Mortgage Rates & Mortgage Broker News in Canada

“Enough is Enough”

That’s the title of a commentary by PricewaterhouseCoopers (PwC) about the federal government’s repeated mortgage rule changes.

In its recently released Consumer Lending Survey, PwC says:

First-Time Down Payments

A wide majority of first-time buyers-to-be plan to put down less than 20%, according to new data from RBC/Ipsos.

Here's the breakdown of their expected down payments:

• 10% or less (62% of respondents)
• 11-20% (26% of respondents)
• More than 20% (12% of respondents)

Over half of newbie homeowners will likely pay the maximum default insurance premium to buy their home.* That maximum ranges from $2,750-$2,900 per $100,000 of purchase price (i.e., 2.75%-2.90%), depending on the source of down payment.

A Little Extra

According to a Scotiabank survey, 6 in 10 mortgage holders say they could add a little extra ($20) to their mortgage payment without impacting their finances.

It makes you wonder about the other 4 in 10 (but that’s another story).

The question here is, what would $20 extra per month mean to the average mortgage? The answer: It would save the typical borrower almost $2,800 in interest over 25 years and reduce his/her amortization by 10 months.*

Manitoba Rates Lead the Nation

Manitoba credit unions (CUs) have the lowest rates in the country on short-term and floating-rate mortgages. It’s been that way for a while.

Check out these deals, for example:

• 6-month renewable fixed: 2.14%
  Source: Cambrian CU; Crosstown Civic CU
• 1-year fixed: 2.34%
  Source: Cambrian CU; Crosstown Civic CU
• Variable: 2.40%
  Source: Steinbach CU

These kinds of rates are not just one-time promotions. Manitoba CUs consistently lead the country in short-term mortgage pricing. Here’s why…

A $500-Million RBC Group Becomes Brokers

A group of five high-performing RBC mortgage specialists have decided that the grass is greener in the broker world. The group formed a company called Denova Group and has joined Mortgage Alliance, a national mortgage brokerage.

Mortgage Alliance President & CEO Michael Beckette pegs the team’s trailing 12-month volume at half a billion dollars.

We spoke with David Goncalves, one of the group’s founding partners, to find out why he left the “golden lion” to be an independent.

Mortgage Careers of the Week

Company: B2B Bank
Position Title: Business Development Manager - Mortgages
Years of Experience Required: 4-10
Licences or Registrations Required: No
Location of Position: Vancouver, B.C.
Applicants may contact: Please apply directly online

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Company: Street Capital Financial
Position Title: Senior Mortgage Underwriter - Toronto, Calgary, Vancouver
Previous Experience Required? Yes
Licences or Registrations Required: No
Location of Positions: Toronto, On; Calgary, Alta.; Vancouver, B.C.
Applicants may contact: alexandra.wharin@streetcapital.ca

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Click on the position title above for more information. Advertise your mortgage job opening today! Click here to post. Or browse CMT's Mortgage Jobs Database

The Latest Constraint on Insured Mortgages

As 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.

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

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Rob McLister, CMT

The Latest Mortgage Share by Channel

They get paid the least for every mortgage they sell.

The mortgages they originate have the highest customer retention rate.

They cross-sell more than either of the two other mortgage channels.

We’re talking about branch mortgage reps, and the banks would love to reverse their long-term decline in market share.

Here are the latest channel share estimates from RBC Capital Markets’ recently-released Canadian Mortgage Primer.

Sources: RBC Capital Markets estimates, CMHC and CAAMP

A Book and an Exam Aren't Enough

Yesterday we tweeted about the importance of experience when giving mortgage advice. The message was that brokers with less than 12-18 months of experience need mentors.

In response, we got this message from an anonymous reader:

“[Your] tweets regarding mortgage experience are disturbing --> No, you don't need a 4 year apprenticeship to become a mortgage broker. The one book and a single multiple choice test is enough. Trying to limit people in the sector so you can fatten your wallets??”

It seems our attempts to shut out newcomers and corner the mortgage broker market have been discovered. Next time we’ll better cover our tracks.

And now for some facts…

Mortgage Career of the Week

Company: Zolo Mortgages Ltd.
Position Title: Mortgage Agents
Years of Experience Required: 2
Licences or Registrations Required: Licensed with FSCO as broker or agent or able to be immediately re-licensed
Location of Position: GTA and Surrounding Area, Ontario
Applicants may contact: john.vanoosterhout@zolo.ca or 416-554-9660

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Click on the position title above for more information. Advertise your mortgage job opening today! Click here to post. Or browse CMT's Mortgage Jobs Database

No Action from the BoC

There was no rate change to report from the Bank of Canada today, and nobody expected one.

