Equitable Bank unveiled a new 40-year mortgage product developed in partnership with a third-party lender at the National Mortgage Conference in Toronto. The mortgage aims to facilitate home ownership and property investment amid challenging economic and affordability conditions by extending the standard 25-30 year amortization period, thereby reducing monthly payment obligations.

The bank’s funding structure involves a partnership with the third-party lender. Equitable Bank won’t bear credit or default risk, as the loans won’t reflect on its balance sheet. Equitable will act as the originator and service provider to the funding partner, managing underwriting, closing, and servicing throughout the loan lifecycle.

Key product insights:

• Product availability extends to owner-occupied purchases, refinances, rental properties, and investor portfolios.
• Initially available in British Columbia, Alberta, and Ontario, with potential expansion based on market success and demand.
• Specific target markets will be determined by high demand and where clients can benefit the most.
• Mortgage professionals can anticipate product details this week.

Regarding pricing, exact rates were undisclosed. However, rates are projected to fall in the 9% range, given that it’s an uninsured alternative lending product with an extended amortization and potential higher risks.

The mortgage product launch is partly in response to affordability concerns heightened by high prices and increased living costs. The initiative aims to relieve financial pressure for clients seeking debt consolidation and those looking to purchase property during challenging economic situations.

Amid interest rate concerns, research notes that the impact of recent hikes may not be fully realized for up to two years. One in six mortgage holders finds payments challenging, according to a recent Angus Reid Institute survey, with concerns looming about higher payments at renewal.

Further, a Leger survey commissioned by ratefilter.ca reveals that more than 6 in 10 Canadians exceed the recommended 30% limit of pre-tax income spent on housing expenses. Additionally, Canadian consumer confidence dipped into negative territory for the first time since April, according to Bloomberg and Nanos’ weekly survey.

Consumer Confidence Takes a Nosedive

According to the weekly survey conducted by Bloomberg and Nanos, consumer confidence in Canada has declined into negative territory for the first time since April. The Bloomberg Nanos Canadian Confidence Index (BNCCI) dropped to 49.45 from 50.93 four weeks earlier, a significant decrease from the 12-month high of 53.12. A score below 50 suggests a prevailing negative economic outlook among Canadians. Since 2008, the average index has been 55.58.

The survey indicated a downturn in the outlook on real estate, which fell to 40.79 from 45.12 four weeks ago. Additionally, sentiment regarding personal finances dropped to 13.68 from 16.04.