Brokers might not want to hear it. But Realtor referrals may increasingly be a lifesaver as refis provide less safe harbour in this stormy market, say industry players.
“We’re seeing more refis than purchases these days,” said Hani Faraj of Mortagage Alliance in Vancouver. “But with the new LTV limits, many applications are not likely to go through.
“I deal with a lot of realtors; through these contacts I am able to get a lot of referrals.”
While many brokers traditionally rely on refi business when home sales slow down, relying on them now is problematic considering new mortgage rules, Faraj told MortgageBrokerNews.ca.
Those federal changes cut LTV maximums from 85 per cent to 80 per cent and have reduced the the ability of many borrowers to use them. It also means brokers have to look elsewhere to make up for the loss of new-purchase business.
In Vancouver, in particular, resale activity has now dropped by as much as 18.3 per cent, according to a recent CREA report. Some brokers fear the slump could go on for about two years.
The change has made it all the more important to strengthen Realtor partnerships.
“My Realtor contacts are able to help me scope potential clients,” said Jackson Cunningham of TMG The Mortgage Group. “It doesn’t always make sense to rely on refis. It’s been a busy summer for me because I use my existing contacts to find clients.”
But even if it slows down for him, Cunningham says he’ll be OK.
“You shouldn’t be hustling deals all the time. It will be a good opportunity to reinforce relationships with business partners and former clients,” he said.
That’s the same idea one Toronto broker has.
“There’s nothing wrong with babysitting refis,” said Richard Samuels of Obsidian Mortgage. “But hopefully we could put our talents to better use.”
For instance, he said, brokers can concentrate on helping clients develop better strategies for accessing loans under the tougher rules.
“For example, we can move to a liability management where we can discuss with clients various options such as consolidation and debt management,” said Samuels. “I think as brokers this is the time for us to expand the box we swim in.”