New Interest Rates have been arranged with a new Lender that will only deal with selected Brokers.
5 year fixed rate @ 3.14% with a 45 day rate hold or, Variable Rate Mortgages at Prime less .30% (2.70%)
December 6, 2011
Rick Moran, AMP, OMB # M08001997
Showing posts with label rick moran mortgage. Show all posts
Showing posts with label rick moran mortgage. Show all posts
Wednesday, December 7, 2011
Tuesday, November 22, 2011
There is no Place like a Second Home for Investors
As wealthy foreign buyers snap up more and more luxury homes in Canada, high-net-worth Canadians are similarly showing strong interest in purchasing multimillion-dollar residences abroad. But while their sights were once set on a French château, perhaps, or a Tuscan villa, the trend now is towards buying in the United States.
“We've really seen a fall-off in buying in Europe because of all the confusion over the past 12 months or so,” says Don Campbell, president of Abbotsford, B.C.-based Cutting Edge Research Inc. and the author of five best-selling books on real estate investing.
With so much volatility in Europe, especially in Spain, Portugal and Italy, “people don't know in which direction the market is heading, or the direction of the potential tax implications,” he says. France has just added a new tax on foreign property owners, and the market in Dubai “is getting hammered,” he explains.
Currency fluctuations can cause real estate values to plummet in real terms, while economic woes often leave European governments with little choice but to raise taxes on properties belonging to the super rich.
As a result, says Mr. Campbell, there's a lot of confusion about where high-net-worth individuals should buy that second property. Hence the popularity of buying in the U.S., where as Mr. Campbell says “you know what you're getting”.
Other destinations of choice right now are stable tropical nations, such as Costa Rica and Panama. But, he says, “No.1 is the U.S. There's no question about that.”
The financial incentives for buying luxury residences south of the border are obvious. “They're at a historic low in terms of pricing,” said Chris Potter, a partner in the Toronto PricewaterhouseCoopers real estate practice.
Lawyer David Altro, author of Owning U.S. Property: The Canadian Way, also finds high-net-worth Canadians are increasingly attracted to real estate prospects south of the border. He says his clients in the eastern part of the country tend to buy in south Florida, while those in the West are eyeing properties in exclusive California cities such as Palm Springs, Desert Palms and Rancho Mirage, or in Hawaii.
The main reasoning behind such preferences is ease of access. Direct and relatively short flights mean less stress and hassle in travelling back and forth between Canadian and U.S. homes.
“They are also liking those areas because they have health care there, too,” he says. “But the bottom line is, we like to go south in the winter to get out of the Canadian weather and play golf and go to the beach. So no matter what the U.S. real estate market is like, it's always going to be busy.”
Mr. Altro says many boomers and high-net-worth Canadians are taking up permanent residence in the U.S. With a much lighter tax regime “on a regular annual income basis,” he points out, “we have a steady stream of high-net-worth Canadians who are moving to the States. I have a client in Vancouver, worth about $50-million, and all that invested money in Canada is being taxed at such a high rate. Move to the U.S. and it's like they have a new annual revenue.”
Hunter Milborne, a partner at Sotheby's International Real Estate, explains why buying a property needs to be planned correctly. If a Canadian owns a property personally, “they have a fairly onerous estate tax [on inheritances], whereas if you own something corporately or through a trust, then that's not the case.”
For Mr. Campbell, another issue implicit in owning foreign property is having sound insurance advice. “Being such a litigious country, you better have an incredibly good insurance agent for liability, fire and all the things you need to protect yourself for down there,” he says.
“If you're buying into a gated community or a high-end condo, check to make sure how many of those properties are actually in use, as opposed to being in arrears, foreclosure or owned by a bank,” he says.
“Because the community still needs money to run ... a lot of people who buy into those semi-deserted gated communities because it's relatively inexpensive, find that their fees and operating costs can start to really go through the roof.”
There are, however, many Canadian multimillionaires opting to simply stay put, keeping the Canadian market in luxury real estate buoyant.
“The real favourite right now is keeping money in your hands and in your own country,” says Mr. Campbell, “especially with the global confusion that's going on, and economic and political confusion in the U.S.”
Rick Moran, AMP, OMB # M08001997
“We've really seen a fall-off in buying in Europe because of all the confusion over the past 12 months or so,” says Don Campbell, president of Abbotsford, B.C.-based Cutting Edge Research Inc. and the author of five best-selling books on real estate investing.
With so much volatility in Europe, especially in Spain, Portugal and Italy, “people don't know in which direction the market is heading, or the direction of the potential tax implications,” he says. France has just added a new tax on foreign property owners, and the market in Dubai “is getting hammered,” he explains.
Currency fluctuations can cause real estate values to plummet in real terms, while economic woes often leave European governments with little choice but to raise taxes on properties belonging to the super rich.
As a result, says Mr. Campbell, there's a lot of confusion about where high-net-worth individuals should buy that second property. Hence the popularity of buying in the U.S., where as Mr. Campbell says “you know what you're getting”.
Other destinations of choice right now are stable tropical nations, such as Costa Rica and Panama. But, he says, “No.1 is the U.S. There's no question about that.”
The financial incentives for buying luxury residences south of the border are obvious. “They're at a historic low in terms of pricing,” said Chris Potter, a partner in the Toronto PricewaterhouseCoopers real estate practice.
Lawyer David Altro, author of Owning U.S. Property: The Canadian Way, also finds high-net-worth Canadians are increasingly attracted to real estate prospects south of the border. He says his clients in the eastern part of the country tend to buy in south Florida, while those in the West are eyeing properties in exclusive California cities such as Palm Springs, Desert Palms and Rancho Mirage, or in Hawaii.
The main reasoning behind such preferences is ease of access. Direct and relatively short flights mean less stress and hassle in travelling back and forth between Canadian and U.S. homes.
“They are also liking those areas because they have health care there, too,” he says. “But the bottom line is, we like to go south in the winter to get out of the Canadian weather and play golf and go to the beach. So no matter what the U.S. real estate market is like, it's always going to be busy.”
