Help for brokers from an unlikely source

Help for brokers from an unlikely source

http://www.mortgagebrokernews.ca/news/newsletter/171282/

_{By Donald Horne | 29/01/2013 8:00:00 AM | 0 comments}

A market effectively closed to brokers – developer subdivisions – may indirectly be putting more money into their pockets.

“The ‘Echo Boomers’ are flocking to the city, and downtown growth is outpacing the suburbs,” says Kim Gibbons, a mortgage broker with Mortgage Intelligence in Toronto. “I live and work downtown, because I don’t want the commute. A lot of my clients do not want the commute.”

That demographic -- the children of post-war Baby Boomers -- is turning away from the suburbs in favour of proximity to work and access to urban transit. But the lack of available land in the Greater Toronto Area is also stymieing the growth of new subdivisions and, in the process, forcing buyers naturally inclined to seek new construction into the existing-home market.

The trend is set to benefit brokers, who traditionally find themselves shut out of developer salesrooms but make their bread and butter in the resale market.

New numbers from RealNet Canada suggest the price gap in the GTA between high-demand housing and condos hit a record $196,844 in December as the price of new detached construction skyrocketed.

The cost of new, single-family homes in the GTA has, in fact, jumped 16 per cent to an average $632,868, a direct result of provincial policies to restrict urban sprawl, says developers.
Whatever the cost, brokers, even a cooling GTA market, stand to benefit.

“There is a lot of condo and residential resale activity, and I am still seeing a lot of multiple offer situations,” she says. “The market is definitely not flat-lining for the resale home and condo sector.”

Canadians Save By Renewing, Renegotiating Mortgages with Brokers

The Mortgage Broker channel in Canada is highly competitive. Research shows that consumers recently renewing their mortgages with Mortgage Brokers came out way ahead of those renewing with other channels.

Maritz Research Canada recently conducted a study of 2,000 Canadians. The study focused on Canadians' opinions of the mortgage industry and specific feedback on their mortgages and experiences with mortgage professionals.

Those who renewed or renegotiated recently with a Mortgage Broker reported an average rate decrease of 1.4 per cent from posted rates, compared with 1.0 per cent among all renewers. It is easy to understand why Broker market share is 27% on early term renegotiation and has potential to grow much higher.

Just one-third of Canadians say they have a good or full understanding of the services provided by Mortgage Brokers. The importance of awareness is clear: Broker market share is roughly twice as high among those who have a good or full understanding of Broker services when compared with those who have a lesser understanding.

The findings demonstrate that Mortgage Brokers could benefit from better explaining their services to home buyers in their local communities. Satisfied clients can also help their friends and families to save on mortgage renewals and renegotiations, by passing on their knowledge to alleviate any uncertainty about the Broker process. 

Calculate the potential payments on your next mortgage using the CENTUM Mortgage Calculator amortization tool. Click here: Mortgage Analyzer

Got questions? We've got answers! E-mail me now at anne_brill@centum.ca. I'm also available directly at 416-565-7795.

Anne Brill

Mortgage Agent

License # M08005655

Centum Metrocapp Wealth Solutions Inc.

License #12147

716 Gordon Baker Road, Unit 204 A

Toronto, ON M2H 3B4

Tel: 416-289-2224

Fax: 1-888-813-9403

_{ING Direct moving to cease broker originations} 

_{By Vernon Clement Jones | 15/01/2013 8:00:00 AM | 0 comments} 

 

For some brokers, it reads like a "Dear John" letter, but on Wednesday, ING Direct annouced it will effectively leave the channel, at the same time referring mortgage professionals to its new parent company Scotia.

"I wish to share with you some important news regarding the future of ING DIRECT’s mortgage business," writes Kim Luxton, director of broker sales for ING Direct Canada, in a letter to brokers. "Following the recent acquisition of ING DIRECT by Scotiabank we have completed a thorough evaluation of our mortgage business and have come to the decision that ING DIRECT will concentrate its origination efforts on its DIRECT channel and transition its broker business to Scotiabank."

The news has come as come as a shock to some brokers.

"It is sad to see a great lender leave the space," said Chad Robinson, owner of Verico Best Interest Mortgages. "ING has a been a great partner over the last decade."

Still, others are viewing Wednesday's announcement as the other shoe they've been waiting to drop since Scotia announced it would buy the upstart lender. At least one high-volume broker with ING told MortgageBrokerNews.ca that he started to ween himself off of the lender in November.
Regardless, Luxton is billing the decision as a way of streamlining the operation.

