The new mortgage rules are more likely to challenge mortgage brokers than mortgage specialists, says one leading road rep, pointing to greater broker reliance on “marginally qualified A clients.”
“This is just my opinion and it’s derived from my conversations with mortgage broker colleagues and friends,” said Cristiano Vilela, a Kingston-based mobile specialist, with more than a decade of banking experience behind him. “The rules will probably affect mortgage brokers more than us because of the type of business we see, which tends to be more A-clients who are well able to qualify under the new rules.
“Brokers tend to do more business with clients who may have just qualified under the old rules and won’t under the new.”
That theory gets put to the test starting today as th new mortgage rules kick in, restricting the maximum amortization on an insured mortgage to 25 years and the LTV on a refi to 80 per cent.
Another potential challenge for brokers, suggests Vilela, are caps on debt ratios, which may further restrict the current client pool for mortgage professionals, in particular.
Still, many brokers have steadily shifted their client focus to Triple-A borrowers, developing books less sensitive to changes in basic eligibility.
The new rules are more likely to affect new agents dependent on first-time buyers, said one industry veteran.
“We’re talking about young agents who haven’t had the time to develop a client book of people with significant equity in their homes and so are dependent on those first-time buyers with 5 per cent down,” Ray McMillan, a broker with Home Mortgage Consultants Inc. in Mississauga, told MortgageBrokerNews.ca. “Also, in terms of refis, unless you have a stable of private lender in place, it will be harder to get those refi deals done."
Vilela and other road reps won’t be relying on those private deals either, but may see their employers gain market share for A deals as a new rate war emerges, argue analysts.