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MBABC Conference Recap

MBABCThis year’s Mortgage Brokers Association of B.C. (MBABC) conference was a good time as usual. It was also educational. Here were some takeaways:

On home equity lines of credit (HELOCs)

Bank of Canada Deputy Governor John Murray said:

  • HELOCs are “great” when “used wisely”
  • They allow Canadians to “smooth consumption” and refinance high interest debt
  • But there is risk that “certain households could find themselves a little exposed”

MBABC President Geoff Parkin noted:

  • OSFI’s proposal on HELOCs is well-intentioned but “somewhat misguided”
  • He pointed to some unnecessary limitations the policy would create for highly-qualified borrowers, particularly those who rely on HELOCs for income generating purposes

On how the Bank of Canada (BoC) sets rates

Murray explained that:

  • The BoC’s singular objective is “achieving and maintaining a low, stable and predictable level of inflation.”
  • The BoC “is as concerned about undershooting (its) 2% (inflation) target as overshooting it.”
  • Changes to the policy rate “typically take 4-6 quarters to have their full effect on economic activity, and 6-8 quarters to have their full effect on inflation (essentially two years).”
  • Policy makers are forced to make their decisions “in conditions of considerable uncertainty.”

On OSFI’s proposal to re-qualify mortgagors at renewal

Parkin said:

  • “Our sense is that this guideline is to quantify risk at renewal only” (i.e., homeowners that have paid as agreed probably won’t be pushed out on the street if they don’t qualify at renewal)
  • “I do believe that…regulators will look to assess that risk on a bank’s portfolio and look to perhaps a higher risk-weighting for capital purposes on that part of the balance sheet…perhaps requiring a higher loan loss provision/reserve etc.”

On inter-provincial broker licensing

Parkin said:

  • “The legislation currently allows inter-provincial licensing. That, however, introduces a challenge because licensing education standards are very different between provinces.  I believe we need a level playing field and that the licensing education requirements should be consistent between provinces.
  • MBABC is advocating a national educational standard so brokers in one province can be licensed more easily in multiple provinces. (This is a much-needed change that would benefit consumers nationwide. It would boost competition, lower rates and let homeowners access top brokers from other provinces.)

MBABC will also be pushing for changes to allow BC sub-mortgage brokers to incorporate. That would help sub-mortgage brokers manage taxes and liability in a similar way as brokers.

Sidebar: Here were the headcounts from this year’s event (source: MBABC):

  • Exhibitors:  53 (versus 58 last year)
  • Delegates:  ~400 (versus ~500 last year)
  • Attendee Breakdown:  60-65% brokers and 35-40% lenders & affiliates.

Rob McLister, CMT