generated?

  • Yes, more lenders are focusing on mortgage specialists or broker business.

[23:20] Have you seen a surge in transactions?

  • There has been a definite uptick since May.

[23:45] Do you have any final thoughts?

  • We welcome the opportunity to spend time with the broker network. We have dedicated broker strategies and we want to ensure everything we do is for the end user.

Contact Edward Kim at 780-982-1998 or edward.kim@genworth.com

Contact Imran Thaver at 780-263-6250 or imran.thaver@genworth.com

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