Mr. Altro says many boomers and high-net-worth Canadians are taking up permanent residence in the U.S. With a much lighter tax regime “on a regular annual income basis,” he points out, “we have a steady stream of high-net-worth Canadians who are moving to the States. I have a client in Vancouver, worth about $50-million, and all that invested money in Canada is being taxed at such a high rate. Move to the U.S. and it's like they have a new annual revenue.”
Hunter Milborne, a partner at Sotheby's International Real Estate, explains why buying a property needs to be planned correctly. If a Canadian owns a property personally, “they have a fairly onerous estate tax [on inheritances], whereas if you own something corporately or through a trust, then that's not the case.”
For Mr. Campbell, another issue implicit in owning foreign property is having sound insurance advice. “Being such a litigious country, you better have an incredibly good insurance agent for liability, fire and all the things you need to protect yourself for down there,” he says.
“If you're buying into a gated community or a high-end condo, check to make sure how many of those properties are actually in use, as opposed to being in arrears, foreclosure or owned by a bank,” he says.
“Because the community still needs money to run ... a lot of people who buy into those semi-deserted gated communities because it's relatively inexpensive, find that their fees and operating costs can start to really go through the roof.”
There are, however, many Canadian multimillionaires opting to simply stay put, keeping the Canadian market in luxury real estate buoyant.
“The real favourite right now is keeping money in your hands and in your own country,” says Mr. Campbell, “especially with the global confusion that's going on, and economic and political confusion in the U.S.”
Rick Moran, AMP, OMB # M08001997
Tuesday, November 8, 2011
Real Estate Sales Continue to Climb: TREB
The market in Toronto seemingly only knows one direction- up.
According new data released by TREB, sales for October climbed an impressive 17.5%, year-over-year.
“The pace of October resale home transactions remained brisk in the GTA. This bodes well for a strong finish to 2011,” said Toronto Real Estate Board President Richard Silver. “Home buyers who found it difficult to make a deal in the spring and summer due to a shortage of listings have benefitted from increased supply in the fall.”
As Steven Fudge, Sales Representative, Bosley R.E. Ltd told Propertywire.ca, although there are plenty of signs that indicate that 2011 will close out with similar, robust activity, there are elements at play that do pose the possibility of influence: “The general consensus is that the fundamentals for Toronto real estate are sound, but the erratic stock market and headline news of other world economies may be causing a reason for pause. If the market slows before the end of the year, these will be the big factors influencing a decline in sales.”
And it wasn’t just sales activity that continued to climb through October; average prices in this hotbed continue their ascent as well, up 8% year-over-year, resting in at $478,137.
And as Fudge points out, these intense conditions, while support consistent upward trends, begin to take their toll on consumers after awhile. “In the City of Toronto, sales of freehold properties will remain strong for the balance of the year, as demand continues to outstrip supply, though purchasers are displaying signs of fatigue and are weary of the bidding wars. Many are refusing to go head to head in competition, which is causing some homes to stay on the market longer than expected “
“Sellers’ market conditions remain in place in many parts of the GTA. The result has been above-average annual rates of price growth for most home types,” said Jason Mercer, the Toronto Real Estate Board’s Senior Manager of Market Analysis. “Thanks to low interest rates, strong price growth has not substantially changed the positive affordability picture in the City of Toronto and surrounding regions.”
Fudge sees the condo market as a possible driver towards balanced territory in Toronto: “The City of Toronto, which has a significantly larger supply of condominiums for sale, is not as robust as the freehold market segment. Unless aggressively priced, condominiums will be for sale longer before trading, which signals a more balanced market. Hopefully this indicates a soft landing, rather than a crash.”
According new data released by TREB, sales for October climbed an impressive 17.5%, year-over-year.
“The pace of October resale home transactions remained brisk in the GTA. This bodes well for a strong finish to 2011,” said Toronto Real Estate Board President Richard Silver. “Home buyers who found it difficult to make a deal in the spring and summer due to a shortage of listings have benefitted from increased supply in the fall.”
As Steven Fudge, Sales Representative, Bosley R.E. Ltd told Propertywire.ca, although there are plenty of signs that indicate that 2011 will close out with similar, robust activity, there are elements at play that do pose the possibility of influence: “The general consensus is that the fundamentals for Toronto real estate are sound, but the erratic stock market and headline news of other world economies may be causing a reason for pause. If the market slows before the end of the year, these will be the big factors influencing a decline in sales.”
And it wasn’t just sales activity that continued to climb through October; average prices in this hotbed continue their ascent as well, up 8% year-over-year, resting in at $478,137.
And as Fudge points out, these intense conditions, while support consistent upward trends, begin to take their toll on consumers after awhile. “In the City of Toronto, sales of freehold properties will remain strong for the balance of the year, as demand continues to outstrip supply, though purchasers are displaying signs of fatigue and are weary of the bidding wars. Many are refusing to go head to head in competition, which is causing some homes to stay on the market longer than expected “
“Sellers’ market conditions remain in place in many parts of the GTA. The result has been above-average annual rates of price growth for most home types,” said Jason Mercer, the Toronto Real Estate Board’s Senior Manager of Market Analysis. “Thanks to low interest rates, strong price growth has not substantially changed the positive affordability picture in the City of Toronto and surrounding regions.”
Fudge sees the condo market as a possible driver towards balanced territory in Toronto: “The City of Toronto, which has a significantly larger supply of condominiums for sale, is not as robust as the freehold market segment. Unless aggressively priced, condominiums will be for sale longer before trading, which signals a more balanced market. Hopefully this indicates a soft landing, rather than a crash.”
House prices and sales will remain stable through 2012, according to the latest forecast by the Canada Mortgage and Housing Corporation (CMHC)
In its fourth quarter outlook, CMHC predicts the average price will increase 1.2% from $363,900 in 2011 to $368,200 in 2012. Sales will rise from 450,100 units in 2011 to 458,500 in 2012, up 1.9%. Housing starts, however, will drop 2.2% from 191,000 in 2011 to 186,750 in 2012, according to the CMHC outlook.
Global economic concerns have resulted in growing fears about how that might impact Canada’s market, but CMHC Deputy Chief Economist Mathieu Laberge said the country’s real estate market will remain strong.
