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).


Who’s Your Agent Working For?

Realtor-referral-feeBanks are hungry for mortgage referrals from real estate agents. They’re so hungry that they’re willing to pay up to $500 per $100,000 of mortgage, just for a Realtor to send you the bank’s way.

But most lenders don’t pay that much. And many of the best lenders pay nothing. So, what do you think the odds are that you’ll be sent to the best lender if your Realtor is getting paid to make that recommendation?


Life After 2.99%

Affordability-and-RatesFalling mortgage rates have been one of the biggest single factors escalating home prices. So as rates reverse higher—assuming it’s a sustained increase—values will feel the pressure of deteriorating affordability.

But there’s a contingent that feel rates and home prices could march higher together, indefinitely. Some believe we may not see 2.99% 5-year fixed rates again for several years.

Is that a bad bet to make? Have people over-reacted by calling for the end of low mortgage rates? Does it matter when it comes to timing a home purchase? Those are some topics in this week’s Globe column.

And on Thursday Sept. 12, we’ll poke at this issue even further in a live Globe and Mail chat at noon ET. Click here to join in.

The Latest Constraint on Insured Mortgages

securitizationAs reported here, the Conservative budget proposes to limit private securitization of insured mortgages. It’s a move that one industry CEO we spoke with calls a potential “dagger through the heart of small lenders.”

That may be an overstatement, but if this measure passes as proposed it will become more expensive for non-banks to compete with the majors. The resulting impact on mortgage rates would be adverse, but modest. On the other hand, even a five basis points rate increase is a $413 interest boost on the typical 5-year mortgage.*

The questions are, how big is the actual risk being addressed by this rule, and does it warrant limiting lending competition, product innovation and consumer savings? That is the topic of this week’s Globe column.

* Assumes the average mortgage of $175,000, a typical five-year fixed term and a 25-year amortization.

Rob McLister, CMT

Bank Mortgages: Disclosure and Suitability

disclosure-of-mortgagesThere are so many things the Average Joe doesn’t know about the mortgage business.

One is that bank mortgage reps often get paid more for selling higher rates—as do many brokers.

Another is that banks sometimes direct borrowers to outside lenders that the bank has financial relationships with. This happens when the bank chooses not to service the applicant directly (due to qualification issues or an inability to meet the customer’s expectations).

Both of these issues entail potential conflicts and disclosure problems, but banking regulators don’t monitor these matters as closely as you’d think. That was the topic in this week’s Globe column: That story


Alternative Down Payment Sources

Down-PaymentThis week’s Globe column looks at ways people scrape together down payments when they don’t have enough non-registered savings of their own.

It’s still perplexing that regulators let homebuyers borrow their 5% down payment from high interest sources, yet the government bans lower-interest cash-back down payment mortgages and 100% financing.

That’s not to say that borrowing a down payment is advisable (it isn’t in most cases). It’s more a statement that there is regulatory inconsistency here, which is peculiar in a hyper risk-sensitive lending environment.

More via: Canadians can still buy a house without saving their pennies

The Evolution of Rental Financing

Rental-Financing (2)Ever since the credit crisis, there’s been an ongoing clampdown on mortgage risk. Nowhere is that more evident than with rental and self-employed mortgages.

This week’s Globe column looks at rental financing—and what makes it more challenging today than, say, four years ago.

If you’re a well-qualified borrower and you only own a few properties, this isn’t a major concern. But when you have a larger rental portfolio or need flexibility with your application, it’s a different story.


Retire Sans Mortgage

Seniors-MortgagesWe get a stream of emails from seniors with mortgages, some of whom are in financial hurt. It is those stories that inspired this week’s Globe column about mortgages in retirement.

This piece has more of a warning tone than most of our articles. That’s because senior debt is one area where there is legitimate danger on the horizon. The trend towards bigger mortgages in retirement is worrisome for the no less than 22% of Canadians who aren’t saving enough to fund normal consumption.