A broker wants mono-lines to step up with a high-ratio subprime mortgage to challenge the market’s sole offering – the product of a bank, free to set its own rates.
“To increase competition and bring rates and fees down on high ratio B lending, we really need one of the mono-lines to enter that end of the alternative sphere and challenge TD Financial Services,” Michael Di Stefano, agent and co-owner of Dominion Lending Centres BTB Mortgage Solutions, told MortgageBrokerNews.ca. “I think that could bring down the kind of rates we’re seeing on those loans by two to three points and also cut the fees.”
B clients relying on those kinds of loans need that relief. On average they pay TD seven per cent interest on those high-ratio loans plus an additional two to three per cent in fees. The rates skirt the lower end of those available through private lenders, but are well above those being offered by institutional alternative lenders on conventional mortgages. Their loan-to-value maximums usually stop at 80 per cent. Private lenders are also reticent to go as high as the 90 per cent some B borrowers need for new purchases and refinances.
TD is the exception to that rule, relying heavily on assessed property values to determine client suitability for the program. Those who qualify have used those loans as a stop-gap measure, allowing them time to rehabilitate credit over the course of terms as long as three years.
Di Stefano, whose Niagara Falls Brokerage has won praise for its contributions to community charities and service programs, worries they are paying too high a price for that assistance.
Any move on the part of mono-lines to enter that end of the alternative market would open it to the forces of fair market competition, he told MortgageBrokerNews.ca, at the same time widen the opportunities for the increasing number of brokers working the alternative sphere.