Study flabbergasts broker

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A study conducted by the Angus Reid Institute found the majority of Canadians believe the government should become more involved with regulating the housing market.

“Data from a series of two new public opinion polls from the Angus Reid Institute also suggest most Canadians see a greater role for government to play in the real estate sector,” Angus Ried said in its recently released study, Beyond Vancouver & Toronto, most Canadian city dwellers say home prices either high or unreasonable.

According to the study, 66% of Canadians said “government should get more involved” in the real estate sector; the remaining third of those polled said the “government should stay out and leave it to the industry to manage.”

The results surprised long-time mortgage broker Joe Sammut.

“That’s the complete opposite of what I believe; I believe the government is not doing enough to regulate consumer credit cards,” Sammut, a broker with Mortgage Architects Mortgage Gate Group, told MortgageBrokerNews.ca. “They have already implemented a number of regulations and (although) we haven’t been crippled by it, it’s certainly hurt us.”

Many brokers have made the same argument before. And while some have countered, arguing the government has very little power when it comes to regulating consumer credit, Sammut says it’s a matter of “won’t” and not “can’t.”

“The problem is these companies are so powerful, the government would have a fight on its hands,” Sammut said. “They need to become more selective with how much credit they give out (to Canadians).”

The public interest research firm conducted a random online survey across Canada from February 2-10, which included 5,867 Canadians. The survey data contains a margin of error of +/- 1.3%. A separate survey included 1,513 participants and had a margin of error of +/- 2.5%.
  • Brad Knight on 2016-03-02 8:39:58 AM

    I wonder if the 66% are the same people that wonder why we need a work letter,pay stub,2 years Noas,proof that no taxes are owed to Cra etc

  • Nick Bachusky on 2016-03-02 9:25:10 AM

    I agree with Joe.

    The fact that we have to work within guidelines and do but then the client can go across the street to a car dealership and the dealer will easily fund a brand new car raising the client's TDS/GDS beyond our guidelines is a real problem.

    I also think that lenders should be requiring the lowering of potential unused credit (LOC's and large unused credit card balances) to fit within our guidelines so that our clients have more difficulty acquiring easy credit after mortgage funded. I used to see this more 5 years ago but not so much anymore.

  • Tomas on 2016-03-02 10:26:27 AM

    You folks know banks make much more on mortgages than credit cards right?

  • Tony Piattelli on 2016-03-02 10:46:56 AM

    Tomas, I worked in the banking world for 20 years and the banks make the spread between what they are charging the borrower versus what they are paying the investor. The average spread on a mortgage is between 1.5% - 2.5%, whereas the spread on most credit cards are between 8.5% and 20% depending on the cc. So the banks actually make a higher return on the ccs. Do you people really believe more regulation is necessary! It's been proven over and over again, the less involved the government the more smoothly the business runs. We need less government involvement especially as most of the politicians don't have a clue about mortgage financing, so let's have them influence the rules around getting a mortgage. Almost like going to a mechanic to get your teeth cleaned.

  • Janice Ashworth on 2016-03-02 12:04:03 PM

    The majority of the public is unaware of the increased scrutiny and many rule changes the federal government has been implementing since 2008.
    Almost all of my clients do not know we now need to use 3% of credit card and other revolving debt balances as a minimum payment and they do not know that there is an "unreasonable (in my opinion) qualifying rate" for terms other than 5 year fixed and up. Many do not know they can not tap 95% of their equity anymore and all clients are overwhelmed by the amount of paperwork now required.
    We need to educate the consumers so they can have an informed answer to the polls mentioned in the article.
    If the people polled - had first been updated on the the government's interventions over the past 7 years - the polls would have reflected more accurately how people feel.

  • John Martin on 2016-03-02 2:38:33 PM

    Here is reality. The banks in this country run the government. Regardless of which party is in power, the banks run them. If you where to sit at one of these nice cozy (we are all friends) get together that all the top guns at these banks do on a regular bases. What you would find out would literally spin your head. Ask Mr Dodig he just gave himself a 72% raise from last year. Of course with the blessing of the usual bunch of cronies on the board. That makes it legal...lol Get one of these job's and you win the lottery every single year. Until you retire. Wow! Got to love that. It is a beautiful thing....

  • Andrea on 2016-03-02 4:28:31 PM

    Tomas, can you tell me where you got the info on the profitability of mortgages over credit cards? I would love to read that and share it.
    Rob McLister can you speak to this? I was under the impression that bank profits are down on mortgages and way up on other products.

  • Jeremy on 2016-03-02 5:15:42 PM

    Tomas,

    How is a bank making more on a mortgage at rates well below even 5% compounded semi annually, vs 19% compounded monthly for consumer credit cards? More return on each dollar, easier to get, more actively borrowed against...

  • RossK on 2016-03-03 12:47:50 PM

    Today in Canada CMHC is approving loans where over 100% of after tax income would be required to cover the obligations contained in any standard mortgage document.

    Clearly someone needs to step in here and help out!

  • Keith on 2016-03-04 5:25:00 PM

    Once again... brokers complain about credit card debt, and some of the biggest complainers are DLC - the ones that SELL credit cards to their customers.

    Pot... meet kettle...

  • Ross Taylor on 2016-03-08 8:08:25 AM

    For what it's worth, mortgage lenders' profit margins are not determined by the coupon rate of the mortgage - it is the spread between their cost to borrow and the rate they lend out at.

    I doubt mortgage lenders' margins would change much at all even if a five year fixed rate mortgage was 19.99%. In fact, it is quite possible the business would be less profitable, since default rates would likely increase.

    And that is one reason why credit card borrowing rates are so high - the default rate is MUCH higher than it is for mortgages.

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