"We determined through our review that there was considerable overlap between Scotiabank’s and ING DIRECT’s broker businesses in terms of broker partnerships and product offering," she writes. "We felt that both ING DIRECT’s and Scotiabank’s objectives would be better served by allowing each entity to focus its efforts on its own relative strengths.

Additionally,  she says, our organization is confident "Scotiabank has the capacity to meet your needs and your clients’ needs, providing you with the level of service you have become accustomed to with ING DIRECT."

Luxton is also reiterating Scotia's commit to the channel ING is now preparing to leave.
As it makes that transition, she syas, "We will continue to accept new mortgage and HELOC applications up to 8:00 pm EST on February 16, 2013.

Also, effective immediately, ING Direct will no longer accept new rate holds and new pre-approvals, although they will honour existing 30-day rate hold certificates up until their expiry date.

Value declines jeopardize subprime market

_{By Vernon Clement Jones | 15/01/2013 8:00:00 AM | 1 comments} 

 

Value declines jeopardize subprime market. 

 

While brokers have their eye on the falling number of sales, in Vancouver they’re now ogling falling prices and the threat they could pose subprime deals.

“It’s really one of the few areas that we expect to see real growth,” Michael Sjerven, owner of Vivid Mortgage, told MortgageBrokerNews.ca. “So it’s of concern that the volume of subprime deals could be in jeopardy if values fall another 5 per cent to 10 per cent in Vancouver.”

The nail-biting has everything to do with 20 per cent equity requirements around subprime deals imposed by both institutional and individual private lenders. In B.C., many potential clients for those types of deal are now skirting that figure, with even a value decline of 5 per cent likely to cancel their access to refinancing in the alternative sphere.

Prices on B.C.’s Lower Mainland have already taken a tumble.

While the number of sales for Metro Vancouver dropped 22.7 per cent in 2012 from 2011, the average home price fell to $730,063, or 6.4 per cent down from a year ago.

For December alone, the average selling price for a home in B.C. fell 3 per cent to $498,205.
That decline is actually expected to continue, especially in the Vancouver area, as Richmond and other top-tier markets grapple with a slowdown in high-end home sales. But the fallout won’t be limited to brokers working the tony end of the market, with most market forecasters pointing to overvaluation across Metro Vancouver.

The situation represents a double whammy for Vancouver mortgage professionals as they move to reconnect with their subprime roots as a way of compensating for the dwindling number of A deals.
Still, for now the number of subprime deals is expected to grow in the short-term as homebuyers, with more than 20 per cent equity in the homes or more than 20 per cent put down, find themselves shut out of the A market by tighter lending guidelines courtesy of the Office of the Superintendent of Financial Institutions.

Market slumps in December

_{By Vernon Clement Jones | 14/01/2013 8:00:00 AM | 1 comments} 

 

 Market slumps in December

 

There’s yet more indication brokers will see a quiet winter, with national home sales slipping 17 per cent in December from a very active year ago.

"National sales activity continues to hold fairly steady at lower levels since mortgage rules were changed earlier in 2012, said CREA President Wayne Moen Tuesday, “but there are still some real differences in trends between and within local housing markets."

More generally, national home sales edged 0.5 per cent lower in December 2012 compared to November, and actual activity was down 17.4 per cent year-over-year.

The one bright spot for brokers, perhaps, is the falling number of listings, said one analyst. They dropped 1.3 per cent from November to December, something that may encourage buyers now in the marketplace to act sooner rather than later.

Still, the challenge of new mortgage rules introduced in July remain, with many brokers now writing off the possibility of a repeat of last winter’s brisk activity. That activity was spurred, in part, by unseasonably warm weather.

In 2012, a total of 453,372 homes traded hands over the Canadian MLS system, which represents a decline of 1.1 per cent from 2011 and 1.4 per cent below the 10-year average.

The downward trend is actually in line with projections for this year, with Jim Flaherty’s new mortgage rules bearing the brunt of any blame.

More good news for brokers is that those rules aren’t expected to tighten any further this year. The Finance minister has suggested the government is satisfied that its move to lower the amortization on insured mortgages, along with other key changes – in addition to OSFI’s new lending guidelines – have already begun to de-accelerate consumer debt.
 

