Tuesday, August 30, 2011

Broker: Gov't has left the refi building

Broker: Gov't has left the refi building

By Vernon Clement Jones | 28/08/2011 4:10:00 PM | 0 comments
New quarterly financials from CMHC are confirming the fears of many brokers, worried the government’s latest mortgage rule changes effectively signalled its exit from the refinance business, now down 40 per cent and expected to stay there.

“It’s a repeat of what we saw when the government increased the down payment requirements for CMHC insurance on rental properties,” Curtis Cannon, a sub-mortgage broker with TMG The Mortgage Group in Prince George, B.C. “By decreasing its maximum loan-to-value to 85 per cent from 90 per cent, the government is basically saying, ‘We’re out of the refinance business.’ That’s regrettable because CMHC seems to have forgotten what they’re there for – to put and help keep Canadians in their homes.”

This week the Crown corporation announced that its insurance activity for refis fell 40 per cent for the quarter ended June 30, compared to “pre-implementation levels.” Moreover, the report adds, that activity has “continued to remain around this level.”

That translates into bad news for broker clients, who through no fault of their own, need to pull equity out of their homes in order to cover debts racked up by a death in the family, divorce and/or illness, said Cannon, concerned the government has abdicated its responsibility to aid those Canadians in its move to keep consumers from “using their homes like an ATM.”

“I don’t think that the new refi rules are good, at least not across the board in that the difference between accessing a LTV of 85 instead of 90 per cent may force someone who is in a tough situation out of their home,” said Cannon.

His comments run counter to those of other brokers who embraced the rule changes around refinancing as a way to put an end to “habitual refinancers.”

“Among our team of six brokers, we’re seeing about  three to four clients a month who we would identify as habitual refinancers – meaning they typically have refinanced their credit card debt back into their mortgages every two years,” Bob Smith, broker/owner for Verico K-W Mortgage, told MortgageBrokerNews.ca, shortly after the amendments. “But what we’re seeing now is that those clients are now finding that they can no longer do that.”

Call Amy Wilson Verico Brokers For Life!

Tuesday, August 23, 2011

RBC hikes up its Variable Rate

RBC hikes variable mortgage rates
Last updated Tuesday, Aug. 23, 2011 11:38AM EDT

A Royal Bank of Canada (RBC) logo is seen at a branch in Toronto November 9, 2007. (Mark Blinch/Reuters)

Royal Bank of Canada is hiking variable mortgage rates, seeking to pump up its profit margins as it becomes evident that interest rates will remain low for some time to come.
The country’s largest bank, which is also Canada’s biggest mortgage lender, said Tuesday that it is increasing the rates on its five-year variable closed residential mortgages by 0.20 percentage points. As a result, the price of its current special offer rate is now prime minus 0.45 per cent.

Sources in the banking industry say that the profit margins banks are earning on variable rate mortgages have become extremely thin. And that’s becoming more of a problem for lenders because there are already signs that Canadians are piling back into variable-rate, as opposed to fixed-rate, mortgages. That’s because expectations that the Bank of Canada will hike interest rates by a significant amount in the near future diminished recently after the U.S. central bank signalled that it intends to keep rates at rock-bottom levels well into 2013.
By making this move RBC is signalling that it is choosing profits over market share. While some rivals are likely to follow suit, other banks might choose to keep rates low in order to lure new customers, hoping that those borrowers will eventually lock in to a more profitable fixed-rate at the same bank.
A spokesperson for RBC said that mortgage rates are tied to the bank’s funding costs, which change from day to day. “Our long term funding costs have gone up considerably due to global economic concerns and while we have held off in passing on these rate changes to our clients, it is now necessary for us to increase this mortgage rate,” the bank said.
The last time it adjusted the variable closed posted rate was in January, when it was decreased from prime minus 0.15 per cent to prime minus 0.20 per cent. That posted rate (as opposed to the special offer rate) is now prime plus 0 per cent.
Published on Tuesday, Aug. 23, 2011 11:22AM EDT

I can beat that rate for your variable mortgage - Call Amy Wilson - Verico Brokers For Life at 780-919-0475 or amy@brokersforlife.ca

Thursday, August 18, 2011

Types of Mortgages

I am happy to provide mortgages for: residential mortgages, mortgages for first time buyers, debt consolidation, equity take out for investment purposes, construction mortgages, financing for land developers, commercial mortgages, financing alternatives for people with poor credit, mortgages for self-employed buyers, refinancing mortgages for self-employed home owners, mortgages for investment properties and mortgages for recreation properties.

Call Amy Wilson - Verico Brokers For Life - 780-919-0475 or amy@brokersforlife.ca