Don’t be Afraid to Talk to a Mortgage Broker

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Halloween aside, this October has plenty of reasons to get you spooked, what with a recession, a long and tiring election campaign, and recent world events. Plenty of reasons, but your mortgage need not be one of them.

We’re here to help in this frightful time, no matter if you’re buying a home, renewing your mortgage, or looking to refinance.

Mortgage brokers have access to a wide range of lenders and products, and we can find a mortgage that’s right for you. After all everyone’s mortgage needs are different. You may require the certainty that your mortgage payment will stay the same from the first day of your term to your last. You may want flexibility, to be able to pull equity out of your home to finance a renovation or a new car. Regardless, you should be able to do so with the lowest mortgage rate available in Canada.

Mortgage rates are incredibly low right now, but you likely wouldn’t know it if you looked at your local bank’s rates. Go with your bank’s mortgage rates, you’ll probably end up paying a ghastly premium.

Data sheds light on big banks and mortgage market

While much has been made of forecasts and feelings regarding Canada's mortgage market in the last few months, nothing compares to cold, hard facts. Fortunately, Canadian Mortgage Trends has compiled a list of various figures from Canada's six largest banks to give a glimpse into the current state of the market. Citing quarterly earnings reports, presentations and conference calls, the data gives Canadian consumers a peek behind the window dressing at Bank of Montreal (BMO), Canadian Imperial Bank of Commerce (CIBC), National Bank of Canada (NBC), Royal Bank of Canada (RBC), Scotiabank and TD Bank.

Mortgage activity rises for most
Outside of CIBC, which saw mortgage activity decline by $1.3 billion during the second quarter of 2013, all other banks tracked saw year-over-year increases. BMO experienced a 13.7 percent rise in mortgage balances compared to the same time last year, as well as 1.9 percent on a quarter-over-quarter basis. NBC saw residential mortgage activity rise 13 percent year-over-year, as well as 4 percent quarterly. RBC had its residential mortgage volume rise 5 percent year-over-year during the second quarter, reaching $177 billion. Scotiabank's residential mortgage portfolio reached $188 billion during the second quarter, marking a 27 percent increase on a year-over-year basis. Finally, TD Bank also experienced an increase in residential mortgages, it's portfolio reaching $156 billion during the second quarter. This is up from $155 billion during the last quarter, as well as $145 billion during the same time last year. Continue reading

Protecting against predatory lenders

A recent article in The Globe and Mail raises questions regarding lending practices at Canadian banks.

Speaking with the news source, Samantha Gale, a former mortgage regulator at the Financial Institutions Commission of British Columbia and current CEO of the Mortgage Brokers Association of British Columbia, said that the restrictions that govern other mortgage lenders are found lacking when it comes to banks, or, more accurately, banks’ mortgage representatives.

“Individual (bank) mortgage reps operate outside of regulatory boundaries which commonly govern licensed professionals,” she said.

This lack of oversight could lead to less than fair deals for mortgage borrowers, whether it concerns mortgage rates or recommendations for unsuitable lenders.

“Banks are kind of like a mortgage shop,” Gale continued. “And when they pass you off to another lender, and you don’t know who you’re dealing with and why, that’s a consumer risk.”

Fortunately, there are a number of ways for potential homeowners to ensure they are receiving good service when interacting with a mortgage lender. The key is being aware of predatory lending practices and choosing a lender you can trust. Continue reading

Hurricane Sandy?s full effect not yet known

Hurricane Sandy has dominated all aspects of the news for the last few days, as it rightly should. The toils and troubles of everyday life tend to take a backseat when a force as powerful and volatile as Mother Nature rears its head.

Besides obvious fears regarding the safety of family and friends, the biggest speculation has come from the financial world. The full effect of Hurricane Sandy won’t be known for some time, but that hasn’t stopped analysts from trying to figure out the costs.

The CBC has estimated that the hurricane may cause as much as $45 billion in losses, affecting 25 percent of the U.S. economy.

"It seems likely that Sandy will impose greater destruction of property [than last year's Hurricane Irene], and add to that the loss of about two days commercial activity, spread over a week across 25 percent of the economy, an initial estimate of the economic losses imposed by Sandy is about $35- to $45-billion,” said macroeconomist Peter Morici in the CBC report. Continue reading

Bank dividend hikes signal a healthy industry

It's likely that everybody – homeowners, potential homeowners, first-time buyers, people who know people with homes, Canadians in general – wants the best for the mortgage industry. Why waste time wishing anything bad on it? After all, it's hard to deal with being called fragile as rumors whiz around about a potentially bursting bubble that could topple the whole thing.

Needless to say, it's always a happy day when the industry boasts some good mortgage news – thankfully, today is that kind of day. News reports reveal that Canadian banks' balance sheets are doing so well that some banks are expected to increase dividends because profit growth will enable them to meet higher capital requirements in 2013.

