“I think there should be better options for second mortgages; there should be more avenues for clients with good credit to obtain second mortgages from A-lenders,” Steve Gilmour, a broker with Dominion Lending Centres
Alliance, told MortgageBrokerNews.ca. “Most of the time these products are costly and I would like something with a competitive interest rate; people with good credit shouldn’t have to pay exorbitant amounts of interest.”
Gilmour says clients who require a second mortgage often have to turn to the private segment and face high interest rates and argues high qualified clients are being let down by lenders.
So should lenders offer lower rate second mortgages?
Not so fast, says another leading player.
“No, (monolines) are not built for that kind of risk; some already engage in B-lending so they already have some exposure to risk,” a broker, who spoke with MortgageBrokerNews.ca on condition of anonymity, said. “Why would they getting into that space? Second mortgages are highly risky and the regulator wouldn’t approve it.”
The broker argues that the most clients who require second mortgages are risks; those with credit issues or who are highly leveraged.
“I don’t run into prime clients who require second mortgages a lot,” the broker said. “Usually it’s people with financial issues.”
When it comes to second mortgages, there aren’t enough viable options in the broker – and bank – space, argues one player who is calling on his lender partners to distinguish themselves by focusing on this segment.