“Despite continued uncertainty in the global economy, Canada’s economic fundamentals remain positive, particularly with respect to interest rates, employment and immigration,” said Laberge. “These factors will continue to support Canada’s housing sector in 2012.”
In Vancouver and Abbotsford, where average-price growth has topped any other Canadian city, the average will gain 3.2% in 2012, on top of 5.3% gains forecasted for this year.
Unemployment there will drop from 7.9% to 7.5%, said the CMHC report. Sales activity, however, will start to tail off from the 7.3% growth in 2011 to 3.3% growth in 2012.
The market will likely continue to attract builders, with housing starts expected to rise 9.4% in 2012 and building on 5.1% gains in 2011 over 2010.
In the Greater Toronto Area, apartment starts are expected to be 37.5% higher in 2011 over 2010, totalling 18,200 stats in 2011. Those numbers won’t slow in 2012, as apartment units will gain another 1.6% to reach 18,500 in 2012.
Overall housing starts will drop 2.3% in Toronto, CMHC predicts, largely based on a 14.1% drop in single-detached starts, from 8,500 in 2011 to 7,300 in 2012.
Toronto price gains will also slow, from 4.3% gains in 2011 to 1.4% gains in 2012 to an average of $457,500.
Global economic concerns have resulted in growing fears about how that might impact Canada’s market, but CMHC Deputy Chief Economist Mathieu Laberge said the country’s real estate market will remain strong.
“Despite continued uncertainty in the global economy, Canada’s economic fundamentals remain positive, particularly with respect to interest rates, employment and immigration,” said Laberge. “These factors will continue to support Canada’s housing sector in 2012.”
In Vancouver and Abbotsford, where average-price growth has topped any other Canadian city, the average will gain 3.2% in 2012, on top of 5.3% gains forecasted for this year.
Unemployment there will drop from 7.9% to 7.5%, said the CMHC report. Sales activity, however, will start to tail off from the 7.3% growth in 2011 to 3.3% growth in 2012.
The market will likely continue to attract builders, with housing starts expected to rise 9.4% in 2012 and building on 5.1% gains in 2011 over 2010.
In the Greater Toronto Area, apartment starts are expected to be 37.5% higher in 2011 over 2010, totalling 18,200 stats in 2011. Those numbers won’t slow in 2012, as apartment units will gain another 1.6% to reach 18,500 in 2012.
Overall housing starts will drop 2.3% in Toronto, CMHC predicts, largely based on a 14.1% drop in single-detached starts, from 8,500 in 2011 to 7,300 in 2012.
Toronto price gains will also slow, from 4.3% gains in 2011 to 1.4% gains in 2012 to an average of $457,500.
Tuesday, May 17, 2011
Canadian Mortgage Borrowers Exhibit Confidence
Many Canadians are aggressively reducing their mortgages by making lump sum payments, increasing monthly payments and reducing amortization periods, revealing confidence and financial flexibility in a stable mortgage environment, according to a recent survey by the Canadian Association of Accredited Mortgage Professionals (CAAMP).
Survey Highlights
· 22 per cent of mortgage borrowers increased their payments during the past year; 18 per cent made a lump sum payment; 9 per cent did both and 27 per cent who renewed increased their payments;
· For mortgages repaid in the last 20 years, one third were paid off early;
· Home Equity Lines of Credit (HELOC) represent 22 per cent of all mortgages, making these lines of credit a $215 billion industry;
· On average, Canadian homeowners have $222,000 in home equity, equal to 66 per cent of the value of their homes;
· During the past year, homeowners borrowed $26 billion in additional equity from their homes. 15 per cent of homeowners withdrew equity, averaging $30,000;
· Investments (28 per cent) replaced debt consolidation (19 per cent) as the number two use of home equity takeout. Home renovations remain number one (36 per cent).
"Prudent management of their mortgage debt has paid off for Canadians," said Jim Murphy, AMP, President and CEO of CAAMP. "By taking advantage of low interest rates, we have been paying down our mortgages. As economic confidence returns in Canada, many survey respondents have told us they now feel comfortable using some of that equity to improve their homes and to invest," said Murphy.
Survey Highlights
· 22 per cent of mortgage borrowers increased their payments during the past year; 18 per cent made a lump sum payment; 9 per cent did both and 27 per cent who renewed increased their payments;
· For mortgages repaid in the last 20 years, one third were paid off early;
· Home Equity Lines of Credit (HELOC) represent 22 per cent of all mortgages, making these lines of credit a $215 billion industry;
· On average, Canadian homeowners have $222,000 in home equity, equal to 66 per cent of the value of their homes;
· During the past year, homeowners borrowed $26 billion in additional equity from their homes. 15 per cent of homeowners withdrew equity, averaging $30,000;
· Investments (28 per cent) replaced debt consolidation (19 per cent) as the number two use of home equity takeout. Home renovations remain number one (36 per cent).
"Prudent management of their mortgage debt has paid off for Canadians," said Jim Murphy, AMP, President and CEO of CAAMP. "By taking advantage of low interest rates, we have been paying down our mortgages. As economic confidence returns in Canada, many survey respondents have told us they now feel comfortable using some of that equity to improve their homes and to invest," said Murphy.
Tuesday, March 15, 2011
Time to Make a Plan - Spring is Right Around the Corner
This is the absolute best time to begin to plan your Springtime Renovations, be it the Interior or the Exterior of your home.
There is nothing more gratifying than the feeling of pulling in to your driveway looking at the awesome updates that make your house look next to brand new.
Currently, by speaking to your qualified Mortgage Professional, you will discover that by taking advantage of the equity in your home for Home Improvement purposes is more affordable than you have ever considered.
The Variable Rate Mortgage today enjoys an interest rate of 2.25%, while if you would rather fix the rate, a 5 year term is as low as 3.89%.
The CMHC Mortgage and Real Estate Report has been very clear about the most profitable areas of your home to renovate and enjoy the maximum increase in the value of your home. Kitchens and Bathrooms are the number one most popular reno, and that will in most cases increase the value by what you spend.
