First National, a top 5 player in the broker market, recently put a new spin on its rental property underwriting guidelines, adding a touch more flexibility.

In a time when so many investors have gone into hibernation, however, the move may seem curious to some. Intrigued by this shift, we connected with First National's Senior Vice President, Scott McKenzie, to understand the logic behind the change.

Here's how he explained it.

BMO's highly anticipated re-entry into the broker market is more than just a headline – it's a robust "vote of confidence in the broker channel" declared BMO Capital Markets analyst Étienne Ricard today.

On First National's conference call today, Ricard questioned CEO Jason Ellis about it, asking, "What do the banks value most in the broker channel that is more challenging to replicate in more traditional distribution channels?"

American politicians didn't take budget stewardship seriously enough.

This is what happens.

A second Big 3 credit rating agency, Fitch, has chopped U.S. sovereign debt to AA+ from AAA. The firm cites runaway deficits and "expected fiscal deterioration over the next three years" as reasons.

By Fitch's definition, the U.S. now has a "very strong capacity" to pay its debts instead of an "exceptionally strong capacity."

Moody's is the only top agency maintaining a triple-A rating on long-term U.S. federal debt.

Counterintuitive mortgage rate impact

This unfortunate news for U.S. sovereign credit comes on top of much higher expected Treasury issuance—another bearish factor for bonds.

Ontario's mortgage broker regulator (FSRA) feels mortgage shoppers need more protection from bad advice. So it commissioned this survey, which it plans to use when developing new broker guidelines this fall.

Mortgage suitability is also on the radar of other provincial regulators. We have comments from some of them below.

But first, here's what FSRA's survey revealed...

As mortgage brokers are painfully aware, the channel's former undisputed #1 lender—Scotiabank—pulled way back from the space last year.

Despite mortgages being an anchor product for the bank, it said it needed to reassess its entire approach to real estate secured lending in order to manage its balance sheet.

This week, the nation's third-largest bank finally made its triumphant return—chopping broker rates and putting it back in contention with archrival TD.

The move was met with fanfare on industry forums like I Love Mortgage Brokering and Twitter. A surprising number of brokers appeared willing to forgive and forget months of horrible rates, suggesting Scotia will likely go from MIA to MVP.

But the cost of its absence was nonetheless steep.

So many mortgagors are tapped out. They're imploring the rate gods at 234 Wellington Street for cuts.

Much to their irritation, forward pricing in Canada's bond market isn't cooperating.

OIS data from Bloomberg now imply:

Members now have direct access to MLN's daily rate database—the same data we use to track and report rate trends in the prime mortgage market.

View it at Canadian Mortgage Rate Survey.

The data has many uses, particularly for mortgage providers employing a spread pricing strategy.

Such originators systematically set their rates to be X basis points above the market's "leading rates." The problem is, "leading rates" can be subjective.

Quantifying rate competitiveness is where the Rate Survey shines. Members can now easily:

1. Monitor unadvertised discretionary mortgage rates at the Big 6 banks
2. Track the nation's lowest advertised non-Big-6 rates
3. Benchmark their rates against the national average.

MLN's Canadian Rate Survey provides a quick objective source for:

• Setting advertised pricing
• Quantifying the competitiveness of a firm's rates for marketing purposes
• Finding pockets of opportunity where a mortgage provider can take the lead on a given term
• Charting average market rates
• Comparing rates on one's personal financing.

The launch today is stage one of the Survey. MLN will continue enhancing the data, including adding product features later this year.

If you have questions about MLN's Canadian Mortgage Rate Survey, please email us at info@mortgagelogic.news.

In other news...

See: Fed still trying to break inflation

The liquidity tap in the world's biggest economy will close a bit tighter today.

The U.S. Federal Reserve is queuing up today's—and possibly one more—hike before taking a potentially permanent break.

The gap between insured and uninsured mortgage originations is now wider than the Grand Canyon. And it just keeps expanding, as the BoC's latest data show (chart below).

The government seems blissfully content to let the insured market wither.

The number of mortgages on CMHC's books, for example, is now below 1.5 million for the first time in over a decade. That's down one million in just six years. (There are roughly seven million mortgages in Canada total.)

Meanwhile, despite 11 years of rising prices that shut out first-time buyers in major cities, the government refuses to increase the default insurance value limit above $1 million. That's despite its 2021 pledge to do so.

That, and the uninsurability of refinances and rental properties, almost guarantee the insured-uninsured gap keeps widening.

But who pays?

The repercussions of the government's insured-mortgage pullback are many: