Brokers are applauding what appears to be MCAP’s decision to put its money where its mouth is – the lender adopting a largely hands-off approach to RMG’s product lineup and features that deviate from its own.
“I’ve been told RMG would be operated as a separate company,” said Collin Bruce, a leading broker for Dominion Lending in Edmonton. “And that is definitely a good thing as far as brokers and our clients are concerned.”
Bruce said there are mainly two indications that MCAP is doing just this:
• RMG retains its maximum 35 years amortization limit as opposed to MCAP’s 30-years maximum
• RMG continues to offer customers its cash back program which is not provided by mother company MCAP
Early last week, the Ministry of Finance cut the maximum amortization limit to 25 years for insured mortgages. The fear was that lenders would apply the same policy to convention lending.
However, most lenders have opted to maintain their conventional mortgage amortization at 30 to 35 years. That was despite analysis suggesting they would be quick to bring conventional underwriting guidelines under the same high-ratio rules.
B2B Bank, Coast Capital in B.C. and Vancity in B.C. currently offer 35-year amortizations, along with RMG.
That’s different from its new parent MCAP, which will maintain its 30-year amortization on most products, matching that offered by TD, CIBC, Scotiabank, ATB Financial, First National and some other broker channel lenders.
The move by these lenders to keep longer amortization limits on conventional loans bodes well for a certain type of client, according to Drew Donaldson of Safebridge Financial Group, in Toronto.
“Not all borrowers fit into this mould, but this is great for the sophisticated client that is in a good financial and cash position and does not want all their money tied into real estate,” said Donaldson.“Taking on longer, uninsured loans is a good strategy to reduce monthly payments."
For Bruce, MCAP’s move to allow RMG to chart its own path benefits brokers and borrowers.
“For brokers it’s great when lenders differentiate and offer varied products,” he said. “This is great for our clients because they get more options to choose from.”