It is also a great time of the year to have a good look at the condition of your roof, windows and air conditioner. These are all expensive upgrades that will immediately qualify for you to take equity out of your home and refinance the mortgage.
Many clients of ours have also chosen to upgrade the Landscaping, interlocking walkways, patios or decks.
Remember the most important thing is that you enjoy the fruits of your labour. Capitalize on your equity and reap the benefits today – you can’t take it with you.
Rick Moran, AMP, OMB # M08001997
There is nothing more gratifying than the feeling of pulling in to your driveway looking at the awesome updates that make your house look next to brand new.
Currently, by speaking to your qualified Mortgage Professional, you will discover that by taking advantage of the equity in your home for Home Improvement purposes is more affordable than you have ever considered.
The Variable Rate Mortgage today enjoys an interest rate of 2.25%, while if you would rather fix the rate, a 5 year term is as low as 3.89%.
The CMHC Mortgage and Real Estate Report has been very clear about the most profitable areas of your home to renovate and enjoy the maximum increase in the value of your home. Kitchens and Bathrooms are the number one most popular reno, and that will in most cases increase the value by what you spend.
It is also a great time of the year to have a good look at the condition of your roof, windows and air conditioner. These are all expensive upgrades that will immediately qualify for you to take equity out of your home and refinance the mortgage.
Many clients of ours have also chosen to upgrade the Landscaping, interlocking walkways, patios or decks.
Remember the most important thing is that you enjoy the fruits of your labour. Capitalize on your equity and reap the benefits today – you can’t take it with you.
Rick Moran, AMP, OMB # M08001997
Wednesday, February 23, 2011
The Rise and Fall of Mortgage Rates
Research released by the Bank of Canada Thursday, not surprisingly suggests that Canada’s largest banks are slow to pass on cuts in the Bank of Canada’s policy interest rate.
“Canadian lenders appear to be extremely slow to pass on changes in the Bank Rate to their customers,” author Jason Allen wrote in the report entitled “Competition in the Canadian Mortgage Market.”
Researchers found that “in the short run, five of the six largest Canadian banks adjust their rates upward more quickly when there are upward cost pressures than downward when costs fall,” he said.
Having market power in Canada, “there is scope for banks to coordinate implicitly or explicitly,” Allen wrote.
If costs rise they all want to increase their prices, but if costs fall they wait before reducing rates “because all the banks can earn higher profits.”
Most Mortgage Brokers agree, calling the banks’ practice of holding off discounting for longer periods “common practice.”
Banks usually lenders hold off until after the end of the month before passing on lower rates because this is when renewal notices for maturing mortgages are printed and issued in advance of the maturity date.
“Renewal notices with a higher rate printed on them provide the illusion of a potentially bigger discount that can be offered to the client – a client who most times does not want to put in the effort in the mortgage transfer process.”
Rick Moran, Senior Mortgage Consultant with Invis, adds: “Great Advantage is taken of those clients that assume they are being offered the best rate at the time. We must educate the consumers to shop – contact your expert Mortgage Broker”.
Dave Larock, a broker with Integrated Mortgage Planners-TMG in Toronto said there is another group affected – borrowers who are just about to close their mortgage transaction. “Since most rate drop policies are in effect until seven days prior to closing, it is this group that misses the savings if rate drops are delayed,” he said. “From a lender’s perspective, this group is not very rate sensitive because they are so close to their funding date that switching lenders is usually not feasible, while mortgage applicants who are earlier in the process will eventually receive the lower rate through any standard rate-drop policy, provided that the rate decrease is sustained.”
The research also indicated that borrowers who use a mortgage broker pay less, on average, than borrowers who negotiate with lenders directly. This average discount is about an additional 19 basis points.
“The conclusions of the report are very reasonable,” said Jim Murphy, president and CEO of CAAMP. “They coincide with our own research at CAAMP on discounts. Mortgage brokers play a key role in offering choice to borrowers when making their most important financial decision.”
Larock said he agrees with the paper’s overall premise that more lending competition leads to better rates and choice for consumers and that in today’s market banks can coordinate implicitly or explicitly. “That’s just the nature of an oligopoly,” he said. “If Canada’s big banks were allowed to merge they would increase their market muscle at the customer’s expense. We need more lenders, not fewer.”
The report stated that Canada’s mortgage market represents “almost 40 per cent of total outstanding private sector credit, BOC researchers said in the quarterly Financial System Review.” It is dominated by the nation’s six major national banks plus a large credit union, the Desjardins Movement, and the Alberta province-owned ATB Financial.
The “Big Eight” controls 90 per cent of the assets in the banking industry. All offer the same types of mortgage assets, the great bulk of these being guaranteed by the federal government’s Canada Mortgage and Housing Corporation.
“The Canadian mortgage market is relatively simple and conservative, particularly when compared with its U.S. counterpart,” the report stated. “Many Canadians sign five-year, fixed-rate contracts for the life of the mortgage -- typically 25 years.”
Bruno Valko, director, national sales for Resmor Trust said there is an advantage because the mortgage broker marketplace is not dominated by a few big players.
“In the broker/wholesale channel, there’s more competition and lenders will move quicker to lower rates and attract business when the opportunity presents itself,” he said. “Furthermore, the scale of product offerings is greater, so in the event a person doesn’t qualify at the Big Eight, a broker can potentially offer solutions.
“And if we agree that the broker/wholesale channel moves quicker to lower rates when the opportunity presents itself, that's another advantage for consumers to choose mortgage brokers.”
Rick Moran, AMP, OMB # M08001997
“Canadian lenders appear to be extremely slow to pass on changes in the Bank Rate to their customers,” author Jason Allen wrote in the report entitled “Competition in the Canadian Mortgage Market.”
Researchers found that “in the short run, five of the six largest Canadian banks adjust their rates upward more quickly when there are upward cost pressures than downward when costs fall,” he said.
Having market power in Canada, “there is scope for banks to coordinate implicitly or explicitly,” Allen wrote.
If costs rise they all want to increase their prices, but if costs fall they wait before reducing rates “because all the banks can earn higher profits.”
Most Mortgage Brokers agree, calling the banks’ practice of holding off discounting for longer periods “common practice.”
Banks usually lenders hold off until after the end of the month before passing on lower rates because this is when renewal notices for maturing mortgages are printed and issued in advance of the maturity date.
“Renewal notices with a higher rate printed on them provide the illusion of a potentially bigger discount that can be offered to the client – a client who most times does not want to put in the effort in the mortgage transfer process.”
Rick Moran, Senior Mortgage Consultant with Invis, adds: “Great Advantage is taken of those clients that assume they are being offered the best rate at the time. We must educate the consumers to shop – contact your expert Mortgage Broker”.
Dave Larock, a broker with Integrated Mortgage Planners-TMG in Toronto said there is another group affected – borrowers who are just about to close their mortgage transaction. “Since most rate drop policies are in effect until seven days prior to closing, it is this group that misses the savings if rate drops are delayed,” he said. “From a lender’s perspective, this group is not very rate sensitive because they are so close to their funding date that switching lenders is usually not feasible, while mortgage applicants who are earlier in the process will eventually receive the lower rate through any standard rate-drop policy, provided that the rate decrease is sustained.”
The research also indicated that borrowers who use a mortgage broker pay less, on average, than borrowers who negotiate with lenders directly. This average discount is about an additional 19 basis points.
“The conclusions of the report are very reasonable,” said Jim Murphy, president and CEO of CAAMP. “They coincide with our own research at CAAMP on discounts. Mortgage brokers play a key role in offering choice to borrowers when making their most important financial decision.”
Larock said he agrees with the paper’s overall premise that more lending competition leads to better rates and choice for consumers and that in today’s market banks can coordinate implicitly or explicitly. “That’s just the nature of an oligopoly,” he said. “If Canada’s big banks were allowed to merge they would increase their market muscle at the customer’s expense. We need more lenders, not fewer.”
The report stated that Canada’s mortgage market represents “almost 40 per cent of total outstanding private sector credit, BOC researchers said in the quarterly Financial System Review.” It is dominated by the nation’s six major national banks plus a large credit union, the Desjardins Movement, and the Alberta province-owned ATB Financial.
The “Big Eight” controls 90 per cent of the assets in the banking industry. All offer the same types of mortgage assets, the great bulk of these being guaranteed by the federal government’s Canada Mortgage and Housing Corporation.
“The Canadian mortgage market is relatively simple and conservative, particularly when compared with its U.S. counterpart,” the report stated. “Many Canadians sign five-year, fixed-rate contracts for the life of the mortgage -- typically 25 years.”
Bruno Valko, director, national sales for Resmor Trust said there is an advantage because the mortgage broker marketplace is not dominated by a few big players.
“In the broker/wholesale channel, there’s more competition and lenders will move quicker to lower rates and attract business when the opportunity presents itself,” he said. “Furthermore, the scale of product offerings is greater, so in the event a person doesn’t qualify at the Big Eight, a broker can potentially offer solutions.
“And if we agree that the broker/wholesale channel moves quicker to lower rates when the opportunity presents itself, that's another advantage for consumers to choose mortgage brokers.”
Rick Moran, AMP, OMB # M08001997
Tuesday, January 25, 2011
REACTION TO MORTGAGE RULE CHANGES
Yesterday, Jim Flaherty announced changes to mortgage rules that will take effect on March 18. Following is my reaction to these changes:
Many industry leaders say that the changes announced were a measured approach to balance the Canadian real estate market, scale back consumer debt loads and reduce the looming threat of personal financial crisis for Canadians who would be in danger if rates increase the next few years. I believe that this is an overreaction, however the fact remains that the best advice continues to come from the expert Mortgage Broker.
I do predict that some sales will be pulled forward over the next 60 days as serious buyers close deals to preempt the changes ahead of the March 18th deadline.
Rick Moran, AMP, OMB # M08001997
Many industry leaders say that the changes announced were a measured approach to balance the Canadian real estate market, scale back consumer debt loads and reduce the looming threat of personal financial crisis for Canadians who would be in danger if rates increase the next few years. I believe that this is an overreaction, however the fact remains that the best advice continues to come from the expert Mortgage Broker.
I do predict that some sales will be pulled forward over the next 60 days as serious buyers close deals to preempt the changes ahead of the March 18th deadline.
Rick Moran, AMP, OMB # M08001997
Thursday, January 20, 2011
The Yummy Mummy Club "Mummies Do Rule" By Rick Moran
The Yummy Mummy Club is housing an article of mine entitled "Mummies Do Rule." Please feel free to read on or visit The Yummy Mummy Club's original post here.
The other day my partner (also my wife and a yummy mummy member) and I had a lively discussion surrounding the majority of the couples that we assist all year long (I head a team of Mortgage Consultants in the greater Toronto area).
The other day my partner (also my wife and a yummy mummy member) and I had a lively discussion surrounding the majority of the couples that we assist all year long (I head a team of Mortgage Consultants in the greater Toronto area).
Janice stated that she had done some research, looking into the thousands of people that we have assisted over the years. Her claims initially surprised me, that is, until I began to do my own research. I began to read, search and compile verifiable data and I made the most interesting discovery.
Over half of Canadian women say that they are responsible for most of the day-to-day financial decisions, according to MasterCards 2010 MasterIndex of Canadian Women Consumers. More than half of those enjoy their role as the primary decision maker.
The report examined the role of women over the age of 18 in Canada as well as looking at the effects of the global recession on consumer behaviour. "The recession was a financial marathon, but Canadian women emerged leaner, stronger and more financially satisfied," says Julie Wilson, Director, Public Affairs in a press release, "They are more confident in their financial situation. They are still spending, but they are now dollar-store chic."
Although the number of women who are responsible for the day-to-day household financial decisions was down to 51 percent from 2006's 55 per cent, more Canadian women enjoy that responsibility. Moms are the ones most likely to have the sole responsibility of day-to-day finances in their home, the study found. More specifically they are making the principal Mortgage Decisions.
Six in ten Canadian women are satisfied with their personal financial situation, with only 14 percent being very satisfied. This number is up from 54 percent in 2006.
Six in ten Canadian women are savers. Their stage of life often dictated how women spend their money. Over seventy per cent of Canadian women say that a good price is the most important factor when they are shopping for themselves and their households. For “New Earners”, brand name is a bigger consideration for moms when it comes to buying for themselves.
That data reverses when it comes to buying household items. The 2010 research was conducted by Environics Research Group from July 22 - August 4, via a national online survey of 2,000 adult Canadian women aged 18+.
Upon discovering this most interesting and verifiable phenomenon, I assembled the “team” and we began a review of over a thousand of the families that we have arranged Mortgages for over the past 10 years. In fact in our experience, over 64% of the ladies have made the final mortgage decision.
I humbly expressed my apologies to all of the girls involved on our team, and I surrender…Mummies do rule.
Wednesday, December 8, 2010
SEVEN DIRECTIONS IN THE FUTURE OF THE MORTGAGE INDUSTRY
As I constantly study trends in the industry, I like to pass on the really informative ones. Following is a very recent article by Deloitte, I find it informative, but I disagree with the number of households that will be using Mortgage Brokers – I will always maintain the importance of the relationship that is developed between the consumer and the talented Mortgage Professional. For over twenty years I have insisted on providing solid advice, preparation and complete disclosure at all times, ensuring a stress free experience..
Unlike the U.S. mortgage broker market, brokers will remain a fixture in the Canadian mortgage distribution landscape, and Canadian mortgage holders will ultimately benefit as a result, says a new report by Deloitte.
“The Canadian mortgage industry is undergoing another significant paradigm shift,” says Todd Roberts, consulting partner and leader of the corporate strategy practice for Deloitte. “In the face of significant industry developments such as the recent credit crisis, industry consolidation and price competition, many banks and non-bank lenders are starting to seriously evaluate the economics involved in pursuing the mortgage brokerage channel. As more and more of these lenders enter this business, Canadian mortgage consumers will ultimately benefit in the form of increased choice of products, value-added advice and more convenient services.”
The future for the mortgage broker channel in Canada remains positive, although the scenario anticipated five years ago where mortgage brokers were expected to represent the majority of origination volume is unlikely, says Deloitte. The channel will continue to stabilize, settling at approximately one-third of mortgage origination dollar volume, it says.
In response to consumer group concerns that mortgage prepayment penalties are complicated and lack disclosure, the federal government has stated its intention to standardize its calculation and disclosure. The typical repayment penalty is either three months’ interest or the difference between the existing rate and the rate the lender could charge in the current environment – known as the interest rate differential (IRD). In a rapidly falling rate environment, the IRD method provides the lender with greater compensation for the foregone interest revenue, but it is typically more expensive for borrowers who plan to discharge their mortgages.
“If new government regulations remove the IRD penalty as a barrier to switching, more consumers will likely switch mortgages in periods of declining interest rates,” says Roberts. “In the absence of stiff payment penalties, lenders will therefore seek to minimize lost customers by building strong relationships through active cross-selling and retention strategies for at-risk groups.”
According to Deloitte, emerging trends that are expected to shape the Canadian mortgage industry and ultimately impact Canadian mortgage holders include:
1. The balance of power will shift from financial institutions to mortgage-seeking Canadians. As the mortgage lending landscape continues to shift, Canadians will have access to a wider range of options when selecting a mortgage. This has increased competition among lenders (bank branches, mobile mortgage specialists, independent mortgage brokers, and online sources) which in turn will result in more customer-friendly service, increased product offerings and convenience for Canadians seeking a mortgage.
2. Online and telephone banking will continue emerging as viable channels. Remote self-service options such as online and telephone banking are emerging as popular alternative channels for obtaining mortgages. Given the new level of sophistication telephone banking has recently achieved, Canadians no longer need to leave home to obtain a mortgage because some lenders are allowing borrowers to complete their mortgage applications using a voice signature. In addition, online features such as calculators, planning tools and live chat options with lenders are giving Canadians access to more information than ever. Although these channels are not new, they are in the early stages of adoption and signify an important trend for Canadians interested in the self-service option.
3. Mortgage brokers will evolve from “rate shoppers”’ to “advisors” in order to survive. Given that Canadians now have increased access to mortgage rate information, mortgage brokers as “rate shoppers” is quickly becoming irrelevant. As such, the “mortgage broker as advisor” value proposition will be the most successful approach for this channel. To succeed in today’s hypercompetitive marketplace, mortgage brokers will start to offer value-added advice to Canadian mortgage holders similar to the way investment brokers have evolved from transactional to advice-based roles.
4. Major banks will continue to compete for broker business. Major banks will continue to invest heavily in proprietary distribution to compete directly with the mortgage broker channel, and to a growing extent, each other. In particular, the emergence of bank mobile mortgage sales forces (MMSF) is challenging the perception of brokers as the low-rate/better customer service alternative (particularly among non-branch/monoline lenders). As a result, bank MMSF are making major inroads due to convenience and customer service. Armed with differentiated products, more than 2,800 mobile mortgage sales agents are operating in Canada today. The evolution of MMSF and the role major banks choose to play in the broker channel will have significant implications for the future of broker originated lending in Canada. If banks choose to stay in the broker channel, Canadians will have more choice and competitive pricing. Brokers will also need to raise their game and increase their level of client service sophistication. However, if banks withdraw from the channel, it will dramatically restrict the supply of mortgages in the broker channel.
5. Investments in technology will benefit consumers in terms of speed and convenience in obtaining a mortgage. As more lenders make technological advances, quick turnaround and visibility on deal status will improve, ultimately benefiting consumers. Improvements to workflow management tools streamline back-office operations, facilitate accurate and timely front-end communication with consumers, and allow lenders to proactively handle exceptions and reduce turnaround times. For example, if a borrower wants to know whether they can increase their mortgage to win a bidding war, the lender can now evaluate the risk and provide them with an answer within four to six hours – compared to the several days it used to take using a manual process.