Dividends – money paid to shareholders from a company's profits or reserves – are signs that companies are healthy and profitable, according to a recent Financial Post article. Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, Bank of Montreal and Bank of Nova Scotia all "join the ranks," as the article nobly states, of banks that really have their financials in order. Royal Bank of Canada and National Bank of Canada may also be in the elite club, though experts aren't going on the record to predict bolstered dividends for either bank. Continue reading

Moody’s believes in Canada’s housing market and economy

There has been a lot of dramatic mortgage news surrounding the Canadian housing market lately – it's difficult to try and keep up with it all.

First, experts said the market was extremely hot – almost too hot for our own good. Condos and homes were built at astounding speeds, and it seemed like everyone and their brother wanted in on the real estate market. The irresistibly low mortgage rates were way too great to pass up.

And then came the housing bubble threat, which experts revealed would soon wreak havoc on the entire housing market and – for lack of a better comparison – create a mortgage crisis of American proportions. Although nothing has happened yet, analysts seem to be split as to whether or not this whole bubble-bursting thing will ever happen.

New mortgage rules created as a response to the bubble theory also have analysts split down the middle as to whether the requirements are doing more harm than good. But one thing is for sure: Housing activity is cooling down. For that reason, Moody's Investors Service reaffirmed Canada's stable triple-A credit rating. Continue reading

Bad news for big banks

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Most of the biggest banks in Canada recently got an unwelcome surprise. Standard & Poors Ratings Service announced July 27 that it had lowered the outlook for a number of banks from "stable" to "negative."

So which banks were unlucky enough – or unstable enough? – to garner the negative outlook?

• Royal Bank of Canada
• Toronto-Dominion Bank
• Bank of Nova Scotia
• National Bank of Canada
• Laurentian Bank of Canada
• Central 1 Credit Union
• Home Capital Group

According to S&P, all the expensive home loans Canadians have taken out over the last few years, coupled with massive amounts of consumer debt, are "contributing to growing imbalances and Canada’s vulnerability to the generally weak global economy, applying negative pressure on economic risk for banks.” Continue reading

Canadian mortgage rates drop at big banks; brokers still best bet

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Some of Canada's biggest banks don't appear to have heard recent calls to raise interest rates sooner than later. The Royal Bank of Canada, Toronto-Dominion and BMO have all dropped the mortgage rates on their five-year home loans.

RBC was the first major financial institution to lower its rates, which fell from 5.44 percent to 5.34 percent on May 24. TD and BMO followed suit the next day. The move comes on the heels of a plea from the Organization for Economic Co-operation and Development for the country to raise its interest rates sooner than later. In March, all of the nation's big banks lowered fixed-interest mortgage rates to 2.99 percent on four- and five-year products.

TD Bank CEO Ed Clark, for one, doesn't share the concerns of the OECD when it comes to interest rates. In a recent earnings report, Clark noted that he sees "signs that the housing market is slowing, and the risk of a sharp correction are diminishing.”

While big banks may have dropped their interest rates, mortgage brokers are usually able to find the best mortgage rates in the country. Brokers work with a variety of lenders and have the flexibility to find exactly the right mortgage to suit a homebuyer's needs.

Get a mortgage online? Someday

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As more people are turned off from dealing with big banks, many financial services – including home loans – are shifting to the internet, according to The Montreal Gazette.

Technology, particularly cellphone technology, that can perform many bank functions wirelessly and online has been emerging in greater volume over the last few years, and with it the opportunity to conduct financial transactions without dealing directly with a bank, the source reported. One recent agreement between banks has paved the way for consumers to make credit card purchases on their smartphones. Homebuyers could soon sign for mortgages with a digital signature from their home computer, according to the Gazette.

"The technology exists," Yvon Audette, an IT advisory partner at KPMG Canada, told the source. "The only [action] I can't think about how to do digitally is a bank draft or a certified cheque. All the other bits and bytes exist to do everything digitally. So I think there's just a matter of time."

Canadians who are sick of dealing with big banks but prefer human interaction in their homebuying transactions should consult with certified mortgage brokers. Brokers have access to a large network of lenders and can help consumers get the best mortgage rates available.

Bank earnings expected lower as regulations, consumer warning sink in

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As more Canadians heed the warning against over-borrowing in the face of low interest and mortgage rates, big banks are beginning to feel the pinch.

Over the last few years, as the housing market expanded and more people took out home loans, big banks saw their rate of growth increase considerably. Even through the first quarter of this year, banks enjoyed strong earnings. New regulations governing the Canadian Mortgage and Housing Corporation coupled with dire predictions of a housing bust from ministers and financial executives have curbed consumer borrowing, however, and most of the country's major institutions are expected to report significantly lower earnings during the second quarter.

While activity at the big banks may be tempering due to stricter rules on mortgage insurance from CMHC, secondary lenders and mortgage brokers may see their market share heating up. A recent market trend analysis from the Financial Post indicated some of the big banks may be getting out of the mortgage broker game as lending restrictions tighten. This could be good news for Canadians hoping to get a home loan without the hassle of dealing with a big bank.