There are so many to choose from, but here are just a few of the best comments brokers penned this week.
David O'Gorman on 28 Jun 2012 09:12 AM
Maybe, in a back- handed fashion, Flaherty has addressed the LoC & credit card debt load issue by forcing consumers to understand they can not crank up c/c debt with the intention to consolidate it all into a new gov't insured mortgage. c/c delinquency will rise & lenders will have to tighten limits. Maybe it's "tough love" for consumers, maybe it is warning to the banks to tighten c/c guidelines before he drops a hammer on them with new tougher c/c regulations.
Gregory Stanley CFP CSEC on 25 Jun 2012 02:55 PM
Do we really wish to promote the word 'cull' when we refer to losing more young mortgage agents from our industry. The word is usually used in reference to animals; deemed pests/unwanted by society. I respect all people that have attempted to make it in our industry and have believed in the broker advantage for the public.
Brian Coventry on 25 Jun 2012 05:40 PM
I think the big six don't like the way we serve the mortgage clients. I know of many files in the big six I wish CMHC would audit certain Branches. We have to exercise due diligence and compliance at the pain of losing our license. There are lenders who in the Branch can play fast and lose with the rules and get away with it, some major fudged deals we could never pull off in our Industry....
Paul Therien, CENTUM on 25 Jun 2012 07:26 PM
It may very well be that some people will leave the industry as it becomes more challenging to source business, however, given that the industry has been experiencing great change already - many of those people would have left eventually without this added encouragement... if they were to leave in the first place.
I think that Welbank makes a valid point. It was not all that long ago when a 25 year am was the norm. If we look back to 10 years ago it was still, even with these changes, more difficult to obtain financing than it is today after these changes were made. The difference between a 30 year am and a 25 year am truthfully should not make or break a deal.
If a customer cannot afford to make the payment on a home at 25 years, perhaps instead of trying to find a way to squeeze them into that mortgage, they need to consider purchasing a home that is not quite so expensive. I understand that presents challenges in some areas, like Vancouver, but… as the song says… “You can’t always get what you want”. Helping the consumer differentiate between the reality of what they want and what they can afford is a big part of being a mortgage advisor. Why anyone would think that maxing someone out to the last penny is a smart financial move is just plain… well… silly. 39% of your GROSS income on housing is still very high, consumers do not think of their gross income when doing a budget, they consider what is in their pocket.
Consider this: let's say you make $1000 before deductions, $200 is gone for deductions, leaving you with $800 – of that $800 we are telling the consumer that they can spend $390 on PIT – which equals 48.75% of their take home income - their real, in pocket income. Doesn’t sound bad until you throw in kids, food, vacation, clothing, etc etc etc. Can't forget debt 44% of their gross would equate to 55% of their net.
Back in the old days I was taught that the very first question you asked your customer was what the maximum amount they would be comfortable spending is, then you built your mortgage plan based on that. Today we ask them what their income is, and then TELL them that they can afford $X per month. Pretty different approach.
Try it yourself, ask your next customer a simple question – “What is the most you would be comfortable spending each month?” – if they are not sure then ask them “If you were renting, what would be the absolute maximum you would be willing to spend?” then “How much more would you add to that, if any, to own a property?” You might be surprised at the answers you get. The amount typically will be lower than what the “maximum” allowed is. Allowed is very different than the comfort level they have for a payment so that they can still maintain their lifestyle.
Maybe, if we approach these changes the right way, it is an opportunity for our industry to make a positive difference to the consumer... just maybe.