'Pleased' Flaherty meet displeased brokers

_{By Vernon Clement Jones | 15/01/2013 8:00:00 AM | 0 comment}

_{"Pleased" Flaherty meet displeased brokers!} 

Finance Minister Jim Flaherty says he’s happy increases in home prices have started to slow, but is relatively mute on a much bigger concern for brokers – the falling number of sales.

“I don’t mind prices coming down a bit,” he said in an interview with The Globe and Mail Tuesday. “I am actually pleased, because we needed to take some of the steam out of the rapid increases in prices in the residential housing market, particularly the condominium market.”

According to new CREA numbers released Tuesday, 20,538 homes sold over the Multiple Listing Service in December -- down 17.4 per cent from a year ago. That amounts to the biggest year-over-year drop since July, when tighter mortgage rules took effect.

The sales slump represents a different and more urgent story than the 0.5 per cent drop in national home prices from November to December, say brokers. Actually, on a year-over-year basis, the national average price rose 1.6 per cent last month.

That softening in home prices is good for the health of both the market and the Canadian economy, says Flaherty. But brokers continue to direct Ottawa’s attention to the slowdown in sales and the very real impact that has on GDP growth and, ultimately, prices.

As recently as last month, CAAMP officials reiterated those concerns in talks on Parliament Hill.
“We will obviously discuss the government’s recent changes along with the need to maintain a healthy housing and mortgage industry in Canada,” the association’s CEO Jim Murphy told MortgageBrokerNews.ca in December.

A large part of CAAMP’s Ottawa presentation was its Annual State of the Residential Mortgage Market report, highlighting the sound management of that secured debt by most Canadians.

The hope continues to be that Ottawa will hold fire on any additional changes to the mortgage rules and the OSFI lending guidelines, also tweaked last year.

Still, brokers continue to express real concern that Flaherty may move to further batten down the hatches if sales begin to climb in the second half of 2013.

First-Time Home Buyers Now Qualify for Additional Tax Credits

First-Time Home Buyers Now Qualify for Additional Tax Credits

Beginning in 2009, the Federal government announced adjustments to the rules for Government-backed insured mortgages. These changes will significantly reduce the total interest payments Canadians make on their mortgages, promote saving through responsible home ownership, and limit repackaging of consumer debt into mortgages guaranteed by taxpayers. A new First-Time Home Buyers’ Tax Credit, in the year the home is purchased, was introduced for first time home buyers that buy a qualifying home.

What is the First-Time Home Buyers’ Tax Credit (HBTC)?

The HBTC is a non-refundable tax credit for certain homebuyers who acquire a qualifying home after January 27, 2009.

How is the First-Time Home Buyers’ Tax Credit Calculated?

The HBTC is calculated by multiplying the lowest personal income tax rate for the year (15% in 2011) by $5,000. For 2011, the credit was $750.00. This may change in the future based on the income tax rate. If the total of your non-refundable tax credits are more than your federal income tax, you will not receive a refund for the HBTC.

How to Qualify for the First-Time Home Buyers’ Tax Credit

• You or your spouse or common-law partner acquired a qualifying home; and
• You did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years.
• If you are a person with a disability or are buying a home for a related person with a disability, you do not have to be a first-time home buyer to get the HBTC. However, the home must be acquired to enable the person with a disability to live in a more accessible dwelling or in an environment better suited to the personal needs and care of that person.

For the purposes of the HBTC, a person with a disability is an individual who is eligible to claim a disability amount for the year in which the home is acquired, or would be eligible to claim a disability amount if we ignore that costs for attendant care or care in a nursing home were claimed as medical expenses on lines 330 or 331.

What is a Qualifying Home?

A qualifying home is a home located in Canada. This includes existing homes and those being constructed. Single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, as well as apartments in duplexes, triplexes, fourplexes, and apartment buildings all qualify. A share in a co-operative housing corporation that entitles you to possess, and gives you an equity interest in, a housing unit located in Canada also qualifies. However, a share that only provides you with a right to tenancy in the housing unit does not qualify.

Also, you must intend to occupy the home or you must intend that the related person with a disability occupy the home as a principal place of residence no later than one year after it is acquired.

Important Things to Remember

The home must be registered in your or your spouse’s or common-law partner’s name in accordance with the applicable land registration system. You do not have to submit documents supporting your purchase transaction with your income tax and benefit return. However, you have to make sure that this information is available if the Canada Revenue Agency asks for it.