Arrears put brokers under the microscope

by |
By Jordan Maxwell
The latest arrears numbers from CMHC could be pointing an accusatory finger at some Western  brokers at the same time they appear to pat others on the back for their advice to clients.

The province with the second highest mortgage arrears rate, B.C., borders the province with the second lowest one, Alberta.

There’s some irony there considering B.C. homeowners, according to Canada’s largest mortgage insurer, have an average mortgage amount of $285,700, which is a full $35K less than that of the average Albertan.

Still, the arrears rate for B.C. is 0.44 per cent while Alberta’s is 0.27 per cent.

The discrepancy has a lot to do with the higher costs of buying a home, say economists, but it may also suggest that brokers need to do a better job of advising clients around what they can and cannot afford to buy.

Still, Diana Petramala, an economist at TD Bank, said that the numbers are to be expected considering that B.C.’s urban hub is the most expensive place to live in Canada.

“There’s a higher concentration of people buying condos in Vancouver and other places in B.C. and typically we see a high rate of homebuyers in arrears because of the cost of living versus income,”  she told MortgageBrokerNews.ca. “Costs are higher than income in most cases, which leads to the arrears, but the 0.44 is still quite low. It was a lot higher in the mid-90s.”

The 0.44 figure is higher than the national average, which is 0.33 per cent according to CMHC numbers and after the first half of the year, stats show that 1,618 homeowners were at least 90 days behind.

Nationally, 0.33 per cent of the $551 billion in mortgages insured by CMHC are in arrears up from 0.31 according to CMHC figures.

Again, nationally, the average CMHC insured mortgage is set at $231,500 with most putting at least eight per cent down compared to nine per cent in B.C.

While the numbers raise flags with those in B.C., they also show the resilience of Canadian homeowners. Homebuying is increasing at record levels and mortgage credit is growing at its slowest pace since 2001, according to TD bank figures.

More Canadians also shedding household debt a lot faster because of lower mortgage lending rates and an aggressive approach to paying off mortgage debt. What’s more, contributions from families on the initial down payment of an insured mortgage loan have also shrunken overall mortgage amounts, according to a report from TD.
 
  • CV Mortgages on 2014-11-25 2:49:26 PM

    Are there any stats on how many of those BC mortgages in arrears are originated by Mortgage Brokers? It's awfully presumptuous to say that brokers need to do a better job advising their clients on affordability when, in my experience as a BC broker, the financial institutions are the ones bending the rules at the branch level, getting people into mortgages they cannot afford.

  • John on 2014-11-25 2:50:26 PM

    A more interesting figure would be, how many of the default mortgages were sold though bank branches and how many were sold through a broker? The article assumes the latter is higher is higher.

  • Kumar on 2014-11-25 3:21:24 PM

    "National was at 0.33 up from 0.31"
    What were the figures for BC and Alberta in the previous year/survey?

  • Dawn on 2014-11-25 3:52:46 PM

    I have attended many different CMHC meetings in the past few months, these numbers are not what was shared for arrears. Has anyone checked the facts? Alberta's deliquency is higher than BC. And Insurers do not break down deliquency as per the delivery channels of Broker versa Banker.

  • Jeremy on 2014-11-25 5:30:50 PM

    I would like to see CMHC name the biggest offenders. Let the world know who those brokers are so we can clean up our own backyard.

  • OkanaganBroker on 2014-11-25 6:46:46 PM

    Okay...lets back up here...So we the Brokers originate the mortgage.. BUT we don't approve it, & we certainly don't create the lending guidelines that the client's borrowing request fits into. How are we to blame? The lender and CMHC are the ones approving the deals...not us!
    When I was underwriting Broker deals for a lender it was my job to review the application, ensure all the required proof and documentation was there, and take full responsibility for approving the deal, and ensuring CMHC had all the correct information to base their decision on. Unless there was fraud involved the Broker IS NOT to blame.

  • John B on 2014-11-25 7:36:03 PM

    Based on my recent experiences, where our branch "competitors", seem to be able to circumvent GDS & TDS requirements, I would not hesitate to bet our community is lower than the provincial and national averages.

  • Mortgage Delivery Guy on 2014-11-26 9:57:24 AM

    I think one has to dig in deeper into the stats and how the conclusions are being drawn. National average # are meaningless when we talk about a specific region in a country.
    One should be careful when drawing generalized conclusions .

  • Steve on 2014-11-26 2:26:01 PM

    If the Nat'l arrears is .33% of 551 billion, then we are talking less than 2 billion in arrears for CMHC. That's almost the same as a liberal gas plant shutdown in Oakville. Not even a hiccup in the political world or worthy of discussion if you see the electorate continue to put the liberals in! Waste of time CMHC. They draw lots in profits to cover several gas plant shut downs. On with our day kids!

  • Faye Drope on 2014-11-26 9:08:40 PM

    I just attended a CMHC function which stated that CMHC contributed over 16 BILLION $$$ to the Feds general revenue (Government Debt) over the last 10 years. Steve your calculations are right and I agree there is nothing to read here.

  • John Martin on 2014-11-27 2:46:40 PM

    Steve is correct. End of conversation. Lot more important things to be concerned about than this cr..p.

  • EX-BANKER, 14yr. Mtge. Agent on 2014-11-27 2:51:56 PM

    Interesting !!! Can't paint all BROKERS or BANKERS in one brush stroke. But, I can say (from experience) may-be look at the bank (BRANCH DIRECT) deals. They (banks - like RBC) seem to be able to get deals thru, that I get a decline on from lender(s)& insurer (s). Which after telling the client these are the rules, and having them walk into RBC, and all the rules go out the window.... it's hard to get the client to understand I'm telling them the truth :(

  • EX-BANKER, 14yr. Mtge. Agent on 2014-11-27 2:51:58 PM

    Interesting !!! Can't paint all BROKERS or BANKERS in one brush stroke. But, I can say (from experience) may-be look at the bank (BRANCH DIRECT) deals. They (banks - like RBC) seem to be able to get deals thru, that I get a decline on from lender(s)& insurer (s). Which after telling the client these are the rules, and having them walk into RBC, and all the rules go out the window.... it's hard to get the client to understand I'm telling them the truth :(

Broker news forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Name (required)
Comment (required)
By submitting, I agree to the Terms & Conditions