Monday, November 30, 2009

Lenders panel plays it safe at CAAMP

Tuesday, 24 November 2009

A panel of lenders at CAAMP's annual conference said they believe
mortgage brokers' share of the market will continue to grow, but also emphasized the need for greater efficiency and speculated that volume bonuses could be scaled back over time.

"There is increasing penetration of the mortgage broker channel because
it takes all the grief of getting a mortgage off a person's shoulders," said Stephen Smith of First National, adding the under 40 generation has created a culture of using mortgage brokers as opposed to their parents' generation who turn to banks.

Among the positive outlook there was also critique. Ivan Wahl of Xceed
Mortgage Corporation talked about his company's goal to do 80 per cent of volume with 20 per cent of brokers and speculated there are only a small number of brokers who "do what they say they're going to do." John Webster of Scotia Mortgage Authority said he didn't think lenders needed to be "all things to all people" in response to one of Smith's comments about catering to all brokers, not just the ones who send in lots of deals.

On the topic of lender exclusivity, Boris Bozic of Merix Financial said
it appeared lenders were after "the same 750 brokers across the country even though there are 14,000", stating brokers can have trouble gaining direct access to a lender. He also stated volume bonuses have a "shelf life expiry" and warned the industry to prepare for changes.

The panel agreed on a trend toward more screening of brokers (such as
Scotia Mortgage Authority's mortgage scorecard) focusing on efficiency ratios, number of delinquencies and deal quality. And although the panel agreed the economic recovery is underway, their optimism was cautious.

"The last half of 2009 was much better than anyone expected," said
Webster. "But there is still a lot of uncertainty."

Friday, November 27, 2009

Experts expect mortgage rate rise to be quick

November 24, 2009 5:40 a.m.

Interest rates aren't going up any time soon, but when they do the rise
will be rapid, mortgage industry experts say.

Because of this, mortgage lenders and brokers have a responsibility to
help homebuyers assess their capacity to make higher monthly payments, and to constantly evaluate their chances for default.

"There should be some prudence and there should be counselling by
mortgage brokers to ensure people do leave a little wiggle room," Ivan Wahl, chairman and CEO of Xceed Mortgage Corp., said at an industry conference yesterday.

Wahl praised Canadian regulators for preventing the housing meltdown that has decimated the American economy, but said mortgage lenders have a responsibility to self-regulate.

The Canadian and American housing markets fared very differently during
the recession. While the financial crisis in the U.S. was caused in large part by subprime mortgages, strict regulations helped the Canadian economy avoid a similar meltdown.

However, even mortgage lenders weren't expecting the Canadian housing market to fare as well as it has.

"The last half of '09 is better than anybody expected," said John Webster, president and CEO of Scotia Mortgage Corp.

"We were looking at a nuclear winter ... ( for new mortgages), a 30 to 35 per cent drop, and that hasn't happened," agreed Stephen Smith, chairman and president of First National Financial.

Thursday, November 26, 2009

When to give out your S.I.N.

Follow the link to this great article on when to give our your social insurance number and why.

Tuesday, November 24, 2009

Experts agree mortgage rates to rise in 2010

Here's a link to a great article you might want to consider as we head into 2010.

As always, we recommend you check with a licensed mortgage broker to take the stress and hassle out of mortgage negotiations.

Wednesday, November 18, 2009

Rapid rebound Fuels Fears of Housing Bubble

Garry Marr, Financial Post

Canadian existing home prices are now rising at a pace not seen in 20 years, fueling talk that a bubble may be forming in the market.

The average price of a home sold last month was $341,079, a 20.7% increase from a year ago, the Ottawa-based Canadian Real Estate Association said Monday. Sales also continued to climb with 42,288 units trading hands, a 41% jump from October, 2008.

At the same time that demand continues to surge and interest rates remain at historic lows, supply remains critically low. New listings last month in the country's 25 largest market were off 16% from a year ago.

"I don't think it's a bubble yet," said Doug Porter, an economist with Bank of Montreal. "The rapid-fire rebound in Canadian housing is showing no sign of letting up. While that may be causing some sweaty palms among bubble-phobes, the quick turn is a vivid illustration that monetary policy still works in this country."

Mr. Porter says large markets are skewing average prices, creating a national picture that might seem more buoyant than it is in reality. Toronto, the largest market in the country, saw a 20% increase in price last month from year ago. In Vancouver, the most expensive market in the country, sales were up 170.8% from a year ago.

"There is a little bit of magic in the way they put these numbers together," said Mr. Porter.

Derek Holt, senior vice-president of economics at Scotia Capital, called what's happening in the marketplace today a once in a lifetime situation. He says record low interest rates, tight supply, a favourable lending environment and government stimulus program have all helped stir the housing pot.

"It's more the medium term, two three years, where we could get into headaches potentially," said Mr. Holt. questioning whether consumers buying today are ready for interest rates that could be three to four percentage points higher by 2011.

Real estate author Garth Turner said the latest figures prove his thesis that Canada is now in a real estate bubble. "We got this type of growth in sales and prices in the middle of a recession. The latest GDP numbers show the economy actually contracted," says Mr. Turner.

A new study from the Canadian Association of Accredited Mortgage Professionals released yesterday shows Canadians are benefitting from the lower interest rates. The average mortgage rate negotiated in the past year was 4.55%, a decline from 5.41% a year ago.

"Clearly people are thinking the worst is behind us and that comes as we have record low rates," said Jim Murphy, president of CAAMP. "If rates were to spike dramatically, there could be some concern but we just don't see that."

Gregory Klump, chief economist with CREA said while the latest numbers appear dramatic they have to be kept in context. "Activity in the early part of 2009 had fallen to a decade low. With improvement in consumer confidence and interest rates, sales activity was expected to respond.," he said.

Mr. Klump suggested prices will ease up as seller's start to take advantage of higher prices. However, CREA is now predicting prices will rise 4.2% this year after suggesting they would only increase by 1.5%.

Michael Polzler, executive vice president of Re/Max Ontario-Atlantic Canada Inc., said he's been expecting these type of price increases. "Last year at this time, everything just stopped. They were very realistic example of where everything was it," he said. "Now we are just back to kind of normal. You are going to see these type of numbers continues into the spring because we are comparing them to last year."

Sunday, November 1, 2009

Turn Back Time

Welcome to November ... a reminder to set your clocks back one hour today and change the batteries in your smoke detectors and other gas detectors around the house.