Here’s a great report that was put out by Deloitte. The report shows that Canadians rely on Mortgage Brokers more than ever… but not as a last resort.
Unlike the U.S., where mortgage brokers used to account for 65% of all mortgages arranged prior to the October 2008 mortgage crisis, U.S. broker now account for less than 20% of mortgage business.
Here in Canada, 38% of all mortgage originations went through a mortgage broker…. including 44% of First Time home buyers.
With national and provincial organizations like CAAMP (Canadian Association of Accredited Mortgage Professionals) and IMBA (Independent Mortgage Brokers Association), Mortgage Brokers play a vital role in informing and educating borrowers. Mortgage Brokers aren’t just a last resort, they are now viewed as a first choice for getting unbiased and professional advice.
Dare we say it, a mortgage broker helps to create competition….and isn’t competition good for the consumer?
A deal was struck earlier this week that will make it easier for seller’s to list their homes on MLS… The Competition Bureau hopes we will see some changes in real estate commissions….click here for the CBC article.
Currently, a seller pays 5% or 6% to sell their home… and that’s been the standard for many years… But with new technology and the internet, we have seen For Sale By Owner companies popping up everywhere. These companies have not been able to access MLS without employing a realtor.
We all want to save money and pay less… but there is a saying…’you get what you pay for’.. For some, paying a reduced flat fee, and handling viewings, the negotiations, etc, could be worth savings…. but others may not have the expertise, the knowledge or the time to deal with this….
In the end, I think choice is good. It remains to be seen how many people will move away from the traditional real estate agent and handle things on their own… Just beware of something that sounds too good to be true…
A few weeks ago, we heard from a source that TD Canada Trust was making a major change in their Mortgage Lending policy. ALL new mortgages would be registered as a collateral mortgage instead of as a conventional mortgage…. previously, only secured lines of credit were registered as collateral mortgages.
By the way, here is a great article from Gail Vax-Oxlade, a well known personal money manager…..she would never take one of these new mortgages with TD… I think she is right on the money with her comments and analysis. Continue reading “Update on TD Collateral mortgage rules”
Bank of Canada governor, Mark Carney, held the Target Rate steady today…as expected… Concerns about the U.S. economic recovery stalling, the Global economy and our own domestic economy were mentioned in the Press Release.
In the press release, the Bank said inflation was not a concern as it is under the 2% target. Take all this data and it spells UNCERTAINTY.
What’s also interesting is that the Bank has adjusted it’s forecast for growth downward for the next 2 years…Great news for those in a Variable rate… Variable rates are hovering around 2.30% these days.
This makes the Variable Rate product that much more attractive…even with 5 year fixed rates in the 3.59% range.
Experts believe the rate will remain steady throughout next Spring and possibly into Fall depending on inflation and Global and domestic economic data….
Click here for the Press Release.
Here is a good article from McLean’s Magazine that talks about more Mortgage Fraud taking place in Mississauga and other parts of Canada.
But before you read any further, just make sure you understand something… during an economic downturn, we will hear and see more crime related reports…. I’m not sure fraud has increased more or if the fraud can no longer hide behind rising house prices and stable employment…
One of the big mysteries is that we don’t know how much mortgage fraud really takes place in Canada. That’s because no statistics are available…or at least are not made public.
The McLean’s article said the Canadian Bankers Association says they have no stats on mortgage fraud… and CMHC said that ‘it wasn’t able to provide that data prior to the article being published’….. Come on… no one has these statistics??? Then how do we know fraud is a problem?? Clearly, the Bank’s obligation is to it’s shareholders… and reporting any type of fraud could affect the value of the shares….discretion is always exercised when talking about taboo subjects like fraud. Some have suggested it’s an acceptable cost of the mortgage business… after all, there are over $940 billion in outstanding mortgages in Canada.
Earlier this year, we saw a high profile case with BMO filing charges of mortgage fraud naming hundreds of people… the fraud was for $140 million and could cost the bank $30 million in losses.
Then in June, a report came out from the BC govt that slammed RBC and BMO for loose lending practices…. what made this report somewhat funny is that during this same week, RBC received an award for Creditor of the Year… one of the reasons for winning the aware was that RBC was ‘thinking outside the box’.…. yeah, I guess they were..!
I don’t know if there is any correlation but the Big Six Banks (TD, BMO, CIBC, Scotia, RBC, National Bank) have been on a massive hiring blitz… hiring record number of so-called Mobile Mortgage ‘Specialists’ …. These banks have doubled and tripled their commissioned sales force in the past few years…. That’s right, COMMISSIONED sales force… Makes you wonder…..
By the way, Bank employed ‘Mortgage Specialists’ are not registered with the Ministry of Finance like Mortgage Brokers are…no license to lose…
Here’s a recent article forecasting low rates that appeared in The Globe and Mail. The article points to Scotiabank’s Economist as saying “the economy has lost considerable momentum.”
Scotiabank is also forecasting the Bank of Canada to keep the Target Rate or the Overnight Rate flat until the 3rd quarter of 2011. This means the Variable rate should remain a good option with rates between 2.25% to 2.30%.
Current Bond yields are at 1.94% as of today…. this means the fixed rate spread is 1.65%.. this is above the normal 1.25% to 1.40%…
Fixed rates are priced closely to the Bond market but indirectly by the Bank of Canada’s actions… we are seeing 5 year fixed rates (the benchmark for fixed rates) hovering at 3.59% to 3.69%… and they could still go lower…
Enjoy the low rates… borrow wisely!
The rumors are true…TD Canada Trust will begin registering all mortgages as collateral charges after October 18. (No official release from TD yet but a source inside TD has confirmed this to us).
What does this mean for the consumer? Well, there is some good but mainly it’s bad..…
- a collateral mortgage is normally registered for floating or revolving debt such as a secured line of credit. It allows for the balance to float up or down.
- TD will register a collateral charge for 125% of the loan amount… this will allow the client to come back at a later date and apply to increase their mortgage if needed….
- in theory, it sounds great…no legal fees required in the future if you need to refinance… and easy approval…
BUT HOLD ON…
- a COLLATERAL MORTGAGE is NOT really portable…meaning you cannot transfer to another institution…that’s because no other Bank or Lender is accepting collateral mortgages for transfer… including TD…you will lose some leverage to negotiate the rate when your mortgage matures…
- and if you wanted to increase your mortgage in the future, you would need to reapply for approval…let’s suppose you don’t qualify in the future..not because your situation changed but because the Bank’s lending policy changes…this happens regularly….you would now have to seek out an entirely new 1st mortgage as no other lender would register a 2nd mortgage in behind a collateral first mortgage (at least none that I am aware of)… that could mean penalties, definitely legal fees and other costs….
- It’s obvious that a big reason TD would be doing this is to improve mortgage retention.. this makes it less appealing to leave TD because of the costs….
- BOTTOM LINE…this type of mortgage limits your options..it doesn’t expand them.. you MAY save on legal fees..but that’s not a big enough reason to go with this product..
My advise to anyone looking at a TD mortgage is to be careful…make sure you understand all the terms, conditions, the differences and the limitations…you be the judge… is this a good thing for the client or is it a good thing for the Bank?? Will other Banks follow? Some might say this is like putting handcuffs on the client… I tend to agree…