Canada’s base interest rate remains at 1.00%. It has held that level for 952 days, an unprecedented stretch of flat monetary policy.

The Bank of Canada’s Mark Carney continues to maintain that “the next move (in rates) is likely to be up.” That so-called “tightening bias” has been in place for more than a year.

But if the next move is indeed up, it won’t be happening this year—that is, if you believe the forecasts of virtually every economist in Canada.

Housing Won’t Bounce Back So Quickly This Time — Dunning

How many times have we heard analysts imply that home sales will bounce back from mortgage rule changes within two to three quarters? This has been a common assertion from people who downplay the consequences of the July 2012 mortgage rules. But one man says that it’s an argument not grounded in fact.

“I think economists have just totally misread what the numbers are saying to them,” housing analyst Will Dunning told CMT.

Home Trust’s Alt-A 6-Month Convertible

Home Trust has a new mortgage for “Alt-A” customers. It’s called the Classic Ace 6-Month Convertible.

Alt-A borrowers are people who “just miss the traditional credit requirements of their bank,” says Pino Decina, EVP of Residential Mortgage Lending at Home Trust.

One example he provides is a self-employed client who is waiting to receive his/her current year’s Notice of Assessment, or finalizing Business Financials. That person may not meet the two- or three-year documentation requirements of his or her bank.

Mortgage Tips from Ellen Roseman

Consumer advocate and Toronto Star columnist Ellen Roseman released a book a few months ago called Fight Back: 81 Ways to Help You Save Money and Protect Yourself from Corporate Trickery. It features quick-hit financial tips derived from her columns and blogs.

We were anxious to read some of her mortgage suggestions, of which there are many. Here are a few such examples:

Waugh to Flaherty: Ease Off

It’s been a long search but finally one has emerged: A top banker who’s not afraid to hold Finance Minister Jim Flaherty publicly accountable for his anti-competitive rate actions.

Scotiabank CEO Rick Waugh said the following about Flaherty's persuasion of banks to raise their mortgage rates:

Mortgage Careers of the Week

Company: FNF Canada
Position Title: Senior Account Manager - Southwestern Ontario
Years of Experience Required: 5
Licences or Registrations Required: No
Location of Positions: Southwestern Ontario
Applicants may contact: gshull@fnf.ca

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Company: FNF Canada
Position Title: Senior Account Manager - Alberta
Years of Experience Required: 3
Licences or Registrations Required: No
Location of Positions: Calgary, Alberta
Applicants may contact: gshull@fnf.ca

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Click on the position title above for more information. Advertise your mortgage job opening today! Click here to post. Or browse CMT's Mortgage Jobs Database

New Buyers Raise Their Ante

When some people think of first-time home buyers, they picture young people shoehorning themselves into a property with the minimum possible down payment.

That’s not the norm, according to two new surveys from BMO and Genworth.

The BMO study finds that typical first-timers expect to spend $300,000 on a new home. That’s 19% below the current average home price of $368,895 (source: CREA).

More interestingly, prospective newbie buyers plan to put down an average of $48,000 (16%). That’s higher than what previous data has suggested.

Mortgage Freedom Now Comes Two Years Later: Poll

Several polls have suggested that it’s taking longer to pay off a mortgage. The latest such survey came out on Friday.

According to CIBC/Leger, Canadian mortgagors now say they won’t be mortgage-free, on average, until age 57. That’s two years longer than respondents said last year.

Not surprisingly, racking up debt makes it harder to pay down a mortgage. Among people who accumulated non-mortgage debt after buying a home, only 11% made extra lump-sum payments on their mortgage. That compares to 19% for people who didn’t add additional non-mortgage debt.

Radius Launches the Right Kind of Status Program

Wholesale lender Radius Financial has been steadily gaining market share. Fourth quarter data from D+H suggests the company is the 15th biggest broker lender—up from 23rd one year ago.

This week, the company launched its new Affinity Program for mortgage brokers. The best thing about it is that it avoids certain conflicts inherent in other industry incentive methods.

The Unsung One-Year Mortgage

People haven’t been lining up for short-term mortgages, given the mesmerizingly low rates on 5- and 10-year terms.

But if you’re a financially secure borrower and you believe that rate direction is random (it is), then 1-year rates shouldn’t be written off. That was my topic in this week’s G&M column.

By way of example, suppose you need to borrow for at least five years. If you’re not risk averse, you might consider options like a: