Northern brokers challenged by dearth of lenders

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A broker working Whitehorse and other Territorial hot spots is blaming a whopping 30-per cent drop in originations on the growing reluctance of channel lenders, the increasing dominance of the big banks and the population’s transient nature.

“Last year I was doing one and two deals there a month,” Karen Hall, owner of Dynamic Mortgages, headquartered in Vancouver, told MortgageBrokerNews.ca. “It’s slowed considerably now, and it’s getting a bit sticky and restrictive for several reasons. But, a big one is that the lenders are more hesitant now about go into Whitehorse and other communities in the Territories that I broker in.”

In terms of the broker channel, Hall is left with only two lenders prepared to underwrite the mortgage business she attracts in the North. That's despite residential construction and home prices that have grown as much as 10 per cent in the Yukon over the last year. Even in Yellowknife, where values dipped 1 per cent in April from the same time last year, the actual average home price sits at $420, 680 – more than $44,000 above the national average. On a per capita basis, housing starts in the North have also outpaced much of the rest of the country.

Still, for lenders with no physical presence in the region, the remoteness of the Territories and the lenders' lack of familiarity with the market have cooled interest in writing A mortgages, especially as spreads and profitability shrink.

It's a tough sell to get lenders into the market for other reasons, said another broker, living and working in Whitehorse.

"As a federally regulated jurisdiction, lenders must meet a different set of regulations and fill out additional paperwork," Christine Richardson, a broker with Verico Zanders and Associates, told MortgageBrokerNews.ca. “Lenders are really overlooking the North and its potential. It’s especially true for Whitehorse and Yellowknife considering they're the jurisdictions  that allow alternative, non-insured mortgage."

 Stable employment and the same geographical isolation have traditionally limited private lender interest as well. CMHC stats, which fail to capture the large number of private sales, have also labeled the market as "sleepy."

“Also the banks have just ramped it up with their competitive rates, and they have branches in the community and know it,” said Hall, who does most of her business in the Greater Vancouver Area.

Ironically, referrals, which led to the Yukon, are now frustrating her efforts to grow her Yukon portfolio.

“Whitehorse is a transitory community with people moving there for two years for work and then going back home,” Hall told MortgageBrokerNews.ca. “It makes it hard to grow referrals from past clients who may no longer be there.”

Brokers actually living there are doing most of their work through the banks.

  • Sandra Hay, MortgageBrokers.com on 2011-05-25 6:57:04 AM

    Similar problem in Northern Ontario. The communities north of Thunder Bay are growing and developing at a surprising pace, and yet there is a great reluctance from lenders to get familiar with that market.

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