A Mortgage Resolution to Keep

Mortgage_ContractIt scares the #*!@ out of me to think about retiring with a mortgage. And if you’re making minimum payments on a long-term mortgage, it should scare you too.

The stats are no joke:

  • 43% of 55 year olds say they haven’t saved enough for retirement.
  • 50% of Canadians believe they’ll run out of money within 10 years of retiring.
  • 1 in 4 retirees bear the load of a mortgage.
  • 51% of today’s borrowers expect to carry a mortgage into retirement.

Imagine the trauma of depleting your savings, being without full-time income, and still having a mortgage payment. For some, it’s a doomsday financial scenario.

Luckily, there is a straightforward New Year’s resolution that can help forestall this outcome:


The Big Bank Edge

Bank_AdvantageThose of us in the mortgage industry know that, at any given time, big banks can undercut virtually any other competitor. It’s not their standard operating procedure (since they prefer to maintain margins), but if they wanted to, big banks could win any mortgage rate war.

One reason for that is their funding advantage. They have a considerable edge when raising cheap capital. A recent Bank of Canada report (link) shows just how much of an edge.


Early Renewals

Renewal-mortgageIt’s hard to imagine the mortgage industry getting more competitive than it already is, but it will…every year.

One area where lenders are constantly looking to outflank competitors is with client retention. And what better way to maximize retention than by making first contact with clients who are approaching maturity?

But when you get that renewal call or letter from your lender, it takes forethought to make the right decision. That’s the topic of this week’s Globe column (click for article).


BoC Rate Guidance: Use with Care

Bank-of-Canada-Benchmark-RateThe Bank of Canada exudes credibility. It’s an internationally respected central bank, it operates with minimal political interference and it has contained inflation for 22 years.

So when a Bank Governor gets surprisingly hawkish, we immediately see headlines like “Interest rates expected to increase.” Thousands of mortgagors key off those headlines and scramble to lock in fixed rates.

That very thing started happening in April 2012. But, as this Yahoo! Finance story points out, Canadians paid a price if they heeded Mark Carney’s 2012 warnings and locked in.


Oaken Financial’s Mortgage Plans

Oaken-FinancialWhen Ally and ING Direct got eaten up by big banks, they lost part of their independent consumer-centric cultures. That created a gap in the market, one that Home Trust would love to fill with its new brand, Oaken Financial.

Home calls Oaken a “direct to consumer” brand. The instant we heard that, we wondered if Oaken would launch a direct-to-consumer mortgage. So we asked Home Trust President Martin Reid.


Q4 2013 Bank Earnings – Mortgage Morsels

Big-6-BanksIt was just another record year of profits for Canada’s Big 5 banks. And they couldn’t have done it without mortgages.

As is customary every quarter, we’ve poured through all the major banks’ earnings reports, presentations and conference calls to pull out the mortgage tidbits.

Below you’ll read comments from CIBC about the broker channel; BMO on its growing mortgage portfolio; National Bank on its decision to decrease its exposure to the broker channel; RBC on its new mortgage origination system and Scotiabank on its openness to acquiring brokerage firms. (Yep, that last point surprised us too.)

If you’re time-pressed, the focal points are highlighted in green