I always strive to leave the impression with my customers that the mortgage business is a service business first. You don't make a profit on one mortgage; you make it on the lasting relationships you establish. It's all about building partnerships.
The relationships I build with my customers are based on the same values I share with my family. Reliability, honesty and commitment are traits that have always impressed me. It seems natural to extend those same values to my customers
Your Banker's 6 Dirty Secrets...
There is a fine line between telling a lie and avoiding telling the truth. It comes back to intentions you can be hurt by a clever omission as easily as you can by an outright lie. It wont come as a surprise, but there are some things your bank would rather not tell you. Well look at six dirty secrets your banker has been keeping.
1. You probably dont need the insurance
Banks offer insurance, sometimes marketed as balance protection, on every debt instrument they offer. You can get insurance on a credit card, line of credit, plain vanilla loan and so on. In return, your payments are covered in certain cases and a death benefit is paid if you die with the debt.
Going through the contract can be interesting and enlightening for consumers. Often many conditions have to be met to receive the hardship qualifications to cover payments and the death benefit is capped at a maximum that may be much less than the value of the loan.
Your banker isnt to blame for that, the bank is. Where the bankers omission comes in is in not advising clients that their life insurance policy may already be enough to cover the new debt already and if not, adding coverage for the amount of the debt will be much cheaper in the long run than paying an extra percentage of your balance on top of the interest.
2. Even if I like you, the system decides
Many banks market the fact that you can go into any branch and have a productive conversation with their representatives the human touch. If you are looking for a loan or mortgage however, theres little human element to the decision process.
Large banks use a computer model that takes inputs such as income, current debt levels and assets, and decides whether you qualify for a loan and, if so, how much. For most people, this process is flexible enough that they dont notice. For farmers, entrepreneurs and business owners, though, this process can be enraging because it discounts elements of their business and often paints them as credit risks.
3. Im a salesman
There are many different terms for it complete banking, one-stop banking, holistic service but when it comes down to it, your banker is there to cross-sell you other products from the bank. Have a chequing account? How about a savings account, credit card, savings bond and a retirement account? Banks want to lock in a customer as much as possible.
4. We offer a complete package to get complete fees
Once a customer opens an account, the pressure is on to open three more. Holding more of a customers financial life at the same bank gives banks the ability to encourage the customer into more fee-bearing accounts without having to worry about the customer shopping around for a better deal. Your banker will never tell you that the bank down the road charges less in service fees and offers the same interest. Instead they emphasize the ease of transferring funds between your accounts within the branch, the transfer fees they wave and the deal they have on balance protection insurance.
5. We make more money from fees than banking
Banks have been pulling an ever-larger slice of their revenues from fees. The tipping point came in the late 90s, when fee income climbed to over half of revenue for the largest banks. Most people, your banker included, will tell you a bank makes its money off the interest it earns from loans to customers. And given how important fees are to revenue, take three guesses at which direction they will be heading in the future.
6. Use a mortgage broker
The biggest secret your banker is keeping is that mortgage brokers have access to the best rates in the business and represent ONLY the clients BEST interest. Instead, your banker will focus on the convenience of having lots of friendly staff wanting to serve you. All those people and buildings cost a lot to keep going. This cost is one of the reasons banks need to tighten their lending models and up their fees. By contrast, a mortgage brokers service doesnt cost you a penny.
The bottom line
Your banker is there to protect the banks interest, not necessarily yours. Its time to look into a Mortgage Broker. Just dont ask your banker for a recommendation, thats another of those things he just wont say.
Mark Fidgett is a Vancouver mortgage broker and the driver behind www.AdvancedEquity.ca
Your Vancouver Mortgage Broker For Life
National house price index rises again in August
The national HPI has grown at a below-inflation rate of 0.6% over the last 12 months. However, the weakness is not regionally broad-based. The national HPI has been depressed by 12 consecutive months without a rise in Vancouvers index, which dropped a cumulative 6.6%. Other Western metropolitan areas (Victoria, Calgary, Edmonton, and Winnipeg) also contributed to slow the national HPI. At the opposite, annual growth has been decent in most of the regions located in the central and eastern part of the country. That being said, home sales in August were up 55% from March in Vancouver, where market conditions went from favorable to buyers to balanced. Over that period, home sales rose 19% in Calgary and 12% in Edmonton. These improvements, if sustained, will sooner or later help limit home-price deflation in this region.
The TeranetNational Bank Composite National House Price IndexTM increased 0.4% in August, a fourth gain in a row after an eight-month string without a rise.
On a monthly basis, the index rose in 8 of the 11 markets covered: Victoria (+0.2%), Calgary (+0.6%), Hamilton (0.7%), Winnipeg (0.7%), Toronto (+0.8%), Montreal (1.1%), Ottawa-Gatineau (1.7%) and Halifax (1.8%). The index was down in Vancouver (-0.8%), Quebec City (-0.4%) and Edmonton (-0.1%).
From August 2018 to August 2019, the Composite index rose 0.6%. Over the period, the HPI declined in Vancouver (-6.6%), Edmonton (-3.1%), Calgary (-2.3%). It was marginally up in Quebec City (0.1%), Victoria (0.7%) and Winnipeg (1.1%). It grew more convincingly in Toronto (+3.8%), Hamilton (+4.4%), Halifax (5.5%), Montreal (+5.7%) and Ottawa-Gatineau (+6.4%).
Source: National Bank, Marc Pinsonneault
CREA Updates Resale Housing Market Forecast
The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity via the Multiple Listing Service (MLS) Systems of Canadian real estate boards and associations for the rest of 2019 and looking ahead to 2020.
Economic fundamentals underpinning housing activity remain strong outside of the Prairies and Newfoundland and Labrador. Population and employment growth have both remained supportive and the unemployment rate remains low. At the same time, expectations have become widespread that the Bank of Canada is unlikely to raise interest rates over the rest of the year and into next.
More importantly for home buyers and housing markets, longer-term mortgage rates have been declining. Among those that have declined is the Bank of Canadas benchmark five-year rate used by banks to qualify mortgage applicants.
Additionally, the Federal Government has recently launched its First-Time Home Buyer Incentive, a shared equity program in which the federal government finances a portion of a home purchase in exchange for an equity share of the homes value.
Of these factors supporting Canadian housing activity, the decline in mortgage rates is arguably the most important development since the release in June of CREAs most recent forecast. The decline in the benchmark five-year mortgage rate has marginally relaxed the B-20 mortgage stress-test, which has dampened housing activity more than other policy changes made in recent years.
Home sales have improved by more than expected in recent months and there are early signs that home price declines in the Lower Mainland of British Columbia and across the Prairies may be abating. Meanwhile, home prices are re-accelerating across Ontarios Greater Golden Horseshoe region.
Strong economic fundamentals, previously unexpected declines in mortgage interest rates and stronger than previously expected housing market trends in British Columbia and Ontario have resulted in CREA upwardly revising forecast home sales in 2019 and 2020. Nonetheless, the overall level of national sales activity this year and next is anticipated to remain below levels recorded prior to the implementation of the B-20 stress test.
National home sales are now projected to recover to 482,000 units in 2019, representing a 5% increase from the five-year low recorded in 2018. While this is an upward revision of 19,000 transactions compared to CREAs previous forecast (85% of which is due to upgraded British Columbia and Ontario forecasts), it represents a return of activity to its 10-year annual average. It also remains well below the annual record set in 2016, when almost 540,000 homes traded hands. Notwithstanding the upward revision, the forecast for 2019 on a per capita basis remains the second weakest since 2001.