Analyst advises banks to focus more on loans, including mortgages

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He got under the skin of many brokers with his prediction of a housing crash, but wait until you hear the advice this leading financial advisor is offering the big banks about their mortgage businesses.

“The banks want people to borrow more money. The ideal client [in a housing bubble] for the advisor is somebody who doesn’t borrow money, who has a modest house and saves a lot of money. This client is not interesting to the banks because they can’t make any money off them,” Hilliard MacBeth portfolio manager with Richardson GMP told MBN sister publication Wealth Professional. “Where the banks make all their money -- really 95 percent of profits -- is from clients borrowing money for mortgages, HELOCs, and credit cards.”

An unwelcome suggestion among mortgage brokers who are constantly competing with the big banks for mortgage market share.
According to CAAMP’s fall mortgage industry report, broker market share fell to 31 per cent from 40 per cent a year prior.

MacBeth, the controversial author whose new book calls for a big crash in real estate prices, also believes that the big banks will soon face their own day of reckoning when they must decide where their bread is truly buttered.


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  • Mortgage Guy Geoff on 2015-03-24 12:01:43 PM

    Once again this guy is promoting a thinly vailed self-serving opinion that we are supposed to believe is expert and I guess impartial? He seems to be suggesting that banks should focus more on the mortgage and loan business and less on the brokerage business, a business in which he competes. Interesting....

    To state the obvious....consider the source and what their self-interest is likely to be before deciding whether their opinion makes sense.

  • HILBOJ2 on 2015-03-24 2:37:15 PM

    95% of bank net income/profits is not sourced from Secured Lending or even CC. He's not even close.
    Having a correct understanding of bank balance sheets and income statements, he would arrive at a different ratio. I recommend he follow his colleague's lead and obtain a CFA. Then he would understand the importance of correct data when deriving predictions.
    As a portfolio manager I would also like to hear disclosures re: his his personal or corp short positions with REIT ETFs. Surely if he predicts 50% decline in Canadian real estate he's putting his money, and his client's, where his mouth is.

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