6. The super-broker networks will continue to consolidate. In recent years, increased competition, heightened compliance requirements and rising technology costs have pushed the broker market to consolidate, with smaller shops merging into super-broker networks. In 2005, almost 70 per cent of Canadian brokers were employed by one of five broker houses. Today, this figure tops 85 per cent as new mid-tier networks have emerged. As a result, the quality of the remaining firms is much higher (for example, more consistent training for brokers, better technological enablement, greater negotiating power with large lenders on behalf of consumers for better products and rates).
7. Niche lenders with specialized product offerings will emerge via the broker channel. As the participation of new lending institutions in the mortgage broker channel continues to evolve, niche lenders with specialized products will emerge via the broker channel. In doing so, they will provide new options to groups of Canadians who previously had few mortgage options available to them due to their financial circumstances (for example, new immigrants, the self-employed and individuals with credit challenges).
Rick Moran, AMP, OMB#M08001997
Unlike the U.S. mortgage broker market, brokers will remain a fixture in the Canadian mortgage distribution landscape, and Canadian mortgage holders will ultimately benefit as a result, says a new report by Deloitte.
“The Canadian mortgage industry is undergoing another significant paradigm shift,” says Todd Roberts, consulting partner and leader of the corporate strategy practice for Deloitte. “In the face of significant industry developments such as the recent credit crisis, industry consolidation and price competition, many banks and non-bank lenders are starting to seriously evaluate the economics involved in pursuing the mortgage brokerage channel. As more and more of these lenders enter this business, Canadian mortgage consumers will ultimately benefit in the form of increased choice of products, value-added advice and more convenient services.”
The future for the mortgage broker channel in Canada remains positive, although the scenario anticipated five years ago where mortgage brokers were expected to represent the majority of origination volume is unlikely, says Deloitte. The channel will continue to stabilize, settling at approximately one-third of mortgage origination dollar volume, it says.
In response to consumer group concerns that mortgage prepayment penalties are complicated and lack disclosure, the federal government has stated its intention to standardize its calculation and disclosure. The typical repayment penalty is either three months’ interest or the difference between the existing rate and the rate the lender could charge in the current environment – known as the interest rate differential (IRD). In a rapidly falling rate environment, the IRD method provides the lender with greater compensation for the foregone interest revenue, but it is typically more expensive for borrowers who plan to discharge their mortgages.
“If new government regulations remove the IRD penalty as a barrier to switching, more consumers will likely switch mortgages in periods of declining interest rates,” says Roberts. “In the absence of stiff payment penalties, lenders will therefore seek to minimize lost customers by building strong relationships through active cross-selling and retention strategies for at-risk groups.”
According to Deloitte, emerging trends that are expected to shape the Canadian mortgage industry and ultimately impact Canadian mortgage holders include:
1. The balance of power will shift from financial institutions to mortgage-seeking Canadians. As the mortgage lending landscape continues to shift, Canadians will have access to a wider range of options when selecting a mortgage. This has increased competition among lenders (bank branches, mobile mortgage specialists, independent mortgage brokers, and online sources) which in turn will result in more customer-friendly service, increased product offerings and convenience for Canadians seeking a mortgage.
2. Online and telephone banking will continue emerging as viable channels. Remote self-service options such as online and telephone banking are emerging as popular alternative channels for obtaining mortgages. Given the new level of sophistication telephone banking has recently achieved, Canadians no longer need to leave home to obtain a mortgage because some lenders are allowing borrowers to complete their mortgage applications using a voice signature. In addition, online features such as calculators, planning tools and live chat options with lenders are giving Canadians access to more information than ever. Although these channels are not new, they are in the early stages of adoption and signify an important trend for Canadians interested in the self-service option.
3. Mortgage brokers will evolve from “rate shoppers”’ to “advisors” in order to survive. Given that Canadians now have increased access to mortgage rate information, mortgage brokers as “rate shoppers” is quickly becoming irrelevant. As such, the “mortgage broker as advisor” value proposition will be the most successful approach for this channel. To succeed in today’s hypercompetitive marketplace, mortgage brokers will start to offer value-added advice to Canadian mortgage holders similar to the way investment brokers have evolved from transactional to advice-based roles.
4. Major banks will continue to compete for broker business. Major banks will continue to invest heavily in proprietary distribution to compete directly with the mortgage broker channel, and to a growing extent, each other. In particular, the emergence of bank mobile mortgage sales forces (MMSF) is challenging the perception of brokers as the low-rate/better customer service alternative (particularly among non-branch/monoline lenders). As a result, bank MMSF are making major inroads due to convenience and customer service. Armed with differentiated products, more than 2,800 mobile mortgage sales agents are operating in Canada today. The evolution of MMSF and the role major banks choose to play in the broker channel will have significant implications for the future of broker originated lending in Canada. If banks choose to stay in the broker channel, Canadians will have more choice and competitive pricing. Brokers will also need to raise their game and increase their level of client service sophistication. However, if banks withdraw from the channel, it will dramatically restrict the supply of mortgages in the broker channel.
5. Investments in technology will benefit consumers in terms of speed and convenience in obtaining a mortgage. As more lenders make technological advances, quick turnaround and visibility on deal status will improve, ultimately benefiting consumers. Improvements to workflow management tools streamline back-office operations, facilitate accurate and timely front-end communication with consumers, and allow lenders to proactively handle exceptions and reduce turnaround times. For example, if a borrower wants to know whether they can increase their mortgage to win a bidding war, the lender can now evaluate the risk and provide them with an answer within four to six hours – compared to the several days it used to take using a manual process.
6. The super-broker networks will continue to consolidate. In recent years, increased competition, heightened compliance requirements and rising technology costs have pushed the broker market to consolidate, with smaller shops merging into super-broker networks. In 2005, almost 70 per cent of Canadian brokers were employed by one of five broker houses. Today, this figure tops 85 per cent as new mid-tier networks have emerged. As a result, the quality of the remaining firms is much higher (for example, more consistent training for brokers, better technological enablement, greater negotiating power with large lenders on behalf of consumers for better products and rates).
7. Niche lenders with specialized product offerings will emerge via the broker channel. As the participation of new lending institutions in the mortgage broker channel continues to evolve, niche lenders with specialized products will emerge via the broker channel. In doing so, they will provide new options to groups of Canadians who previously had few mortgage options available to them due to their financial circumstances (for example, new immigrants, the self-employed and individuals with credit challenges).
