RBC does away with mortgage limits for foreigners

The Royal Bank of Canada will no longer limit mortgage size for immigrant buyers in Vancouver.

“We’re seeing a lot of affluent newcomers looking to buy high-purchase price homes,” Christine Shisler, RBC’s director of multicultural markets, told Reuters. “Now we can actually service any mortgage amount.”

Shisler said the bank removed its internal $1.25 million mortgage limit for buyers who have no Canadian credit history in May.

According to Reuters, a case study was released Monday that found two-third of buyers in neighbourhoods around the University of British Columbia had names typical of those from mainland China. 88% of those also had a mortgage.

And the big banks are the ones serving that market.

The mortgages in that study ranged from $1.25 million to over $9 million. They were predominantly backed by HSBC, CIBC, and BMO. For its part, RBC originated 8% of those loans.

The fact that the majority of those properties have mortgages goes against the conventional wisdom that wealthy foreigners are purchasing homes outright.

“It counters a lot of our mythologies, in terms of this idea of people showing up with very large bags of money and paying cash,” Andy Yan, an urban planner and professor at UBC, told Reuters.

And it’s an interesting bit of information on a market segment that has long been debated by industry professionals.

It is unclear just how much foreign money has influenced the housing market in Canada – especially in Vancouver and Toronto.

And while the industry lacks sufficient information, CMHC recently said it is examining ways to better track foreign influence.

“Currently there is no perfect source of information on the level of foreign investment in the housing market,” chief economist Bob Dugan The Canadian Press in late September. “CMHC has undertaken steps to address this data gap.

“As a result, we know a lot more about it today than we did a year ago and are continuing our program of work to determine the level of foreign investment in Canadian residential real estate.”

Source: MortgageBroker News.ca by Justin da Rosa | 02 Nov 2015
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