Rick Moran, AMP, OMB#M08001997
WHY IT PAYS TO STAY IN TOUCH WITH YOUR MORTGAGE BROKER
When you were researching your options for your current mortgage, you probably spent a fair bit of time speaking with your mortgage broker. You may not realize that your mortgage broker can still be a valuable resource many years from now.
1. Your broker understands your needs. Whatever situation you might find yourself in as a homeowner, your broker has extensive experience providing with mortgage advice to others in similar scenarios, whether it’s buying, selling, or refinancing.
2. Your broker understands the market. You can count on an independent view of what’s happening in the markets. Your broker stays on top of the trends in real estate financing and other economic conditions and is aware of new developments and products that could be useful to you.
3. Your broker is a source of advice and knowledge about refinancing. If you’re thinking of refinancing, your mortgage broker is one of the first people you should speak to. He or she will again review your goals and outline your options, so you can make an informed decision.
4. Your broker can refer you to good people. Your mortgage broker regularly works with lenders, real estate agents, home inspectors, and lawyers who specialize in real estate. If you ever need a referral – for example, if you are looking for a real estate agent to help you find your next home – your broker can provide you with recommendations.
Rick Moran, AMP, OMB # M08001997
1. Your broker understands your needs. Whatever situation you might find yourself in as a homeowner, your broker has extensive experience providing with mortgage advice to others in similar scenarios, whether it’s buying, selling, or refinancing.
2. Your broker understands the market. You can count on an independent view of what’s happening in the markets. Your broker stays on top of the trends in real estate financing and other economic conditions and is aware of new developments and products that could be useful to you.
3. Your broker is a source of advice and knowledge about refinancing. If you’re thinking of refinancing, your mortgage broker is one of the first people you should speak to. He or she will again review your goals and outline your options, so you can make an informed decision.
4. Your broker can refer you to good people. Your mortgage broker regularly works with lenders, real estate agents, home inspectors, and lawyers who specialize in real estate. If you ever need a referral – for example, if you are looking for a real estate agent to help you find your next home – your broker can provide you with recommendations.
Rick Moran, AMP, OMB # M08001997
Monday, November 29, 2010
HOME OWNERSHIP AFFORDABILITY IMPROVES (PART 2: ONTARIO)
Home Ownership Affordability Improves (Part 2) Ontario
After four consecutive quarterly increases, the cost of homeownership declined in Ontario in the third quarter thanks to lower mortgage rates and some softening in property values. RBC's Measures fell between 1.3 and 2.4 percentage points, fully reversing the increase in the second quarter.
Existing home sales ended their precipitous slide confirming RBC's earlier expectation that the slowdown in activity through the spring and summer largely reflected various transitory factors - including the HST and changes in mortgage lending rules - that spurred demand at the start of this year. With the market now back in balance, the recent softness in home prices will likely prove to be a healthy recalibrating following a strong rally.
Contacting your Mortgage Professional and spending quality time planning is the most important component in your quest for a healthy financial future.
Rick Moran, AMP, OMB#M08001997
After four consecutive quarterly increases, the cost of homeownership declined in Ontario in the third quarter thanks to lower mortgage rates and some softening in property values. RBC's Measures fell between 1.3 and 2.4 percentage points, fully reversing the increase in the second quarter.
Existing home sales ended their precipitous slide confirming RBC's earlier expectation that the slowdown in activity through the spring and summer largely reflected various transitory factors - including the HST and changes in mortgage lending rules - that spurred demand at the start of this year. With the market now back in balance, the recent softness in home prices will likely prove to be a healthy recalibrating following a strong rally.
Contacting your Mortgage Professional and spending quality time planning is the most important component in your quest for a healthy financial future.
Rick Moran, AMP, OMB#M08001997
Thursday, November 25, 2010
EXCLAIM.CA x Rick Moran Article
By Allison Outhit
Rick Moran (www.rickmoran.ca) has over 20 years experience and is part of a select group of Mortgage Professionals in Canada that hold an Accredited Mortgage Professional designation. He has worked with a number of arts and media professionals and as a regular guest on Newstalk 1010 AM radio Toronto, Rick has assisted thousands of listeners with their financial questions.
Do musicians have particular issues when it comes to getting into the real estate market?
What I have found is that anybody who’s young and/or struggling at all seem to be of the same mind, which is "I will never be able to buy a house or qualify for a mortgage.” That is in fact 90 percent of the time just not the case. I specialize in self-employed people who have had a decent past credit history and who are self-employed and that transfers instantly to the music industry and the arts.
What should young artists think abut to get on the right path?
It’s very important that they establish a credit history that’s healthy and on an ongoing basis make some sort of plan to budget to buy real estate. I am a firm believer in investing and to take it a step further, invest your money in real estate.
What are the chief obstacles for musicians who don’t think they can do it?
It’s education, it really is. To give you an example: the mortgage brokerage industry in Canada has become very much not fee-generated. We used to charge fees in order to place mortgages on people’s behalf. Today the industry has morphed greatly, and our compensation for the most part is done with AAA business being given to some 50 lenders in Canada who pay us a commission for placing a mortgage with them. In most cases if you have good credit history and you have a good go to the bank deal, there will be no charge from the mortgage broker. My best interest rate will be much better than what their bank’s rate is, and over a five-year term it’s monster money. So the message is, we are able to do much better without it costing you any money to do it. The challenge is getting this message out to the entertainment industry: we are professionals with a very good understanding of how credit works and will not hesitate to spend our time providing advice or counselling to help people get where they should be. And it’s firmly my belief that everyone should own a piece of real estate.
Why?
It would make our country much healthier and make the general population much happier. There comes with ownership of real estate a level of pride that a renter will ever have. It’s much more than just having it for your retirement. As long as it is possible to access your day-to-day world, find something in your price range that is accessible somehow. Buying properties jointly [with band members] is not a bad idea, and there’s no reason why that couldn’t be done. You have to start somewhere.
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